The Washington PostThe Washington Post

Rishi Sunak's route to economic growth

By Sebastian Mallaby

25 Oct 2022 · 3 min read

After an efficient selection process, Britain has acquired its third premier in two months: former finance minister Rishi Sunak. He is suited to a time of economic storms: An alumnus of Goldman Sachs and a couple of hedge funds, he has a grip on financial reality that is as firm as his predecessor's was shaky. But like other rich-country leaders, Sunak will have to convince people of hard truths. The era of stimulus is over. The route to economic growth lies in smarter regulation.

From the aftermath of the 2008 financial crisis until last year, debates on economic policy were dominated by one central fact: Inflation was low, so governments needed to boost spending. Across the rich world, central banks duly printed money and politicians spent it. But today, with inflation way above target, the macroeconomic logic has reversed. Central banks are hiking rates, and politicians who refuse to discipline budgets invite the wrath of markets.

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