France closed 2025 with a deficit of 5.1% of GDP and a debt of 115.7%, compared to 2.4% and 100.5% for Spain. Markets are now demanding more than 170 basis points of risk premium from Paris.
The risk premium that investors require for ten-year French bonds compared to the German bund surpassed 170 basis points this Thursday, the largest gap between the two benchmarks since November 2011. This is reported by diariofinanciero.com in an analysis by the firm XTB, which places the contagion risk in other European economies.
The yield on the ten-year French bond exceeded 5%, its highest level since 2002. XTB believes that Paris is maintaining spending commitments while markets are calling for measures to contain debt, which could exacerbate its imbalances.
According to Eurostat data for 2025, public spending was equivalent to 45.3% of GDP in Spain and 57.3% in France. The public deficit was 2.4% of GDP in Spain and 5.1% in France, a difference of 2.7 points.
The trend also separates the two countries. The Spanish deficit fell from 4.6% of GDP in 2022 to 2.4% in 2025, while the French increased from 4.7% to 5.1%. Spanish debt decreased from 109.3% to 100.5% of GDP during this period, while French debt rose from 111.4% to 115.7%.
The International Monetary Fund (IMF) forecasts that Spanish debt will fall below 100% of GDP this year for the first time since 2019, to 97.6%, and will reach 89.4% by 2031. The agency estimates GDP growth of 2.5% in 2026 and 1.8% in 2027.
The Bank of Spain considers that public indebtedness remains a vulnerability, despite the reduction in the ratio. It calls for a credible path for public accounts and a composition of income and expenditure that favours investment, employment, and productivity. It also highlights the strong position of households, businesses, and banks after the cleaning up of their balance sheets.
XTB calculates that, between 2015 and 2025, housing prices rose by 80.6% in Spain, compared to 29.9% of nominal average wages. In France, housing increased by 27% and wages by 24.4%. The firm proposes increasing the housing supply and raising productivity.
Finally, Spain recorded a fertility rate of 1.10 children per woman in 2024, the second lowest in the European Union, according to data cited by XTB. The firm warns that ageing will increase spending on pensions, healthcare, and care services.
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