Economic News

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.

The impact of higher financial and political volatility on Türkiye’s credit ratings will mostly depend on the effectiveness of the monetary policy response and the consequences of any shifts in domestic policy.

Germany’s ample fiscal space to finance higher defence spending by issuing debt contrasts with the more constrained public finances in France and the United Kingdom.

France is heading towards difficult budgetary trade-offs to reconcile its commitment to lower budget deficits while increasing defence spending given France’s role in strengthening Europe’s security architecture.

The outcome of Germany’s election makes a coalition between the CDU/CSU and the SPD likely, allowing for a rapid coalition agreement, though reforms to Germany’s debt brake will remain challenging.

The UK’s sovereign rating has remained resilient to recent crises. But greater structural risks in the UK government bond market and a worsening public debt outlook are downside factors.

Rising tariffs, lower growth, higher defence spending, deeper political fragmentation and rising dollar-denominated borrowing costs are set to weaken the European credit outlook unless Europe unites and makes bold reforms.

The new government coalition provides an opportunity to address Belgium’s fiscal challenges, although the trade-offs between budgetary consolidation and the administration’s social and economic agendas could slow reform.

Germany’s next government faces the urgent task of addressing the economy’s structural weaknesses while navigating an increasingly protectionist and unpredictable US trade and defence policy.

Lithuania is set to outperform Estonia and Latvia fiscally and economically in the short to medium term, driven by structural, cyclical and policy-related factors.

As challenging as France’s fiscal and political outlooks are, the country’s underlying areas of resilience include a favourable government debt profile, a resilient economy and well capitalised banks.