ALEX BRUMMER MER
governments.Thistooktwoforms.Inthe first instance almost a trillion pounds in Britain alone was spent holding up the banking system and this was multiplied many times over across the globe. Secondly, when the global economy came to an alarming halt in early 2009, governments poured massive assistance back into their economies. This was done through the automatic stabilisers, the transfer payments in the shape of unemployment benefits and welfare to those who lost their jobs, and direct assistance in the shape of tax breaks (the temporary cut in VAT to 15 per cent), carscrappage schemes and the like.
In many of the advanced Western economies the measures taken prevented countries, including Britain, falling into a 1930s-style recession and growth returned in 2010. But the crisis of 200709 left behind a new crisis of bloated budget deficits and swelling sovereign debt. The first fissures in sovereign debt came to the surface some 16 months ago