Opinion | Pandemic austerity plans that benefit the few at the expense of the many must go
- More than 140 governments will cut spending in 2023, affecting more than 6.7 billion people – or 85 per cent of the world population
- Unless this policy contagion is contained, the coming years will be even more painful than the era following the 2008 financial crisis
However, the return of failed policies such as austerity, now called “fiscal restraint” or “fiscal consolidation”, and a lack of effective taxation and debt-reduction initiatives threaten to exacerbate the macroeconomic instability and daily hardships that billions of people are facing. Unless policymakers change course, an “austerity pandemic” will make global economic recovery even more difficult.
In fact, most governments started scaling back public spending in 2021, and the number of countries slashing budgets is expected to rise through 2025. With average spending cuts of 3.5 per cent of GDP in 2021, this contraction has already been much bigger than in earlier shocks.
Even more worryingly, upwards of 50 countries are adopting excessive cuts, meaning their spending has fallen below their (already low) pre-pandemic levels. This cohort contains many countries – including Equatorial Guinea, Eswatini, Guyana, Liberia, Libya, Sudan, Suriname and Yemen – with large unmet development needs.
The austerity measures that governments are considering or already implementing will be deeply harmful to their populations, and especially to women.