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Where will the downturn leave the public finances?

While governments across the developed world are stepping in to shore up their ailing economies, the fiscal boost in the euro-zone looks set to be fairly modest. With a gradual economic recovery likely to start sooner than in the US or the UK, the deterioration in the public finances should not be quite as severe. Nonetheless, we could see the aggregate euro-zone budget deficit rising to an unprecedented 5.0% of GDP next year.

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