If economic growth does not take off, then do higher taxes and financial repression lie in the wait?
The International Monetary Fund estimated in January that governments across the world have collectively spent $14 trillion to soften the economic impact of the pandemic. The size of the global economy in 2019 was $88 trillion. This extra spending, combined with a collapse in tax revenues, has led to a huge increase in fiscal deficits. Central banks have also stepped in by unleashing a wave of liquidity. Regulators have also tweaked rules to ensure that banks are not brought to their knees by a wave of bankruptcies. Some governments have provided credit guarantees to small enterprises.