Is France in 2026, Greece in 2009?

France’s ten-year government bond yield reached 5% last week, its highest level in more than two decades. The extra interest it pays over Germany – the “spread” investors use to gauge French-specific risk – has widened dramatically. Parliament is wrestling with a 2027 budget requiring €54 billion in fiscal measures, while protests and violent clashes across France dominate the headlines. With political instability and social tensions rising, comparisons with Greece at the start of its debt crisis have become inevitable. As Greece’s finance minister when its crisis erupted in 2009, I am increasingly asked how the two situations compare. I understand the temptation, but also how misleading it can be. France’s problem is not a weak economy France is not Greece. It is one of the world’s largest economies, with globally competitive companies, substantial household savings, a deep financial system, robust institutions. And, unlike Greece in 2009, it has no large external financing imbalance. Its problem is the persistent gap between what the economy produces and what the state spends and what taxpayers will finance. According to INSEE, public expenditure reached 57.3% of GDP in 2025, among Europe’s highest, yet the deficit was still 5.1% (and the government expects it to reach 5.4% this year). Public debt has risen to almost 116% of GDP, from below 100% before the pandemic (the only G7 country where the ratio is higher today than it was in 2020 at the peak of the pandemic). And France at present pays more to fund its debt than all former eurozone crisis countries – and more than what its official AA-credit rating would imply. L’« Exception française » : France’s costly social model Over the last twenty years, France has also consistently run primary deficits, spending more than it collects even before interest payments. Much of this spending finances a social model to which citizens are understandably attached, but one that increasingly protects older generations through pensions at the expense of younger ones. Sustaining it becomes harder with weak growth and ageing demographics. Sluggish productivity, high taxation and persistent uncertainty weigh on investment and growth (the IMF expects growth of just 0.6% in 2026). From fiscal weakness to political paralysis Successive governments have struggled to reconcile fiscal discipline with expectations of the state. Political fragmentation has made compromise harder. Passing the 2026 budget required months of confrontation and repeated recourse to Article 49.3, which allows legislation to pass without a parliamentary vote. France’s 2027 budget offers three uncomfortable possibilities: Force it through, possibly using unprecedented budget ordinances under Article 47 Negotiate a compromise that dilutes the adjustment Face another government collapse, leaving the budget unresolved as the presidential campaign approaches. Greece, in 2009, was far more vulnerable. It had lost competitiveness, accumulated enormous external deficits and concealed the true state of its finances. France has none of these institutional failings. Yet the Greek experience illustrates how fiscal difficulties become considerably harder to manage when political credibility deteriorates. Markets today do not doubt that France can pay. They doubt that it can decide. When markets set the timetable A French debt crisis is not inevitable. Deep financial markets, a broad investor base and relatively long debt maturities mean that higher borrowing costs feed through gradually. But as cheaper debt is refinanced, the interest burden will grow. The French government’s debt report projects that public debt will reach 121.7% of GDP in 2027, even assuming the proposed adjustment. In the Commission’s no-policy-change scenario, it reaches 144% by 2036. In Greece, the transition from fiscal difficulties to a financing crisis was extraordinarily fast. When we lost market access and had to negotiate international assistance, we also lost much of our control over the pace and composition of adjustment. Governments postpone difficult decisions to preserve political room for manoeuvre. Paradoxically, that can ultimately deprive them of it. Europe’s safety net: stronger than in 2010, but untested Can France rely on European protection? In 2010, the eurozone had virtually no instruments for confronting a sovereign debt crisis. Greece’s first rescue package combined bilateral European loans and IMF financing. The temporary European rescue fund, and eventually the permanent European Stability Mechanism, came later. Today, stronger banking supervision and the ECB’s capacity to intervene in sovereign bond markets provide considerably greater protection. Its Transmission Protection Instrument allows potentially unlimited purchases of government bonds to counter unwarranted, disorderly market pressures. But intervention depends on assessments of fiscal sustainability and compliance with European commitments; activation is a decision by the ECB, not by governments. Nor have these mechanisms been tested against a crisis involving an economy as large and financially interconnected as France. A serious loss of confidence in French debt would reverberate across European banks, insurers and sovereign bond markets. So while Europe is better protected than in 2010, that does not make national action less urgent. Fiscal credibility and democratic legitimacy The Greek experience also demonstrated the limits of fiscal adjustment conceived primarily as an accounting exercise. Greece suffered a devastating contraction, partly because the recessionary effects of adjustment were underestimated. The consequences for social cohesion, political stability and trust in institutions lasted well beyond the immediate crisis. France faces nothing comparable. But protests over education and living conditions illustrate the difficulty of reconciling fiscal restraint with expectations of public services. With spending already at 57% of GDP, the debate must address not just how much the state spends, but on what, and who pays. A credible strategy must combine expenditure restraint with stronger growth and a fairer distribution of the burden – and crucially, rebalancing protection from the old to the young. Without political and social legitimacy, even technically sound policies are difficult to sustain. France retains economic resources and institutional capacities that Greece lacked in 2009. Its predicament is different, but the Greek experience should remind French policymakers how much harder adjustment becomes once financial markets, rather than elected governments, determine its timing and terms. France is not Greece in 2009. That should be a reason to act early, not an excuse to wait. George Papaconstantinou is Professor of International Political Economy at the Florence School of Transnational Governance, European University Institute, and former Greek finance minister (2009-2011).