European Economics Analyst: Euro Area Fiscal Policy - Continued Consolidation and Debt Decoupling

Fiscal consolidation in the Euro area’s four largest economies will continue for the next three years, write Goldman Sachs Research’s European economists. The cautious fiscal policy outlook in Europe stands out in the international comparison. This policy mix will decrease the chances of market stress in the sovereign space, in their view. However, in the absence of a clear commitment to address the industrial challenges at the European level or implement parts of the Draghi Plan at the EU level, they believe the policy stance will continue to weigh on future growth in the coming years.