Europe’s debt map flips: Belgium borrows like Greece as France pays more than Italy

Fourteen years after the euro crisis, the debt landscape of the European Union has shifted dramatically. Once, Greece was the poster child for high borrowing costs, while Germany's bonds were the safest in the region. Today, the tables have turned.

Belgium, home to the EU institutions, now borrows at rates similar to Greece, at 4.29% for ten-year bonds. In contrast, France, once considered part of the "core" with low borrowing costs, pays more than Italy for the same ten-year loans. Greece, despite having one of the highest debt-to-GDP ratios in Europe, has managed to run a budget surplus of 1.7% of GDP in 2025 and reduce its debt by nearly nine percentage points of GDP in a single year.

This flip in the debt map is a result of differing fiscal policies and economic conditions. While the former core countries like Germany have managed to extend debt maturities, improve primary balances, and digitalise tax collection, the southern periphery countries have faced more challenges. Belgium, for instance, saw its deficit widen to 5.2% of GDP in 2025, larger than France's 5.1%, and its debt rose above 109% of GDP in the first quarter of 2026.

The French government is preparing to borrow a record €340 billion in medium- and long-term bonds in 2026, up from €310 billion this year. Much of this debt will be refinancing existing bonds that matured during the pandemic and energy crises. The annual interest bill for this debt is forecast to rise to €72.9 billion in 2027, accounting for a fifth of the state's revenue last year.

Investors are now closely examining the fiscal story behind each government's borrowing needs. Borrowing to fund investment and future growth is viewed differently from borrowing to cover rising interest bills. The European Central Bank's interest rate hikes and the tightening fiscal fundamentals have also contributed to the rising sovereign yields across the G7 countries.