Targeted economic relief measures are advocated by the OECD's top economist.
The OECD's Chief Economist, Laurence Boone, has urged governments to adopt rescue strategies during the coronavirus crisis that are carefully calibrated and prepared to respond flexibly depending on how the situation evolves.
In her recommendations, Boone emphasizes the importance of governments being ready to react if the economy weakens significantly, which implies a measured but responsive fiscal approach rather than aggressive or one-size-fits-all measures.
Boone's comments come at a time when trade tensions and economic challenges pose significant risks, although a hard economic landing is not expected. She advises against ignoring the concerns of many people about the growing mountains of debt, but also suggests a plan that doesn't cut debt-financed spending too early in 2021 and 2022, outlining a realistic multi-year path from 2023 onwards.
The economist believes that the promotion of industries should be focused on companies that can adapt to structural change towards more digitalization and climate protection. She suggests that only companies with a future in digitalization and climate protection should be supported by the state during the second phase of the crisis. However, Boone does not provide details on how the proposed adjustments would be implemented or financed.
Boone also recommends allowing short-time workers in Germany to qualify and work part-time, following the example of the Netherlands. This move, she believes, would increase people's trust in the government's response to the crisis.
It's worth noting that Boone does not reiterate her warning about the need to address the concerns about growing debt, nor does she specify the consequences for companies that do not meet the criteria of digitalization and climate protection.
In summary, Boone's recommendations for the coronavirus crisis rescue strategies emphasize the need for flexibility, targeted measures, and a focus on long-term economic conditions, while promoting industries that can adapt to structural change towards digitalization and climate protection.
Other business sectors may find it necessary to seek alternative finance options as government support gradually tapers off, given the need for a measured fiscal approach to avoid aggressive or one-size-fits-all measures. In the second phase of the crisis, the focus should be on supporting companies with a future in digitalization and climate protection, as these are the industries that are expected to adapt to structural changes.
