By Dr Andrew Sentance, Senior Adviser - Cambridge Econometrics & Former MPC Member
Across the world, governments have found that the need to support their economies in the face of the global pandemic leading to a massive surge in government borrowing. The OECD’s most recent Economic Outlook projected general government borrowing would reach 11.5% of GDP across the OECD countries as a whole in 2020, around 3% of GDP higher the peak in the Global Financial Crisis (2009).
Finance ministers are now having to judge how far they need to go to continue to support economic activity in 2021 and beyond, and what changes might be required to put public finances on a more sustainable footing in the medium term. That was the balancing act facing UK Chancellor of the Exchequer Rishi Sunak in delivering his 2021 Budget.
Further Short-Term Stimulus To Aid Recovery
In the short-term, the Chancellor has provided stimulus to recovery by rolling forward many of the support ...