Rich countries must boost public spending and kickstart growth if the world is to avoid a damaging downturn as emerging economies slow, according to the UN’s trade and investment arm, Unctad.
In its annual trade and development report, the Geneva-based body warns that developed countries risk sliding into “secular stagnation” – a long period of lacklustre economic growth, driven by weak consumer demand.
With many emerging economies suffering crises, Unctad argues the prospects for global growth look grim unless rich countries can boost their growth rates, which could mean boosting public investment and tackling inequality by increasing wages.
“Enhancing public investment should be a key instrument for addressing secular stagnation,” Unctad said, adding that pushing up wages through an “incomes policy” should also help, by boosting workers’ productivity – something George Osborne hopes to achieve with his “national living wage”.
