The new orthodoxy

Developed countries may be permanently ending austerity

The latest annual meetings of the Bretton Woods institutions — the World Bank and the International Monetary Fund — have been dominated by discussion on how economies can respond to and recover from the Covid-19 pandemic. What is striking many observers is the degree to which the consensus in the policy and financial community is for a large increase in borrowing — which may, indeed, be open-ended — in the developed world. In some ways this fits the broader intellectual currents that had begun to dominate even before the pandemic hit. The United States Federal Reserve, for example, had taken