Austerity may be over, but Britain is right to hold back on the spending

Let the good times roll! Governments of advanced economies have finally ditched austerity, according to the International Monetary Fund, and are spending again. Breaking a five-year streak of budget cuts, governments loosened the purse strings by 0.2pc of GDP last year.

As this marginal shift indicates, however, the mood is hardly celebratory. Instead, it illustrates that rich countries have exhausted the stimulating potential of monetary policy and are turning back to fiscal policy for a boost.

Thankfully, Britain has so far decided not to take part in this reckless policy reversal and Philip Hammond (assuming he is still Chancellor in June) would be wise to keep it that way.

Public debt remains higher than ever. Gross government debt in advanced countries is 107.6pc of GDP. The halt in fiscal consolidation means that instead of declining to about 100pc in the next five years, as the IMF...

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