Relief that the end of the world recession appears in sight will be short-lived. Once the world’s economy is growing again and the panic is past, attention will turn towards cleaning up the mess. And for the exchequers of the world’s leading economies, there is a lot of mess to sort out.
International Monetary Fund estimates suggest the extraordinary fiscal stimulus of 2 per cent of G20 gross domestic product had quite an effect. Emergency government spending programmes and temporary tax cuts raised G20 growth by between 1.2 and 4.7 percentage points in 2009. It means that bad though the recession has been, the damage to the global economy and the destruction of millions of jobs would have been much greater had governments around the world stuck to normal budgetary niceties.
