Every Australian should be handed $100,000 to wipe out household debts and prevent a full-blown financial crisis from the coronavirus pandemic, an economist has said.

Professor Steve Keen of the University College of London said the economy cannot recover from the COVID-19 shock unless a large chunk of private debt is written off.

“Give $100,000 per person as a flat rate to everyone to eliminate the private debt,” he told Daily Mail Australia.

Australians have the world’s second-largest household debts, sitting at around 120 per cent of GDP. A recent survey also found that about three in five Aussies could not manage their debt amid the COVID-19 outbreak.

“We let ourselves get into the biggest debt bubble in human history,” Professor Keen said.

He said bank lending had “financed” the private debt bubble, which pushed up house prices and in turn led to even higher levels of debt.

The solution was to reduce individual debt to the rates Australia had before the recession of the early 1990s.

Treasurer Josh Frydenberg said $200 billion worth of loans had been deferred, most of which were residential mortgages.

Nearly 600,000 people left the workforce in April, the Australian Bureau of Statistics said, wiping away two years of jobs growth.

This article originally appeared on Over60.