World Bank calls for 'better economic leadership'
Following last Thursday Parlimentary address by George Osborne, Head of The World Bank, Robert Zoellick has warned that the crisis of confidence sweeping through markets in recent weeks has resulted in a new 'danger zone' for the global economy.
Currently in Australia for US-Australia leadership meetings, Zoellick spoke on Sunday, and stated that the turmoil seen in the last few weeks has led investors to lose confidence in the ability of authorities around the world to lead their nations out of the current malaise.
He warned, as a result, investors are now fretting about another recession.
"There was a convergence of some events in Europe and the United States that has led many market participants to lose confidence in the economic leadership of some of the key countries," Zoellick said.
"I think those events combined with some of the other fragilities in the nature of the recovery has pushed us into a new danger zone. And I do not say those words lightly", he continued.
His comments come as the crisis in Europe shows no sign of abating, with talks on the launch of a new eurobond backed by all 17 member countries in the eurozone continuing to flounder. Last week the market punished France amid talk of a downgrade because of its banking system's exposure to the debt of sevreal weak European nations.
Zoellicks speech follows George Osborne's address on the 11th of August, when the UK Chancellor stated; "History teaches us that recovery from this sort of debt-driven, financial balance-sheet recession was always going to be choppy and difficult. But the whole world now realises that the huge overhand of debt means that the recovery will take longer and be harder than had been hoped."
He went on; "Solutions such as euro bonds or other forms of guarantees now require serious consideration. And they must be matched by much more effective economic governance in the Eurozone to ensure fiscal responsibility is hard wired into the system."