Although the UK’s post-war experience is encouraging, it should not lead us to be too sanguine about future prospects for the advanced economies. First, a return to an environment of financial repression is neither desirable nor feasible. It would represent a reversal of the trend in policy over the last 40 years towards freer capital markets.
Second, we should probably not expect the real growth rates in the developed world to go back to the levels of the 1950s or 1960s, an era now characterised by economic historians as a “Golden Age”. 12 That being said, one should never underestimate the room for higher growth potential through resolute structural reforms, particularly in Europe, which is still marked by numerous rigidities.