1. Terry McKinley and Giovanni Cozzi Centre for Development Policy and Research (CDPR) School of Oriental and African Studies (SOAS) University of London AUGUR stakeholder’s workshop, 17-18 November 2011 DG Research and Innovation, CDMA building, 21 rue Champ de Mars, Brussels AUGUR A WORLD TRAPPED INTO DEBT AUGUR SCENARIO 1

2. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR  Continued Fiscal Consolidation in developed countries: Budget Deficits limited to -3% of GDP in European blocs Debt stock reduced also in other developed countries (such as to 60% of GDP in the US)  Government Revenue is allowed to decline in Europe, US and Other Developed Countries Revenue/GDP drops to 15% in the US & 20% in most European Blocs  There is a consequent drop of private investment in Central and North Europe and reduced intra-Europe migration  Multinationals tend to move Industrial Production and Exports to other regions, such as South America and India SCENARIO 1 ASSUMPTIONS

3. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR  The pervasive influence of Global Markets continues to increase  National and International Governments have a declining influence over economic and financial developments  Global Investors and Corporate Management determine the availability of finance and the distribution of economic growth  Any improvements in the Environment are driven mainly by slow growth in developed countries and continued high oil prices  There is no concerted effort to achieve Greater Inclusiveness of Economic Growth, regionally (within Europe) or globally  Developing Countries continue to grow at a faster rate than Developed Countries—although some, such as China, slow down SCENARIO 1 BACKGROUND ASSUMPTIONS

4. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR GOVERNMENT DEBT (% of GDP) 150% 107% 74% 61%

5. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR 125% 91% 66% 62% GOVERNMENT DEBT (% of GDP)

6. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR GOVERNMENT EXPENDITURE VERSUS INCOME (% OF GDP) - 1.7% - 1.5% - 3.0% - 2.1%

7. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR CURRENT ACCOUNT (% OF GDP)

8. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR REAL GDP GROWTH (% p.a.)

9. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR REAL GDP GROWTH (% p.a.)

10. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR REAL GDP GROWTH (% p.a.)

11. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR EMPLOYMENT RATE (% OF WORKING AGE POPULATION) 69% 54% 56%

12. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR WORKING AGE POPULATION (% OF TOTAL POPULATION)

13. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR ELDERLY POPULATION (% OF TOTAL POPULATION)

14. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR NET MIGRATION (MILLION)

15. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR REDUCTIONS IN GOVERNMENT EXPENDITURES  While the elderly dependency ratio is rising, government expenditures are falling: what is the impact?  We use a composite index, the Government Service Standard, to gauge the impact of expenditure cuts on dependants Government expenditures are compared to a weighted population index (for the elderly, children and the working- age population) Then this ratio of public expenditures per population index is compared to general income per capita  The Results for Europe: There is a declining trend across the various blocs

16. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR GOVERNMENT SERVICE STANDARD (%)

17. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR ENERGY USE AND CARBON EMISSIONS  Conflicting Effects on Energy Use and Carbon Emissions: Slow Growth in Developed Countries but Faster Growth in Developing Countries (along with a rising share of Global GDP) A High and Rising Price of Oil both slows growth and energy use

18. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR INCOME PER CAPITA WITHIN EUROPE EUROPE AND OTHER BLOCS

19. AUGUR stakeholder’s workshop, 17-18 November 2011 AUGUR  The results of this scenario are not promising:  Growth is slow and debt reduction unimpressive in Developed Countries  Employment is reduced and Government income and services decline  Developing Countries maintain more rapid growth rates, as global investment shifts towards them  But energy intensity and emissions do not decline globally  In terms of income per capita, East Asia gains on Developed Countries but South Asia and Africa lag far behind, leaving pronounced global inequalities unresolved CONCLUDING REMARKS