The world has changed and what are we doing?

For many years, the G7 countries could count on having a steady 65% of overall GDP in the world. But the world is changing. James Wolfensohn, investment consultant and former president of the World Bank, warns that the developed countries are now confronted with “the fiscal realities of life”, where heavy debts incurred by bailing out their banks will make it increasingly difficult for governments to meet spending commitments and stimulate their economies back into growth. Here, in an edited extract from his keynote speech last week to the Lloyd’s City Dinner at the Merchant Taylors’ Hall in London, an event attended by senior figures from the worlds of insurance, banking and politics, Mr Wolfensohn says that developed countries also have to deal with the growing economic might of India and China. Over the coming decades these two countries will expand to account for nearly 25% of global output by 2025 and almost half by 2050. A dynamic which, Mr Wolfensohn argues, is occurring virtually unobserved and which represents the true challenge to the City of London and all its institutions as well to the G7 countries

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