European Economic Commissioner Valdis Dombrovskis said there are currently no indications of a new sovereign debt crisis in the eurozone, although rising borrowing costs and increasing government debt levels require careful fiscal management.
Speaking during the International Monetary Fund meetings in Bangkok on October 14, Dombrovskis emphasized the importance of maintaining prudent budget policies across European Union member states.
His comments came as investors expressed growing concerns about the fiscal outlook of several European economies, particularly France, where government borrowing costs have increased amid uncertainty surrounding the country's public finances.
The yield spread between French and German 10-year government bonds has approached a record 140 basis points, reflecting investor concerns about France's debt levels, budget deficit and political uncertainty.
France's proposed 2027 budget aims to reduce the deficit to 5% of gross domestic product, compared with an expected 5.4% in 2026.
However, the political environment and upcoming elections have raised questions about whether the proposed fiscal measures will receive parliamentary approval.
Dombrovskis stressed that passing the budget would provide greater clarity and stability regarding France's fiscal direction.
He also acknowledged that other European countries face debt-related challenges, although the relatively long average maturity of government bonds provides some time for fiscal adjustments before higher yields significantly increase debt-servicing expenses.
The comments reflect growing concern about the long-term sustainability of government finances across Europe as policymakers balance economic growth, public spending requirements and financial-market stability.
