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  1. Business
  2. Economics
2 May 2012updated 26 Sep 2015 7:17pm

Fitch hitches to the anti-austerity bandwagon

Credit ratings agency argues against affects of austerity.

By Alex Hern

Fitch Ratings are jumping on the anti-austerity bandwagon, it seems. Their new research is unambiguous about the extent to which stimulus helped the US:

Oxford Economics’ Global Economic Model (GEM) suggests that the U.S. policy response to the recession increased aggregate GDP by more than 4 per cent two and three years after the trough of the last crisis than otherwise would have been the case. These policies helped to support GDP growth of 3.0 per cent in 2010 and 1.7 per cent in 2011, implying that the U.S. might still be mired in a recession absent this stimulus.

If you like your bandwagon-jumping in visual form, they are happy to accommodate:

This is, of course, the same Fitch Ratings which wrote two months ago, as it put the UK on negative outlook, that one of the things which would trigger a downgrade would be:

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Discretionary fiscal easing that resulted in government debt peaking later and higher than currently forecast.

So in March, discretionary fiscal easing is enough to downgrade a country; in May, it’s found to have caused a 4 per cent boost to GDP. Those don’t sound like consistent positions.

We asked Fitch whether this new research affected their recommendation for the UK, but they declined to comment.

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