Events in Spring 2010 have exposed the urgency of addressing the fiscal challenge in the euro area and the EU. Sovereign risk premia increased to unprecedented levels in Member States with perceived high budgetary and macro-financial risks. The 2010 Report on Public Finances in EMU presents recent budgetary developments, reports developments in budgetary surveillance and draws lessons for debt reduction strategies. It also investigates the link between macro-financial and budgetary risks. [more]