The deficits of some countries have even exceeded the threshold of 3 p.c. Fiscal policy has thus not been an impediment to recovery. One might however wonder whether the stimulation of the economy intended by the fiscal easing in many countries was not eroded by the adverse impact which such a relaxation of discipline can have on the climate of confidence.
It seems that people in Europe more and more have a “Ricardian perception” of fiscal deficits. They are more aware of the enormous challenges and costs our ageing society entails. People in the different European countries are really worried about the long-term sustainability of public finances. High fiscal deficits will only worsen their anxiety and so incite them to increase their precautionary savings.