But in a world where real returns are low everywhere, there is simply not enough demand for capital elsewhere in the world to absorb that excess saving without declining returns. So the long-term answer to raising real rates of return must be a structural rebalancing of global saving and investment.
And since demographic-related saving is likely to remain high, that has to come through raising demand for capital. This is why structural reforms are so important today. They are key to raise productivity growth and hence make investment more attractive. The ECB Governing Council, the European Council and the European Commission have repeatedly called for such structural action in Europe.