31.   Achieving greater economic convergence among EC members in such areas as inflation, budget deficits and interest rates was regarded by Germany in particular as a prerequisite for EMU.

32.   The main cause of inflation was the overall public-sector budget deficit.

33.   The expense of servicing the debt burden increased the budget deficit, which in turn stimulated inflation.

34.   In order to tackle the problem of the escalating budget deficit and increasing public debts the government would pursue a policy of austerity in both public and private expenditure.

35.   Many analysts had called for a more ambitious target in reducing the budget deficit.

36.   Apart from reducing the budget deficit, the cuts were intended to reassure financial markets after the European-wide currency crisis forced the floating of the markka.

37.   During the budget debate many deputies argued for heavier spending on public works projects to cut unemployment, rather than the introduction of measures to reduce the budget deficit.

38.   Any particular local government may be forced to incur an extremely large budget deficit in order to have an expansionary effect on the local economy.

39.   Meanwhile a number of governments abroad were running large and sustained budget deficits, the financing of which was steadily expanding the size of other markets in government debt.

40.   The ratio can rise either as a result of an increase in OM or through a fall in P.