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Exhaustion Of Austerity Meets Maxed-Out Monetary Policy

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There won't be any press conferences, fireworks or tears to mark its passing, but the latest wave of austerity worldwide may well have had its day.

While that may sound peculiar to Greeks still struggling to meet stiff budget targets set by creditors or even Britons faced with another round of spending cuts by finance minister George Osborne this week, a turn in post-credit crisis government retrenchment looks to be under way.

With monetary policy virtually maxed out in many parts of the world, fiscal policy is again forecast to act as a marginal net stimulant rather than a drag on world growth over the coming year. Even in the region that epitomizes post-crisis government budget cuts, the euro zone, the heavy lifting looks to be over.

What's more, the so-called 'bond vigilantes' in the debt markets have barely blinked. Their growing ambivalance about how austerity affects debt sustainability, growth and investment amid the anaesthetic of zero interest rates, quantitative easing and a global savings glut means there's no sign of a tantrum.

Framing the shift, Edinburgh-based Standard Life Investments reckons the average country in the 34-nation Organization for Economic Co-operation and Development will structurally loosen fiscal policy next year for the first time since 2010.

And for the UK we have this story.

The Autumn Statement marks the ‘end of austerity’

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