We Are All Keynesians Now, So Let’s Get Fiscal

The great economist John Maynard Keynes would have called for a huge fiscal package to weather Brexit

by Ambrose Evans-Pritchard

The Bank of England has done everything possible under the constraints of monetary orthodoxy to cushion the Brexit shock. It is now up to the British government to save the economy, and the sooner the better.

Monetary policy is close to the limits. The Bank’s pre-emptive £170bn stimulus package is brave – and unquestionably the right thing to do in these dramatic circumstances – but it is not an economic bazooka and much of the boost will leak into asset price inflation.

Governor Mark Carney said the package should be enough to eke out a “little growth” and avert a recession in the second half of the year.

Catastrophist talk of an instant downward spiral following a No vote in the referendum – mostly emanating from George Osborne’s coterie – was always premised on the willfully-false assumption that the Bank of England would sit idly by and let it happen.

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