The global financial landscape is shifting as bond markets push-back against government spending plans. In Britain Rachel Reeves budget faces tough market scrutiny due to its tax-and-spend approach; investors dont believe her revenue predictions will match up
The situation isnt limited to the UK — across the Channel Michel Barnier struggles with Frances finances (where tax collection already hits 48% of GDP). The country got two debt downgrades this year after chaotic spring elections: its now desperately searching for new revenue sources
Wall street shows growing un-ease about US government debt with yields hitting new peaks in 10/2024. Neither presidential candidate seems ready to address the nations 6% deficit which makes investors nervous about next weeks election outcome
- LVMH paying huge temporary surcharges in France
- Italy implementing windfall taxes
- EU green bonds finding no buyers
- UK gilt markets showing instability
The markets attitude towards government spending has changed big-time — theyʼre no longer buying the idea that borrowed money equals growth. Back in the 90s Bill Clintons adviser had an interesting take on this:
I want to be reborn as the bond market because you can intimidate everybody
Government debt rates keep climbing everywhere: UK plans to collect 44% GDP in taxes (matching post-war levels)‚ while Frances state already takes 48% — leaving little room for more. The markets clearly show they wont support endless borrowing and unrealistic green-investment schemes anymore