Fiscal policy in advanced economies is looser this year than last and may well be eased further in the years ahead. In Japan, policy makers are on the cusp of announcing a large supplementary budget, and the UK government has scrapped its fiscal targets following the EU referendum. Meanwhile, public debt ratios in most countries are under control and the further decline in bond yields has markedly reduced the cost of servicing debt. As a result, there is unlikely to be further austerity in either the euro-zone or US.
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