At some point, there may need to be a fiscal squeeze to pay for any lasting increase in spending caused by the COVID-19 crisis and increases in age-related spending. But the biggest danger is that fiscal policy is tightened too much too soon to fill a perceived hole in the public finances that never materialises. That could be self-defeating as it would lead to a slower economic recovery, cause long-term scarring and could mean that any eventual fiscal consolidation would have to be greater.
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