WSJ reports that global growth is increasingly propped up by government spending financed by large and persistent budget deficits. From America to Europe, Japan and China, politicians are borrowing to fund defence, welfare and industrial policy. High interest rates and ageing populations make this strategy riskier than during the pandemic spending boom. So far, investors remain calm, believing major economies can still service their debts. But rising interest bills suggest today’s fiscal comfort may prove temporary.
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WSJ reports that global growth is increasingly propped up by government spending financed by large and persistent budget deficits. From America to Europe, Japan and China, politicians are borrowing to fund defence, welfare and industrial policy. High interest rates and ageing populations make this strategy riskier than during the pandemic spending boom. So far, investors remain calm, believing major economies can still service their debts. But rising interest bills suggest today’s fiscal comfort may prove temporary.