The 2012 Fiscal Sustainability Report analyses the sustainability of public finances in the Member States, against the background of the impact of the financial, economic and fiscal crisis and the demographic ageing projected in the 2012 Ageing Report. It responds to the Council request of 10 November 2009 for a new Sustainability Report to be prepared based on updated long-term budgetary projections incorporating the implications of ageing populations. Analysing prospective government debt developments and risks to fiscal sustainability is crucial at the current juncture for euro-area... countries and the EU as a whole to be able to formulate appropriate policy responses and restore credibility and confidence. High levels of public debt and/or significant budget defi cits need to be addressed resolutely and promptly so as to ensure the stability of public finances. Failing to do so might prompt strong and sudden policy adjustments at some point. The report provides a comprehensive analysis of the sustainability of public finances across the EU by providing and analysing quantitative results on sustainability indicators and debt projections, as well as other factors relevant to sustainability. It includes an assessment of the sustainability challenges in each EU Member State, in light of the quantitative and qualitative analysis. Finally, a statistical annex gives a country-by-country overview of the main relevant results.