In an interview published in this week’s New Statesman, the former PM and chancellor of the exchequer, Gordon Brown, has called for debt relief for developing countries struggling with the fallout from coronavirus.
“At the moment, sub-Saharan Africa is paying more in debt interest payments than it is investing in health”, he told Stephen Bush. “If you can tell people today that they don’t have to make debt interest payments for the rest of the year, and hopefully for the rest of next year, then that is money that can be used for health and social safety nets.”
He described the Rwandan President’s estimate of a necessary $100bn in relief for the continent as “an understatement”.
Speaking from his home in Fife, the Labour grandee said that fiscal orthodoxy had changed since the 2008 financial crisis, with more people accepting the need for debt-financed stimulus, and less focus on its potential inflationary side effects. This sentiment has been echoed by several economists on the left, including Paul Mason, who this week called for the monetisation of government debt – effectively printing money to fund government spending – as well as more widespread state intervention, nationalisation and welfare measures.
There has been serious speculation about whether a period of austerity will follow the coronavirus lockdown measures, given that the government has already taken on unprecedented liabilities to protect jobs and the private sector. George Eaton has written on the alternatives to continued austerity, and for bolder intervention in the economy – “while the cost of intervention is great, the government would do well to remember that the cost of inaction may be even greater.”
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