Economic News

The United States-European Union trade deal ensures euro area and EU growth will remain relatively resilient this year even though effective US tariffs on EU exports increase this year by around 16pps in aggregate.

Transatlantic trade tensions are contributing to a moderate deceleration in near-term growth in the EU and euro area by around 0.4pps, even in a baseline scenario of the US and the EU reaching a preliminary trade agreement.

Germany’s defence and infrastructure borrowing plans will lead to a marked increase in its public deficit and debt. Sustaining fiscal space will depend on growth effects but also on pension and labour market reforms.

China is confronting several daunting challenges: persistent deflation, historically low rates, structurally declining economic growth and rising government debt. This raises significant obstacles for economic stability.

The government’s commitment to fiscal discipline is challenged by a rising interest burden, economic slowdown and a fragmented and uncertain political environment.

Achieving NATO’s higher defence spending target of 3.5% of GDP will increase budget deficits and public debt across the EU unless governments consider a mix of spending cuts, tax hikes, and joint defence funding.

The Israel-Iran truce fails to permanently reduce geo-political uncertainties weighing on an already subdued economic outlook for Europe, but the crisis’s impact on Europe’s economy is limited for now.

The US and European economies will expand more slowly in 2025 than previously forecast, contributing to more moderate global economic growth, with risks for the global economy skewed to the downside, Scope Ratings says.

Bulgaria is due to become the 21st country to join the European single currency in January 2026. This Q&A explains the timing and circumstances surrounding the country’s likely admission to the euro area.

Bulgaria is on track to adopt the euro in January 2026, a development which would support the stability of the highly euro-ised economy, improve monetary-policy flexibility and enhance sovereign market access.

Portugal likely faces another minority government after an inconclusive snap parliamentary election, which risks complicating policy making, including fiscal and economic reforms.

Without substantive corrective fiscal measures, the US general government debt ratio will reach 133% of GDP by 2030, exceeding Scope forecasts for France (122%) and the UK (111%).

Nicușor Dan’s victory in presidential elections eases political tensions and supports EU alignment, but addressing the widening fiscal deficit, the weak absorption of EU funds and a backlog of reforms remain challenges.

Political uncertainty in Romania is complicating fiscal consolidation, raising borrowing costs and delaying reforms linked to EU funding while shifts in United States trade and security policies add further challenges.

Italy’s economy is set to grow more slowly in 2025-26 given US tariffs and delays in recovery-plan investments. Still, reforms and continuing EU-fund deployment should support medium-term growth after 2026.

Three scenarios for the sovereign credit outlook have emerged from the uncertainty over US trade policy – “tariff-light”, trade war, or a wider economic and financial crisis including introduction of capital controls.

Despite Trump’s victorious stance on inflation, the long-term impact of the United States’ tariffs could cause more inflationary pressures over the months ahead.

Unless Austria’s government undertakes additional reforms to stabilise and reverse rising public debt, public finances will continue to weaken given the modest economic growth outlook and sustained fiscal pressures.

The balance of risks for the global credit outlook remains negative. The United States government’s wide-ranging new import tariffs have exacerbated global economic and financial vulnerabilities.

Fiscal deterioration and weaker debt sustainability pose economic challenges, while 10% US tariffs on UK exports alongside 25% on steel and aluminium harm UK growth.