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Investment: Nowhere to hide

The path to global recovery remains far from clear. Four leading voices set out the regional risks

By Prospect   May 2011

Adam Posen, external member of the Bank of England’s Monetary Policy Committee

UK: Three steps are needed to put the economy on the right track

Most of the economic problems that emerged in Britain during the financial crisis were due to the misallocation of capital over the preceding decade.

Private investment went disproportionately to pure financial transactions (and to rents taken by the financial sector) or to property rather than to the creation of productive assets.  Non-financial corporations have been sitting on cash for years without either returning it to their shareholders or investing commensurately. Public investment caught up after…

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