The divergence between the fiscal policy stances of the major euro-zone countries

In the euro zone at present there is: An even more restrictive fiscal policy in Germany; A tendency to let fiscal deficits increase in France, Italy and Spain. Without capital mobility between Germany and the other euro-zone countries, the result will be a widening of those countries' yield spreads against Germany . This will happen to a lesser extent in France, due to a shortfall in the supply of risk-free bonds from Germany.