By this point, buffeted by gloom and uncertainty, you may be considering joining the bankers in pushing me off the mountainside, so let me begin to outline how we can address these challenges. We can start by recalling that the global economy has been in similar circumstances before. Everyone knows that the 1930s marked the depressing aftermath of a great financial crisis. Less well-appreciated was that it also marked a period of intense innovation that laid the groundwork for post-war growth, particularly in the United States. Alexander Field in his book “A Great Leap Forward” contends that the 1930s were the most technologically progressive decade of the 20th century. He notes the development of chemical-based materials like Teflon, Nylon and synthetic rubber; the development of the Television, and the expansion of the public road network that paved the way for advances in distribution and transportation. In the 1930s, the collapse of demand meant mass unemployment and slow adoption of new technologies. It took a recovery in aggregate demand after the Great Depression, partly spurred by mobilisation for the Second World War, for many innovations to be applied and new markets to develop. Demand was persistently weak in the 1930s because policy mistakes were legion. A protectionist backlash closed global markets and ended global finance. Policies favouring liquidation led to widespread bank failures. Monetary policy was tightened dramatically. This time, thus far, is different. Protectionism is being resisted, banks recapitalised, and the global financial system rebuilt. In parallel, monetary policy is highly accommodative.

After rising to an expected 3.5 percent this year, global growth could finally re-attain its pre-crisis trend of 4 percent in 2015. Three quarters of this acceleration is expected to be driven by advanced economies, with the US and the UK leading the pack. And this isn’t the best case scenario. Even in the euro area, risks have become two-sided, albeit around a modest growth rate of about 1%. None of this is to suggest that current levels of economic activity are acceptable or that the world economy is no longer under strain. After the Great Moderation and the Great Recession, there are several reasons why it will be years before any superlatives are attached to this recovery. First, for all the talk of austerity and deleveraging, the aggregate debt burdens of advanced economies have actually increased; with their total non-financial sector debt rising by 25% relative to GDP since 2007. Balance sheet repair in the public and private sectors will exert a persistent drag on major economies for some time. Second, the need to rebalance demand from deficit to surplus countries endures. Given the adjustment pressures on the former, without progress on rebalancing, robust and sustainable global growth will remain an aspiration. Third, confidence, while improved, remains subdued. Recognising that the end isn’t nigh is far from marking the normalisation of business and consumer sentiment. Given past shocks and modest prospects, business investment in particular remains hesitant across the advanced world. On balance, corporations remain more focused on reducing operating expenditures than increasing capital expenditures.