John Weeks - Coronavirus will drive public debt far higher than expected – but that doesn't mean a return to austerity

After C-19 the right will try to bring in more austerity, says John Weeks, which isn't necessary, and will harm the economy. We need to fight this, he says.

Even if the economy quickly returns to 2.5% annual growth, I calculate that public debt will rise to a peak of around 150% of GDP. This is around 50% more debt than the OBR expects, which seems to assume a return to near 2% growth in 2021 without any further recovery spending beyond the initial £70 billion – not tenable in my view.

No doubt some will call for balanced budgets aka more austerity, but I think those favouring increased public spending will probably win out. The UK’s experience after the second world war suggests that such high public deficit and debt levels do not in themselves prevent strong recovery or put an intolerable burden on the state.

Even if the economy quickly returns to 2.5% annual growth, I calculate that public debt will rise to a peak of around 150% of GDP. This is around 50% more debt than the OBR expects, which seems to assume a return to near 2% growth in 2021 without any further recovery spending beyond the initial £70 billion – not tenable in my view.

No doubt some will call for balanced budgets aka more austerity, but I think those favouring increased public spending will probably win out. The UK’s experience after the second world war suggests that such high public deficit and debt levels do not in themselves prevent strong recovery or put an intolerable burden on the state.

The Conversation 

John Weeks - Coronavirus will drive public debt far higher than expected – but that doesn't mean a return to austerity