MNI POLICY: Carney:Don't Pull Stimulus Too Soon After Covid-19

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

self-isolate."

     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: greg.quinn@marketnews.com

[TOPICS: M$C$$$,M$E$$$,M$U$$$,MC$$$$,MI$$$$,M$$CR$,MFU$$$,MGU$$$]