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The Economic Risks of Pandexit

Although everyone hopes that Pandexit, or the end of the COVID-19 pandemic, will come soon, the economic benefits will not be unalloyed. One plausible downside scenario is that current price pressures intensify and inflation rises further, eventually requiring a monetary response.

EDINBURGH – People have been using “exit” as a suffix for a decade or so. Grexit, referring to a potential Greek departure from the eurozone, was the first to emerge. Italexit made a brief appearance, and has recently been revived on the Italian right. But neither has come to pass. Nor has Frexit, or France’s unilateral withdrawal from the European Union. The far-right politician Marine Le Pen previously flirted with the idea, but then let it drop. And the only candidate in the 2017 French presidential election who advocated it, François Asselineau, won just 0.9% of the vote.

Such exits seem to put off most continental Europeans. To date, only Brexit has actually happened, even though polls in the month before the United Kingdom’s June 2016 referendum showed that more French than British voters were unhappy with the EU, by a margin of 61% to 48%.

All these potential and actual exits were regarded by most economists as undesirable. Now another is under discussion that everyone hopes will happen: Pandexit. This unsightly portmanteau encapsulates the optimistic idea that we can soon hope to put the COVID-19 pandemic behind us, and go back to kissing casual acquaintances (on the cheek at least) and jamming ourselves like sardines into trams and trains in cities from New York to Tokyo.

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