Greater confidence in sound economic policies may have a positive effect on the economy via higher private consumption and investment, even now. One particular challenge when it comes to fiscal discipline is the effect that ageing populations will have on government spending in the decades ahead.
Concerns about unsustainable public finances due to high deficits and debts, and unsustainable social security systems, may lead consumers to save more, in anticipation of future tax increases. Sound public finance and sustainable non inflationary growth are mutually reinforcing and are creating a virtuous circle : growth in turn reinforces public finance.