This is a known problem from trying to cram a five cylinder engine plus transmission all between the wheels (the RWD cars avoided this problem by having the tranny behind the engine on the way to the rear axles, not alongside the engine, so the net setup was thinner and allowed more wheel turn). The net result today: a very wide setup which drives impaired maximum turning angle of the front wheels. Spacers will only make this worse (with the same stops, putting the wheels further out will increase the turning radius). If you could add spacers but allow the wheels to turn through a larger angle, you might see an improvement.

No efforts underway to improve this, as far as I know. It's an unfortunate idiosynchrasy we'll have to deal with to enjoy the other (good) features of a Volvo.

I've seen it mentioned that this lack of space is likely what prevents Volvo from offering more forward gears in their AT setups (no place to put a bigger tranny).