French sovereign borrowing costs have surged to their highest level since the eurozone debt crisis, driven by political instability as the government confronts the threat of collapse over a proposed austerity budget.

On Wednesday, the gap between French 10-year government bond yields and those of Germany widened to as much as 90 basis points, the largest difference in 12 years, while stocks on the Paris exchange also saw a sharp decline.

Amid the growing threat of political unrest in the eurozone’s second-largest economy, the situation reflects the challenges faced by Prime Minister Michel Barnier as he seeks to implement a budget that includes €60 billion in spending cuts and tax hikes, despite lacking a parliamentary majority, The Guardian reports.

Appointed by President Emmanuel Macron in September following a snap general election that resulted in a hung parliament, Barnier warned on Tuesday that any attempt to topple the government could lead to a financial market meltdown.

“There will be a big storm and very serious turbulence on the financial markets,” he said when asked by French broadcaster TF1 about the potential impact if the budget measures failed to pass.

As his options decline ahead of a mid-December deadline, Barnier stated on Tuesday that he was likely to invoke Article 49.3 of the constitution, which enables the adoption of the budget without a parliamentary vote.

However, this move would almost certainly prompt a no-confidence motion against the government.

For weeks, Marine Le Pen from the far-right National Rally (RN), and her supporters have been intensifying pressure on Barnier, warning they will vote to bring down the government unless their demands to protect households, small businesses, and pensioners from the financial strain are addressed, Reuters reports.

In an article published in Le Figaro on Tuesday, Le Pen seemed to prepare for a potential push to topple the government, insisting that public-sector salaries would not go unpaid and rejecting her rivals' portrayal of her party as “artisans of chaos.”

However, according to an Elabe poll for BFM TV released on Wednesday, more than half of the French population believes that a no-confidence vote leading to the government's ousting should be avoided. 

Indeed, if Barnier's government were to collapse, 63% of those surveyed expressed support for President Macron's resignation.

“If we can avoid censure we will avoid it,” RN lawmaker Thomas Ménagé told Reuters news agency. “But if by mid-December (Barnier) has not listened to the 11 million French people who voted for us ... we will responsibly vote to topple this government.”