Former British Prime Minister Gordon Brown warned that a leaderless world is sleepwalking towards a repeat of its near meltdown of the last significant financial crisis a decade ago.
Britain’s former prime minister – during the period when the collapse of Lehman Brothers triggered the worst financial crisis since the Great Depression – said that after a decade of stagnation the global economy is now moving into a “decade of vulnerability.”
“We are in danger of sleepwalking into a future crisis,” Brown told The Guardian in a recent interview at his estate in Scotland. “There is going to have to be a severe awakening to the escalation of risks, but we are in a leaderless world.”
The former prime minister, who lost the 2010 election following Britain’s deepest recession on a post-war basis, said that countercyclical measures by governments and central banks have become widely exhausted. He warned the ability for global central banks to drop interest rates is not as readily possible today as it was a decade ago, while finance ministries would also have difficulty injecting fiscal stimulus, and here is the surprise: there is no guarantee that China would bail out the world, again.
“The cooperation that was seen in 2008 would not be possible in a post-2018 crisis both in terms of central banks and governments working together. We would have a blame-sharing exercise rather than solving the problem.”
Brown had its doubts that China would be as cooperative for the second time to provide a global stimulus, primarily due to the Trump administration’s trade war launched squarely at Beijing. “Trump’s protectionism is the biggest barrier to building international cooperation,” he said.
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