Both the Republicans in the US and the Tories in the UK are calling for an end to the stimulus programs. As in the stimulus programs that have prevented even deeper recessions. Yes, in the US, the same stimulus programs that the CBO said created over 2 million jobs and added significant growth to the economy. Everyone fully realizes that these programs are temporary and can't go on forever. Everyone also understands that bringing an end to these programs or not having them in the first place would have been painfully damaging to the world economy. But supporting these programs doesn't always make for good politics. Attacking them repeatedly is great for whipping fools into a frenzy.
In a rebuff to David Cameron's avowed intention to start repairing the public finances as soon as this spring's election is over, the Washington-based IMF said the fragility of the global economy meant stimulus packages should be left in place well into 2010.
The detailed study – Exiting from Crisis Intervention Policies – was published as data from the British Bankers' Association for January showed a dip in mortgage borrowing, a sharp drop in lending to businesses and a repayment of credit card debt for the 10th successive month.
"In general, fiscal and monetary stimulus may need to be maintained well into 2010 for a majority of the world's economies, including several of the largest, although the timing of the exit is likely to differ substantially across countries," the IMF said. It added that the recovery from the global economy's most severe downturn since the second world war had been stronger in the leading emerging economies such as India and China than it had been in the developed west.
