Fiscal Cuts To Prove Politically Testing

Recent protests in Slovakia against the new centre-right coalition's fiscal consolidation strategy augur a difficult road ahead for the government. While the administration is well primed to deliver on its pledge to cut the deficit to below 3.0% of GDP by 2013, we believe that deteriorating public support as a result of higher taxes on consumption and reduced welfare benefits could see the coalition's unity come under significant pressure further down the line.

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