IMF warns Europe faces fiscal squeeze as spending pressures rise

European governments face an unprecedented financing challenge as rising spending demands linked to ageing populations, the energy transition and defence threaten to place public finances under severe strain, according to a new paper released by the International Monetary Fund (IMF).

The IMF’s European department said public spending across the region is expected to increase by close to 5 per cent of GDP on average by 2040, while many countries are already burdened with elevated public debt...