DeAnne Julius, Chatham House and former MPC member

Those countries that manage their policy response best will recover soonest from this global downturn.  But the optimal response differs between countries depending on the vulnerability of their economies to global financial strains.  Countries with relatively little household debt – such as Germany – are not as exposed to the virulent financial transmission channel as many others, although Germany is more exposed to the fall in world trade.  The eurozone as a whole does not need the extreme monetary loosening that the US has put in place.  Countries with substantial budget surpluses going into this recession – such as China – are also less likely to suffer longterm damage from expansive fiscal policy than those – such as the UK – that entered the recession already in deficit