Slovakia’s government is continuing efforts to reduce the budget deficit despite sluggish growth but the risk of missing targets amid worsening fiscal fatigue is rising. Use of temporary measures raises doubts over the durability of the adjustments.

Germany, the Netherlands and Belgium need far more investment to modernise their electricity transmission grids through 2034 than southern European countries, hence the importance of having secured most of the EUR 200bn-plus in required funding.

Poland’s structurally embedded spending increases and wider budget deficits highlight its fiscal vulnerabilities as institutional gridlock hampers any durable adjustment. Yet resilient growth and EU financial support are containing debt-servicing costs.

Almost EUR 1.9bn has been repaid from 13 securitised CRE loans in 2025. This is below EUR 7.1bn of issuance, but the decrease in delinquent loans from 37% in 2024 to 21% offers some comfort around the performance and fundamentals of underlying properties.

August collections fell 53% from July, a sharper decline than the 42% of the previous three years. August always suffers seasonal effects of Italy’s national holidays but August 2025 collections were the lowest since this report's inception in 2020.

Corporate NPL ratios remain high, particularly in Germany, France, Austria and Belgium, while geopolitical risks and trade tensions have rendered the economic outlook uncertain. Our baseline of a moderate deterioration in asset quality remains intact.

The latest government shutdown in the United States occurred as a result of policy disagreements between Republicans and Democrats on issues such as healthcare, but it reflects the country’s deepening political polarisation.

Following MPS’s acquisition of Mediobanca and BPER’s takeover of BPSO, we expect Banco BPM to play a more active role in Italy’s banking consolidation wave, which is being driven by financial as well as strategic and political factors.

US plans to slap hefty tariffs on pharmaceutical imports have led European firms to speed up US investment and reset supply chains, the full credit impact of which will depend on the products targeted and whether the extra costs compromise innovation.

As Russia’s war in Ukraine war drags on with no end in sight, the challenges for Ukraine’s debt sustainability and finances are mounting. Addressing them requires the use of frozen Russian reserves. Deeper debt restructuring should also be considered.