Growing wealth inequality biggest risk to globalisation
The World Economic Forum on Wednesday published a report on the biggest threats facing the world
By CFOWorld.co.uk | CFO UK | Published 14:38, 11 January 12
The growing wealth divide risks the progress of globalisation and endanger the growth of worldwide economies, according to a risk report by the World Economic Forum.
Severe income disparity and precarious government finances rank as the biggest economic threats facing the world, according to the group's 2012 global risks report released on Wednesday.
The 60-page analysis of 50 risks over the next decade precedes the World Economic Forum's (WEF) annual meeting in two weeks' time in the Swiss ski resort of Davos, and paints a bleak picture of an increasingly uncertain world.
Over the past four decades, Davos, which brings together politicians, central bankers and business leaders, has become a byword for globalisation. Now confidence about the steady gains from the onward march of the global marketplace is faltering.
Rising youth unemployment, a retirement crisis among pensioners dependent on debt-burdened states and a yawning wealth gap have sown the "seeds of dystopia," according to the report, based on a survey of 469 experts and industry leaders.
For the first time in generations, people no longer believe their children will grow up to have a better standard of living.
"It needs immediate political attention, otherwise the political rhetoric that responds to this social unease will involve nationalism, protectionism and rolling back the globalisation process," said Lee Howell, the WEF managing director responsible for the report.
The unsustainable level of government debt in many countries had already been highlighted as a top threat in the previous two WEF risk reports but the chronic nature of fiscal deficits means the issue remains centre stage.
"We're seeing governments kicking the can down the road and not trying to get their hands on it," Howell said.
Since last January, the euro zone's debt crisis has spread and deepened - toppling governments in Greece and Italy - while the US has lost its triple-A credit rating, after failing to stabilise its debt position.
There will be a greater focus than ever in Davos this year on the failures of the modern market economy, including discussion on the uncertain future of capitalism, a subject that would have got short shrift in the years before the financial crisis.
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