Greece Now Outperforming France in Market Confidence, Says Budget Office Report

Greece now appears more reliable than France in the markets, according to the Budget Office’s quarterly report, which devotes a special chapter to France as a “case study” of how political instability can turn into an economic burden.

Since mid-August, political uncertainty in Paris has pushed French bond yields above Greek ones, with the gap persisting for over a month. Fitch’s downgrade of France to its lowest rating in history further highlighted the cost of instability. In contrast, Greece has benefited: the combination of turmoil abroad and prudent domestic fiscal policy has improved the standing of Greek bonds, attracting more investor interest, capital inflows, and lowering refinancing costs.

The Office stresses that this turnaround is not accidental but grounded in stronger fiscal performance and solid growth. Greece is expanding at 2.2% this year, above the Eurozone average, with a primary surplus of more than €9 billion and fixed investment up 6.5%.

Still, risks remain. Inflation is stuck at 3.1%, higher than the Eurozone’s 2%, eroding competitiveness. The housing market is under severe strain, with rising rents and limited supply—driven in part by short-term rentals—posing a social challenge, especially for younger households. Public debt also remains the highest in the Eurozone.

According to Professor Yannis Tsoukalas, head of the Budget Office, the general government’s primary surplus reached €9.2 billion in the first seven months of 2025, up €2.7 billion year-on-year. Tax revenues rose sharply, mainly from income tax (+€2.6 billion) and VAT (+€1.1 billion). He noted that exceeding this year’s 3.2% of GDP primary surplus target is “very likely.”

The economy grew by 1.7% in Q2 2025, versus 1.5% in the Eurozone, supported by consumption (+1.1%), services exports (+3.9%) and investment (+6.5%). Employment also strengthened, with unemployment dropping to 8.9% from 10% a year earlier, although staff shortages persist in public administration, health care and manufacturing.

The report concludes that while Greece’s relative credibility has improved significantly, persistent inflation and a deepening housing crisis threaten to undermine the country’s hard-won economic stability.