Europe is in the middle of stagflation, struggling with rocketing inflation and negative growth. The painful reality about growth is that it can’t be stimulated overnight, especially in countries that do not address underlying weaknesses with steely determination. The EU member states and Britain are suffering from low productivity, especially in the last decade post the 2008 great financial crisis. Low growth and flattening productivity have become endemic. Short-term solutions, like tax cuts and immediate demand stimulus only bring temporary relief. Relying on consumption to promote growth at the expense of investment in people, innovation and technology is not sustainable. Such short-term measures adopted by some European countries have failed to stimulate sustainable growth. Worryingly they have disrupted political stability as people lose faith in their leaders’ ability to do what is right to promote prosperity. Tony Danker, director-general of the Confederation on British Industry, in this year’s annual conference, argued that “GDP growth is a simple multiplier of two factors – people and their productivity”. There are many ways to measure productivity, but the base...
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