Eurozone Debt Hits 88.8% of GDP as Italy Nears Greece's High Mark, France's Borrowing Soars

Government debt across the Eurozone climbed to 88.8% of its combined economic output in the second quarter of 2026, a worrying jump that puts Italy colossal debt burden just shy of Greece—the bloc's most indebted nation. This surge signals growing fiscal pressure across the 21-country currency union, especially as France debt hit 119.1% of GDP and its borrowing costs topped 5%, signaling increased investor unease. This latest data from Eurostat underscores a persistent challenge for Europe, exacerbated by higher interest rates from the European Central Bank and the post-pandemic economic landscape. While Greece has actually managed a slight reduction in its debt-to-GDP ratio in Q2 2026, Italy continued accumulation has tightened the gap significantly. France, the Eurozone second-largest economy, is now grappling with rising interest payments expected to hit €79 billion this year, forcing hard choices amid existing budget deficits. The International Monetary Fund recently warned Europe that doing nothing about its mounting debt is 'not an option,' urging faster growth or less borrowing. With the reformed EU fiscal rules now in play, countries like France and Italy face intense scrutiny to present credible plans for debt reduction, especially with projections indicating France debt could reach 121.7% by 2027. The coming months will test whether European policymakers can navigate these economic headwinds without triggering a wider bond market shock, which economists warn could push both France and Italy into recession.