Southern European economies were mired in long recessions after the eurozone crisis in 2009, with public debt and unemployment soaring amid frequent changes of government. The worst-hit economies, such as Greece, were below their pre-crisis levels after over a decade of painful reforms.
Economists have pinpointed risks linked to the Commission bringing an end in 2026 to post-pandemic funding. At the same time, governments will have to continue investing in green and digital projects without this specific stream of funding from Brussels.
Countries with big debts are likely to bear the brunt of the shock and analysts warn it could hit economies hard, which could have a knock-on effect in politics.
Governing parties in France and Italy — the eurozone’s two largest economies after Germany — have reason to worry. The next French presidential election is in April 2027, with Emmanuel Macron unable to run again and far-right leader Marine Le Pen gaining support. The Italian general election is scheduled for no later than the end of the same year.
Governments are still getting post-pandemic cash from the EU
At the moment, countries are reliant on a series of EU support schemes and exemptions that were aimed at softening the financial blow of the Covid-19 pandemic, including the Recovery and Resilience Facility (RRF), which saw EU countries issue joint debt for the first time. They are still providing a lifeline to countries with the most debt.
The EU is pouring billions of euros into green and digital projects through this dedicated fund — worth over €700 billion — which is set to run out at the end of 2026.
