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By Greg Quinn
OTTAWA (MNI) - Mark Carney warned leaders from the UK, Germany, France and
Canada at a UN conference Thursday not to remove stimulus too soon through the
Covid-19 pandemic, and said traditional fiscal action is less powerful with
households skittish about spending.
"Countries will need to use all of their policy instruments," Carney told
the conference. "We have to be careful not to withdraw that stimulus too soon as
we saw shortly thereafter" the global financial crisis in 2009, he said.
"Coming out of this crisis, some of traditional stimulus measures will be
less effective than usual, think of income transfers or temporary tax cuts,
because they will be dampened by heightened risk aversion" Carney said. He cited
concerns about healthcare and unemployment as reducing confidence.
The pandemic will mean "much more debt for everybody" including nations and
companies, the former BOE and BOC Governor said. Carney is now a UN envoy for
climate action and finance, and said the economic shifts forced by the pandemic
are a chance to focus on meeting emissions goals.
"We have to learn from this Covid crisis, it proves we can't wish away
systemic risk," Carney said. "It's much cheaper, much more effective to invest
up front in order to avoid disaster. So it is with climate change, a crisis
which also involves the entire world, but one from which no one can
Governments must shift more infrastructure spending to clean projects to
avoid the error of 2009 where just one in six of those dollars was devoted to
those goals, Carney said.
--MNI Ottawa Bureau; +1 613-314-9647; email: firstname.lastname@example.org