Discussion paper: Ultra-low interest rates have failed to spark investment and economic demand. What can be done?
The persistence of lackluster growth and weak demand has left companies reluctant to invest, while household and government investment are also down. But anemic investment weakens aggregate demand and depletes the economy of its productive capacity, creating a vicious cycle that ultra-low interest rates have failed to break. It is critical to examine the deeper issues at work, identify promising opportunities, and consider bold new actions that can unlock investment and support a return to growth. This research-in-progress—published for discussion at the April 2016 Europe as an Investment Destination conference, which is organized by the European Political Strategy Centre—represents the starting point for further research on this topic from the McKinsey Global Institute.
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