Eurozone government debt rises to 88.8% of GDP as Italy closes in on Greece

France's debt climbs to 119.1% as borrowing costs top 5% for first time since 2002

By LineZotpaper

Published21 October 2026

Read Time2 min

Eurozone government debt rose to 88.8% of gross domestic product in the second quarter of 2026, up from 87.3% a year earlier, according to Eurostat. Italy's debt ratio now stands just 0.9 percentage points below Greece's, the bloc's most indebted member, while France's ratio climbed to 119.1% as its 10-year bond yield exceeded 5% for the first time since 2002.

The European Union's statistics office reported on Wednesday that public debt across the 21 eurozone countries reached 88.8% of combined economic output between April and June. In cash terms, eurozone governments owed approximately 14.4 trillion euros.

Greece remained the most indebted member state at 140.8% of GDP, down 11.2 percentage points from a year earlier as the country runs budget surpluses. Italy, however, rose to 139.9% of GDP, up 1.3 percentage points in the second quarter alone. In 2022, Greece's ratio stood at 177.8% against Italy's 138.4%.

France has the third-highest debt ratio at 119.1%, up 3.7 percentage points in a year. Belgium and Spain also remain above the 100% threshold, at 110.2% and 101.4% respectively. Estonia recorded the lowest ratio at 26.1%, followed by Denmark and Luxembourg. Poland saw the sharpest annual increase, up 6.7 percentage points.

The EU's wider debt ratio rose to 82.9% of GDP in the second quarter from 81.4% a year earlier. Full-year figures for 2025 show EU debt at 81.5% of GDP, up from 80.3% in 2024, while the bloc's budget deficit held at 3.1%, just above the EU's 3% limit.

France's 10-year bond yield topped 5% on the same day, reflecting investor concerns over its fiscal position. The country's deficit stood at 5.1% of GDP in 2025, the fourth-largest in the EU. A divided parliament is debating the 2027 budget, which aims to cut the deficit to 5% of GDP. Ratings agency Moody's is due to review France's credit rating on Friday, with most economists expecting a downgrade.

Germany, the bloc's largest economy, saw its debt ratio rise to 62.8% from 61.4% as its deficit widened to 2.9%. Eurostat expressed a reservation about the quality of Bulgaria's 2025 data on how it records spending by its road infrastructure agency.

Analysis

Why This Matters

Rising government debt and widening deficits across the eurozone could push borrowing costs higher for highly indebted members, increasing pressure on national budgets.
France's bond yield crossing 5% signals growing investor concern over fiscal sustainability, particularly as the government struggles to pass spending cuts through a divided parliament.
A potential Moody's downgrade of France could trigger further volatility in European sovereign debt markets and raise questions about the bloc's fiscal rules.

Background

Government debt across the eurozone has remained above 80% of GDP since the COVID-19 pandemic, when it peaked at 89.5% in 2020. Under EU rules, debt should not exceed 60% of GDP and annual budget deficits should not exceed 3%. In 2025, 12 member states had debt above the 60% ceiling and 11 ran deficits of 3% or more. Bulgaria joined the euro on 1 January 2026, expanding the eurozone to 21 countries.

Key Perspectives

Investors: Higher debt ratios and rising yields in France and other highly indebted countries suggest growing risk premiums, potentially leading to higher borrowing costs for governments and spillover effects on corporate borrowing. EU officials: The bloc's fiscal rules are designed to ensure sustainable public finances, but persistent deviations by major economies raise enforcement challenges. The European Commission may face pressure to take action on excessive deficits. High-debt member states: Countries such as Italy and France face difficult trade-offs between fiscal consolidation and spending on public services and growth initiatives. Their ability to service debt depends on maintaining access to affordable credit.

What to Watch

Moody's rating decision on France, expected on 23 October 2026, and the market reaction to any downgrade.
The progress of France's 2027 budget through parliament and whether it can deliver the targeted deficit reduction.
Whether Italy's debt ratio continues to rise or stabilises as its government manages fiscal policy.

Sources

Eurozone government debt climbs to 88.8% of GDP as Italy closes in on Greece · Euronews

Checked

12 claims in this story checked against 1 source: 11 supported.

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SupportedEurozone government debt rose to 88.8% of GDP in the second quarter of 2026, from 87.3% a year earlier.Euronews: “Government debt in the eurozone rose to 88.8% of GDP in the second quarter of 2026”
SupportedItaly's debt ratio is 0.9 percentage points below Greece's.Euronews: “Greece remained the most indebted EU country at 140.8% of GDP in the second quarter, but Italy was just behind at 139.9%.”
SupportedFrance's debt ratio climbed to 119.1%.Euronews: “France has the third-highest debt-to-GDP ratio, at 119.1%”
SupportedFrance's 10-year bond yield rose above 5% for the first time since 2002.Euronews: “the yield on France's 10-year government bond rose above 5% for the first time since 2002”
SupportedEurostat reported on Wednesday that public debt across the 21 eurozone countries reached 88.8% of combined output between April and June.Euronews: “Public debt across the 21 countries of the eurozone reached 88.8% of their combined economic output between April and June, up from 87.3% a year earlier, the EU's statistics office, Eurostat, said on Wednesday.”
SupportedEurozone governments owed approximately €14.4 trillion.Euronews: “In cash terms, eurozone governments owed some €14.4 trillion.”
SupportedGreece's debt ratio was 140.8% of GDP, down 11.2 percentage points in a year as the country ran budget surpluses.Euronews: “Greece's ratio has fallen by 11.2 percentage points in a year as the country runs budget surpluses”
SupportedItaly's debt ratio was 139.9% of GDP, up 1.3 percentage points in the second quarter alone.Euronews: “Italy was just behind at 139.9%.”
SupportedThe EU's debt ratio rose to 82.9% in the second quarter from 81.4% a year earlier.Euronews: “Across the wider EU, government debt rose to 82.9% of GDP in the second quarter, from 81.4% a year earlier.”
Not in the sourcesFrance's bond yield exceeded 5%, reflecting investor concerns over its fiscal position.Euronews: “the yield on France's 10-year government bond rose above 5% for the first time since 2002, as investors demanded more to hold French debt.”
SupportedFrance's 2025 deficit was 5.1% of GDP, the fourth-largest in the EU.Euronews: “France's deficit was 5.1% of GDP last year, the fourth-largest in the EU after Romania, Poland and Belgium.”
SupportedMost economists expected Moody's to downgrade France's credit rating at its Friday review.Euronews: “Moody’s is due to review France’s credit rating on Friday, with most economists expecting a downgrade”