This also comes as no surprise. Businesses will only invest if they perceive growing demand for their goods and services. But the dilemma for the CEOs gathered in Davos is that the policies they have championed in the past – fiscal austerity, weaker trade unions, aggressive cost cutting – have hammered consumer spending. In the past, spending could be supported by rising household debt, but the banks don't want to lend and consumers don't want to borrow.
This is a recipe for continued economic torpor. Three things would help: fixing the banks, a reining back of austerity and a new social compact to ensure that productivity gains are once again shared by capital and labour.
Edited by Noah, 25 January 2013 - 06:33 AM.