A country once regarded as a "safe zone" in European financial markets is now paying more to borrow than Greece and Italy. More alarmingly, France's debt has approached 3.6 trillion euros, and its 10-year government bond yield briefly neared 5%, hovering near its highest level since 2002. The market is worried: could France become the "black swan" that ignites the next European debt crisis?

The Wall Street Journal recently issued a warning: France's long reliance on "magic money"-like cheap funding is now turning into a giant debt bomb. France's problems did not form overnight. From the "Yellow Vest" crisis, to the COVID-19 pandemic, to energy and geopolitical shocks, every time a crisis hit, the French government chose to use more fiscal spending to prop up the economy and people's livelihoods.

In an era of ultra-low interest rates, this model did not seem to pose much of a problem. Money was cheap, and no matter how much debt accumulated, old debt could be rolled over with new borrowing. But now, the rules of the game have completely changed. As global interest rates have risen sharply, the huge debt France accumulated in the past is facing its most dangerous moment.

As of June this year, France's public debt had reached about 3.596 trillion euros, equivalent to 119% of GDP. Even more striking, France has not achieved a fiscal surplus for more than half a century. The European Commission expects France's fiscal deficit to remain at 5.1% of GDP in 2026 and possibly widen further to 5.7% in 2027; the debt ratio may exceed 120% of GDP. In other words, on one side there is weak economic growth, and on the other side there are persistently high deficits, while interest costs are also becoming more expensive. This is precisely the most worrying combination for a debt crisis.

The Wall Street Journal pointed out that before 2030, more than $1 trillion of French debt will need to be repaid at maturity. Next year alone, France may need to issue a record roughly $380 billion in bonds. The question is: who will buy them? In the past, the European Central Bank was an important buyer of French government bonds, but now the central bank is no longer expanding its holdings; traditional overseas investors such as Japan have also partly withdrawn. As a result, France must offer higher interest rates to attract market funds.

The result is a dangerous vicious cycle: the higher the debt, the higher the interest rate investors demand; the higher the interest rate, the greater the government's interest expenses; and the greater the interest expenses, the harder it becomes to control the fiscal deficit. France's debt interest payments this year have already risen to about 64.8 billion euros. According to research by France's finance ministry, by 2030 the cost of servicing debt could rise by about another 59%. And financial markets have already begun voting.

The yield on France's 10-year government bonds briefly approached 5%, even higher than that of Greece and Italy, which were once mired in the European debt crisis; the spread between French and German 10-year government bonds once widened to about 150 basis points, near an extreme level not seen since the 2011 European debt crisis. Panic has even begun to spread to the currency market. The euro briefly fell below $1.12, hitting a 17-month low.

However, it is still too early to conclude that a "French version of the Greek crisis" has arrived. Today's European Central Bank has crisis intervention tools that did not exist during the 2011 European debt crisis, and France's economic size, financial system and financing capacity are far beyond those of Greece at that time. What truly deserves vigilance is market confidence. Because France is not only facing a debt problem, but also political gridlock: cutting spending means enormous political resistance, while not cutting spending may allow debt to continue snowballing.

So whether France's debt bomb ultimately explodes may no longer hinge on "how much money is owed," but on whether the market still believes the French government has the ability to control it. If French government bonds continue to be sold off, financing costs break through a new critical threshold, and the contagion further spreads to highly indebted countries such as Italy and Belgium, then the "black swan" Europe truly fears may no longer be just France's problem. It could reawaken the nightmare the entire eurozone least wants to remember—the European debt crisis.