There was a stark warning from the IMF this week as it predicted government debt across the world would hit the highest level since the aftermath of World War Two by the end of the decade. According to analysis in the IMF’s Fiscal Monitor report, aggregate government debt rose quicker than expected before the COVID pandemic, when policymakers stepped in to protect people and bail out businesses.
The UK was among the G20 countries whose ratio is set to peak above 100% of GDP in the coming years, along with the US, China, France, Japan and Canada.
The report comes ahead of the government’s autumn budget, where chancellor Rachel Reeves is expected to raise the tax burden on families and businesses. In fact, Reeves’ package of tax rises and spending cuts is likely to stretch to around £30bn, analysts at Goldman Sachs (GS) said this week, as the government aims to tackle the growing shortfall in the public finances.
Employment data released on Tuesday won’t have made the chancellor’s life any easier as she looks for ways to boost the economy. The official figures showed pay growth slowing and unemployment edging higher in the three months to August.
Perhaps Reeves could find inspiration in the work of Joel Mokyr, Philippe Aghion and Peter Howitt, who were this week awarded the 2025 Nobel economics prize for “having explained innovation-driven economic growth”.
The American, French and Canadian economists “have taught us that sustained growth cannot be taken for granted,” the prize-awarding body said. “Economic stagnation, not growth, has been the norm for most of human history. Their work shows that we must be aware of, and counteract, threats to continued growth.”
Let’s have a look at these and other financial headlines from the last few days.
The Bank of England plans to allow stablecoin issuers to hold accounts directly at the central bank. ·tanit boonruen via Getty Images
The International Monetary Fund warned that government debt across the world is on course to hit 100% of global economic output by 2029, the highest level since the aftermath of the second world war. Vitor Gaspar, head of the fund’s fiscal affairs department, said public debt levels could soar as high as 123% of GDP by the end of the decade under an “adverse, but plausible scenario”.
The IMF urged governments to help bolster the world economy and make debts more sustainable by switching spending to growth-friendly areas such as infrastructure and education.
In this week’s Behind the Brand feature we meet the marketing manager who’s bringing the laughs to LinkedIn. There can’t be many, if any, who have a head of marketing role quite like Henry Hayes, but London startup Passionfruit does things differently to cut through the noise in an agency-dominated industry.
“I basically realised I wanted to be the world’s No. 1 comedy marketer. There is a real need, isn’t there?” jokes Hayes, who made his name with viral sketches on London stereotypes. “Even though we are a small company, we are a bit of a stormy beast. If CMOs only go on LinkedIn three times per month, we need to make sure we are at the top of their feed.”
The central bank plans to support the UK’s digital asset framework by allowing systemic stablecoin issuers to hold accounts directly at the central bank.
In remarks at DC Fintech Week on Wednesday, deputy governor for financial stability Sarah Breeden said the BoE would “play the role of banker” to large, systemic stablecoin issuers, a move aimed at bolstering financial stability and confidence in digital money.
“That avoids the issues we’re already starting to see overseas, where stablecoin issuers struggle to access banking services,” she said.
Warnings that an AI bubble is on the horizon are growing louder by the day. Many companies that are creating AI products or providing the infrastructure to support it have achieved sky-high valuations, and industry watchers have compared the situation with the bursting of the dot-com bubble 25 years ago, which wreaked havoc on global stock markets.
Not everyone agrees with this pessimistic outlook, but our poll shows that for most of you, our readers, it is a worry.
Home renovations can seriously increase the value of your property. ·Jackyenjoyphotography via Getty Images
Ever thought about renovating your house, and what that may do to its value? An analysis published by Nationwide this week showed that a 10% increase in floor space, all things equal, can add 5% to the price of a typical house. The building society found that an extra bathroom could add 4% to the price of a typical home, equating to a boost of £11,300. Find out whether it’s worth upgrading your property: Loft conversions can boost value of a home by £65,700
Government data boffins have examined the times when most credit card transactions take place, and it turns out the afternoons are by far the busiest time for spending. But why should that be and, perhaps more importantly, how can you keep your post-lunch spending under control?: 5 reasons why we spend more in the afternoon
Economic data: Wednesday is an important day for UK economic updates with the release of key inflation data. Analysts see the annual rate of price increases climbing to 4% in September from 3.8% in August.
Attention will switch to the US on Thursday with jobless claims in the spotlight. Investors will be watching closely for any weakening of the labour market that may sway a deadlocked Fed rate-setting committee towards lowering borrowing costs.
A busy Friday will see the release of US inflation figures, with economists predicting a slight uptick in the annual rate for September. watch out too for S&P’s all important flash manufacturing and services PMIs.
Company earnings: Elon Musk’s Tesla (TSLA) kicks off “Magnificent 7” earnings, off the back of record deliveries in the third quarter. Streaming giant Netflix (NFLX) is also due to release earnings, with the company expected to report another set of strong results.
In addition, chipmaker Intel (INTC) is scheduled to report third quarter earnings, as the company pushes ahead with its turnaround strategy.
Back in London, it’s a busy week for major banks, with Barclays (BARC.L), Lloyds (LLOY.L) and NatWest (NWG.L) set to report results.
Consumer goods company Unilever (ULVR.L) is another major FTSE-listed company slated to update on performance, following a steady first half.
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