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Chancellor may have to spend more when the recovery slows

Our view that, after an initial vigorous rebound, the economic recovery from the coronavirus crisis will slow later this year suggests that the further loosening in fiscal policy announced by the Chancellor this week won’t be the last. Next week’s release of the OBR’s Fiscal Sustainability Report will generate more talk about how government debt will be brought back down. But a major lurch to austerity in the next few years at least seems very unlikely.

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