How will the fiscal costs of the crisis be dealt with?

This Update draws together the conclusions from the various pieces of research that we have published in recent weeks on how the fiscal costs of the crisis will be dealt with. In short, we are generally sanguine about the rise in government debt, which we think most countries can tolerate. But to keep interest rates on government debt low, financial repression could become more widely used in the years ahead. And in the few exceptions where the debt outlook is not sustainable, austerity, default or inflation will be seen.