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It only took a few months for fear of the crisis to be replaced by fear of debt. Before summer it was the recovery which dominated all other subjects. Now it has been eclipsed by talk of deficits and the rising levels of public debt.

It is easy to see why. The deficit numbers expected for 2010 look suspiciously like the inflation figures of the 1970s: some countries below 5% of GDP, most between 5% and 10% and a few even above 10%. As for the debt, the European Commission forecasts that between 2007 and 2013 it will, in the best possible scenario, increase by an average of 30 percentage points of GDP. We should definitely expect a higher figure. And for some countries – certainly Ireland and the UK – the rise in debt will exceed 30 points by 2010. There is legitimate concern.

What is to be done? It is too early to act. Euro-area GDP is currently 5% below its level at the start of 2008, the situation is more serious in the UK and even more so in central Europe. And things would have been worse still if Europe had not opted for recovery, or if it had had the bright idea of limiting deficits. The lesson of the 1930s had been learned and governments did not apply belt-tightening measures on top of the crisis. This is to be welcomed, rather than ruing now what are the purely mechanical consequences of what was a perfectly sound decision. It will only be in 2011, when the recovery – it is to be hoped – is well underway that deficits can start to be corrected.

But it is not too early to start preparing the ground both at national and European level, and to draw up so-called exit strategies.

First, all countries will be obliged to take large-scale action. It will not be possible to rely solely on the recovery since part of the revenue lost will not be recouped, and because the burden of additional debt will have to be paid for just as the impact of ageing populations begins to weigh on public budgets. Stabilising – to say nothing of reducing – debt levels will therefore require a combination of tax measures, choices as to which tasks should remain to government and which can be outsourced, and without doubt postponement of the retirement age. The Swedes, who went through this in the 1990s, say that in order to succeed it is better to get going early, be transparent about the size of the challenge and announce everything in a package – in other words the reverse of the habitual hodgepodge.

In order to borrow at a reasonable rate, it will be necessary to provide evidence of sound behaviour. The crisis has taught us what the debt should be earmarked for: not for day-to-day spending but to smooth cyclical fluctuations and deal with exceptional shocks – crises, wars, environmental disasters – where it is necessary to spread the cost over time. One performance indicator is therefore the ability to reduce the debt ratio during the upswing. But over the last 25 years there have been 12 years of reduction in the UK and Spain, nine years in the US, six in Germany and only five in France. Incapacity to cut debt when the economy is doing well is a sign of a political and institutional malfunction which we can ill afford in the future. Germany has just sought to remedy this by inserting a budget rule in its constitution. As for France, it is for the moment remaining true to its culture of discretionary decisions.

European countries are – just like those of the G20 at global level – together facing a coordination problem without precedent. On the one hand, they must absolutely reduce their deficits. On the other hand, they must avoid making deep and simultaneous budget cuts which might stifle the recovery. This means that they must now agree on the size and pace of their budget measures and, at the same time, on action designed to raise the potential growth rate. The tools at their disposal will not be sufficient, in particular the EU’s Stability and Growth Pact whose credibility - already limited before the crisis – is now seriously damaged. Temporarily – for at least two years, probably nearer five – they will have to rise above the futile consultations which are often the norm and adopt a common strategy for the euro area. We will shortly find out whether the ability to act together which they discovered during the crisis survives the recovery.