As the economy recovers fiscal policy has to shift
Is it time to wind down emergency stimulus?
Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub
AS THEY FIRST battled the pandemic with lockdowns earlier this year, governments in the rich world pumped cash into the economy almost indiscriminately. Output was collapsing and the speed and scale of support rightly trumped any worries about its cost, accuracy or side-effects. Now lockdowns are easing, there are tentative signs of economic recovery (even in places where covid-19 is still raging) and political debate has shifted to whether, when, and how far to pare back these dauntingly expensive emergency fiscal policies. America’s unemployment top-up scheme expires on July 31st, Britain’s furlough scheme at the end of October. What should governments do?
This article appeared in the Leaders section of the print edition under the headline "Tapering without the tantrum"
From the July 11th 2020 edition
Discover stories from this section and more in the list of contents
Explore the editionMore from Leaders
Why South Africans are fed up after 30 years of democracy
After a bright start the ANC has proved incapable of governing for the whole country
How disinformation works—and how to counter it
More co-ordination is needed, and better access to data
America’s reckless borrowing is a danger to its economy—and the world’s
Without good luck or a painful adjustment, the only way out will be to let inflation rip