Summers calls for Davos to restore confidence

“ABNORMALLY high uncertainty” is the main factor driving financial markets at the moment, according to former US Treasury secretary Larry Summers.

He said that the debate at Davos on how to overcome the problem risks becoming polarised between economists and business leaders, who want to see either government stimulus or private-sector growth.

“The right current approach involves borrowing from both contending lines of thought,” he said.

But he added that the onslaught of post-crisis regulatory reform risks being counter-productive.

“This is not the right time to add unnecessarily to their worries. Except where the rationale is both urgent and compelling, new regulations that burden investment should be avoided.”

But Summers, who is served as Treasury chief and an economic adviser to President Barack Obama, added that “governments have the best chance of creating economic recovery”.