Weak Growth and Inequality Haunt Western Economies, Raising Specter of Pre-War Instability
-
Western economies have struggled with weak growth and rising inequality since the 2008 financial crisis despite extensive stimulus efforts by central banks and governments.
-
There are worrying parallels between current times and previous eras of economic and political instability like the 1920s-30s.
-
Policymakers' efforts to return to pre-2008 economic orthodoxy via austerity may reduce deficits but risk further fueling public anger and support for extreme parties.
-
More public investment in areas like infrastructure is needed to revive growth, crowd in private investment, and ultimately strengthen public finances.
-
Achieving major policy shifts like higher taxes or spending cuts to reduce deficits looks politically difficult given current public discontent.