A currency union of 21 EU states using the euro as legal tender
Deficits have expanded to around $2 trillion for the 2026 fiscal year, with net interest costs topping $1 trillion. Analysts warn a self-reinforcing cycle of higher rates and borrowing costs is unfolding, threatening fiscal stability. Receipts from taxes are up modestly, but Social Security and Medicare remain the largest outlays.
England’s prime minister is accelerating talks on a national care service with cross‑party support, aiming to fund reforms from existing budgets. Baroness Casey’s review will inform the plan, with a focus on pay for care workers and integration with the NHS. Officials say there will be no immediate tax rises as talks proceed.
The Federal Reserve has held its policy rate, with investors pushing yields higher amid concerns about inflation. Markets are signaling a harder path ahead, with oil prices rising and equities correcting after recent swings.
EY has warned the UK economy could slip into recession if Hormuz remains closed, while a reopening could keep growth resilient at 0.9% in 2026 and 1.2% in 2027. The outlook shifts with oil prices easing and talks of a potential AstraZeneca–BMS merger, set against a backdrop of manufacturing activity data and a stretched timetable for a takeover.
Italy has reached 1,413 days in power, the longest-serving government since the republic’s founding, as Meloni’s coalition marks the milestone amid debates over stability, growth, and the outlook ahead of 2027 elections.
Central banks have tightened policy in response to a surge in energy prices and persistent inflation. The US Federal Reserve has raised its policy rate to 3.75–4.00% and signalled further hikes; the ECB has lifted its key rate to 2.50%; the Bank of England has held at 3.75% but warned higher energy costs will force future rises. Markets have repriced yields and mortgage costs are rising.
The euro has fallen to near 17-month lows after investors have pushed up French borrowing costs and bond spreads. France has faced rising yields, mass protests and a political stalemate over deficit cuts ahead of the presidential election. Markets are pricing greater contagion risk across the eurozone and the ECB is under pressure to act.