Interest rate developments in recent years have been a major source of relief for government budgets in the euro-area countries. Most of them saw their interest burdens contract on the back of cheaper borrowing terms despite some having substantially increased their debt ratios. The average rate of interest on government debt has hit a low, including for countries whose risk premiums surged for a time in the wake of the financial and economic crisis. If the average interest rate were, for example, still at its pre- crisis level, interest expenditure, viewed in isolation, for the past year alone would have been higher by almost 2% of nominal gross domestic product (GDP) for the euro area. Since 2008, this downturn in interest charges has yielded savings of almost €1 trillion, or a little short of 9% of euro-area GDP. The very advantageous borrowing terms available currently will probably provide continued relief for government budgets for a time. Yet fiscal policymakers would nonetheless be wise to make provisions for when interest rates bounce back. One fundamental objective anchored in the Stability and Growth Pact is that governments be required to achieve structural budgetary positions which are at least close to balance. Achieving that goal swiftly would go a long way towards reining in what are still very high debt ratios overall and trimming both interest burdens and any risk premiums. However, the most recent figures show that consolidation progress (measured in terms of the structural primary balance) has largely ground to a halt – probably partly because of the sustained favourable borrowing terms. But high debt ratios represent a lingering threat for public finances, given the mounting risk that a rate reversal might erode confidence in the sustainability of individual countries’ public finances, and not least that monetary policymakers might then be pressured to respond.