Most euro-zone governments look set to continue running large budget deficits in the coming years. This will support aggregate demand and is a key reason why ECB interest rates will stay higher than before the pandemic. The biggest fiscal loosening will come in Germany, where we now expect the debt ratio to rise substantially over the next five years. We also expect France’s public debt ratio to increase, and Italy’s to remain extremely high. In contrast, public debt ratios in Spain, Portugal and Greece should fall.
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page.
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