Grim warning the Australian economy will 'go off a cliff' when government support programs end in September
- Private sector and government hardship measures due to end in September
- Expert has warned economy will collapse if both expire at the same time
- Dr Andrew Charlton called for gradual withdrawal of JobKeeper and JobSeeker
- Says plan is needed to ease businesses and workers off government support
- Here’s how to help people impacted by Covid-19
Australia's economy could collapse and 'go off a cliff' if government fiscal support programs are withdrawn in four months time, an economist has warned.
The federal government's JobKeeper and JobSeeker payments for businesses and workers impacted by the coronavirus crisis are set to expire in September- the same time banks plan to lift loan deferrals.
AlphaBeta founder Dr Andrew Charlton predicts the economy to take a further nosedive if private sector and government hardship measures to households end at the same time.
AlphaBeta's real-time tracker shows consumer spending is returning to similar levels prior to the pandemic as lockdown restrictions ease.
Dr Charlton, who was a government adviser to then Prime Minister Kevin Rudd during the global financial crisis, has a dire warning for the economy.
While consumer spending levels are returning to normal, there are fears the economy will dive again if private sector and government support to households ends at the same time. Pictured is a busy Pitt Street Mall in Sydney on May 17
'Our economy is currently propped up by government and big business support... without them, the economy would collapse,' Dr Charlton told 2GB morning show host Alan Jones on Monday.
He warned the economy would 'go off a cliff' if that support ended simultaneously.
'Come September, banks will require the repayment of those deferred mortgages to recommence, generous payment holidays by utility companies will expire, bills will be due,' Dr Charlton warned.
'All of those things will happen at once and without those supports, the economy could dive again.'
'So we need a plan to ease businesses and workers off government support and create a rebound in growth and jobs.'
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Economist Dr Andrew Charlton called for the tapered decline of government support programs for businesses and workers. Pictured are jobseekers queuing outside a Melbourne Centrelink in April
Alphabeta's tracker showed spending May 11-17 was just three per cent below pre-pandemic levels, fuelled by government payments and private sector hardship assistance to households.
The figures have sparked fears the economy could crash again when that support is lifted.
'Businesses will only re-employ workers if the demand is there and can see a pipeline of activity in the community, so that's what we need to create now,' Dr Charlton told 2GB.
'Confidence and activity so businesses want to rehire those workers and put them to productive use come September.'
While consumer spending for the weeks of May 11-17 (pictured) was three per cent below than normal levels prior to the pandemic, experts have questioned what will happen in September when the government and banks are due to left hardship provisions
Dr Charlton called for the gradual easing of government support programs to give affected businesses and households time to adjust post-coronavirus.
'These programs can't go on forever, but they also can't all stop at the same time,' he said.
'If we pull the rug out from under all of that too quickly then, unfortunately, many of those businesses will be lost and many of those jobs will be lost as well.'
'We need the JobKeeper program to be tapered and more targeted so we wean ourselves off it in a way that doesn't crash the economy.'
Consumer spending is predicted to plummet again if private sector and government hardship measures for households end at the same time. Pictured is a reopened Myer in Sydney on May 22
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