Eurozone's record borrowing reshapes Europe as debt costs hit 20-year high

Eurozone governments are preparing record bond issuance as the IMF warns borrowing costs have hit a 20-year high, reshaping the bloc's financial structure. Traditional risk premiums between core and periphery countries have shifted significantly. Belgium now borrows at 4.29% for ten-year bonds, nearly matching Greece at 4.35%, while Portugal pays less than Spain and Ireland approaches Dutch levels. France currently pays more than Italy, driven by fiscal divergence: Greece posted a 1.7% budget surplus in 2025, while Belgium's deficit reached 5.2% of GDP. France's debt reached 119% of GDP, with planned 2027 bond issuance of €340 billion and interest payments rising to €72.9 billion. Nearly 30% of G7 and Spanish debt matures within a year, increasing sensitivity to ECB rates. The situation affects Ukraine, as France and Belgium are key EU budget donors facing tighter fiscal constraints.