However, it is unavoidable that there has to be a lot of effort put to debt reduction. At the same time, this may have adverse consequences for growth in the short run. The excess leverage is difficult to get rid of, and the impression of being overindebted even more so.
Debt has become like an undesirable bucket that every firm, every government and every sector tries to pass on to the next. This competition between sectors for financial health will slow down the growth prospects in the near term. Just last week, the IMF drew attention to the dangers that a contraction of bank lending would pose to the European economy, in particular.