Economic stimulus: in search of the Goldilocks option | Editorial | The Guardian 17/08/2011

The Guardian, editorial, 17/08/2011

The western world is running out of economic steam. The US has experienced a sharp slowdown and was joined this week by the eurozone, which reported annualised expansion of only 0.5%. Britain is running on near empty and Japan is in the negative zone. Tuesday's meeting between Angela Merkel and Nicolas Sarkozy produced some interesting, if controversial, ideas for the medium and long term – convergence of fiscal policies, common corporation tax, balanced budgets and even a tax on foreign exchange transactions – but nothing to avoid the increasing danger of a double-dip recession. There is much talk of the need for strong leadership to get us out of this mess but no one has come forward to do the job. However, help may be at hand.

In an article this week Christine Lagarde, recently appointed managing director of the International Monetary Fund, made some practical suggestions that many IMF member countries dare not say out loud. She argued for a Goldilocks approach to fiscal consolidation – neither too fast nor too slow. While endorsing consolidation in the medium term she warned that "slamming on the brakes too quickly will hurt the recovery and worsen job prospects", a view echoed yesterday by the National Institute of Economic and Social Research, which urges a modest loosening in the UK, focused on growth-enhancing measures. These, it says, would "improve prospects for output and employment with little or no negative effect on fiscal credibility". George Osborne, the chancellor, still regards such views as on the "outer fringes" of the economic debate.

It is both barmy and potentially catastrophic for all countries to reduce deficits simultaneously when the world economy is on the brink of recession. What is needed is international collaboration among stronger economies with spare capacity – Germany, the US, France, Japan and the UK for a start – to spend money on employment-generating or investment measures to boost long-term growth. Britain this week announced some modest things including an expansion of broadband to country areas (though at modest speeds compared to competitors) and more tax-friendly enterprise zones (though these have yet to prove they will boost jobs rather than shift them from other areas). But this will not be enough to stem the rise in unemployment, which, as yesterday's figures show, grew to 7.9% in July.

Much bolder initiatives are needed. These include short-term boosts such as mending roads, accelerating the return of call centres to the UK and refurbishing the housing stock, and longer-term ones to increase growth, for which there are big opportunities as the digital revolution reaches every nook of the economy. Sir James Dyson is right: incentives are needed for companies to invest in R&D during the recession. Practically everyone agrees that clean tech and renewables are strong growth areas which could help revive engineering prowess. The biggest exporters do well, but smaller companies need to be galvanised to seize the opportunities created by a weaker pound. The rise of internet-based entrepreneurialism is a hugely positive factor where government could help by enabling links with universities in the way that has produced so many web giants in the US. Government could also help by tackling the obstacles preventing able-bodied young people from taking jobs in the service industries.

Not everything is gloom. Asian countries continue to provide exporting opportunities, as do some east European economies. Even Ireland is beginning to show signs of a comeback. But unless the west seizes this opportunity it will have only itself to blame if the world slithers into a downward spiral of fiscal retrenchment leading to lower revenues and further contraction. Yes, there are risks to a short-term stimulus – but they are tiny compared with the risk of continued fiscal strangulation.

G-20 Entrevista: Wolfgang Schäuble - Ministro de Hacienda alemán - El País

El País, Juan Gómez, Berlín, 25/06/2010, extractos.-

Wolfgang Schäuble entra en la sala en mangas de camisa y con el nudo de la corbata aflojado. Las temperaturas veraniegas han tomado la enorme sede del Ministerio de Hacienda, donde se prepara la cumbre del G-20 este fin de semana en Toronto. El pasado martes se hablaba todavía de las posibilidades de Alemania en el partido contra Ghana, que terminó ganando uno a cero. El ministro se negó a vaticinar un resultado, pero no se privó de bromear sobre las dificultades de la selección francesa. Partidario de que España se apriete más el cinturón presupuestario, Schäuble es el artífice de las duras medidas de austeridad del Gobierno alemán. El veterano político de 67 años lleva en silla de ruedas desde que un loco lo tiroteó en 1990. Formula sus frases con la sintaxis rigurosa del alemán culto. Durante más de una hora respondió a las preguntas del vespertino francés Le Monde, el Corriere della Sera italiano y EL PAÍS.

(...) P. ¿Cómo valora las críticas de Obama a los planes de ahorro alemanes y europeos?

R. En el G-20 hemos alcanzado acuerdos muy claros sobre la estrategia de salida de los programas de reactivación económica. Aspiramos a un crecimiento sostenible y a una reducción de los déficits públicos. Casi todos en el G-20 estamos de acuerdo en que estos déficits disparados son una de las principales causas de la crisis. Reducimos nuestro déficit gradualmente, sin perder la medida. No doy consejos, pero muchos dudan de que los altos déficits estadounidenses puedan prolongarse indefinidamente. Es cierto que en Europa hay diferencias profundas en cuanto a competitividad, pero eso no se arregla con más endeudamiento. Para lograr un crecimiento sólido, hay que reducir el déficit público. Sólo así aumentará la confianza necesaria para impulsar el consumo y las inversiones.