Political unrest in France is sending the euro tumbling and borrowing costs rising as the manufacturing crisis deepens

French borrowing costs rose and the euro fell yesterday as the Paris government teetered on the brink of collapse and bleak data showed a further downturn for Europe’s manufacturing sector.

The market turbulence came as right-wing and left-wing parties said they would support a vote of no confidence against Prime Minister Michel Barnier in the coming days.

Barnier made a dramatic appeal to French MPs, urging them not to support the move – which would mark the first time since 1962 that a French government has been toppled by a vote of no confidence.

“We are in a moment of truth,” he said. “The French will not forgive us for putting the interests of individuals above the future of the country.”

Yields on French 10-year bonds – the returns investors demand for government loans – spiked and briefly surpassed those of Greece.

The narrowing of the gap between the two countries’ borrowing costs illustrates how, while Greece has fought back from its chaotic debt crisis more than a decade ago, France – Europe’s second-largest economy – has sunk into the mud.

At the same time, the gap between French bonds and those of Germany has widened.

That ‘spread’ – a measure of the premium charged by investors for holding French government bonds – widened to 0.9 percentage points last week, the highest since 2012, and rose close to that level again yesterday.

The euro, meanwhile, fell below $1.05 against the US dollar, closing at a two-year low.

Pound sterling rose almost €1.21 against the euro – a boost for British travelers heading to the continent over Christmas.

France has been plunged into political turmoil after snap elections earlier this year in which no bloc delivered a parliamentary majority.

That has left Barnier struggling to pass a budget bill providing for tax rises and spending cuts worth £50 billion as he tries to repair the country’s debt-laden public finances.

Due to the lack of support, the Prime Minister said he would ram the bill through without a vote.

That prompted National Rally leader Marine Le Pen to say she would table a vote of no confidence, while left-wing parties were expected to do the same.

This came as the closely watched Purchasing Managers’ Index (PMI) showed that the downturn in the eurozone manufacturing sector had deepened last month.

The PMI index, compiled by S&P Global and Hamburg Commercial Bank, fell

from 46 in October to 45.2 in November – on a measure where the limit of 50 separates growth from contraction.