After years of relative quiet, fiscal policy is poised to retake centre stage in the eurozone’s economic narrative.
As member states unveil their 2026 budget plans, a renewed focus is falling on deficits, debt dynamics, and the sustainability of public finances, metrics that had receded during the European post-pandemic recovery.
The International Monetary Fund’s latest Fiscal Monitor forecasts a gradual but persistent deterioration in the eurozone’s fiscal outlook.
The region’s aggregate budget deficit is projected to widen from 3.2% of GDP in 2025 to 3.4% in 2026, reaching 3.6% in 2027 and 3.7% by 2030. While deficits above the 3% Maastricht threshold have become the norm since the pandemic, the IMF’s projections confirm that fiscal rebalancing remains elusive.
Government debt is expected to rise in tandem.
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