Global markets send warning signals to big-spending governments
Financial markets show growing resistance to government borrowing plans across major economies. Bond yields rise as investors reject excessive spending while France‚ UK and US face tough fiscal choices
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
