Public Debt Against a Depression

One of the few certainties regarding the consequences of the COVID-19 pandemic, aside from the inestimable loss of life, is that in economic terms there will be severe falls in GDP and large increases in public debt.

Key points

• Key points:
• The effort of the two world wars, the Great Depression of 1929 and the Financial Crisis of 2008 saw the United States' debt-to-GDP ratio increase drastically.
• Debt will grow on a global scale in order to finance and compensate for increased spending, falling tax revenues, and new loans and guarantees for businesses and income subsidies for households.
• Beating the coronavirus to limit the loss of life as much as possible and attempt to embark upon a new normal is paramount, although excessive debt accumulation will cause uncertainty about its sustainability if the crisis continues in the longer term.

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