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Focus - G7 deficits and debt put upward pressure on rates

G7 debt ratios rose during Covid and deficits remain higher than in 2019 despite full employment. In fact 2023 saw a new fiscal stimulus in most G7 countries. While governments plan to cut deficits we are sceptical. The ageing trend, which is boosting health and pensions spending, has not gone away, while there are now three new pressures for increased outlays - defence, net zero and industrial policies. We conclude that fiscal pressures make it very unlikely that interest rates will return to pre-Covid levels. For a copy please email

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