Western governments need to convince markets they have credible plans to reduce debt so that a much-feared double-dip recession does not materialise.
After the unprecedented shock treatment for the global economy, governments and central banks are counting the cost and looking for exit strategies that will ensure the feared ‘double-dip’ recession does not materialise. It is clear the size of the fiscal and monetary stimulus delivered by governments and central banks cannot be funded indefinitely without risks. The IMF’s World Economic Outlook forecasts that most developed economies are likely to see their total debt ratio approach 100% of GDP in the next few years. In the UK, the speed of the deterioration of the budget deficit has be...
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