Europe Fiscal Policy | Europe From Cheap Debt to Hard Choices M BluePaper July 8, 2026 04:00 AM GMT Europe's fiscal challenge is structural: ageing, defence and interest costs will mechanically widen deficits by at least 3pp of GDP by 2040 in most euro area countries. Borrowing cannot be the only answer. Credible adjustment must freeze and reallocate spending, protect investment and lift growth. Markets will reward plans that raise growth, not debt. Morgan Stanley does and seeks to do business with companie ...