Italia e Francia devono finanziare difesa e investimenti. Ma hanno un enorme debito pubblico. Una proposta del 2014, aggiornata, consente di ridurne lo stock senza trasferimenti tra paesi e senza perdite per i creditori. E può convenire anche ai “frugali”.

L'articolo Ridurre il debito pubblico si può. E conviene a tutti proviene da Lavoce.info.

France’s borrowing costs have risen to levels last seen more than two decades ago as investors shift towards German, Dutch and other lower-risk European debt, placing Paris at the centre of renewed concern over eurozone public finances.

France is emerging as the principal source of concern in Europe’s government bond market as investors reassess the fiscal strength of eurozone states and increasingly move money towards Germany and other countries regarded as safer borrowers.

The yield on French ten-year government debt has reached its highest level since 2002 after rising by about 70 basis points during September. The difference between French and equivalent German borrowing costs approached 160 basis points last week, its widest since 2012, according to market reporting on the sell-off.

The shift represents a sharp reversal in how investors view French sovereign debt. France has traditionally traded close to Germany and benefited from its status as one of the eurozone’s largest and most liquid bond markets. It is now being treated increasingly as a country whose political and fiscal outlook warrants a substantial premium.

The immediate concern is the French budget.

Paris said in September that this year’s deficit would exceed the government’s five per cent target, while the country faces the additional challenge of issuing a record €340 billion of government bonds in 2027. The money will be needed both to finance current expenditure and refinance debt accumulated during the Covid period.

EU Today reported earlier this week that French debt concerns had already pushed the euro to a 17-month low against the dollar. Political uncertainty ahead of the 2027 presidential election has added to market concern over whether any government will be able to deliver the spending reductions required to stabilise the public finances.

Bond markets, however, are responding to France’s present position rather than promises extending into the next presidential term.

The movement is also beginning to alter longstanding assumptions about which European sovereign borrowers are considered risky.

Italy remains vulnerable. Its ten-year bond spread over Germany rose to about 130 basis points last week, compared with roughly 80 basis points a month earlier. Italian public debt stands at around 138.6 per cent of GDP, and Rome expects its deficit to move above the EU’s three per cent ceiling.

Yet French debt has recently come under greater pressure than Italian debt.

Spain provides an even more striking contrast. During the eurozone sovereign-debt crisis in 2012, Spanish ten-year bonds yielded around five percentage points more than French debt. Spain’s ten-year yield is now approximately 75 basis points below France’s.

The difference reflects stronger Spanish growth and improved confidence in Madrid’s finances, although investors are watching Spanish and Portuguese debt for evidence that the French sell-off is spreading elsewhere in the currency union.

So far, the movement is not comparable with the eurozone crisis of the early 2010s. At that time, Italian bond spreads above Germany exceeded 500 basis points and Greece’s reached thousands of basis points. Current differences remain far smaller.

The direction of capital flows is nevertheless notable. Germany has re-established itself as Europe’s principal bond-market safe haven despite questions earlier this year about Berlin’s increased spending on defence and infrastructure. German ten-year yields fell as investors bought Bunds during the recent turbulence.

Higher sovereign yields feed into the interest costs faced by governments when refinancing debt and can affect borrowing throughout an economy. For a country already running a large deficit, rising yields make efforts to restore the public finances more difficult because an increasing share of expenditure must eventually be devoted to debt servicing.

Marine Le Pen has set out plans to cut French public spending by €140 billion by 2032, reduce the deficit and impose a constitutional constraint on future borrowing, placing France’s deteriorating public finances at the centre of the campaign for the 2027 presidential election.

Marine Le Pen has presented a five-year fiscal programme under which a National Rally administration would seek €140 billion in net savings by 2032, restore France’s primary budget balance within 18 months and bring the headline deficit back below the European Union’s three per cent threshold by 2030.

The proposals, presented on Tuesday as Le Pen outlined the financial trajectory she would pursue during a presidential term, come as France faces rising borrowing costs and a public debt ratio approaching 120 per cent of GDP.

The scale of the problem was underlined on the same day by France’s Directorate-General of the Treasury. Its latest report on public debt projects the debt ratio at 119.3 per cent of GDP this year before rising to 121.7 per cent in 2027. Debt stood at 115.7 per cent at the end of 2025.

EU Today has already reported that French borrowing costs and concerns over the sustainability of the country’s finances have begun to weigh on the euro and widen the gap between French and German government bond yields.

Le Pen’s programme is therefore aimed not only at French voters but at financial markets increasingly focused on whether Paris can prevent debt from continuing to rise.

According to the proposals outlined on Tuesday, spending reductions would be concentrated heavily in the first three years of a Le Pen presidency. She would also seek to introduce what she calls a constitutional “golden rule”, requiring successive governments to reduce the budget deficit each year.

The measure would be put to a referendum and is intended to make deficit reduction binding beyond an individual government’s annual budget decisions.

Le Pen has also proposed reducing France’s public debt to around 112 per cent of GDP by 2032. That would reverse the trajectory currently expected by the French government, although the National Rally’s assumptions would depend on its ability to deliver the proposed savings and on economic growth during the next presidential term.

Among the most politically significant proposals is a plan to restrict France’s net contribution to the EU budget to €5 billion. The party argues that some European spending should instead be financed through harmonised taxes on products such as tobacco and alcohol.

Le Pen also expects substantial savings from tighter immigration controls and the introduction of the National Rally’s proposed “national preference” rules for access to parts of the welfare system. Her programme estimates that measures connected with immigration could eventually produce savings of as much as €29 billion annually.

Other elements include changes to pension policy, reductions in corporate and energy taxation, measures against VAT fraud, the abolition of more than 120 taxes and a reduction in the number of state agencies.

The programme marks an attempt by Le Pen to make fiscal policy a central part of a campaign that has until now been dominated largely by immigration, security and questions surrounding France’s political fragmentation.

The timing is significant. Prime Minister Sébastien Lecornu’s government has itself introduced a difficult fiscal consolidation programme. The 2027 budget presented by the Finance Ministry envisages €54 billion in measures to improve the public finances, including €43 billion contained directly in the state and social-security budgets.

The government expects the deficit to fall from 5.4 per cent of GDP in 2026 to five per cent next year. It forecasts growth of only 0.5 per cent this year before a recovery to one per cent in 2027.

The debt burden is becoming increasingly costly. Interest payments are expected to reach €91.2 billion in 2027, up from €79.2 billion this year, according to the Finance Ministry. By 2030, total public-sector interest costs are projected to reach 3.7 per cent of GDP.

That gives the presidential campaign an economic dimension that is difficult to separate from France’s relationship with Brussels. Paris remains subject to EU fiscal rules requiring a gradual reduction in its deficit, while any attempt to reduce the French contribution to the EU budget would require negotiations with the other member states.

Le Pen enters that debate from a strong electoral position. Recent polling examined by EU Today has placed her ahead in first-round scenarios for 2027, although the final field remains unsettled. EU Today reported in September that Le Pen was polling between 33 and 36 per cent depending on her opponents.

Her latest intervention shifts part of the campaign onto terrain traditionally associated with the centre-right: public spending, debt and the credibility of France’s finances.

With the government attempting to secure parliamentary support for its own austerity measures and French borrowing costs under closer scrutiny, the question of how the country pays for the state is now moving towards the centre of the contest to succeed Emmanuel Macron.

The euro fell to its lowest level against the dollar since May 2025 on Monday as investors reacted to rising French borrowing costs, political uncertainty and doubts over Paris’s ability to stabilise its public finances before next year’s presidential election.

The euro fell to a 17-month low against the US dollar on Monday as renewed pressure on French government debt raised concern over the fiscal position of the eurozone’s second-largest economy.

The single currency dropped as far as $1.116 during trading, its weakest level since May 2025, before recovering part of the fall. By late Monday it was trading at around $1.121, still lower on the day.

The move followed a sharp sell-off in French government bonds and a widening gap between French and German borrowing costs.

According to market data published on Monday, the spread between French government debt and equivalent German Bunds had approached 160 basis points on Friday, its widest level since the eurozone sovereign-debt crisis in 2011.

The gap subsequently narrowed, but the scale of the movement has drawn attention back to France’s public finances.

French debt is already close to 120 per cent of gross domestic product and is expected to continue rising.

Investors are now assessing whether Prime Minister Sébastien Lecornu’s minority government can secure sufficient parliamentary support for measures intended to put the budget on a more sustainable path.

That challenge is becoming more difficult as France approaches its 2027 presidential election.

Spending cuts and tax increases are politically sensitive even under stable parliamentary conditions. Lecornu’s administration does not have an outright majority in the National Assembly, while opposition parties have challenged several elements of the government’s fiscal programme.

The French economy itself is providing little additional room.

Revised national accounts examined by EU Today showed that the economy failed to grow during the second quarter, while household purchasing power weakened and investment declined.

Slower growth makes deficit reduction harder because tax revenues tend to grow more slowly while welfare and debt-servicing costs remain high.

Bond markets have also changed the calculation.

For much of the period following the eurozone debt crisis, France was able to borrow at historically low rates. Higher interest rates now mean maturing debt has to be refinanced at greater cost.

France’s debt burden is therefore rising at the same time as the price of servicing it increases.

The euro’s fall on Monday shows that those concerns are no longer confined to the French bond market.

Currency traders are also assessing whether fiscal pressure in France could affect confidence in the wider euro area.

The comparison with the sovereign-debt crisis of 2010–12 should nevertheless be treated cautiously.

France remains one of Europe’s largest and most diversified economies, and the eurozone now has institutional mechanisms and European Central Bank instruments that did not exist at the beginning of the earlier crisis.

There is also no indication that France is unable to finance itself.

What markets are pricing is an increase in the risk attached to holding French debt and growing uncertainty over the country’s medium-term fiscal trajectory.

The euro has now fallen for four successive weeks against the dollar and has lost more than three per cent over that period.

US monetary policy is contributing to the movement. Persistent inflation indicators have supported the dollar even as expectations of an immediate Federal Reserve interest-rate increase have declined.

For Europe, however, Monday’s trading was dominated by France.

French fiscal policy has been a domestic political dispute for much of the past year. The widening bond spread and the euro’s fall show that it is increasingly becoming a eurozone market issue.

Europe was supposed to be emerging from its inflation nightmare. Instead, the nightmare has apparently decided to return for a second act.

Eurozone inflation surged to 3.8 per cent in September, up sharply from 3.2 per cent in August and considerably above the 3.6 per cent economists had expected. It is now almost twice the European Central Bank’s 2 per cent target.

The immediate culprit is familiar: energy. Fuel and natural gas prices have been climbing sharply, while food costs are also beginning to exert pressure. Energy prices were reportedly 18.8 per cent higher than a year earlier in September, compared with a 14.3 per cent annual increase in August.

There is, however, a particularly awkward detail for the ECB. Inflation is not confined entirely to the petrol pump.

Core inflation — stripping out volatile food and energy prices — edged up from 2.4 to 2.5 per cent. Services inflation also rose to 3.2 per cent. That suggests the energy shock may gradually be finding its way into the wider economy, and that is precisely what central bankers fear.

An energy shock is unpleasant. An energy shock which becomes embedded in wages, services and business costs is considerably more troublesome. Once consumers and companies begin assuming that prices will continue rising, inflation can acquire a momentum of its own.

The ECB therefore finds itself facing the oldest monetary-policy dilemma in the book: raise interest rates and risk damaging economic growth, or hold back and risk allowing inflation to become entrenched.

It has already raised rates twice this summer. Its deposit rate currently stands at 2.5 per cent, and investors are contemplating as many as three further increases over the coming year. Yet markets are not expecting an October increase, with the next move not fully priced in until January.

That caution is understandable. Interest rates are a remarkably blunt instrument for dealing with an energy shortage. Raising the cost of borrowing cannot produce another cubic metre of natural gas or another barrel of oil. It can, however, make mortgages more expensive, discourage investment and squeeze companies already facing higher energy bills.

Europe has another problem: its public finances. Governments are under increasing pressure to cushion households and businesses from soaring energy costs. France has already seen street protests over fuel prices, while government support measures risk becoming another burden on national budgets already under considerable strain.

This creates an unpleasant feedback loop. Governments subsidise energy to protect consumers; deficits increase; bond markets demand higher yields; borrowing becomes more expensive; and households and businesses face another round of financial pressure.

France is an obvious danger point. The spread between French and German borrowing costs has risen to multi-decade highs, reflecting growing investor concern about French debt sustainability.

The ECB is consequently being asked to perform an increasingly improbable balancing act: suppress inflation without strangling growth, protect financial stability without appearing complacent, and somehow compensate for an energy shock over which it has virtually no control.

There is one reason for optimism. The underlying inflation numbers have not exploded. ECB policymaker Olli Rehn has pointed out that rising long-term interest rates themselves could restrain the transmission of higher energy prices into wages and other prices.

But that is hardly a comforting economic strategy. Europe is effectively relying on expensive money to prevent expensive energy from becoming even more expensive.

The danger is that policymakers discover they are always one crisis behind.

The eurozone’s inflation rate has already risen from 2.0 per cent at the beginning of 2026 to 3.8 per cent in September. Eurostat’s latest figures show just how rapidly the situation has changed.

If energy prices remain elevated into 2027, the ECB may have little choice but to tighten further.

Europe was promised an inflation victory. Instead, it has been handed yet another bill.

Annual inflation in the eurozone is expected to rise to 3.3% in August 2026, from 2.9% in July, according to a preliminary estimate released on Tuesday, September 1, by the European statistical agency, Eurostat. Looking at the main components of eurozone inflation, energy prices are expected to record the highest annual increase in August (14.3%, […]

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