Group Chief Economist Neil Shearing warns the potential threat to fiscal positions from higher rates is “perhaps the most important question hanging over the outlook for the next couple of years”.
In this episode, he speaks to Head of Research Vicky Redwood and Andrew Kenningham, Chief Europe Economist, about the size and scope of that threat, including what governments need to do to keep markets onside, whether Italian and US debt positions are particular causes for concern and how a busy year for elections could shape the market’s perceptions of which issuers are at risk.
Plus, after the FT’s Martin Wolf highlighted our unique analysis of global economic fracturing, Neil talks to Chief Asia Economist Mark Williams about why investors should be considering US-China competition in terms of blocs of aligned countries and territories rather than as individual economies. Mark shows how that economic competition looks very different when measured by these blocs, but also highlights the risks to our view that fracturing will remain a relatively benign process.
Analysis and events referenced in this episode:
Government debt sustainability back under the spotlight
Shifts in the long-term outlook for interest rates relative to GDP growth have left the fiscal position in most developed economies looking more precarious. Unless governments manage to reduce their
Fiscal policy adds to headwinds
We continue to think the euro-zone economy will fall into recession in the second half of this year and roughly flatline in the first half of next year. This is mostly due to the impact of squeezed
Fiscal health and the outlook for the euro-zone’s bond markets
We continue to forecast a small fall in euro-zone yield spreads over Bunds in the next year or so. However, rising risks to the upside in recent months and differences in fiscal positions between
The shape of the fractured world economy in 2024
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously