Scope Ratings calls for comments on its Sub-Sovereigns Rating Methodology by 1 September 2025. The proposed update refines Scope’s analytical approach. No rating changes are expected as a result of this update.

The Portuguese government’s payment of a pension bonus this year and multiyear corporate tax cuts will not reverse the declining public debt trajectory, but diminished fiscal leeway leaves less room for manoeuvre in case of future shocks.

Transatlantic trade tensions are contributing to a moderate deceleration in near-term economic growth in the European Union and euro area by around 0.4pps, even in a baseline scenario of the United States and the EU reaching a preliminary trade agreement.

China is confronting several daunting challenges: persistent deflation, historically low interest rates, structurally declining economic growth and rising levels of government debt. This raises significant obstacles for economic stability.

The government’s commitment to fiscal discipline is challenged by a rising interest burden, an economic slowdown and a fragmented and uncertain political environment weighing on the country’s fiscal and reform outlook.

Germany’s ambitious defence and infrastructure borrowing plans will lead to a marked increase in its deficit and debt-to-GDP. Sustaining fiscal space over the long term will depend on associated growth effects but also pension and labour market reforms.

Tuesday, July 15th 2025 - 3:00 PM (CEST)

Achieving NATO’s higher defence spending target of 3.5% of GDP will increase budget deficits and public debt across the EU, weakening sovereign credit profiles unless governments consider a mix of spending cuts, tax hikes, and joint defence funding

The Israel-Iran truce fails to permanently reduce geo-political uncertainties weighing on an already subdued economic outlook for Europe, exposed to continued volatility in energy prices, but the crisis’s impact on Europe’s economy is limited for now.

Poland’s polarised politics and institutional tensions are hindering reforms while wide budget deficits and rising structural spending are curbing fiscal space. Still, EU funds and investment inflows continue to underpin the economy’s robust fundamentals.