April 3, 2020 / Analysis by Charles Riley, CNN Business
London (CNN Business) – Governments are launching one rescue package after another in hopes of preventing economic catastrophe as the coronavirus pandemic rampages around the world, shutting down entire industries and costing tens of million of people their jobs.
In most countries, political opposition to spending increases funded by borrowing has vanished in the face of a potential global depression. But the trillions of dollars in support promised to households and businesses will push up budget deficits to their highest levels since the global financial crisis.
And the borrowing binge could result in national debt mountains to rival those last seen in the late 1940s.
The amount of stimulus already committed ranges as high as 20% of GDP in some countries, but economists warn that even more will likely be needed to support workers and companies harmed by the pandemic. At the same time, tax revenue will decline along with economic activity, blowing out deficits even further.