The UK’s debt-to-GDP ratio is set to rise above official forecasts given continued pressure for more welfare and government spending unless future governments raise tax revenues, reduce the welfare state or significantly improve growth prospects.

Climate and demographic risks have an important if moderate impact on medium-term public debt trajectories for most EU countries but become increasingly credit relevant and mutually reinforcing in the long run, says Scope Ratings.

Commerzbank’s new three-year growth plan is reliant on durably favourable interest rates, ambitious revenue gains in private and corporate banking, plus benign banking-sector competition and buoyant activity in Germany, leaving room for disappointment.

The constitutional court ruling underlines Germany’s strong fiscal framework but complicates the government’s ability to address persistent under-investment, which we estimate at around EUR 300bn over the past decade vis-a-vis AAA-rated economies.

A wider Middle East conflict could adversely impact the credit ratings of some euro-area sovereigns if this resulted in higher commodity prices, leading to further monetary policy tightening to tame renewed rises in inflation, and thus weaker growth.

The French government is counting on an end to emergency support for business and households, more efficient public spending and above-potential GDP growth to reduce public debt more quickly. It is an optimistic plan given challenges ahead.

Spain and Portugal, both rated A-/Stable, have shown strong resilience to the Covid-19 and energy shocks and share promising growth outlooks, but diverging debt-to-GDP trajectories leave Spain more exposed to high interest rates and political uncertainty.

Western-led multilateral developments banks have close to EUR 1trn in callable capital, a unique but unused source of funding, which, with appropriate enhancements, could help meet the heightened demand for loans on the banks, says Scope Ratings.

The Tusk coalition will have beaten the odds if it secures a parliamentary majority. But while a Tusk coalition will face significant governance and budgetary challenges, the change of government supports the country’s credit standing.

Extra spending by EU states on interest, pensions and healthcare is limiting funds needed for defence and green investment, testing NATO spending targets and climate goals. Shifting spending to the supranational level and carbon taxes could help.