Interest rates can rise, the public deficit widen and taxes may have to go up.
The growth slowdown will make the public deficit and debt worse and potentially unsustainable over time.
But who will pay for those new jobs and increases in wages and benefits without swelling the public deficit?
The new government is under the same grinding pressure to reduce the public deficit to qualify for the single currency.
France plans to trim its public deficit to 5.7 % this year, 4.6 % next year and 3% in 2013.
But that would rile the European Commission, whose rules do not allow such proceeds to be used in calculating the public deficit.
Mr Rajoy and his party were elected by a landslide in November 2011 on a promise to reduce the high public deficit.
Culling a few quangos may seem like one of the easier decisions the coalition will have to make as it tries to reduce the public deficit.
The Greek government is trying to reduce a national debt that stands at about 115% of its gross domestic output, and a public deficit that exceeds 13%.
He pledged to cut India's public deficit to 4.6% of the GDP in the next financial year beginning 1 April, from 5.2% in the current financial year.
He also blamed the downgrade on the economic management of previous governments and added that France was still committed to cutting its public deficit to 3% of output next year.
David Cameron told the BBC that the UK's huge public deficit was "a clear and present danger" and being honest about the cuts needed to tackle it was the only option.
The Item Club report said that as the government continued with its "plan A" of cutting public spending to try to reduce the UK's public deficit, the economy was "muddling through".
Meanwhile, Finance Minister P Chidambaram has pledged to cut India's public deficit to 4.6% of the GDP in the next financial year beginning 1 April, from 5.2% in the current financial year.
Finance Minister P Chidambaram has also pledged to cut India's public deficit to 4.6% of the GDP in the next financial year beginning 1 April, from 5.2% in the current financial year.
His Portuguese colleague Marisa Matias claimed the policy went against an earlier threat by the EU to suspend cohesion funds from countries - like Portugal - who did not meet their public deficit targets.
But others, including Dominique Strauss-Kahn, the finance minister, are insisting that at least part of the bounty must be used to reduce the public debt, whose interest payments now gobble up nearly a fifth of total tax revenue, and to trim the public deficit (to a planned 2.3% next year) against some future rainy day.
If the OBR is any guide, it suggests Scotland's public sector deficit is going to look healthy for 2011-12.
Our Chancellor of the Exchequer, who in December will resist pressure to loosen constraints on public spending (the so-called "spending envelope" will not be increased, which means that any increase in public-sector investment will be financed by cuts elsewhere), is alarmed that backstop measures to reduce America's public sector deficit are draconian - and, if implemented, would force the US (and probably Britain) back into recession.
But the public-sector deficit has remained high and debt is rising, partly to finance a still unreformed public-pensions system.
But it is the defiance in France's public attitude as much as the deficit in its public accounts which draws the ire of countries, such as the Netherlands and Austria, which tend to respect the EU treaties they sign.
What I am saying is that the whole of public expenditures is deficit financed.
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The public-sector deficit has been trimmed in line with Maastricht requirements for the euro.
France now looks certain to qualify for Europe's currency after hitting, spot on, the 3% target for its public-sector deficit.
Despite a low starting-point for public debt, deficit overshoots have revealed insufficient central control over the 17 regions that are responsible for a big chunk of spending.
It is hard to see how that fits with the government's determination to keep France's public-sector deficit down to the 3% limit needed to join Europe's single currency.
Rising demands to fund health care, education, and the state pension system present a challenge to the Polish government's effort to hold the consolidated public sector budget deficit under 3.0% of GDP, a target which was achieved in 2007.
If much of that is borrowed at the higher 3.5% interest rate prevailing today, that would deprive the French government of vital money to fund public services - which is not great news just days after France announced an emergency five-year 65bn euro package of tax rises and spending cuts to reduce its public-sector deficit.
Thus, even if the US is successful in reducing its fiscal deficit significantly, public debt relative to GDP continues to rise due to sluggish economic growth and a still high fiscal deficit.
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