UK & France: Fiscal Risk Scenarios

The report evaluates the fiscal stability of the UK and France, finding that both nations face rising debt-to-GDP trajectories under realistic economic scenarios, contrary to official optimistic forecasts.

Key Takeaways

• 1.Both the UK and France face weak fiscal positions with upward debt trajectories and significant political uncertainty in the coming years.
• 2.UBS's debt projections are more pessimistic than official government plans, highlighting the risk of persistent budget deficits and rising debt-to-GDP ratios.
• 3.For the UK, fiscal consolidation is back-loaded, creating risks that planned tightening will not be delivered before the 2029 election.

Table of Contents

• UK & France - a tough balance of fiscal constraints and politics
• Debt ratios on upward trajectories - consolidation is key challenge
• What to watch: UK Autumn Budget and French Presidential election
• Rates strategy: Steady spreads for now
• Details on the debt sustainability analysis for the UK
• Details on the debt sustainability analysis for France
• Valuation Method and Risk Statement
• Required Disclosures
• UBS Global Research Disclaimer

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