The Globe and Mail reports in its Tuesday edition that a sliding euro is the latest alarm bell for policy-makers facing a surge in French borrowing costs that has started to spill over into the broader euro area. A Reuters dispatch to The Globe reports that the euro hit 17-month lows below $1.12 (U.S.) on Monday and tumbled against sterling, the Swiss franc and Japan's yen. France is at the heart of the European market concerns. The French government is seeking to enact an unpopular 2027 budget to lower its deficit and contain its record-high debt load, a tall order in a deeply divided parliament as political factions position ahead of next year's presidential election. Investors, unwilling to take chances, are dumping French bonds while buying safe German debt. With the premium investors demand to hold French over German government bonds now at its highest since the 2010-2012 debt crisis, currency markets fear contagion. Every further 10 bps widening in the French spread against Germany would be associated with a 0.4 per cent fall in euro/dollar, BofA estimates. Goldman Sachs says, "The typical response is closer to zero most of the time, but (the spread impact) can rise significantly in times of acute stress."