Europe’s debt map shifts as French and Belgian borrowing costs rise

Belgium’s 10-year borrowing rate has reached 4.29%, close to Greece’s 4.35%, while France now pays more than Italy, according to Euronews. The shift comes as eurozone governments prepare to borrow record amounts.

Greece recorded a budget surplus of 1.7% of GDP in 2025, and its debt ratio fell by more than nine percentage points that year. KBRA’s Ken Egan told Euronews that former high-risk borrowers have improved fiscal balances, tax collection and debt management.

Belgium’s finances have moved in the opposite direction. Its deficit reached 5.2% of GDP last year, and public debt rose above 109% of GDP in the first quarter of 2026.

France’s rising bill

France’s Treasury said on September 29 that it plans to issue €340 billion in medium- and long-term bonds in 2027, up from €310 billion this year. Much of the borrowing will refinance maturing debt, including bonds issued during the pandemic and energy crisis.

The average interest rate on France’s medium- and long-term bonds issued so far this year was 3.55%, compared with 3.14% last year. The government’s annual interest bill is forecast to climb from €62.6 billion in 2026 to €72.9 billion in 2027.

France’s 10-year yield briefly touched 5% in early October, and its gap with Germany’s reached the widest level since 2012. The European Central Bank raised its deposit rate twice this year, to 2.50%, to contain inflation.

Risks and limits

Egan said investors are paying closer attention to what governments borrow for, as well as how much. He warned that political uncertainty or a weak budget can push borrowing costs higher, narrowing governments’ room to manoeuvre.

Lombard Odier argues that markets are pricing uncertainty rather than the conditions for a new sovereign debt crisis. The bank expects French spreads to remain wide until a credible budget passes parliament, probably not before the May 2027 presidential election.

The International Monetary Fund has also warned that debt refinancing can transmit rate changes to government budgets quickly. In the G7 and Spain, nearly 30% of public debt matures within a year, according to its latest World Economic Outlook.