Economic News

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.

Germany needs a stable and reform-oriented government to respond to the impact of US president-elect Donald Trump’s potential policy shifts that will impact Germany’s trade, fiscal and defence policies.

Donald Trump’s emphatic victory in the US presidential elections is a net negative for US risks over the medium run because it raises financial risk, although nearer-term implications for the economy are more mixed.

Questions remain over the UK autumn budget’s ability to meaningfully boost long-run economic growth. The easing of budgetary constraints and reduced monetary flexibility pose economic risks.

Greece’s favourable credit trajectory is underscored by falling public debt, more resilient banks, and structural reforms. Scope Ratings’ baseline is for primary budget surpluses to be sustained in coming years.

Georgia’s coming elections highlight its tough balancing act between the West and Russia. Competing visions for the nation’s future, challenging geopolitics and sanctions risks threaten the sovereign’s ratings.

Italy aims to accelerate fiscal tightening to exit the Excessive Deficit Procedure earlier than expected, but high public debt, structural economic weaknesses and unfavourable demographics pose challenges.

The US and global economies remain resilient ahead of forthcoming US elections. However, Europe’s economic fragility poses challenges for its recovery despite support from the easing of interest rates.

Germany is facing demographic challenges with more acute structural pressures than other advanced economies. Labour-market and pension reforms are essential, but fragmented politics risk are eroding competitiveness.

Türkiye’s restrictive monetary policy continues to drive disinflation, bolster external accounts and replenish official reserves, improving the economic outlook despite persistent inflation and a wide budget deficit.

Political deadlock in Germany and France limits the prospect of implementing reforms proposed by the Draghi report, which, together with Southern Europe’s productivity gap, challenges Europe’s growth outlook.

Political uncertainty, a challenging fiscal outlook, and the rising divergence in funding conditions between France and other core euro area sovereign borrowers underscore the importance of political stability.

The German government is maximising the modest leeway it has under the debt brake to inject public funds into the economy, but the measures are insufficient for addressing large and widening investment gaps.

The proportion of Italian sovereign debt held by foreign investors, a less stable source of demand than the ECB and residents, is rising and will make Italy more susceptible to changes in market sentiment.