Donald Trump's 'mad economic policies risk world crisis', says ex-Bank of England adviser
A former Bank of England economist has warned Donald Trump’s “mad policies” risk sending the US into recession, bringing the global economy down with it.
Paul Fisher said he feared the US president’s low tax-high spending agenda will see the US economy overheat.
“It is economic madness to think that this is the time to do a fiscal expansion in the US,” he said. “The economy [will] be in a complete mess” in around five years’ time, he predicted.
MORE: Is Donald Trump right that trade wars are ‘good’?
Fisher said the president’s $1.5 trillion stimulus package is storing up problems for later.
By the time the next presidential election comes along in a two years, the benefits from that huge investment will be being felt.
However, warned Fisher, the fallout will most surely follow.
“I can see why Trump might do it – by the time the next US election comes around you will have had the benefits but you won’t have had the costs,” he said.
“It is the old stop-go cycle we had in Western economies for years and years.”
He said Trump’s policies would almost inevitably see inflation rise, hitting the poorest in America the hardest. A recession could soon follow, he added.
MORE: EU ready for a ‘stupid’ trade war if Trump slaps on tariffs
Fisher spent 26 years at the Bank of England, five years of them sitting on the Monetary Policy Committee – the group of economists and advisers that set the UK interest rate.
A central plank of Trump’s presidency is making “America great again” by putting domestic growth at the top of the agenda.
His confrontational and protectionist style appeals his core voters as he seeks to deliver on campaign promises of “jobs, jobs, jobs”.
That has seen him impose steel and aluminium tariffs on EU and Chinese producers as he declared that “trade wars are good”.
Both the European Union and China have threatened to retaliate in kind, raising the spectre of an all-out global trade war.
Fisher added: “One thing we know from thousands of years of history is that trade makes you rich, and anything that damages trade is probably not a good idea.”