Global economy in need of rescue

THE spectre of debt is halting an economic revival and there appears to be no obvious solution, an economic journalist has warned a local audience.

Philip Coggan (pictured) is a regular columnist for The Economist magazine and was in the island for a conference organised by training provider BPP. He has written books about the issue, but even he admits that the resolution is unclear.

His view is that either the world must suffer prolonged stagnation – a fairly close summary of the current position – witness massive defaults, or the accumulated debts of the past years must be inflated away, difficult to do in the age of the euro, with many parties trying to prop up the single currency.

'There is too much debt and we cannot pay it back,' he said.

'Something has to happen. Five years since the crisis started and we still haven't solved it because people cannot pay debt off in real terms. The thing with debt is that someone must lose – you cannot deal with debt without someone losing.'