The eurozone economy faces new financial challenges, with France and Belgium emerging as areas of concern for investors. After the sovereign debt crisis of 2010-12, which almost destroyed the euro, countries such as Portugal and Spain were able to recover and are now seen as engines of growth. Now, rising public debt and fiscal deficits in France and Belgium are jeopardizing the fiscal credibility of these two countries.
The latest IMF fiscal monitor highlights that despite productive economies and low levels of unemployment in Belgium and France, their public finances are deteriorating, The Economista reveals.
Public debt in both countries now exceeds 100% of GDP, and their credit ratings are beginning to suffer. Rating agencies such as Fitch and Moody's have recently issued warnings about the financial situation of these countries, lowering their forecasts due to concerns about high debt and political uncertainty.
Fitch Ratings revised France's outlook to negative, keeping the rating at “AA-,” while Moody's did the same for Belgium, which finds itself in a complex political situation, with difficulties in forming a government after the June elections. France faces a projected deficit of 6.1% of GDP in 2024, nearly three times the average for countries with an “AA” rating.
On the other hand, Portugal showed the opposite path, as it was able to reduce its public debt to less than 100% of GDP, thanks to balancing its accounts and obtaining financial surpluses. Spain is also showing signs of recovery, although its overall deficit remains a chronic concern.
With presidential elections scheduled for 2027, political instability and necessary reforms in France and Belgium raise questions about the long-term sustainability of their economies.
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