Invest
$50 billion stimulus needed: UBS
Despite debt soaring to wartime levels, one of the largest investment banks believes the government will need to reach into its back pocket and spend a further $50 billion to keep the country afloat.
$50 billion stimulus needed: UBS
Despite debt soaring to wartime levels, one of the largest investment banks believes the government will need to reach into its back pocket and spend a further $50 billion to keep the country afloat.

Research released by UBS has explained how the government will need to spend even more as the impact of Victoria’s lockdown rolls through the economy and unemployment climbs to 9.25 per cent.
“The government’s comments suggest that there will be more stimulus coming through in the 6 October budget.”
UBS economist George Tharenou said on a media call: “We think that will be part of a broader reform package, and we added $50 billion to our expectations for stimulus last week.”
Mr Tharenou believes the most likely form of stimulus will come in the form of another extension to JobKeeper and JobSeeker – costing between $10 billion and $13 billion, assuming payment rates are tapered again – as well as more support for businesses to encourage investment and bringing forward tax cuts for households to next year.

“You’re going to have an outlook for growth that is positive from the stimulus coming through the economy but also with some negatives from the Victoria shutdown,” Mr Tharenou said, adding that stronger than expected retail and trade data could mean the economy had contracted less than expected.
Mr Tharenou also expects the government will significantly increase its infrastructure spend, broaden items covered by GST, and transition payments to state governments to encourage and fund a switch from “inefficient” stamp duty to land tax.
However, September’s fiscal cliff still looms large over proceedings.
“Our estimate on the fiscal cliff has been reduced by the extension of some of these stimulus measures, but it still remains very large at $80 billion, or 16 per cent of quarterly GDP,” Mr Tharenou said.
Impact of spending
While the government is continuing to help support the Australian economy, the budget deficit is continuing to grow, UBS stated.
“We now estimate total government (included states) fiscal stimulus is $214 billion or 11 per cent of GDP. Government comments indicate further material fiscal support by the ‘full budget’ in October, which we assume eventually gets the 2020-21 deficit to our $213 billion forecast.”
UBS projects that growth will recover to 2.6 per cent in 2021 as domestic and international borders reopen. The RBA is expected to keep interest rates on hold, while there is “limited reason” to restart its quantitative easing program unless lockdowns persist for longer than expected.
About the author

About the author


Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more

Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more

Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more

Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more

Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more

Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more

Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more

Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more

Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more

Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more

Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more

Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more

Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more

Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more

Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more

Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more