*"Unless a pick-up in nominal growth drives higher incomes and tax revenues – AI investment and/or productivity per se might not be enough – some countries might face tough consolidation challenges," HSBC analysts wrote last week.
The consolidation needed would be large. With borrowing costs at current levels, HSBC estimates that the U.S. would need a fiscal adjustment of over 4% of GDP to stabilize its debt-to-GDP ratio, with 3% required by France, and 2% by the UK and Germany.
Consolidations of such scale are rare. In major advanced economies since 1990, there have been only eight of over 4% of GDP during a 5-year period, with fifteen over 3% of GDP in that timeframe.
Whether all this fiscal expansion ends in currency debasement, hyperinflation and crashing bond markets is a separate debate. But even if these doomsday scenarios fail to play out, it's fair to assume that bond markets will be under pressure moving forward.*
Reuters
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2026-02-12 12:31:43 CET
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wss://theforest.nostr1.comPublished at
2026-02-12 12:31:43 CETEvent JSON
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"content": "*\"Unless a pick-up in nominal growth drives higher incomes and tax revenues – AI investment and/or productivity per se might not be enough – some countries might face tough consolidation challenges,\" HSBC analysts wrote last week.\n\nThe consolidation needed would be large. With borrowing costs at current levels, HSBC estimates that the U.S. would need a fiscal adjustment of over 4% of GDP to stabilize its debt-to-GDP ratio, with 3% required by France, and 2% by the UK and Germany.\n\nConsolidations of such scale are rare. In major advanced economies since 1990, there have been only eight of over 4% of GDP during a 5-year period, with fifteen over 3% of GDP in that timeframe.\n\nWhether all this fiscal expansion ends in currency debasement, hyperinflation and crashing bond markets is a separate debate. But even if these doomsday scenarios fail to play out, it's fair to assume that bond markets will be under pressure moving forward.*\n\nReuters",
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