Archive

March 26, 2025
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UK Fiscal Smoke Over Treading Water

  • Attempts to recreate fiscal headroom after slippage rely on implausible and optimistic assumptions. Further tax rises and delayed prudence are likely in the Autumn budget.
  • Replacing aid resources with capital defence spending helps loosen fiscal policy inside the budgetary rules. Policy changes are relatively neutral over the next few years.
  • Without corrective action, the gross financing requirement path is £18bn a year higher than in the Autumn, and almost £50bn higher than last Spring, burdening gilt issuance.

By Philip Rush

March 17, 2025
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EU: Defence Spending

  • The EU faces two imminent deadlines in determining defence spending. On 20 March, the Commission presents its full loans-for-arms proposal to a divided European Council, and on 24 March, the ‘old’ Bundestag will step down, after which easing Germany’s debt brake becomes even harder.

By Alastair Newton

March 13, 2025
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Heavy Metal Trade War

  • Volatility in US trade policy continues a cleaner tightening trend against China in the well-established tech war. Tariffs are a tool, but so are export restrictions.
  • China expanded restrictions on rare earth mineral exports to license critical materials like tungsten. The West lacks friendly suppliers and struggles to develop alternatives.
  • European defence investments may flounder. Japan and Korea may also suffer, so they can indirectly frustrate the US. Aggressive trade policy hits volumes as well as prices.

By Philip Rush

March 11, 2025
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Trump-ism And East Asia

  • Donald Trump’s abandonment of the US-led international order and efforts to reshape global trade and finance do not bode well for East Asian economies that may find themselves forced by Washington into a Chinese sphere of influence as part of a grand bargain with Beijing.

By Alastair Newton

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