United Nations urges end to austerity, calls for ambition to rebalance global economy 

The global economy appears stuck on its way to recovery, according to a United Nations Conference on Trade and Development (UNCTAD) report released Thursday, which urges an end to global austerity.

Launching the report, Mukhisa Kituyi,UNCTAD Secretary-General said, “A combination of too much debt and too little demand at the global level has hampered sustained expansion of the world economy.”

The report states that people should be put before profits, calling for a 21st-century makeover to offer a global “new deal”.

It says ending austerity, cracking down on corporate rent-seeking and harnessing finance to support job creation and infrastructure investment are key to such a makeover.

Kituyi said, “A combination of too much debt and too little demand at the global level has hampered sustained expansion of the world economy.”

Unregulated finance remains at the heart of today’s “hyper-globalized world,” and the failure to tame it and address the deep-seated inequalities it has generated threatens efforts to build inclusive economies, the UN report said.

It stresses that, despite talk of the urgency of reform at the time of the financial crisis, and recent claims that the financial system is safer, simpler and fairer, regulatory actions have so far done little.

“The public purse was used generously to prevent the financial sector going under in 2007/08, but the root causes of financial instability have not been addressed by national governments or on a global scale,” said Kituyi.

The degree of bank concentration remains alarmingly high, which is highlighted across the report, says UNCTAD. In many countries, the globally consolidated balance sheets of the top five banks are greater than national income.

For many economies, the external asset and liability positions of their domestic sectors are also greater than their GDP.

“To stop this cycle from spiraling out of control, public authorities, at national and international levels, must reclaim knowledge and competition as public goods,” said Kituyi.

“Market power and concentration has also increased steeply in terms of revenues, physical assets and other assets such as intellectual property rights,” said the UNCTAD head.