Reading through the latest IMF economic forecasts, I was reminded of one very obvious fact: the expansionary fiscal response to the credit crunch is now well and truly over. The global economy is about to pass through an important inflexion point, in which the fiscal stance of the major developed nations is changing from broadly expansionary to broadly contractionary. Of course, everyone who has been paying the slightest bit of attention to economic events since 2007 knows that already. But the era of fiscal consolidation could be with us for a very long time, and the financial markets are only now begining to pay close attention to what this could imply. Read more
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