Financial markets reassess European risk: Belgium borrows at nearly the same cost as Greece, while France surpasses Italy

Emese Grancsa

15 October 2026, 12:30

Economy

Credit foto: shutterstock.com

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Europe’s financial risk hierarchy is changing amid budget deficits, rising debt and increasingly higher financing costs. Recently, investors have begun penalizing developed economies such as France and Belgium, while Greece and Portugal have improved their market perception through more prudent fiscal policies.

Belgium is paying a 4.29% yield on ten-year bonds, close to Greece’s 4.35%. France is borrowing at a higher cost than Italy, and the yield on its bonds temporarily reached 5% at the beginning of October. French public debt is estimated at 119% of GDP, while interest costs could rise from €62.6 billion in 2026 to €72.9 billion in 2027.

Greece recorded a budget surplus of 1.7% of GDP in 2025, while Belgium’s deficit reached 5.2%. Romania has lower debt, at 60.1% of GDP in the first quarter of 2026, but a high deficit, estimated at 6.2% for this year. Markets are therefore assessing not only debt levels, but also fiscal discipline, political stability and the credibility of deficit-reduction plans.

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Context: Markets are watching fiscal discipline and financing costs, while France and Belgium are increasingly penalized

Before the shift in the hierarchy of financial risk in Europe, several analyses warned that pressure on sovereign bonds could be fueled by the combination of high debt, a persistent deficit, and rising financing costs. In France’s case, attention focused on the debt trajectory and the fact that refinancing a large stock of debt is carried out at higher yields, which can push interest expenses upward.

At the same time, there were warnings about the limited room for intervention by the ECB, especially if the increase in yields primarily reflects the state’s fiscal risk rather than a problem with the transmission of monetary policy. In parallel, the IMF pointed out that the pace of deficit reduction may be insufficient to reduce vulnerabilities, while public debt could continue to rise, keeping the economy in a risk zone.

In Belgium, the context was marked by political difficulties in preparing the budget, with the coalition failing to reach an agreement for 2027, while the prime minister warned about the seriousness of the budgetary situation and the need for a signal regarding the sustainable recovery of public finances.