Will Austerity be ended in Davos?

CC World Economic Forum on Flickr

The World Economic Forum 2012 is held again in Davos this week. It is the ‘Glastonbury of Globalisation‘ as Larry Elliott of The Guardian aptly put it; but the preparation for this year’s meeting was unusual as the so-called Global Issues Group, comprising members of the world’s multilateral and regional institutions, issued a strongly-worded warning message to urge political leaders to boost growth and avoid protectionism.

It is the latest step in what the New Statesman described as an emerging consensus against the austerity drive in Europe and elsewhere:

That the consensus has begun to shift is unsurprising. In Europe, austerity has increased, rather than diminished, the threat of a Greek default and the collapse of the single currency. In Britain, Osborne’s programme has entirely failed to deliver the growth and jobs that he promised. The Chancellor told the House of Commons in November 2010 that private sector job creation would “far outweigh” the job losses in the public sector. But the number of public sector jobs lost in the last year (276,000) now exceeds the number of private sector jobs created (262,000).

So what are the chances that the emerging consensus – remember that S&P argued in a similar fashion when it downgraded France and other Euro countries not too long ago – finally makes it into the political system? The Global Issue Group stated that:

We call on leaders to devote the necessary political energy to deliver concrete actions to exit the crisis and boost growth. Every country, working through its regional economic organizations and development banks and through the international financial and UN institutions, has a role to play.

and

The governments of individual countries and our international organizations have their own distinctive roles and responsibilities, but working in partnership, we can together achieve more than the sum of our parts. We stand ready to do what we can to surmount the difficulties ahead and to contribute to building greater confidence in the future.

In a few days we shall know whether this call for action ends up on the political agenda or in the Swiss snow.