Government Debt

Stingy Uncle Sam subverts both suppliers and state

18 Mar 2025

Abrupt spending cuts and pressure to justify existing deals are wreaking havoc on US government contractors from Lockheed to Pfizer. Some $760 bln of annual outlays are at risk, spooking investors. Worse, frugality threatens to impair national strategic capabilities for decades.

US budget botches subtraction and multiplication

27 Feb 2025

Republicans are trying to preserve $4.5 trln of tax cuts by slashing government spending. The healthcare, food assistance and revenue collection programs being targeted, however, punch far above their weight economically. Higher debt and slower growth will only spook bond buyers.

Sticky inflation is a quagmire for tariff plans

12 Feb 2025

A surprisingly high 3% annual rise in US prices threatens to halt interest rate cuts from the Federal Reserve, and that’s before new tariffs go into effect. Policymakers seem to see gutting spending as the preferred fix. Scrapping inflationary trade barriers is a better bet.

Half-baked budget leaves France vulnerable

10 Feb 2025

Prime Minister François Bayrou managed to ram his finance bill through parliament. Bond investors look relieved, but with a deficit at 5.4% of GDP, France’s government still can’t control a rising debt load. It may need more market pressure to get serious.

Uncle Sam’s debt offers flimsy refuge to investors

6 Feb 2025

Yields on 10-year US government bonds have dropped amid signs of slowing growth and President Donald Trump’s tariff talk. But the safe haven faces threats from $8 trln in unfinanced tax cuts, inflation, and Elon Musk’s meddling with payment systems. The calm is unlikely to last.

India’s tax cuts grasp at a fleeting growth fix

3 Feb 2025

By hiking the income-tax exemption threshold, Narendra Modi’s government hopes the middle class will go out and spend. But that leaves the state relying on 1% of the working age population to help pay its bills. It throws the urgency to tackle stagnant wages into sharp relief.

Excessive belt-tightening risks choking US economy

28 Jan 2025

A budget edict citing 'wokeness' and 'transgenderism' claims to temporarily freeze $3 trln in federal grants and loans. Chipmakers, small business owners and medical researchers are among those probably affected. If no one stops the overreach, the consequences may be dangerous.

Bond bulls put Beijing on the horns of a dilemma

28 Jan 2025

The relentless plunge in yields allows China to issue debt inexpensively to stimulate its $18 trln economy, but it also reinforces expectations of slow GDP growth, a weak yuan and the People’s Republic as a low-interest-rate country. Managing that tension is getting riskier.

Davos presents elites with economic Rorschach Test

27 Jan 2025

Delegates in the Swiss ski resort hailed Donald Trump’s deregulatory plans and got starry-eyed about AI. Others worried about inflation, debt, and fossil fuels, while Europeans bemoaned their back yard. Assessing the “mood in Davos” reveals more about the observer than the world.

US Treasury pick pushes contradictory tariff cure

17 Jan 2025

Scott Bessent sees import fees of 10% or more as a surgical tool to combat everything from China’s military rise to climate change, but also a long-term deficit fix. Wall Street might have hoped for orthodoxy from the hedge funder, but he’s inviting a protectionist trap.

Bond chaos induces headaches worldwide

16 Jan 2025

Rising yields on long-term US debt, now around 5% despite the Fed’s cuts, are having ripple effects across the globe. Leaders in Britain and beyond may be forced to rethink their policies. In this Viewsroom podcast, Breakingviews columnists explain the potential pain in store.

Cracks in India’s consumption story run deep

16 Jan 2025

Wages of its giant workforce are stagnating, dragging down growth in the $4 trln economy. Authorities can cut taxes or ease the flow of credit to stimulate spending. It will, though, cut the financial stability that underpins the emerging market’s moment.

Trump’s agenda already faces irresistible forces

8 Jan 2025

With his party in legislative control, the US president-elect is promising action on an $8 trln tax plan, immigration and energy. But with long-term bond yields spiking to 5% even after central bank cuts and congressional dysfunction looming, he might be stymied from the start.

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.