The financial crisis affecting banks and Governments is no more than a symptom of a deeper problem. That problem is a loss in relative competitiveness of both Europe and North America vis a vis  the emerging economies of China, India, Brazil and others over the past  twenty years. The loss of competitiveness was accompanied by an unwillingness to face up to long term problems like the  eventual  cost of ageing societies, and the ephemeral nature of some of the innovations of the so called  “new economy”.

The   boom- driven expansion of credit was like an anaesthetic that concealed an underlying loss in competitiveness from us   until 2008. Now that the anaesthetic has been withdrawn, after such a long time, the pain is acute. The human cost is all too real.

The answer to this for all European  countries  is, I believe, to work to increase what economists would call the total factor productivity of our economy, the productivity of the way in which we use all our resources, public and private,  capital and labour, tangible and intangible. We need a new  way of thinking , an enhanced  orientation towards  finding ways to earn a living  from meeting  the needs of the  rest of the world .

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