ECB’s Stournaras Warns French Uncertainty Could Slow EU Reforms, Trigger Spillovers

23 November 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Sunday said that political and economic uncertainty in France risks weighing on its borrowing costs and growth potential, with possible spillovers to the wider euro area and delays to key EU reforms.

Stournaras, who heads the Bank of Greece, told Vima tis Kyriakis, the Sunday edition of Greek daily To Vima, that extended fiscal slippage in France could “affect the European financial environment, with spillover pressures on bond yields and the financing costs of other member states.” He also warned that rising political uncertainty could slow progress on capital-market integration and a unified industrial and defense strategy.

The record level of global debt is a source of concern because high servicing costs can crowd out investment in areas that support long-term growth, he said. He argued that gradual fiscal adjustment and prioritizing public investment in infrastructure, education, health, innovation and the green and digital transitions are needed to mitigate risks.

Stournaras said reduced international investor demand for US government securities has pushed up long-term Treasury yields and reflected expectations of higher medium- and long-term inflation. He linked those expectations to “undermining the Fed’s independence,” adding that the episode shows the cost of questioning central bank autonomy.

He said the shift also presents an opportunity for Europe to expand common debt issuance to finance European public goods, which he said could strengthen the supply of safe assets, deepen capital markets and reinforce the euro’s international role.

Stournaras argued that politicizing central banks can weaken confidence and distort markets. He said that in an environment of elevated uncertainty, central bank independence is “a crucial factor in safeguarding price stability, preventing economic distortions and shielding financial stability.”

He said Greece’s fiscal position is now on a more stable and sustainable path than in the previous decade. The country has achieved sizeable primary surpluses, placed debt on a downward path and restored investment grade, he said, adding that Greece “reverently adheres” to the EU’s new fiscal framework.

Stournaras said shifting energy dynamics create opportunities for Greece to serve as a natural gas transit hub and future exporter of renewable energy, provided investment in storage and grids increases.

He described inequality of opportunity as a threat to social cohesion and said addressing it requires credible fiscal policy, structural reforms in education, health, labor markets and financial inclusion, and international cooperation on tax policy.

Greece’s demographic outlook is worrying despite the pension system being sustainable after past reforms, he said. Declining labor supply will create pressure, he said, arguing that policies must go beyond tax incentives to expand childcare access and improve work-life balance.