London, 11 November 2026 — EBM Newsdesk Analysis — By Katie Winearls
This autumn, France’s 10-year borrowing costs touched 5%, their highest close since 2002, while Belgium found itself paying more to borrow than Greece for the first time since 2008, according to Brussels Signal, citing Reuters and De Tijd. As the Financial Times reports, a new divide is opening in the eurozone bond market. The surprising detail is who sits on which side. The countries rescued in the debt crisis a decade ago are now borrowing more cheaply than two of the bloc’s founding members.
For European businesses, this matters well beyond government finance. A country’s borrowing costs set the floor for the rates its banks and companies pay. Higher French and Belgian yields feed into mortgages, corporate loans and investment decisions in two of the eurozone’s core economies, just as the European Central Bank raises rates to fight 4% inflation.
The Old Map Has Flipped
For years, the eurozone split neatly into a safe “core” of Germany, France, the Netherlands and Belgium, and a riskier “periphery” in the south. That map no longer works.
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SubscribeGreece ran a budget surplus of 1.7% of GDP last year and has cut its debt sharply, although it remains the highest in Europe. Portugal now borrows more cheaply than Spain, and France pays more than Italy, Euronews reported. The gap between French and German borrowing costs reached its widest in more than a decade in October.
The difference is direction. Southern countries have spent years cutting deficits. France and Belgium have not.
Why France and Belgium
France’s deficit is above 5% of GDP, well beyond the EU’s 3% limit, and its debt has reached about €3.6tn, or 119% of GDP. Public spending is the highest in the G20 at 57.2% of GDP. Next year the government plans to borrow a record €340bn, while its interest bill is forecast to rise from €62.6bn to €72.9bn.
Politics makes it worse. Prime Minister Sébastien Lecornu governs without a majority and has relied on special constitutional powers to force budgets through, surviving repeated no-confidence votes. Investors expect little change before the 2027 presidential election.
Belgium’s problems look similar. Its deficit is about 5.3% of GDP and its debt above 110%. Last month, Prime Minister Bart De Wever cut his planned savings from about €10bn to about €3bn, and talks in his inner cabinet collapsed without agreement.
Not a Crisis, Yet
There is no sign of panic. Lombard Odier says markets are “pricing uncertainty rather than the conditions for a new sovereign debt crisis”, and expects French spreads to stay wide until a credible budget passes. The ECB also has tools to calm disorderly markets, if needed.
But the costs are real and growing. Higher yields mean more taxpayers’ money spent on interest rather than services or investment, a squeeze that we explored in Europe’s bond sell-off. The same pressures apply across the developed world, and the IMF warns that waiting makes the eventual adjustment more painful.
For investors, the picture is more mixed. Some see value in French debt after the sell-off, as we reported in Investors Are Dumping French Bonds.
What I Think
The eurozone bond market has stopped grading countries on reputation and started grading them on behaviour. That is healthy. Greece and Portugal earned their lower borrowing costs the hard way, through years of painful reform. France and Belgium are discovering that being a founding member is no protection against running large deficits indefinitely. The danger is that Paris and Brussels treat this as a market problem to wait out, rather than a budget problem to fix. With a new ECB president to be chosen as the race to replace Lagarde gets under way, the question of who rescues whom may come back sooner than anyone expects.
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