Greece is currently financing itself at lower costs than France in the debt markets, a remarkable inversion compared to what happened during the eurozone crisis. This situation occurs despite Greece continuing to have a significantly higher public debt-to-GDP ratio than Paris.
The recovery of market confidence in Greece is due to several factors, including the structural reforms implemented after the adjustment programs, the sustained primary surplus, and the accommodative monetary policy of the European Central Bank over the years.
In contrast, France faces a progressive loss of fiscal credibility, with a high budget deficit and moderate economic growth. Rating agencies have expressed concerns about the trajectory of French debt, which has pressured the yields on Paris bonds.
This situation illustrates how financial markets now evaluate a country's credit quality based on its fiscal discipline and future fiscal prospects, and not just on the absolute level of debt. The inversion between Athens and Paris has thus become a symbol of the changes in risk perceptions in the eurozone.
