The International Monetary Fund has been dishing out bitter pills all week from its spring conference taking place in Washington DC.
Europe’s banks have been told they face a profitability crisis, countries around the world, including the UK, have had their growth forecasts slashed, and the Fund’s managing director Christine Lagarde has taken a generally disapproving stance on how well national politicians are handling the fragile recovery.
Today, in Lagarde’s snapshot of her take on the world economy, she hammered home the message that governments need to buck up their ideas and warned that without doing so, the prosperity of their citizens will take a hit.
“The global economy has been impaired from growth that has been too slow for too long, and at this rate a sustained recovery - with the expected higher living standards, lower unemployment and declining debt levels - may not be delivered,” she wrote in her global policy agenda update, published today.
“Growth is being dragged down by persistently high unemployment, high debt, and low investment in some countries, in addition to a long-term decline in productivity growth that predates the crisis.”
She called on policymakers to implement a number of solutions, including:
Stronger levels of public investment in infrastructure
Improved efforts on ‘fiscal consolidation’ in countries where government deficits remain too high
Completion of the Eurozone’s banking union, particularly the common deposit guarantee scheme
Better focus on training for those who are unemployed
Reducing income taxes on workers