It makes you wonder – are policy makers just, well, making it up as they go along? After all, nobody can really be sure of the long-term impact of all the quantitative easing that has already been pumped into our economies since the financial crisis.
“Our belief is that the rise in vox populi reflects a feeling that the massive monetary stimulus measures enacted since the global financial crisis of 2008 have benefitted a small section of the population, but have failed to ignite the famous ‘animal spirits’ in the majority of voters,” says Cosimo Marasciulo, head of European fixed income at Pioneer Investments.
“With mainstream politicians facing an increased backlash from the electorate, and witnessing the rise of populist parties, many governments appear to have lost confidence in the ability of central banks to generate a broad-based recovery of any magnitude.”
This, Marasciulo says, is explains the switch in focus to fiscal stimulus measures, which are directly controlled by governments and politicians rather than central banks.
Is government spending a panacea for economic misalignment? Charles McKenzie, CIO for fixed income at Fidelity International, suggests not pointing out that outside the UK there is less room for fiscal expansion, in part due to the EU-wide Stability and Growth Pact.
