ECB: Eurozone public deficits set to worsen in 2026, peaking in 2027

Debt-to-GDP ratio ‘just under 90 per cent’ in 2028

(Il Sole 24 Ore Radiocor) - ‘The local authorities’ budget balance is expected to deteriorate’

public finances in the euro area, with the deficit set to peak well above the 3 per cent threshold in 2027’. The ECB states this in its Economic Bulletin, noting that the deficit ‘is expected to rise sharply to 3.6 per cent of GDP in 2026’ from 3 per cent in 2025 ‘and peak at 3.7 per cent in 2027, before falling marginally to 3.6 per cent

‘in 2028’. Much of the deterioration in the budget balance, writes the Eurotower, ‘is expected to occur in 2026, reflecting the easing of the fiscal policy stance’. Furthermore, ‘interest expenditure is projected to rise by 0.2 percentage points of GDP

in 2026 and a further 0.3 percentage points in cumulative terms over the two-year period 2027–2028’. Consequently, “over the projection horizon, the euro area debt-to-GDP ratio is expected to follow an upward trend, reaching a level just below 90 per cent of GDP in 2028”.