Nicușor Dan’s victory in Romania’s presidential election 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 stark challenges for the authorities.

Operating environment assessments, the starting point for the analytical process, reflect regulatory and supervisory convergence. Ratings are determined by economic, sector and bank-specific factors. Despite uncertainties, the picture is resilient.

The Spanish economy’s growth continues to outpace the euro area’s due to improving labour markets, strong tourism receipts and ample EU funds. Still, further fiscal consolidation and reforms are needed to improve Spain’s resilience to potential shocks.

Wednesday, 28 May, 3 pm CEST

The robust solvency of European banks and their capacity to absorb credit losses from ordinary profitability provide important buffers against credit deterioration at a time when US trade policy is impacting Europe’s growth and interest-rate outlook.

European households will see housing affordability deteriorate as the supply-demand gap persists and prices continue to rise. Stimulus measures are urgently needed to boost housing supply in European countries where the situation is particularly acute.

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 policy add further challenges to the fiscal and growth outlooks.

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 the introduction of US capital controls – says Scope Ratings.

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.