IMF tells Global Governments to INCREASE spending, and to AVOID austerity measures

The International Monetary Fund, mostly known as the IMF, has seemingly abandoned free-market economics and has turned to Keynesian Economics, urging global governments to invest in their economies rather than slashing public expenditure rather than going down the .

This comes after the IMF Chief Economist, Gita Gopinath, called on governments to spend more. The IMF suggested that more money should go into healthcare, social housing, digitalization and environmental protection.

“For advanced and emerging market economies … Increasing public investment by 1 percent of GDP in these economies would create 7 million jobs directly, and between 20 million and 33 million jobs overall when considering the indirect macroeconomic effects,” the fund said in a chapter of its latest Fiscal Monitor.

Calculating the “amplifying effects of public investment” in periods of high uncertainty, the IMF said that increasing public investment by 1% of GDP “could strengthen confidence in the recovery and boost GDP by 2.7 percent, private investment by 10 percent, and employment by 1.2 percent” after two years “if investments are of high quality and if existing public and private debt burdens do not weaken the response of the private sector to the stimulus.”

When governments step up their public investments, they signal their “commitment to growth and stability” and that tends to boost private investment too, the IMF added.

Will the Tories listen to the IMF? Unlikely! We’ll see if the Chancellor Rishi Sunak abandons all the threats of a pay freeze to public-sector workers, increasing taxes on middle and low income workers, and other austerity measures.

Franglish Politics

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