Public finances under pressure in the eurozone

European governments are preparing their budgets for 2024 in challenging economic and financial conditions. First, the outlook for nominal growth is revised down, portending a slowdown in government receipts. Second, the interest rate environment has changed. Debt refinancing is more expensive. Whilst the impact on debt servicing is modest in the short term, it will increase over time. Finally, the rules of the Stability Pact suspended in 2020 are supposed to be reinstated, which...