The key facts

  • Belgium borrows for 10 years at 4.29%, Greece at 4.35%; France pays more than Italy
  • France is preparing record borrowing of €340 billion in 2027, with interest payments rising to €72.9 billion
  • IMF: nearly 30% of government debt in G7 countries and Spain is repaid within a year, increasing budget vulnerability

The Old Periphery Has Shifted North

The map of the eurozone that took shape after the 2012 crisis, when the 'core' led by Germany borrowed cheaply while the periphery (Greece, Portugal, Spain, Italy, Ireland) paid dearly, no longer corresponds to reality, Euronews writes. Belgium, home to the EU institutions, borrows for ten years at 4.29%, while Greece, which was rescued three times, pays 4.35% — almost the same. Portugal, which received assistance in 2011, borrows more cheaply than Spain, Ireland has almost caught up with the Netherlands, and France pays more than Italy. This is happening as eurozone governments prepare to borrow record amounts from investors.

Why the Borders Have Shifted

Bond yields reflect investors' assessment of a country's ability to service its debt. According to the publication, Greece in 2025 closed its budget with a surplus of 1.7% of GDP, and its debt, while remaining the largest in Europe, shrank by more than nine percentage points of GDP in a year. Ken Egan, head of European sovereign credit at the agency KBRA, told Euronews that over the decade the periphery pursued more cautious fiscal policies, improved its primary balance, lengthened debt maturities, established tax collection through digitalization, and restored its banks — this reduced refinancing risks. Belgium has moved in the opposite direction: the budget deficit rose to 5.2% of GDP, exceeding the French figure of 5.1%, and debt in the first quarter of 2026 exceeded 109% of GDP. According to Egan, in the 'traditional core' there is less clarity in policy, more uncertainty and structural pressure on spending, and the cost of refinancing is noticeably higher than in the era of low rates.

France: Record Borrowing and Rising Interest

France's position is determined primarily by the fact that the state spends 57.2% of GDP — the highest figure in the G20. Debt has reached €3.6 trillion, or 119% of GDP, versus 98.2% before the pandemic. On September 29, the French treasury announced plans to borrow €340 billion in 2027 in medium- and long-term bonds — a record, about 11% of GDP, versus €310 billion in the current year. Most of the funds will go toward refinancing old debts issued during the pandemic and the energy crisis, at higher rates: the average rate of placements this year was 3.55% versus 3.14% a year earlier. Interest payments are forecast to rise from €62.6 billion in 2026 to €72.9 billion in 2027 — roughly one-fifth of last year's state revenues. Egan notes that markets are paying increasingly close attention not only to the volume of borrowing but also to its purposes: loans for investment and growth are assessed differently from loans to cover rising interest payments.

Context: Record Issuances and Short Debt Maturity

Germany is issuing a record €512 billion in debt securities this year, but for defense and infrastructure — markets 'forgive' such borrowing. Italy and Spain are each refinancing several hundred billion. The IMF in the fresh World Economic Outlook points out that in G7 countries and Spain nearly 30% of government debt is repaid within a year, so changes in rates affect the budget within months, not decades. From February to September, the average yield on ten-year G7 bonds rose by more than a percentage point to a nearly 20-year high, wrote IMF fiscal director Rodrigo Vargas and his deputy Era Dabla-Norris. They link this to the oil shock, persistent inflation, and the flow of money into the AI sector, but emphasize the role of fiscal fundamentals. The ECB has also added to the cost of borrowing, raising the deposit rate twice this year to 2.50%. The German ten-year yield rose from 2.64% in February to 3.45%, the French one grew twice as fast and briefly reached 5% in early October — the widest spread with Germany since 2012.

A Vicious Circle and a Changed Buyer Base

Egan warns that the market itself can become part of the problem: political headlines or a weak budget push the yield curve up, refinancing becomes more expensive, fiscal maneuvering narrows — and the market demands an even greater premium. The circle spins faster because the buyers have changed: the ECB has stopped expanding its portfolios and is letting them shrink, pension demand is shifting, and marginal demand is moving toward price-sensitive investors. High energy prices, he adds, weaken growth while supporting inflation and rates. The IMF formulates the key problem: in a growing number of countries, the rate on new debt exceeds the pace of economic growth, causing debt to grow on its own if there is no surplus before interest payments. 'The longer countries delay, the more painful the adjustment will be,' the Fund warns.

A Repeat of 2012? Opinions Differ

Lombard Odier believes not yet: markets are 'pricing in uncertainty, not laying the groundwork for a new sovereign debt crisis.' France's interest payments amount to just over 2% of GDP — roughly half of Italy's, the current account deficit is small, and the country does not depend on external financing the way Portugal, Spain, and Greece did in 2012 with capital inflows of 7–12% of GDP annually. The bank's forecast: French spreads will remain wide until a convincing budget is adopted, probably no earlier than the presidential elections in May 2027, and the euro will fall to $1.09. Vice-Governor of the Bank of Portugal Clara Raposo warned that sovereign bond markets have become more sensitive to inflation, fiscal doubts, and geopolitics, and that shocks spread faster because of funds that 'sell first and ask questions later.' 'Trust may be an intangible quantity, but its economic consequences are quite real,' she noted. The trust channel is also discussed in a CEPR experiment with German companies from the Bundesbank panel (about 7,000 firms): half of respondents believe the ECB will hold down rates for weak treasuries, and after a pessimistic forecast for the debt of France, Italy, and Spain, companies that distrust the ECB raised their three-year inflation expectations for Germany by 1.4 percentage points. In 2012, the question was whether the periphery could pay its debts; in 2027, the publication concludes, the question is who belongs to the periphery today.