Welfare as fiscal policy? Why benefits should be raised, not lowered, during recessions

Is the welfare state really a drain on the economy? Or can it be our saviour during recessions? Max Mosley (LSE) shows that as most welfare recipients are highly responsive to changes in temporary income, changes to benefits will have a disproportionately strong economic effect. This means raising levels during recessions can in fact act as a more powerful form of fiscal stimulus. Conversely, cutting them will have a negative effect on the economy – which has implications for the end of the £20 Universal Credit boost.