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Business implications of post-COVID government deficits

Kevin Sneader, global managing partner for McKinsey & Company, provides perspective on how corporate business leaders think in response to the global coronavirus crisis:

What are the implications for business of the deficits resulting from governments stepping in to save the economies around the world in the wake of the COVID-19 crisis?

Over the last three months, the ramp up of relief and stimulus spending has occurred just as tax revenues have stopped. Indeed, government deficits could reach around $10 trillion this year and as much as $30 trillion by 2023. There's a real risk of a debt crisis that could compound the already existing economic crisis.


The challenge, therefore, is how to manage these deficits while addressing inequality and driving for sustainable and inclusive growth. Printing money at scale could prompt a rise in inflation. A big rise in taxation could hamper innovation and growth. So, the answer is two parts. On the one hand, manage the entire balance sheet of government. Take a hard look at assets such as land and property in order to strengthen fiscal sustainability and support broad based economic recovery. And on the other hand, work in partnership with the private sector to prepare workforces for a technology driven future and to improve long term competitiveness and resilience. In short, the message is clear. It's avoid the risk and the temptation to tax and print and instead seek to balance and partner.

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Learn more about Callista in this episode of Faces of Eni.

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If former Homeland Security Secretary Jeh Johnson could give incoming Homeland Security Secretary Alejandro Mayorkas advice, what would it be? "Well, first I would say, 'Ali, I'm glad it's you, not me.'" His conversation with Ian Bremmer was part of the latest episode of GZERO World.

Listen: For the first time in twenty years extreme poverty around the world is growing. How does the developing world recover from a pandemic that has brought even the richest nations to their knees? David Malpass, the President of the World Bank, is tasked with answering that question. He joins Ian Bremmer on the podcast to talk about how his organization is trying to keep the developing world from slipping further into poverty in the wake of a once-in-a-century pandemic.

The GZERO World Podcast with Ian Bremmer. Listen now.

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