The German government is maximising the modest leeway it has under the so-called debt brake to inject public funds into the economy, but the measures are insufficient for addressing the country’s large and widening investment gap.

Egypt’s public finances remain vulnerable to external shocks given the government’s limited fiscal space though external support, increased foreign direct investment and progress on reforms are improving resilience.

A hung parliament in France mitigates risk of significant fiscal slippage due to the policy agendas of the far right or radical left. Still, reform momentum will likely stall given the need for compromise by centrist parties and the political extremes.

The Labour Party won a landslide victory in Thursday’s UK general elections but long-run challenges will endure, including dealing with rising debt and reviving the economy while hitting fiscal targets. But the results at a minimum ensure a clear mandate.

Higher-for-longer rates heighten the stakes for sovereign debt sustainability especially as financial-market and institutional checks on excessive borrowing of rich countries are weaker than they were several years ago, says Scope Ratings.

France’s planned consolidation of its public finances risks being deferred considering the most likely outcomes of the legislative elections, with important consequences for the EU’s policy agenda and potentially euro area investor sentiment.

Scope Ratings calls for comments on its Government Related Entities Rating Methodology by 29 July 2024. The proposed update refines Scope’s analytical approach. No rating changes are expected as a result of this update.

Scope has published the final version of its supranational methodology together with a feedback report addressing market participants’ comments. The methodology update, which follows a call for comments released on 10 May 2024, has no rating impact.

A sustained period of higher interest rates will present a challenge for many borrowers worldwide, as economies adapt to a new era of comparatively tight monetary policy amid a recovery in growth and enduring inflation.

Strong momentum behind the Flemish nationalists and separatists in Belgium’s federal election aggravates political fragmentation and polarization. It complicates forming a new government and the consolidation of public finances, a key credit challenge.