Growth, inflation and fiscal policy

Data released this week suggest that the euro-zone economy is struggling and that price pressures in the services sector are easing. Meanwhile, the European Commission published its assessment of governments’ medium-term tax and spending plans. Fiscal policy in the region as a whole looks set to be tightened gradually in the coming years, but budget deficits will remain fairly wide and we think that France’s government in particular will struggle to rein in its borrowing.