Growth Surprises On The Upside

The government approved the 2008 state budget draft on October 11, with particular emphasis on keeping the fiscal deficit in check in preparation for eurozone entry in 2009. The government proposal for increased spending on healthcare and housing subsidies, as well as a promise to provide pensioners with a one-off Christmas bonus, may conflict with keeping expenditures down to alleviate the deficit. Balancing domestic expenditure with the need to maintain fiscal prudence for eurozone entry may create further political tension in the medium term.

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