The world is confronting multiple compounding crises, from Covid-19, energy, inflation, debt and climate shocks to unaffordable living costs and political instability. The need for ambitious action cannot be greater. However, the return of failed policies such as austerity, now called “fiscal restraint” or “fiscal consolidation”, and a lack of effective taxation and debt-reduction initiatives threaten to exacerbate the macroeconomic instability and daily hardships that billions of people are facing. Unless policymakers change course, an “austerity pandemic” will make global economic recovery even more difficult.
As we show in a recent report, the looming wave of austerity will be even more premature and severe than the one that followed the 2008 global financial crisis. An analysis of IMF expenditure projections indicates that 143 governments will cut spending (as a share of GDP) in 2023,…
