https://docs.python.org/3/reference/compound_stmts.html#the-try-statement says

=============
except E as N:
    foo
=============

is converted to the following statement:

=============
except E as N:
    try:
        foo
    finally:
        del N
=============

In the examples in this thread, foo is 'import pdb; pdb.set_trace()'. So, I was expecting 'del N' to be executed only after executing foo. This implies that err should have been available in the scope.

Further, isn't the code execution supposed to be stopped at the set_trace() line and not on the next line. Should it at least respect the scope (indentation) and not execute the '--Return--' line event until the user actually executes the next line (x=1 in your example)?