Even Iran mocks us in a €14.4 trillion debt quagmire - Italy following Greece's path - Moody's set to downgrade France on 23/10

In their analysis, Iranian media outlets essentially mock Italy and Greece, considering them the two states with the highest debt-to-GDP ratios in the eurozone... generally, even the Iranians consider that Europe, with €14.4 trillion in debt—while the US surpassed $40.3 trillion in debt—is becoming trapped in a quagmire of problems and chaos. However, it is recognized that Greece is attempting to put its house in order, unlike France and Italy which are deteriorating. Debt levels in the Eurozone have risen, while debt growth in Italy and France has intensified pressure on Europe's major economies. According to the Tasnim news agency, the public debt-to-GDP ratio for Eurozone countries reached 88.8% during the second quarter of 2026. Data from Eurostat shows an increase from the 87.3% recorded in the corresponding period last year.

Greece with the worst economic indicator in the eurozone

Concurrently, Italy's debt ratio is approaching that of Greece—the country with the highest debt in the European Union—while France's debt has reached 119.1% of its GDP. At the same time, the yield on French 10-year government bonds surpassed 5.2%. Eurostat (the statistical office of the European Union) announced that public debt across the 21 member-states of the Eurozone rose to 88.8% of their total economic output during the April–June period. This ratio reflects the scale of government debt relative to the size of the economy.

Europe slips into a debt quagmire with €14.4 trillion

According to European Union regulations, the public debt-to-GDP ratio should not exceed 60%, while the annual fiscal deficit should be restricted to 3%. Across the entire European Union, the government debt-to-GDP ratio reached 82.9% in the second quarter of 2026. The corresponding figure for the same period last year was 81.4%, with the total debt of Eurozone governments amounting to approximately €14.4 trillion. Annual statistical data published by Eurostat indicates that the debt-to-GDP ratio in the European Union increased to 81.5% in 2025, up from 80.3% in 2024. The Union's fiscal deficit remained at 3.1%—slightly above the 3% threshold defined by EU rules.

Since the COVID-19 pandemic—when the rate reached its peak at 89.5% in 2020—the debt-to-GDP ratio in the European Union has remained consistently above 80%. In its annual statistics for the Eurozone, Eurostat continues to include the 20 countries that utilized the single European currency last year (it is noted that Bulgaria joined the Eurozone on January 1, 2026). The debt-to-GDP ratio for these 20 countries rose from 86.6% to 87.7%.

Reservations over Bulgaria

Eurostat also expressed reservations regarding the quality of Bulgaria's data for 2025—specifically regarding the manner in which the country's Road Infrastructure Agency recorded its expenditure.

In Germany, the largest economy in the European Union, the public debt-to-GDP ratio increased from 61.4% to 62.8%. The country's fiscal deficit reached 2.9%.

Rise in fiscal deficits across European nations

The upward trend in European states' fiscal deficits continued into 2026. According to seasonally adjusted data, the total fiscal deficit of Eurozone countries amounted to 3.3% of GDP during the second quarter, up from 3.2% in the first quarter.

For the whole of the European Union, the fiscal deficit grew from 3.1% to 3.5% of GDP. In 2025, the public debt-to-GDP ratio in 12 EU member-states exceeded the established threshold of 60%. Furthermore, 11 countries recorded fiscal deficits equal to or greater than 3% of their GDP.

Italy approaches levels of Greece's economic crisis

During the second quarter of 2026, Greece remained the country with the highest debt in the European Union, with its debt-to-GDP ratio forming at 140.8%. Italy follows closely behind at 139.9%—narrowing the gap with Greece to less than one percentage point. Greece's debt ratio fell by 11.2 percentage points within a single year, a trend accompanied by the country achieving a fiscal surplus. Conversely, Italy's debt ratio increased by 1.3 percentage points in the second quarter of 2026 alone. Comparing debt trends between the two countries reveals that in 2022, Greece's debt-to-GDP ratio reached 177.8%, whereas the corresponding figure for Italy stood at 138.4%.

France deteriorates... Estonia best

France occupied third place in the European Union, with its debt-to-GDP ratio reaching 119.1%. The country's debt grew by 3.7 percentage points within one year—one of the sharpest increases among Union member-states. Debt-to-GDP indicators for Belgium and Spain also remained above 100%, reaching 110.2% and 101.4%, respectively. Conversely, Estonia recorded the lowest debt level among EU nations at 26.1%, followed by Denmark and Luxembourg. Meanwhile, Poland registered the largest increase in this metric, with its debt-to-GDP ratio rising by 6.7 percentage points compared to the previous year.

Increased borrowing costs for France

Concurrently with the release of these statistics, the yield on France's 10-year government bonds surpassed the 5% mark for the first time since 2002. This surge implies that investors are demanding higher yields to hold French debt securities. France recorded the fourth-largest fiscal deficit in the European Union, behind Romania, Poland, and Belgium.

The French parliament, which currently faces political tensions, is examining the budget for 2027. The stated objective of this budget is to reduce the deficit to 5% of Gross Domestic Product (GDP); however, the French Prime Minister lacks the necessary majority to pass proposed expenditure cut measures.

Moody's set to downgrade France on 10/23

Rating agency Moody's is scheduled to review France's credit rating on October 23, 2026. Most economists anticipate a downgrade—a development that could further increase borrowing costs for the French government.

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