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02 Dec 2011

Can austerity be self-defeating?

Daniel Gros

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With European governments cutting back on spending, many are asking whether this could make matters worse. In the UK for instance, recent OECD estimates suggest that ‘austerity’ will lead to another recession, which in turn may lead to a higher debt-to-GDP ratio than before. As the debate heats up, this new commentary by CEPS Director Daniel Gros provides some cool economic logic.