OECD warns governments to rethink constraints on public spending

 Fresh austerity risks a public backlash, says chief economist Laurence Boone

The economic impact of the coronavirus pandemic should transform governments’ attitude to public spending and debt, according to the chief economist of the OECD, who has warned that fresh austerity would risk a popular backlash.

Laurence Boone, who has run the economics directorate at the Paris-based organisation since 2018, told the Financial Times that the public would revolt against renewed austerity or tax rises if governments sought to quickly return deficits and debt to pre-pandemic levels.

Governments and central banks across the developed world have rolled out unprecedented stimulus measures in a bid to cushion their economies from the massive impact of the pandemic. After the crisis “people are going to ask where all this money has come from,” Ms Boone said, adding that governments would struggle to argue they could not spend to address climate change or to compensate those who lose out from policy reforms.

FT

OECD warns governments to rethink constraints on public spending