Britain’s budget • Bumpy bond markets • Fukushima, ten years after • The pope in Iraq

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THE PANDEMIC has forced governments into a splurge of social spending. President Joe Biden’s $1.9trn package, which promises $1,400 to most Americans, has passed the House of Representatives, though it will be slimmed in the Senate. Worldwide, at least 1,600 social-protection programmes were launched last year. What of the long term? Voters were becoming more sympathetic to greater generosity before the pandemic (most Europeans would favour a universal basic income scheme). But social safety-nets were already fraying too. And public finances will not support covid-induced measures for ever. The nets need repairing and redesigning. Modern technology can make bureaucracies more efficient, but a balance must also be struck between generosity and labour-market flexibility—as Denmark, which spends 1.9% of GDP on retraining and advice, has managed to do. Most countries, including America and Britain, fail.


Britain’s Conservative government has been among the biggest pandemic spenders, to the tune of 16% of GDP. Its budget this week extended the largesse, continuing wage subsidies for idled workers and loans and grants for stricken firms, and adding a big tax break for business investment and promising to “level up” prospects for northern England (which has a lot of newly Tory parliamentary seats). Although the government’s fiscal watchdog expects a speedy recovery, the pandemic will cause permanent damage to the economy and the public finances. The chancellor, Rishi Sunak, is not yet ready to tighten policy. He says he will eventually raise corporation tax—an idea pinched from Labour—as part of the fiscal patching-up.


Ultra-low interest rates have made the extra public-sector debt resulting from covid-19 stimulus and social-support measures bearable. But lately the prospect of economic recovery, and with it a pickup of inflation, have unnerved bond markets, sending yields higher. Such worries are likely to recur, with knock-on effects for stockmarkets and governments. In particular, governments in emerging economies have reason to worry about rising Treasury yields (and a consequently stronger dollar). Six poor countries even defaulted on their debts last year, as the pandemic bore down on their finances. For those that get into such serious trouble, rivalry among creditors has made debt restructuring more complicated.


On March 11th 2011 a tsunami caused by an earthquake under the sea swept across 500km of Japan’s Pacific coast. It killed nearly 20,000 people, destroyed 100,000 homes and may have cost more than $200bn. Also in its path was the Dai-Ichi Fukushima nuclear power station. The meltdown at the plant has cast a long shadow in Fukushima prefecture. Although only 2.1% of people are still unable to return home, the disaster has sped up the decline in population. But it also had global repercussions, notably Germany’s phasing-out of its nuclear power stations. Yet despite its expense and public antipathy, well-regulated nuclear power remains remarkably safe. It will have an important role in the battle to stabilise the climate.

This weekend Pope Francis is visiting Iraq, the first head of the Roman Catholic church to do so. His hosts are among the world’s oldest Christian communities, established in the first century, but also among the most imperilled. The toppling of Saddam Hussein (who largely protected Christians), anti-Christian violence during the American occupation and the ravages of Islamic State caused many to flee. The Christian population has fallen from 1.2m in 2003 to around 250,000. In America, by contrast, evangelical Christianity is thriving. But it is divided, over support for Donald Trump. Polls say that 80% of white evangelicals voted for Mr Trump in 2016 and 75% did in 2020. Our reporting suggests that his support is less solid than such figures imply.