Scope Ratings’ outlook for 2017 for large EU sovereigns, which includes Germany, France, Italy, Spain and the UK, reflects the common challenges these countries are facing. Except for Germany, there is a lack of deleveraging in the public sector. Furthermore, subdued and non-inclusive economic growth, and political movements that are simultaneously populist, anti-austerity, anti-establishment, anti-immigrant and anti-EU, are pushing established political parties towards anti-reformist and nationalist policies. This makes progress in structural reforms, which are necessary at national level, within the EU and among euro area institutions, increasingly uncertain. Scope expects that policy response will remain mostly confined to monetary policy, and aid from the fiscal side will be marginal. This leaves the large EU sovereigns, except for Germany, ill-prepared for the next downturn, as their capacity to stimulate the economy during the next crisis is significantly impaired […]