Think Tank Warns Risk Of Repeat Crisis

(Reuters) – NOT ENOUGH HAS BEEN DONE to address the problems at the root of the financial crisis and unless urgent action is taken it could be repeated, the Institute for Public Policy Research said today.

In a report reviewing capitalism, the think tank warned that, while the worst of the crisis appeared to be over, signs that lessons had not been learnt — such as a rapid return of the bonus culture in banking — showed real reform was needed.

‘Unless policymakers take action to create the blueprint for a more stable and sustainable model of capitalism, and one that delivers better outcomes for all and not just a small elite, there is a real danger of another economic crisis in the future,’ said Tony Dolphin, senior economist at IPPR and author of the report.

The IPPR said greater coordination of economic policies among major economies was needed to avoid a repeat of the crisis, adding that countries should ensure they are not pursuing policies that will create global imbalances.

Internationally agreed regulatory principles for the financial system based on greater accountability were also required, the report added.

The think tank recommended that organisations such as the International Monetary Fund be reformed to give a greater role to large emerging economies, particularly China and India.

Dolphin said the UK’s obsession with consumerism and debt-driven spending also needed to be tackled, advising that under a more sustainable, equitable model of capitalism, economic growth should be based on exports and investment.

Alongside this, policymakers should place more weight on measures of progress based on wellbeing rather than growth in GDP in order to reduce inequality, the report said.

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