Advanced economies are trying to find their footing in the new normal economy as they sidestep a maze of obstacles: increased competition from emerging markets, fiscal austerity, persistently high unemployment, cash-constrained consumers, aging populations and rising commodity prices. As Bank of England Governor Mervyn King has put it: “The next decade is likely to be a sober decade—a decade of Savings, Orderly Budgets, and Equitable Rebalancing.”
It is no wonder, then, that over 60% of executives surveyed believe that economic growth rates will slow in Western economies over the next five years, and that companies will be more cautious in making new investments. Worryingly, a majority of survey respondents think that government has lost touch with the challenges facing business, suggesting little confidence that politicians will be able to engineer successful new growth strategies.