BGN Entrepreneur

The debate on the need for further fiscal stimulus or quicker retrenchment has become too ideological, and too extreme. Underneath it, however, there is more agreement on the basic than may be apparent at first blush.
Although there is warring comments that have apeared in these pages, there is actually no necessary conflict between restoring fiscal sustainability and maintaining support for the recovery.
In spite of the rising fears of a double-dip recession in both the US and UK in the recent days, the basic facts remain unchallenged. Government debt in advanced G20 countries will reach 115% of GDP by 2015, which is almost 40% points above pre-crisis levels. Some commentators look at these numbers and question about the earlier fiscal stimulus. However, only one tenth of this new debt is attributable to those attempts to boost the economies.

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