When Greek government borrowing costs fell below French levels late last month, attention focused on the political turmoil in Paris. There is no doubt that the fall of the government after its inability to set a budget demonstrates dysfunction in Paris, but the real story lay elsewhere. It is the astonishing success of what we have derogatively called the Eurozone’s “periphery” a decade or more after its sovereign debt crisis.
While there was a natural focus on rising French borrowing costs compared with those of Germany, France has no difficulty servicing its debts, which are no more expensive than a year ago. In the same period borrowing costs have fallen a little in Germany on the expectation of lower interest rates, but come down by much more in Portugal, Ireland, Italy, Greece and Spain — the countries at the centre of the 2010 to 2015 Eurozone crisis.
Between the eve of the Covid crisis in 2019 and 2024, IMF data shows GDP per head will have grown more than 11 per cent in Greece, around 7 per cent in Italy and Portugal and almost 4 per cent in Spain. Ireland has done even better on this measure — nearly 18 per cent — although its GDP data exaggerates this due to the location of intellectual property in the country for tax reasons. France has shown less than 2 per cent growth, with Germany being negative.