Property prices rose rapidly and fuelled ever higher borrowing, which left individuals vulnerable to the inevitable downward leg of the boom-bust cycle.

In parts of Latin America, however, high public-sector borrowing resulting in inflation had significantly increased poverty between 1981 and 1987.

"What's different about this period is that the rise in spending is being financed by lower savings and higher borrowing."

Rising oil income allowed the government to continue its expansionary fiscal policy, partially financed by higher foreign borrowing.

It is committed to a high tax policy, high borrowing and high spending, which in the past have led to pain, suffering, misery and job losses.

Therefore cuts lead to fall in output ie recession and higher borrowing.

But there are real consequences, and they are not just the high borrowing costs the state has to pay to make up for last year's overspending.

Financial institution customers may experience higher and more volatile borrowing and hedging costs after implementation of the recommended reforms.

The Treasury said the higher borrowing is a result of a lowered forecast for income tax payments during the quarter.

Generally, an upward-sloping yield curve is associated with higher long-term borrowing to meet investor demand and, hence, lower original sin.