When governments are faced with a recession, they reflexively look to the example set by Franklin D. Roosevelt. History textbooks maintain that the 32nd US president single-handedly wrenched his country from the grip of the Great Depression with his New Deal programme of public investment. In doing so, he created a template that future leaders would deploy when confronting their own financial crises. Its guiding principle is simple: spend massively on infrastructure to create jobs and boost productivity.
Some modern economists have cast doubt on the effectiveness of infrastructure-as-stimulus schemes, but this hasn’t made them any less popular among politicians. Citizens can expect to see big-ticket public projects announced in the wake of the coronavirus crisis. China has already indicated that it will fast-track planned infrastructure initiatives to drive domestic growth. Ultrahigh-voltage power facilities, intercity high-speed rail networks and giant data centres are at the top of the country’s agenda. Not to be outdone, some of Europe’s biggest economies have earmarked hundreds of billions for new green infrastructure initiatives. France is planning to upgrade its railways and make its buildings more energy efficient, while Germany has set aside €40 billion for green projects as part of its €120 billion stimulus package.
Read more from Jennifer Johnson with City Monitor here.