Europe's economy is being held back for several reasons:Austerity. Whether they got into trouble by overspending or after rescuing banks from a real-estate collapse, European governments are tackling their debts the same way: by raising taxes and cutting spending, including wage cuts for public sector workers. Italy slashed its deficit by 2.8% of GDP this year, but economists estimate that reduced growth by 1.5 percentage points. Less spending by the government and less spending by consumers who gave more of their income to the government were a drag on the Italian economy.
As Eurozone Economy Shrinks, Government Debt Loads Grow
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