France's Borrowing Costs Surpass Italy's, Minister Warns of Financial Crisis

France's Minister of Economy warns of rising borrowing costs surpassing Italy's, highlighting major fiscal challenges ahead.

Key Points

  • • France's borrowing costs now exceed those of Italy as of July 4, 2025.
  • • €67 billion is needed for debt repayment this year, surpassing defense budget.
  • • High public spending in France is at 57% of GDP, above the EU average.
  • • Geopolitical tensions and competition from China contribute to financial instability.

On July 4, 2025, Eric Lombard, France's Minister of Economy, issued a stark warning regarding the country's financial stability, revealing that France's borrowing costs have now exceeded those of Italy. Lombard emphasized the importance of public awareness about the escalating fiscal challenges facing the nation, particularly as budget deadlines approach.

This alarming trend comes as France prepares to allocate €67 billion for debt repayment in the current year—significantly more than the national defense budget. Lombard stated that within just three years, this obligation could balloon to €100 billion if current financial trajectories continue. He attributed these rising borrowing costs to a growing perception among investors that other nations, including Italy, are relatively less risky compared to France.

The economic backdrop is further complicated by France's high public spending, which sits at 57% of GDP, far exceeding the European average by ten percentage points, indicating urgent need for fiscal reform. Lombard pointed to several external factors also at play, including ongoing geopolitical tensions stemming from the conflict in Ukraine and intense industrial competition from China, both of which threaten France's economic viability.

The minister's comments set the stage for an impending budget announcement on July 15, 2025, where the government is expected to outline crucial financial strategies to address these mounting challenges. Without decisive action, the outlook remains precarious, as Lombard cautioned that the financial landscape carries serious implications for the country’s economic future.

As France grapples with these issues, the potential for rising costs to impact public services and national stability looms large.