Europe Weekly

Slovakia's parliament has approved a 2027 budget projecting a general-government deficit of 4.94 percent of GDP, higher than the previous year's already elevated shortfall and part of a fiscal path that would push public debt toward 71.8 percent of GDP by 2029. At the same time, railway unions have declared a strike alert after wage negotiations collapsed, exposing a sharp contradiction at the hea...

Hungary's new government is pursuing a sweeping fiscal overhaul, combining a proposed wealth tax on its richest households with a long-range target to adopt the euro by 2032. Both moves are designed to signal a break with the past, but analysts and critics warn the plans face formidable practical obstacles. The central test is whether Budapest can close a budget deficit projected at roughly 7.5 pe...

Austria faces a politically charged dilemma as its 2026 deficit is forecast to reach 4.1 percent of GDP, well above the EU's 3 percent threshold, while economic growth remains too weak to ease the burden on households. With inflation still projected at 3.3 percent and unemployment expected to climb to 7.6 percent, the government must pursue fiscal consolidation at precisely the moment when citizen...

Slovenia's government is pressing ahead with expansionary budgets for 2027 and 2028, framing higher public investment as a development strategy rather than fiscal recklessness. But a gap between Ljubljana's own deficit projections and the European Commission's earlier forecasts has handed critics a credible line of attack. The dispute goes beyond ideology: it raises pointed questions about whether...

Romania has spent more than five months without a functioning government, cycling through four failed prime-ministerial candidates while its economy contracts and inflation remains well above comfortable levels. The combination of political paralysis and a deteriorating growth outlook is placing mounting pressure on households, investors and Romania's standing inside the European Union. The countr...

Croatia's government is simultaneously defending its economic record against accusations that price controls mask deeper affordability problems and managing the fallout from a hazardous-waste crisis in Gospić that has provoked parliamentary walkouts and criminal investigations. Together, the two disputes reveal a widening gap between the government's macroeconomic confidence and the daily insecuri...

Germany's governing coalition is struggling to contain the electoral rise of the far-right Alternative für Deutschland while simultaneously trying to convince voters that a genuine economic recovery is underway. The two crises are deeply intertwined: political instability is undermining confidence in democratic government at precisely the moment when citizens most need competent economic managemen...

France is attempting to close a roughly 43-billion-euro spending gap while navigating a fragmented parliament, rising borrowing costs and nationwide student protests over crumbling schools. The collision between fiscal consolidation and public-service decline has produced one of the most politically volatile moments in recent French domestic history. The outcome matters well beyond Paris, with imp...

Belgium's federal government has failed to agree on a package to close a projected budget gap of more than ten billion euros by 2029, forcing Prime Minister Bart De Wever to postpone his State of the Union address and raising questions about the coalition's durability. The deadlock arrives as Belgian inflation accelerates to 4.6 percent, intensifying a dispute over who should bear the costs of fis...

The Dutch minority cabinet is navigating a roughly €6 billion hole in its social-security budget after abandoning plans to cut disability and unemployment benefits under pressure from unions and opposition parties. At the same time, a court-mandated overhaul of the country's Box 3 wealth-tax system remains legally and politically unresolved, threatening to delay billions in projected revenue. Toge...

Italy is navigating a simultaneous energy-price surge and a budget squeeze that threatens to push its 2027 deficit above the European Union's 3% ceiling. The Meloni government argues that defence commitments and a sharp energy shock justify exceptional fiscal room, but critics warn that debt near 138% of GDP leaves the country with dangerously little margin. The debate is as much about who pays no...

Greece is posting some of its most encouraging economic indicators in years, with unemployment falling and growth holding steady, yet households and small businesses continue to absorb rising prices and mounting debt obligations. A proposed expansion of tax debt repayment installments has crystallised the tension between fiscal credibility and everyday financial pressure. The political contest is...

Denmark is preparing to raise defence spending to 3.5 percent of GDP by 2030, a commitment that will reshape national priorities and force difficult questions about the future of the welfare state. At the same time, a cross-party deal to invest nearly one billion Danish kroner annually in vocational training is testing whether the country can build the skilled workforce its ambitions require. Toge...

Sweden's centre-left bloc won the most seats in the Riksdag but has so far failed to convert that advantage into a stable government, leaving Social Democratic leader Magdalena Andersson in a second attempt to assemble a workable coalition. Meanwhile, an economy expected to grow by roughly 3% in 2026 is sending mixed signals: policymakers speak of recovery, but households still face rising prices...

Finland is navigating a deepening fiscal crisis, with a projected deficit well above EU limits and a debt load approaching 90 percent of GDP. The government's consolidation strategy is triggering sharp political and social conflict, splitting opinion along lines of class, age and ideology. Within the governing coalition itself, the Finns Party has overtaken the prime minister's own party in pollin...

Ireland's government has unveiled an €8.5 billion budget package designed to ease the cost-of-living burden on households, but inflation is forecast to remain above the European Central Bank's 2% target through 2027, and public-sector unions are preparing nationwide strikes that could cancel up to 150,000 medical appointments. The twin pressures of persistent price rises and threatened disruption...

Lithuania is planning to raise defence spending to more than 5% of GDP by 2027, a move that would push its budget deficit above the European Union's reference threshold. At the same time, new restrictions on foreign workers are threatening to choke off a labour supply that businesses say has driven nearly half of the country's economic growth over the past five years. Together, the two debates exp...

A sharp acceleration in inflation, driven by fuel and housing costs, is squeezing Estonian households and intensifying pressure on the governing coalition. With the opposition Center Party surging in at least one recent poll, the country's next election is shaping up as an economic referendum. The tension between fiscal discipline, rising defense needs, and household relief is now at the centre of...

Latvia's governing United List secured its strongest post-independence election result, winning 35.3 percent of the vote and 42 of 100 parliamentary seats, cementing Prime Minister Andris Kulbergs's pro-European, pro-NATO course. Yet the result tells only part of the story. With consumer prices still 3.2 percent higher than a year earlier and fiscal consolidation looming, the government's durabili...

Warsaw has launched a fuel-price intervention package designed to cut pump prices and ease household costs, but the move arrives as official data confirm that Polish inflation is rising, not falling. At the same time, the government faces mounting pressure over a deficit that the European Commission projects will reach 7.3 percent of GDP in 2025. Together, the two developments expose the tension a...

Czechia faces a twin political stress test as a coalition dispute over the 2027 budget threatens to deepen divisions within the government, while the European Commission has withheld millions in subsidy reimbursements over unresolved conflict-of-interest concerns linked to former prime minister Andrej Babiš and his Agrofert conglomerate. Both crises reflect a country grappling with fiscal discipli...

Slovakia's economy is growing at a pace too slow to ease household pain, while inflation remains above European Central Bank targets and sticky enough to erode purchasing power. At the same time, an alleged arson plot linked to a domestic drone factory has sharpened public anxiety about hybrid threats and foreign interference. Together, the two developments paint a picture of a country navigating...

Hungary's new government is moving to repeal Orbán-era restrictions on the "promotion" of homosexuality to minors, signaling a sharp break with its predecessor's social agenda and a potential realignment with European Union norms. Simultaneously, the country's central bank has warned that worsening drought and heatwaves could reignite food price inflation, threatening households already worn down...

Austria is confronting two interlocking crises as the new political season opens: a re-acceleration of consumer price inflation to 3.2 percent in August 2026 and a fiercely contested school-year ban on headscarves for girls under 14. Both issues are exposing deep fault lines between government reassurances and public frustration. The combination is sharpening political polarisation and drawing scr...

Germany's governing coalition faces a double challenge as a dramatic far-right electoral breakthrough rattles the political establishment and stubbornly elevated inflation continues to strain household budgets. The AfD's surge to around 44.5% in Saxony-Anhalt has sent shockwaves through Berlin, raising urgent questions about coalition stability and the durability of the mainstream consensus. Toget...