Must-Read: : Echoes of the 1930s must focus finance ministers’ minds: “The lesson of the global financial crisis of 2009 is that…
…when the G20 gets going, it can act in a decisive and co-ordinated way. However, we should not have to wait for the crisis to hit before our financial leaders take the action needed to deal with it…. One problem is focus. Back in 2009, the whole world was alive to the risk of global depression. Not so today. Europe is focused on Brexit and the refugee crisis; America is in pre-election paralysis; meanwhile Asian countries are trying to convince everyone there is no need for panic…. Stagnating growth, fragile investor confidence, fears of competitive devaluation spreading mistrust, isolationist politicians flourishing in the polls–the echoes of the 1930s should be enough to focus minds on making the case for co-operation, open markets and finding new policies to deliver more inclusive economic growth…. Listen to the OECD and IMF on fiscal activism. Countries with room for manoeuvre should boost growth through infrastructure spending. That includes the US, Germany and, yes, Britain too. Medium-term fiscal consolidation is vital. But a slide in growth will make things worse. And the cost of funding these investments is very low.