13/10/2021 – The decline in economic activity associated with caution, lockdowns and other restrictions in response to the COVID-19 pandemic brought government revenue down substantially in 2020 across the OECD. Governments have appropriately responded with a range of temporary programmes to support workers and businesses, simultaneously raising expenditure. Consequently, fiscal positions have deteriorated sharply and gross government debt in the OECD is projected to be around 20-25 percentage points of GDP higher in 2022 than it would have been absent the pandemic.

The immediate fiscal challenge for governments is to continue to target fiscal support towards sectors hardest hit by the COVID-19 shock, and as the pandemic ebbs, to phase out temporary programmes gradually, along with the restrictions that limit doing business in these sectors. In the longer run, however, the direct fiscal impact of the pandemic may pale in comparison to additional fiscal pressures stemming from secular trends, such as population ageing and the rising relative price of services.

The long game: fiscal outlooks to 2060 underline need for structural reform, brings together the latest long-run projections from the OECD. The fiscal pressures are assessed using stylised projections that take secular trends into account. The objective is not to obtain precise forecasts, but rather rough orders of magnitude to size up the fiscal challenge ahead, notably stemming from growth in public health and long-term care expenditures, public pension expenditure, other central government expenditures and the cost of servicing long-term debt.

Media requests to receive The Long Game: fiscal outlooks to 2060 underline need for structural reform, under embargo until release at 11:00 (CEST) on Tuesday 19 October, should be sent by e-mail to embargo@oecd.org. Journalists requesting an electronic version in advance of the release time agree to respect OECD embargo conditions.

For further information, contact Lawrence Speer in the OECD Media Office (+33 1 4524 9700).

 

Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.

 

 

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