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Trichet Says Failure to Cut Government Debt Risks ‘Lost Decade’

European Central Bank President Jean-Claude Trichet said governments risk a “lost decade” of weak economic growth if they delay reversing the surge in public debt triggered by the financial crisis.

“The lesson from past history is that dealing with the legacy of accumulated imbalances is not simply a duty to be fulfilled after the economic recovery, but rather an important precondition for sustaining a durable recovery,” Trichet said yesterday in a speech at the Kansas City Federal Reserve Bank’s annual monetary symposium in Jackson Hole, Wyoming. “The primary macroeconomic challenge for the next 10 years is to ensure that they do not turn into another ‘lost decade.’”