Do we need another fiscal stimulus?

This column for the FT says no, and it would be politically impossible in any case. The problem now is not so much the stimulus, but the long-term fiscal outlook.

Measures of confidence are indeed beginning to pick up. Most companies now say they expect improving market conditions; six months ago they did not. The stock market is no longer contemplating doom. Credit flows are normalising. Output is flattening off. But the role of fiscal policy is ambiguous.

The stimulus this year and especially next directly injects demand, which is all to the good. But the stunning scale of the intervention adds to growing alarm about an approaching fiscal crunch. On present policies, the public debt is on a path of explosive growth. The danger is that when it comes to confidence, what the stimulus gives, the debt projections take away.