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

Government debt in the eurozone rose to 88.8% of GDP in the second quarter of 2026, with Italy closing in on Greece, the most indebted member state, and France's debt climbing to 119.1% as its borrowing costs topped 5%. 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. Italy's debt ratio is now less than one percentage point below Greece's, while France's has climbed to 119.1% as its borrowing costs rose above 5%. The debt-to-GDP ratio compares what governments owe with the size of their economies. Under EU rules, debt should not exceed 60% of GDP, and annual budget deficits should not exceed 3%. Across the wider EU, government debt rose to 82.9% of GDP in the second quarter, from 81.4% a year earlier. In cash terms, eurozone governments owed some €14.4 trillion. Full-year figures, also published on Wednesday, show EU debt rose to 81.5% of GDP in 2025 from 80.3% in 2024, while the bloc's budget deficit held at 3.1%, just above the EU's 3% limit. EU debt has stayed above 80% of GDP since the COVID-19 pandemic, when it peaked at 89.5% in 2020. For the eurozone, Eurostat's headline full-year figures still cover the 20 countries that used the euro last year, as Bulgaria joined on 1 January 2026. Their debt rose to 87.7% of GDP from 86.6%. Eurostat also expressed a reservation about the quality of Bulgaria’s 2025 data on how it records spending by its road infrastructure agency. Germany, the bloc's largest economy, saw its debt ratio rise to 62.8% from 61.4% as its deficit widened to 2.9%. Deficits are also increasing again this year. Adjusted for seasonal swings, the combined deficit of eurozone governments edged up to 3.3% of GDP in the second quarter from 3.2% in the first, while the figure for EU governments rose to 3.5% from 3.1%. Last year, 12 member states had debt above the EU’s 60% ceiling, and 11 ran deficits of 3% or more. Italy closes in on Greece while France's debt and yields climb Greece remained the most indebted EU country at 140.8% of GDP in the second quarter, but Italy was just behind at 139.9%. Greece's ratio has fallen by 11.2 percentage points in a year as the country runs budget surpluses, while Italy's rose by 1.3 percentage points in the second quarter alone. In 2022, Greece's debt stood at 177.8% of GDP, against 138.4% for Italy. France has the third-highest debt-to-GDP ratio, at 119.1%, up 3.7 percentage points in a year, one of the steepest rises in the bloc. Debt also remained above 100% of GDP in Belgium and Spain, at 110.2% and 101.4%, respectively. Estonia had the lowest ratio, at 26.1%, followed by Denmark and Luxembourg, while Poland recorded the sharpest increase in its debt ratio, up 6.7 percentage points from a year earlier. The figures landed on the same day 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. France's deficit was 5.1% of GDP last year, the fourth-largest in the EU after Romania, Poland and Belgium. A divided French parliament is debating the 2027 budget, which aims to bring the deficit down to 5% of GDP, while Prime Minister Sébastien Lecornu lacks a majority to pass his spending cuts. Ratings agency Moody’s is due to review France’s credit rating on Friday, with most economists expecting a downgrade that could push its borrowing costs higher still.