(Maeil Business Newspaper, Bylined Column by Reporter Kim Je-gwan) [Reporter's 24 Hours] The Warning Sent by Europe's Fiscal Crisis (October 8, 2026)

In the 1990s, Sweden went through a fiscal crisis in which its fiscal deficit exceeded 12% of gross domestic product (GDP).

The government embarked on reforms that overhauled pensions and social insurance and put a ceiling on spending, and the political sphere united behind them.

The reforms continued even after a change of government, and in 1998 the fiscal balance returned to surplus.

Some 30 years later, the situation in France is the exact opposite. National debt is approaching 120% of GDP, and the fiscal deficit exceeds the European Union (EU) threshold. Population aging is driving up pension and medical costs, and rising interest rates are swelling interest expenses.

Yet while reform is needed, the political strength to carry it out is hard to find. The French parliament is split between left and right. Any attempt to cut spending or raise taxes meets fierce resistance. A government that pursued austerity collapsed in a no-confidence vote. Ahead of next year's presidential election, demands for tax cuts and expanded support are growing as well.

The political consensus that existed when Sweden escaped its crisis is hard to find in France today. Such fiscal and political instability is not confined to France. In Spain and other European countries, too, fiscal burdens, demands for cost-of-living support, and political division are intertwined.

As European government bond yields jump, concerns are also mounting that the nightmare of the fiscal crisis that rocked Europe in 2010 could return.

The problem is that markets do not wait for politics to decide. In 2022, the British government of Liz Truss withdrew its policy after government bonds and the pound plunged in response to large-scale tax cuts with no funding plan, and Truss stepped down 49 days after taking office.

The recent surge in French government bond yields to their highest level in 24 years likewise reflects the market's doubts about the political capacity to resolve fiscal problems.

Korea is in no position to look on as if this were someone else's problem. Low birth rates and population aging make increases in pension and welfare spending inevitable. Demands for economic stimulus and various kinds of support are also growing.

The lesson Europe offers is that a fiscal crisis does not begin suddenly one day.

Problems accumulate while spending needs grow, the capacity to bear them weakens, and politics puts off hard decisions.

The weight of the debt now pressing down on Europe is a concern familiar to us as well. We must not hear the alarm of Europe's fiscal crisis as merely another country's story.

[Kim Je-gwan, Reporter, Global Economy Department]

https://n.news.naver.com/article/009/0005746114?sid=110