Government debt sustainability

Global public debt has risen sharply, while higher interest rates and reduced central-bank support are increasing borrowing costs and market scrutiny. Debt sustainability depends on the interplay between interest rates and growth, primary balances, debt dynamics, refinancing needs and market confidence. France appears vulnerable due to large deficits, rising debt and political gridlock, while Italy benefits from a primary surplus despite its higher debt ratio. An acute debt crisis is not our baseline, supported by long maturities and European backstops. However, rising interest costs could drive a gradual deterioration in fiscal positions.