Government Debt

Donald Trump will meet his match in bond markets

18 Dec 2024

The president-elect’s bullying and bluster may steamroll any political resistance to tax cuts and tariff hikes. Like many world leaders before him, though, he’s about to feel the punch that debt buyers pack. They’ll beat back an inflationary agenda that imperils US finances.

China’s wealth pledge will face tough sceptics

10 Dec 2024

In a key meeting, Beijing identified stabilising stock and property prices as a top task in 2025. It recognises that people will spend more if they feel rich. This implies a policy bottom for both markets. Yet observers are forecasting a huge range of outcomes in the coming year.

Months of chaos will cripple France for years

6 Dec 2024

PM Michel Barnier’s budget was only the first step in a plan to stabilise public debt at 116% of GDP by 2028. His government’s collapse will make businesses and households even more reluctant to invest and spend, hitting growth. The country is headed for long-term economic pain.

India’s slowdown flashes an early-warning signal

2 Dec 2024

GDP growth slipped to 5.4% last quarter, the slowest pace in nearly two years, on weak manufacturing and spending. Perhaps it’s a blip. But the Adani fallout, Trump tariff threats and China stimulus could all deal blows to rosy assumptions about the world’s fifth-largest economy.

France faces long-term pain more than debt crisis

28 Nov 2024

Fears that PM Michel Barnier will be ousted by parliament after failing to pass his budget sent French spreads to a 12-year high. The country’s size and resources shield it from a sharp fiscal crunch, but six months without a proper government would weigh heavily on its finances.

Indian business may learn wrong lesson from Adani

27 Nov 2024

US corruption charges against tycoon Gautam Adani have cast a shadow over Narendra Modi’s war on graft. The prime minister has made progress. But rather than spurring a cleanup in the $4 trln economy, the saga might just make its capitalists warier of tapping global markets.

Mapping the way for Elon Musk’s efficiency drive

26 Nov 2024

Tesla’s CEO has touted the idea of slashing $2 trln from the bureaucracy, a fanciful figure that exceeds optional budget items and threatens to ape the worst of UK and Argentine austerity. There may be a tortuous path to cut $500 bln, but improving services is a far better route.

China’s stimulus priorities are plain to see

14 Nov 2024

Readouts of Beijing’s economic meetings focus on fixing local government debt and reflating asset prices, both for equities and property. Expect ongoing policies to zero in on these areas. Those waiting for heavy spending and consumer handouts will be disappointed.

George Soros’ 1980s US debt warning echoes today

8 Nov 2024

The hedgie said in 1986 that booming stocks belied shaky government finances. That’s true now, and not just in the United States. Britain and France are also battling a fiscal trilemma, where states can’t simultaneously have high spending, low taxes and financial stability.

China consumer is epitome of delayed gratification

4 Nov 2024

Beijing says it wants to boost consumption’s 53% share of GDP as investment-led growth fades. Yet central planning is hard to square with free-spirited spending. Rebalancing without a period of stagnation is not easy. Recent policies also suggest the old model is hard to ditch.

Value push will mostly survive Japan election mess

29 Oct 2024

A decade-long effort to boost shareholder returns can continue to gain traction despite the LDP's disaster at the polls. It helps that Japan Exchange took charge of the party's initiative for structural reform. For now, as politicians vie for power, a weak yen will buoy stocks.

Debt rule tweak can help UK avoid moron premium

25 Oct 2024

Two years ago, former Prime Minister Liz Truss’ unfunded tax cuts sent 10-year gilt yields surging to 4.5%. Now, new Chancellor Rachel Reeves can avoid a similar debacle with small changes to the fiscal rules in next week’s Budget. With yields at 4.2%, there is no room for error.

UK budget is a tightrope walk over a black hole

24 Oct 2024

Finance Minister Rachel Reeves is due to set out tax and spending pledges while hemmed in by campaign promises and economic reality - even if debt rules are tweaked. In this Viewsroom podcast, Breakingviews columnists discuss the tall task of selling it to the public and markets.

China pins stimulus on money merry-go-round

23 Oct 2024

Beijing plans to swap some of its $9 trln of local government debt into bonds with full, rather than implicit, state backing. The rejig will lower rates of interest, lengthen maturities and allow provinces to issue more debt to banks. That will juice spending for a while.

Italy has more to gain from France’s pain

14 Oct 2024

Rome borrowing costs are converging with Paris. Prime Minister Giorgia Meloni’s stable government is pledging to contain its deficit and pushing through reforms, at a time when its peer is in turmoil. To press home the advantage, though, Meloni will need to take bolder action.

China stimulus aims at its greatest wall of debt

14 Oct 2024

The finance ministry pledged to tackle local government borrowings. It reveals an intent to smash systemic financial risk and, by not rushing to support consumer demand, a desire to avoid repeating past spending mistakes. Beijing's plan is welcome but still missing key details.

French PM has a plan but lacks time to fix budget

4 Oct 2024

Michel Barnier is proposing 30 billion euros of spending cuts and tax hikes to shrink the country’s deficit. Even if a divided parliament approves, he will have to repeat the feat in future years to fill the fiscal hole. This government’s weak hold on power makes that unlikely.

Greece is unlikely victor in bank selldown race

3 Oct 2024

Athens sold 10% of National Bank, effectively ending the privatisation of the major lenders it rescued. Germany, the Netherlands, the UK and Ireland still own bank stakes. Greeks can thank continued government support and a strong economy, fuelled by rising investment.

Beijing directs fiscal firepower at itself

27 Sep 2024

The government may sell $284 bln of special bonds. Part of that will be to boost consumption while a huge chunk will probably support indebted local provinces and state banks. That'll help GDP hit the official target this year but won't do much to alter the longer-term picture.

Beijing’s $114 bln stock market bet rings hollow

25 Sep 2024

The central bank is hoping to jump-start a lasting stock market recovery by funding investments and share buybacks. But without a way to deal with underlying lacklustre growth, such schemes are likely to provide a short-term boost that soon fizzles out.