Discussing its roadmap for the year, the parking operator said, “approximately 5,500 to 7,500 new spaces are expected to be added over the course of 2026, driving revenues for the public parking segment to reach between AED 560 million and AED 610 million (USD 166 million).”

The infrastructure expansion will be accomplished through the opening of additional on-street and open-air parking slots, representing a 3.9% increase over the current public parking portfolio of 193,200 spaces. It is also worth mentioning that the venture last year entered into a strategic agreement with Dubai Holding, to introduce parking solutions across several master-planned communities in Dubai.

Parkin will oversee end-to-end management of parking operations by deploying its advanced digital technologies, enforcement systems and real-time data analytics, which will help the public parking provider to enhance its operational efficiency, apart from optimising parking management across the designated areas. Implementing the concept of controlled parking will reduce the increasing pressure on parking availability across key destinations in Dubai.

Meanwhile, Parkin has made public its operational and financial results for Q4 and the full year 2025. Apart from the overall revenue increasing to AED1.326 billion (USD 361 million) in 2025, up 43% year-on-year, net profit reached AED625.5 million (USD 170.32 million), representing an annual increase of 48%.

In Q4 alone, Parkin posted record revenues of AED389.4 million, marking a 47% increase compared to the tally registered in 2024. The company’s earnings before financing costs, taxes, depreciation and amortisation (EBITDA), on the other hand, reached AED232.9 million, reflecting similar growth, while maintaining a 60% margin.

“We closed 2025 with a strong quarter, converting disciplined execution into higher earnings. As in prior periods, we continued to expand our operational footprint, adding both public and developer parking spaces to our portfolio, supported by Dubai’s status as a world-class place to live, work, visit, and invest,” said Eng. Mohamed Abdulla Al Ali, CEO of Parkin.

Breaking down the data segment-wise, Parkin’s public parking revenue increased 29% to AED144.5 million in Q4, supported by factors like an increase in the weighted average hourly tariff to AED3.03 and an increase in the size of the public parking portfolio.

Developer parking revenue, on the other hand, increased 38% to AED28.1 million during the same period, supported by space growth, stronger transaction volumes and the application of the variable tariff in relation to around one third of the developer portfolio.

The company also witnessed revenue increases from seasonal cards and permits in Q4 2025, rising 66% to AED67.4 million. Enforcement revenue increased by 65% to AED127.1 million during the period.

“Seasonal card sales reached record highs as customers continued to recognise the relative value offered by this product. Total transaction volumes were broadly in line with the same period last year, while utilisation moderated as expected, reflecting a greater mix of seasonal card users, as well as the addition of new parking space capacity,” concluded Al Ali.

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The latest “OECD Economic Survey of Thailand” projects the nation’s GDP to grow by 2.0% in 2025, followed by 1.5% in 2026. Increasing domestic demand and exports, as the peak impact of higher tariffs passes, will lift output growth to 2.6% in 2027, while inflation is expected to remain low.

“After decades of impressive economic and social development, further reforms are needed for Thailand to maintain strong growth momentum. Lowering fiscal deficits and public debt, together with measures to tackle informality and boost productivity – by strengthening competition, reducing restrictions on foreign direct investment and scaling back public ownership – are key for strong, sustainable growth as well as social development,” OECD Deputy Secretary-General Frantisek Ruzicka said, while presenting the study report in Bangkok alongside Thailand’s Minister attached to the Prime Minister’s Office Supamas Isarabhakdi and Secretary-General of the National Economic and Social Development Council Danucha Pichayanan.

“With population ageing, public spending is set to rise, driven by increasing expenditure on pensions and healthcare. Raising retirement ages and enhancing the contribution of taxes, for example, value-added or personal income taxes, to deficit reduction and quality public services will help ensure sustainable public finances. Further regulatory reforms, including easing restrictions on foreign direct investment and removing barriers to competition, would boost productivity. Creating a level playing field by reducing the dominant role of state-owned enterprises is also key to strengthening productivity in Thailand,” the report noted.

More efforts are needed to tackle informality, one of the Thai economy’s key challenges. Lowering the cost of formal job creation, including through reforms to social protection systems, can create more formal jobs. Strengthening human capital through education reforms, such as updating school curricula and enhancing vocational training, will further contribute to the formalisation of employment.

“Extreme weather events, such as floods and droughts, cause significant damage to Thailand’s economy and communities. Advancing climate adaptation in agriculture, infrastructure resilience and early warning systems would reduce the cost of climate change, while expanding renewable energy sources is important to meeting the country’s climate change mitigation ambitions,” the OECD report concluded.

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Debt-to-GDP hovers around 100%, among the highest in the developed world, and borrowing has reached record monthly highs. In this context, newspapers and analysts have begun warning of a potential crisis reminiscent of the 1970s, even speculating about the possibility of an IMF rescue. Official voices and independent observers caution that while risks are real, an IMF bailout is not imminent as long as fiscal and economic reforms stay on track.

GDP stalls as inflation persists

Economic growth has been modest under the Keir Starmer government. After a strong start to the year (GDP rose 0.7% in Q1 2025), activity slowed sharply, with real GDP just 0.3% higher in Q2. This beat analysts’ forecasts (0.3% vs 0.1% expected), but firms and the government built up stockpiles and boosted spending ahead of known shocks. For example, businesses ramped production to avoid incoming American tariffs, and public sector outlays rose 1.2% in Q2. In contrast, private investment and consumer spending languished. Business investment fell 4% in Q2, and household spending was hardly up.

The Confederation of British Industry (CBI) warns that recent tax increases (higher national insurance and a higher minimum wage) have dampened firms’ hiring and investment plans, meaning growth is likely to remain subdued. Official forecasts now target only about 1-1.3% annual expansion in 2025-26, little up from the 1.2% and 1.4% predicted by the IMF. In short, the economy is no longer contracting, but growth is anaemic, leaving the United Kingdom the “joint-second” fastest grower in the G7 in Q2, alongside France.

Inflation remains elevated. Consumer prices (CPI) climbed 3.8% year-on-year in July 2025, the highest rate in the G7. Much of this reflects base effects (e.g. energy prices and airfares) and recent food cost rises, but the broader picture is worrying.

Wages are rising (regular pay growth around 5% in mid-2025), and corporate costs are up, while housing and transport prices are volatile. Critics note that stubborn price rises, coupled with a shrinking workforce, make it hard for inflation to fall to the Bank of England’s 2% goal. BoE Governor Andrew Bailey has flagged this “sticky” inflation as a chief concern.

Labour market, debt strains, and reforms

Signs of weakness also appear in the labour market. Official data show payrolled employment has been falling for months, and though wages still rise faster than inflation, slack is growing. The jobless rate ticked up to 4.7% in Q2 2025, and analysis by the Resolution Foundation suggests unemployment may hit around 5% this autumn. The number of people claiming jobless benefits has climbed sharply since Labour’s victory, reaching a record 6.5 million by mid-2025.

A particularly troubling aspect is the low labour-force participation, with 21% of prime-age Britons neither working nor seeking work, well above the pre-pandemic level. Governor Bailey and other officials point out that a falling workforce and ageing demographics are structural headwinds. Bailey warned at Jackson Hole that Britain now lags other advanced economies on workforce participation and must boost productivity to grow. This mismatch partly explains why UK inflation (at 3.8% in July) remains the highest among peer countries.

Behind these problems lie the public finances. Debt has ballooned, as the net government debt stands around 100-104% of GDP, near all-time highs. In January 2025, the UK ran the largest-ever monthly deficit (outside the pandemic), over £21 billion. This debt burden magnifies any shock. The IMF and the OBR warn that, at current trends, debt will rise sharply in the coming decades unless policymakers act. Labour’s early budgets reflect this pressure.

Chancellor Rachel Reeves has restored sound fiscal rules, raised taxes (for example, reversing a Tory cut in employers’ national insurance), and cut some spending (notably disability benefits) to trim the deficit. The IMF noted in July 2025 that these measures have “enhanced the credibility” of British fiscal policy, even as it cautioned that limited headroom means small shocks could breach the deficit target.

In practice, this has meant tight constraints, with many departments facing cuts or stagnation, while capital investment (in infrastructure, net-zero and innovation) has been prioritised. In effect, Treasury has chosen to “hold spending steady while targeting new investment on growth areas.”

After more than a year in power, the Starmer government has launched several initiatives. It made large capital commitments. For example, the 2025 Spending Review increased infrastructure, energy and defence investment substantially, even as day-to-day budgets were squeezed. Taxes have risen (e.g. overturning the NI cut, freezing personal allowances), and certain welfare payments have been trimmed to keep to fiscal targets.

On the growth front, the government has prioritised technology and industry. In January 2025, the Prime Minister unveiled an AI-focused growth plan, backing all 50 recommendations of the “AI Opportunities” review. This included new “AI Growth Zones” (fast-tracked planning for tech campuses) and a massive commitment to data centres.

It means that by that day, three firms had already pledged £14 billion in British AI data infrastructure and 13,250 jobs. For example, Vantage Data Centres announced a £12 billion expansion to build one of Europe’s largest campuses (11,500 jobs).

A new national supercomputer and an “AI Energy Council” were also proposed, tying digital strategy to industrial policy. In short, Whitehall is explicitly betting on AI, data centres and the so-called “digital economy” to drive future growth.

The government has also revived industrial strategy measures. It completed a free-trade deal with India and inked a preliminary “Economic Prosperity Deal” with the United States on limited tariff cuts. A UK-US full FTA remains under negotiation, but the May 2025 pact eliminated tariffs on aerospace and set a quota for car exports (100,000 vehicles per year, roughly equal to recent British output).

Domestic plans include a “Growth Mission” focusing on housing, childcare, and “green” industries. Labour has also promised to protect core services against drastic cuts, even as spending elsewhere is pared back.

Despite this activity, critics say hard reforms have lagged. Planned measures to improve labour supply have been watered down amid political resistance, and productivity-boosting reforms are slow to roll out.

As one analysis notes, Reeves’ early fiscal changes were “relatively modest,” leaving only small room for slack in the rules.

The budget and spending announcements have largely kept the promise of higher living standards, but only over a multi-year horizon, with actual disposable incomes still squeezed in the near term. In sum, the government is delivering on long-term industrial strategy and stabilising the public finances, but many promised reforms are still only beginning to materialise.

Trade deals with US and India

The UK recently secured two headline trade agreements, with mixed impacts. In May 2025, London and Washington signed the so-called “Economic Prosperity Deal.” This quasi-deal is not yet a full free-trade treaty, but it pledges mutual tariff reductions and opens a path to further talks. Crucially, the US agreed to scrap tariffs on British aerospace parts and cut auto tariffs to 10% (from 27.5%) on up to 100,000 British-made cars per year.

In return, London committed to the quota system. However, Trump’s administration kept the existing 25% duties on British steel and aluminium in place. The deal is legally non-binding, and many details remain unresolved (for example, American law permits higher 10% “baseline” tariffs on cars even after the deal).

In practice, the immediate benefits seem limited, as direct UK exports to the United States account for only about 7% of overall British exports, and the tariffs on metals are effectively unchanged until a future quota system is set up. In the long run, a deeper UK-US FTA could boost investment and consumer choice, but for now, analysts caution that trade barriers remain mostly intact.

Even more transformative is the UK-India free trade agreement signed in July 2025. After three and a half years of talks, Prime Minister Starmer and India’s Narendra Modi hailed a “historic” deal. Official estimates project it could add about £4.8 billion a year to UK GDP and attract £6 billion in bi-directional investment.

Key elements include steep cuts in tariffs, as on average, British exporters will see duties on their goods fall from 15% to around 3%. For example, UK whisky and spirits face half the tariff immediately, with further cuts later; the auto, food and garment sectors also gain improved market access. This opens up India’s 1.4 billion consumers to British products.

However, experts caution that the deal has big gaps. It contains virtually no new liberalisation for UK services or finance and lacks binding provisions on environmental and labour standards. Critics note that India’s average tariff (13%) is still much higher than the United Kingdom’s (1.5%), so the principal gains may be for goods exporters. The agreement will only take effect after parliamentary ratification, so benefits lie ahead.

In the longer run, openness to Indian markets could help sectors like whisky, pharmaceuticals, and automotive parts. But because underlying structural issues remain, any boost may be gradual. In sum, the deals with the United States and India promise targeted export growth but are unlikely to be a panacea for the economy’s deep problems. As OECD notes, trade openness helps, but “very thin fiscal buffers” and global uncertainties mean growth will stay weak unless domestic reforms keep pace.

Ambitious AI action plan

A centrepiece of the government’s strategy is boosting high-tech capacity at home, especially data centres and semiconductors. The Labour administration has deliberately courted large tech projects. The AI Action Plan and Digital Strategy have helped secure about £25 billion in data centre investment since last summer.

That includes Vantage Data Centres’ £12 billion Welsh campus and Nscale’s multi-billion-pound AI data campus in Essex. These projects will certainly create some high-skilled jobs and upgrade the UK’s digital infrastructure.

But experts warn the net benefits may be overstated. Data centres consume enormous amounts of electricity and water. As one analysis starkly put it, “They suck up energy and water and don’t employ many people, but the UK economy really needs more data centres.”

In other words, the environmental cost is high, and the direct job creation is modest, especially compared to heavy industries.

Even the Treasury’s own AI plan acknowledges the need to manage the energy demand (it set up an “AI Energy Council” to tackle that challenge). Some analysts fear we may end up with beautiful tech parks that boost nominal GDP but leave local economies little better off.

Thus, while the government’s data-centre push aligns with its AI ambitions, observers note that sustainability and genuine productivity gains must be assured if it is to pay off in the broader economy.

The semiconductor sector is seen similarly as a future growth area. The United Kingdom launched a National Semiconductor Strategy (in May 2024), aiming to capture a slice of the global chip market, particularly niche fields like compound semiconductors (advanced materials for 5G, lidar and power electronics).

The government pledged in its last term to invest £1 billion in chips and set up a Semiconductor Advisory Panel. However, the new government has been noncommittal on those headline targets, and as reported in mid-2024, ministers declined to guarantee the full £1 billion, focusing instead on leveraging private capital.

Analysts and bank views: The diagnosis

What do experts say is ailing the economy? Across the board, the consensus is that Britain faces weak productivity and structural weakness more than any single shock. Bank of England chief Andrew Bailey calls the situation “an acute challenge,” citing slow growth and falling labour participation after the COVID-19 pandemic. His worry, echoed by many, is that chronic factors are dragging growth down.

In Bailey’s view, the economy is “well at the bottom of the league table” on key metrics of workforce and output. He and other BoE officials stress boosting productivity via technology and reform, rather than relying solely on low interest rates. Indeed, Bank staff told Reuters they expect more monetary easing only if inflation falls decisively; for now, the July inflation surprise was deemed temporary.

International bodies echo this. The IMF’s mid-2025 review applauds the government’s “good balance” of supporting growth while reducing deficits and projects 1.2-1.4% growth as easing continues. But it warns of “significant risks,” such as volatile markets, rigid public finances, and little fiscal headroom, meaning any shock could force belt-tightening or expose the United Kingdom to higher debt dynamics.

The OECD similarly downgraded the British growth forecasts (to 1% for 2026) and noted that very thin fiscal buffers leave the UK exposed. In private, one IMF economist reportedly told The Telegraph that policy uncertainty and debt could make the situation “as perilous as 1976.” Publicly, however, Fund staff have emphasised that a bailout is not on the table as long as the government sticks to its plans.

Heading for a bailout?

Chancellor Reeves repeatedly says the United Kingdom has no reason to seek IMF aid, and has not signalled any such need. Unlike in 1976, today’s policymakers have set clear fiscal targets and are credibly pursuing them, which keeps the public debt trajectory only gradually rising (the OBR forecasts net debt barely above 100% of GDP in 2026).

The British economy is beset by stagnant growth, stubborn inflation, and high debt, a fragile mix that has sparked chatter of an IMF rescue. So far, however, Labour has taken steps to address the situation by raising taxes and cutting spending to meet strict fiscal rules, while launching ambitious investments in infrastructure and technology.

Chief economists and officials stress that these moves have improved credibility, even if the progress is just beginning. Critics say the government must go further, but there is no sign of an immediate crisis. Whether that remains true will depend on whether growth can firm up and borrowing falls back once the temporary shocks pass.

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In absolute terms, global debt exceeded $324 trillion in early 2025, up from around $255 trillion in 2019. This massive debt overhang threatens to undercut every economy’s ability to withstand the latest headwinds, including a return to protectionism in the form of higher trade tariffs. Without urgent course correction, the world could be headed toward a widespread debt crisis with lasting economic and social repercussions.

Global debt overhang and its risks

World Bank Chief Economist Indermit Gill notes that debt is a powerful tool for growth and stability, yet it is also “a form of deferred taxation.”

By borrowing instead of immediately raising taxes, governments can finance long-term investments that benefit future generations or support incomes during a downturn when austerity would be counterproductive.

This strategy makes sense as long as economic growth outpaces the cost of borrowing. Eventually, however, the piper must be paid. If a country’s income does not grow faster than its interest payments, taxes, or inflation, it will inevitably have to increase to service the debt.

In other words, today’s debt is simply tomorrow’s taxes by another name. Persistently high debt, without commensurate growth, thus becomes a drag on development, a barrier to economic progress that grows taller with each passing year of heavy borrowing.

That barrier has seldom been higher than it is now. Over the past 15 years, developing countries have become hooked on debt, accumulating liabilities at a record pace of roughly six percentage points of GDP per year. This debt binge was fuelled by years of ultra-low global interest rates and often justified by optimistic growth projections.

History shows that such rapid debt build-ups often end in tears. Indeed, research indicates that about half of large debt booms in emerging and developing economies have been followed by financial crises. In effect, the odds that the recent developing-country debt surge will trigger a crisis somewhere are roughly 50-50.

With global debt levels at all-time highs, the world is precariously balanced on what Gill calls a “debt time bomb.” Each additional shock, whether economic, geopolitical, or climatic, increases the chances of a detonation.

In May 2025, the International Monetary Fund (IMF) stated that the global public debt could increase to 100% of global GDP by the end of the decade if current trends continue.

According to the IMF report, “The rising ratio of public debt to GDP reflects renewed economic pressures as well as the consequences of pandemic-related fiscal support.”

“This trend raises fresh concerns about long-term fiscal sustainability as many countries face rising budget challenges,” the global monetary body remarked.

The report indicated that approximately one-third of countries, representing 80% of global GDP, now have public debt levels exceeding those recorded prior to the COVID-19 pandemic and are increasing at a faster rate. More than two-thirds of the 175 economies examined in the IMF’s study are carrying heavier public debt burdens compared to the period before the pandemic began in 2020.

In March 2025, the United Nations Trade and Development (UNCTAD) noted soaring interest payments were squeezing budgets, forcing governments to choose between repaying creditors and funding essential services.

“Developing countries are sinking deeper into a debt-driven development crisis. Their external debt, money owed to foreign creditors, has quadrupled in two decades to a record $11.4 trillion in 2023, equivalent to 99% of their export earnings. A mix of factors has fuelled this surge, including increased borrowing for development projects, volatile commodity prices, and widening public deficits. The COVID-19 pandemic worsened the situation, as countries borrowed heavily to offset the economic fallout and fund public health measures,” UNCTAD added.

While debt can be a vital tool for economic growth and development, it becomes a problem when repayment costs outpace a country’s capacity to pay. That is now the case for two-thirds of developing countries. Debt distress now looms over more than half of the 68 low-income countries eligible for the IMF’s Poverty Reduction and Growth Trust, more than double the number in 2015.

Rising interest rates

Exacerbating the danger, the latest debt surge has been accompanied by the fastest increase in global interest rates in four decades. After a long era of cheap money, central banks worldwide applied the monetary brakes in 2022 and 2023 to combat inflation.

The result has been a sharp spike in borrowing costs, as interest rates Monjumped multiple percentage points within months, the steepest rise since the early 1980s. For about half of all developing economies, debt servicing costs have essentially doubled in a short span. On average, the interest payments on government debt in developing countries rose from under 9% of government revenues in 2007 to about 20% of revenues by 2024.

Such a surge in debt service burdens would be daunting even in good times. Amid today’s challenges, it verges on the catastrophic. By 2024, many governments were spending one-fifth of their budgets just to pay interest, resources no longer available for public investments or essential services.

Although the world has so far averted a systemic financial meltdown of the kind seen in 2008 and 2009, too many developing countries are now caught in a “doom loop” of debt and underinvestment. To service their loans, governments are cutting back on the very spending that would boost future growth, slashing funding for education, healthcare, and infrastructure.

This self-defeating cycle undermines human development and erodes the productive capacity needed to escape from debt. Alarmingly, this is not a problem confined to a few outliers; it has become a widespread phenomenon.

Almost half of humanity, about 3.3 billion people, now live in countries that spend more on interest payments than on health or education. In low-income countries, especially, scarce fiscal resources that should be used to build schools, clinics, or roads are instead absorbed by creditors. It is a vicious circle: high debt forces spending cuts, which strangulate growth, which in turn makes the debt even harder to bear.

Debt threat to future workforce

Nowhere is this doom loop more troubling than in the world’s poorest nations. Some 78 low-income countries eligible to borrow from the World Bank’s International Development Association (IDA) are teetering on the brink of a debt disaster. These countries are home to roughly one-quarter of the world’s population, and include a large share of the 1.2 billion young people poised to enter the global workforce in the next 10 to 15 years.

The future of the global labour market, and of these nations’ development, depends on whether this youth bulge can be educated, healthy, and productively employed. Yet high debt threatens to derail that potential. Saddled with onerous debt service, many of these countries cannot invest adequately in their burgeoning young populations.

The result could be a lost generation, where millions of youths are deprived of quality schooling, healthcare, and jobs, sowing the seeds for frustration and instability down the line.

Policymakers, unfortunately, have so far responded with complacency or denial. In what Gill describes as “another triumph of hope over experience,” many governments are effectively gambling that a favourable global environment will somehow rescue them from the debt trap. They bank on global growth suddenly accelerating and interest rates falling just enough to defuse the debt bomb. But counting on a lucky break is a perilous strategy.

In reality, most of these countries are already in deep trouble by any objective measure. According to the IMF, about 60% of low-income countries are now either in debt distress or at high risk of debt distress.

Several have already defaulted or are seeking restructuring of their debts in the wake of the pandemic and other shocks. The world cannot afford another decade of drift and denial on this issue, as the costs in foregone development and human suffering would be staggering.

Low growth, high borrowing costs

If anything, the broader global outlook is making debt burdens harder to manage. Escalating geopolitical tensions and current trade wars, marked by increased tariffs and protectionist measures, have further darkened the economic outlook. Business confidence has been undermined by record levels of policy uncertainty in international trade.

At the start of 2025, private economists expected about 2.6% global GDP growth for the year, but as new data and conflicts emerged, the consensus forecast was downgraded to roughly 2.2%. That is nearly one-third below the average growth rate of the 2010s.

The World Bank likewise projects a significant growth slowdown in 2025 compared to prior estimates. Slower growth directly translates into lower revenues for governments and fewer job opportunities, making it even harder for heavily indebted countries to grow their way out of debt.

At the same time, borrowing costs are expected to remain far higher than they were in the last decade. In advanced economies, central banks have indicated that policy interest rates will average around 3.4% in 2025 and 2026, a level more than five times the ultra-low average that prevailed from 2010 to 2019.

In the United States, for example, the Federal Reserve raised its benchmark rate by over five percentage points in 14 months, the most aggressive tightening in over 40 years. Such moves, echoed by other major central banks, have ended the era of near-zero rates.

For developing economies, the consequences are painful, as higher global rates push up the cost of new financing and often strengthen the US dollar, making dollar-denominated debts harder to repay. In an era of scarce public resources, boosting growth and development will require mobilising private investment, yet foreign capital is unlikely to flow into countries perceived as debt-crippled and low-growth.

Prioritising debt reduction

Given these realities, reducing debt levels is an urgent priority, especially for developing economies with chronically high debt-to-GDP ratios. This must start with responsible national policies, as governments should rein in excessive borrowing and improve their fiscal balances where possible to stabilise debt dynamics.

Some may need to make painful but necessary adjustments to curb non-essential spending and boost domestic revenue. However, the challenge is too large for individual countries to solve alone, especially when many are already insolvent or nearly so.

What is needed is a systemic solution. The global financial community must come together to upgrade the apparatus for assessing debt sustainability and handling debt distress. The current international system for sovereign debt restructuring is widely seen as inadequate, being too slow, too fragmented, and too biased toward kicking the can down the road.

All too often, official lenders and institutions opt to extend new “bridge” loans to tide countries over, when in fact many low-income countries require outright debt write-offs to restore solvency. Procrastination through serial lending ultimately serves neither debtor nor creditor if a country’s debt is unsustainable.

Recent trends underscore the scale of the problem. The number of countries facing high debt levels has jumped dramatically, from 22 countries in 2011 to 59 countries in 2022. As of last count, 52 developing countries, nearly 40% of the developing world, are in serious debt trouble, meaning they either are already in default or face severe financial stress.

Yet progress on mechanisms such as the G20 Common Framework for debt treatment has been disappointingly slow, hampered by coordination problems among traditional creditors, newer lenders, and private bondholders.

To prevent a lost decade for development, the world needs a more streamlined and swifter process for restructuring unsustainable debts. This could involve tougher assessments to distinguish liquidity problems from true insolvency, and bolder action to write down debts that cannot reasonably be repaid without strangling a country’s future.

Returning to prudent debt levels

As the saying goes, when you find yourself in a hole, the first step is to stop digging. The world’s borrowing binge must come to an end. The era of extraordinarily low interest rates that once tempted many countries to live beyond their means is over.

Over the last five years, a series of unprecedented crises, both natural and man-made, made heavy borrowing unavoidable in some cases, as governments acted to cushion their people from harm. Now, however, a return to prudence is essential. Policymakers should re-embrace clear fiscal limits and revert to earlier norms of what constitutes excessive sovereign debt.

One sensible guideline is what Gill calls the “40-60 maximum,” roughly 40% of GDP as an upper debt limit for low-income countries, and 60% of GDP for high-income countries. Middle-income economies would fall somewhere in between those benchmarks.

While these ratios are not necessarily strict thresholds, they hark back to long-standing debt targets, for example, the 60% debt-to-GDP limit in the European Union’s fiscal rules, which were associated with greater stability. Adhering to such limits would give countries more fiscal space to handle shocks and invest in development, instead of constantly teetering on the edge of default.

The looming global debt disaster is not inevitable. It is a man-made crisis, and it can be solved with decisive action. Reining in debt and reigniting growth are difficult tasks, but the alternative is far worse. Without corrective measures, persistently high debt will continue to stall economic progress and heighten the risk of financial crises.

By contrast, a combination of debt relief, sound fiscal management, and growth-enhancing reforms can gradually defuse the debt bomb. The world has arrived at a critical juncture. Having deferred the costs of debt for years, governments and international institutions must now confront them.

The next generation’s prosperity depends on choices made today, on the willingness to restore fiscal discipline, revamp the global debt architecture, and unleash the productive potential of open markets and private enterprise.

The window to act is narrowing, but with clarity of purpose and collective resolve, a global debt disaster can be averted. The lesson of recent years is clear. We can no longer afford another decade of denial and delay on sovereign debt. The time to pay the piper, and to chart a sustainable path forward, is now.

The post Averting the global debt crisis appeared first on International Finance.

Growing accounting needs

The short-term rental industry has expanded rapidly over the past decade, fuelled by platforms like Airbnb, Vrbo, and Booking.com. What was once a niche market for vacation properties has become a mainstream investment strategy for individuals and institutional players. With this growth, financial technology (fintech) has become an integral part of how operators manage their businesses.

Historically, short-term rental owners relied on traditional banking services, manual spreadsheets, and delayed payouts from booking platforms. These processes often created inefficiencies and left operators vulnerable to liquidity challenges. Today, fintech companies are reshaping the landscape by providing tools that allow operators to manage cash flow with greater precision, transparency, and speed.

New technology and services have enabled short-term rental operators to professionalise their financial operations, from embedded payment systems to revenue management platforms and real-time data analytics. For finance professionals, this shift represents more than just operational convenience. It demonstrates how fintech can transform fragmented, consumer-driven markets into scalable business models with sophisticated financial infrastructure.

Common cash flow challenges

While short-term rentals can generate attractive returns, they are inherently volatile businesses. Operators face several recurring cash flow challenges that make financial management more complex than in traditional real estate.

Short-term rental operators face cash flow challenges due to seasonal demand shifts, delayed payouts from booking platforms, and high fixed costs like mortgages and maintenance. Irregular income paired with scheduled expenses creates liquidity issues. Regulatory requirements such as taxes and insurance add unpredictability, while reliance on a single platform heightens risk—any disruption can severely impact revenue. These factors combined make accurate forecasting and financial stability difficult to maintain.

Addressing cash flow issues

Modern fintech solutions are helping short-term rental operators manage unpredictable revenue and recurring expenses more effectively. Faster payout tools offer near-instant access to guest payments, reducing reliance on credit and improving cash flow for payroll and vendor payments. Revenue management platforms use machine learning to optimise pricing and forecast income, enabling better planning for debt and capital expenditures. Expense tracking software integrates with bank and property systems to automate bookkeeping and flag budget deviations, minimising financial blind spots as operators scale.

Additional innovations include embedded lending products that offer flexible repayment tied to projected bookings—ideal for seasonal markets. Automated tax and compliance platforms handle occupancy taxes and reporting, reducing the risk of unexpected liabilities. Holistic dashboards unify financial data across properties, giving operators and finance teams real-time visibility into performance. These tools empower operators to make smarter, faster decisions and maintain financial stability in a volatile industry.

To illustrate, consider a short-term rental operator managing 25 properties across three cities. Without utilising third-party resources, this operator must manually reconcile booking payouts, vendor invoices, and tax obligations—a process prone to delays and errors. With fintech, payments are deposited immediately, revenue projections update in real time, and credit facilities are automatically extended during off-peak months. This transforms financial management from reactive to strategic.

The short-term rental sector demonstrates how third-party financial solutions such as SaaS platforms and outsourced accounting services are becoming essential infrastructure for growth. By helping operators manage the industry’s inherent cash flow volatility, these tools provide the visibility, control, and agility needed to make smarter, faster decisions.

What was once a fragmented and unpredictable asset class is now becoming more financially disciplined and operationally scalable. As the sector matures, those who adopt purpose-built financial tools will be better positioned to mitigate risk, unlock efficiencies, and build sustainable, competitive businesses.

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Oil prices have fallen due to the surprise supply increase by OPEC+ members in the first weeks of April 2025, due to the rising threat of a United States-China trade war and its dire effects on the world economy. The IEA has also significantly reduced its growth projections for oil demand in 2025 and 2026. Since the start of the month, both the US West Texas Intermediate crude and Brent, the primary benchmark for Middle Eastern producers, have dropped by about USD 10.

In contrast to BMI’s projection of USD 68 for the benchmark, Goldman Sachs now projects Brent to average USD 63 for the rest of 2025.

State-backed energy company Saudi Arabian Oil Company’s forecast for a smaller dividend payout of roughly USD 85 billion in 2025 as opposed to USD 124 billion in 2024 is another factor straining the government’s finances.

According to the IMF, Saudi Arabia needs oil at more than USD 90 a barrel to balance its budget. Despite the government’s current and fiscal account deficits, Fitch Ratings projects that in 2025, the fiscal deficit will increase to 4.1% of GDP due to decreased dividend payments from Aramco and an average price of USD 70 for Brent.

Paul Gamble, Senior Director of Sovereigns at Fitch Ratings, noted that under normal circumstances, “A USD 10 per barrel drop in the oil price would increase the budget deficit by around 3 percentage points.”

“We had already been projecting a fiscal deficit for Saudi Arabia in 2025 prior to the sell-off that started in April, and with oil prices set to hold at lower levels for the rest of this year, we now expect that the fiscal deficit will widen,” stated Edward Bell, Acting Group Head of Research and Chief Economist at Dubai-based Emirates NBD.

Growth Without Oil

The non-oil sector, which grew 4.3% in 2024 and outpaced the 1.3% rise in the total GDP, was predicted to account for a large portion of the Kingdom’s growth in 2025.

Any fiscal policy step to reduce overall spending might also restrain development in the non-oil sector, even if Saudi Finance Minister Mohammed Al Jadaan has reaffirmed that the Gulf nation’s focus is currently on increasing non-oil GDP.

“So far this year, non-oil growth has stayed strong, and the domestic market continues to show a strong pipeline of new orders for 2025. Later in the year and into 2026, government expenditure may decline, which would limit the growth rate of the entire economy,” Bell added.

According to reports, several of the most ambitious megaprojects have been scaled back or recalculated by the Public Investment Fund, the Saudi sovereign wealth fund that is leading the nation’s economic transformation initiative.

As part of the recalibration, companies hired to build NEOM, the Red Sea development that is the cornerstone of Crown Prince Mohammed bin Salman’s economic diversification agenda called “Vision 2030,” are reportedly laying off employees and cutting budgets.

Arenas and stadiums that are anticipated to host major international sporting events, such as the Asian Winter Games and FIFA World Cup, have been pushed to the front of the line.

“Saudi Arabia has committed to several projects with deadlines set by other parties, including the 2029 Asia Winter Games, the 2034 [FIFA] World Cup, and Expo 2030, which will take place in Riyadh. Logistics, event locations, hospitality, and infrastructure are among the projects associated with major events, and we anticipate that expenditures will be kept constant. Timelines for other projects might be extended, or the initial delivery scale may be reduced,” Bell stated.

The Market For Debt

In the event of a low oil price, Saudi Arabia, which has stated plans to raise USD 37 billion in 2025 from both local and international markets to cover the budget deficit, may increase borrowing. It helps that Moody’s Investor Services improved its sovereign rating from A1 to Aa3 in November due to the economic diversification programme’s favourable pace.

According to Moody’s, “A significant drop in oil production or prices could exacerbate the trade-off between fiscal prudence and economic diversification progress, potentially resulting in a weaker sovereign balance sheet.”

Saudi Arabia has good access to financial markets, according to Bell of Emirates NBD, and “we would expect them to continue raising both local and foreign currency debt to help maintain spending commitments.”

The Ministry of Finance estimates that public debt will be at 30% of GDP in 2024, which is comparatively low when compared to economies of comparable size.

Senior Economist Hekmat El Matbouly of the Egyptian investment firm CI Capital claims that the managed public debt will allow for further borrowing, increasing from 30% of GDP last year to 35% in 2025.

“Borrowing activities benefit from a sustained decline in the USD because it relieves pressure on the peg from higher borrowing costs for longer periods,” she added.

According to LSEG data, the monarchy has raised USD 14.1 billion from two Eurobond issuances so far in 2025.

New Taxes

According to James Swanston of the London-based consulting firm Capital Economics, “the Saudis’ first course of action will likely be cuts to capital spending. But there may also be fresh efforts to raise non-oil revenues and, possibly, to push through new taxes, such as property or personal income taxes.”

Gamble acknowledged the potential for increased taxes.

“Saudi Arabia has expanded its revenue-raising options in recent years, but it takes planning to impose new levies anywhere. The authorities also have the option of altering the current tax rates,” he continued.

With no simple answer in sight, Saudi Arabia must negotiate a challenging economic environment while striking a balance between short-term budgetary requirements and long-term strategic objectives.

Achieving its “Vision 2030” goals and preserving economic stability will depend heavily on the Kingdom’s capacity to adjust to these difficulties.

The post IF Insights: Vision 2030 faces harsh reality as Saudi faces fiscal crunch appeared first on International Finance.

Donald Trump is correct when he says that tariffs can help achieve most, if not all, of those goals. When applied correctly, tariffs can increase domestic output by raising the cost of imported goods. The United States could use tariffs to seriously harm other nations’ economies without entering a recession, as America’s economy is vast and diverse and does not depend as heavily on trade as its neighbours. Some of its deficits could be partially mitigated by the revenue generated from tariffs.

However, as the saying goes, if something seems too good to be true, it generally is.

Donald Trump’s strategy is flawed because tariffs cannot accomplish all of these objectives simultaneously. This is due to Trump’s often incoherent goals.

For example, if tariffs are part of a pressure campaign, they must end as soon as the countries agree, so there will be no more tariffs to balance the trade. Tariffs cannot increase revenue to offset deficits if they are intended to support America’s manufacturing sector. If Americans choose to purchase items made in the US, then who will be responsible for paying the tariff on imported goods?

Furthermore, Donald Trump’s proposed tariffs may hurt the US economy more than they will benefit. Recently, Trump admitted that tariffs would create a “disturbance.” Additionally, equities fell on Monday when Trump refrained from predicting that his trade policies would prevent America from entering a recession.

For several reasons, Donald Trump seems committed to enacting massive tariffs on goods manufactured abroad, starting on April 2, despite repeated postponements and withdrawals.

Increasing Income And Jobs In Manufacturing

During his joint address to Congress last week, Donald Trump declared, “We will take in trillions and trillions of dollars and create jobs like we have never seen before. The goal of tariffs is to restore America’s wealth and greatness.”

According to the Committee for a Responsible Federal Budget, Trump’s tariffs on Canada, Mexico, and China would generate roughly $120 billion annually and $1.3 trillion over a ten-year period.

One of Donald Trump’s main arguments for tariffs was highlighted in his joint speech to Congress: “We want to cut taxes on domestic production and all manufacturing,” he stated. However, under the Trump administration, “you will pay a tariff and, in some cases, a rather large one if you don’t make your product in America.”

Donald Trump claims that this trade policy, which uses rewards and penalties, would revive the manufacturing sector in the United States.

Extended tariffs have significant consequences for American businesses, consumers, and the US economy as a whole. Investor concern about the possibility of tariffs slowing down economic development is reflected in the latest market selloff. Tariffs can lead to lower investment, higher consumer prices, and strained international relations by increasing costs for companies reliant on imported goods.

These factors combined increase the likelihood of a recession. Businesses depending on global supply chains could see their production costs rise due to levies on imported parts.

Higher consumer prices, reduced competitiveness of American goods overseas, and potential job losses in sectors unable to absorb the higher costs could follow. Tariffs are essentially taxes on imports, and firms typically pass these expenses on to consumers. This leads to higher prices for a range of products, thus limiting customers’ purchasing power and possibly slowing down overall economic growth. Strong tariff rules can sour relations with important trading partners and allies, fragmenting the global trade landscape. Such fragmentation can complicate global cooperation on broader geopolitical and economic concerns.

Trump’s Tariff Plan And Its Potential Impact On Revenue

President Donald Trump’s tariff plan is expected to generate so much revenue for America that income taxes will no longer be required of its citizens.

The issue, however, is that America imports around $3 trillion worth of goods annually and collects about $3 trillion in income taxes annually. Therefore, for tariffs to replace income taxes, they would need to be at least 100% on all imported items. This would be an excessive amount that would shock American consumers with higher prices.

Accusation Of Unfair Practices

President Donald Trump has repeatedly claimed that numerous nations use unfair trade policies that harm the United States. To assess these assertions, it’s important to examine trade balances and practices with key partners.

With a trade deficit of $310.8 billion in 2020, the US trade imbalance with China has long been a source of concern. China’s industrial policies, currency policies, and market access limitations have all been blamed for this disparity.

Under the North American Free Trade Agreement (NAFTA), trade between the US, Canada, and Mexico grew notably. Although the United States has trade deficits in some areas with both nations, these deficits are relatively small. While opinions on fairness remain unresolved, the renegotiated United States-Mexico-Canada Agreement (USMCA) sought to address some of these issues.

At $23.8 billion in 2020, the US had a trade imbalance with India. Points of dispute have included issues such as intellectual property rights, market access, and tariff and non-tariff barriers.

In 2020, the US trade deficit with the European Union came to $184 billion. Disputes over tariffs on certain goods, regulatory rules, and subsidies have led to ongoing talks and occasional trade conflicts.

Although trade imbalances exist, they are shaped by many factors, including variations in savings and investment rates, currency values, and comparative advantages. Calling these disparities the result of unfair behaviour oversimplifies complex economic linkages.

Donald Trump has stated that his 25% tariffs on Canada and Mexico, which have been mostly postponed, and his 20% tariffs on China are intended to pressure those nations to stop the flow of illegal immigrants and fentanyl into the United States.

Most economists agree that trade imbalances are neither losses nor subsidies. In fact, they may indicate a strong economy.

However, Donald Trump may not be trying to destroy the global economy through protectionism but rather seeking to bring all parties to the table to renegotiate long standing terms using economic threats. As someone who takes pride in his negotiation skills, there is a good chance that he might not follow through with his threats if he can secure deals that are even slightly better for the US.

Regardless, the great powers will reluctantly have to comply with Donald Trump, as he controls the world’s wealthiest economy (which everyone wants access to) and the US Navy, which protects merchant vessels on maritime routes worldwide. This is an expensive exercise that the US has been conducting almost exclusively since World War II, and without it, the global economy would likely collapse.

But if taken at face value, tariffs are unlikely to reduce the US-foreign trade imbalance. If this occurs, America’s purchasing power may decline.

The post IF Insights: Analysing the fairness & effectiveness of Donald Trump’s trade war appeared first on International Finance.

The lawsuit alleges that Binance has avoided paying taxes on its local profits and that its operations in Nigeria have seriously harmed the country’s economy.

Nigeria is taking a daring step in regulating its quickly expanding cryptocurrency industry and holding foreign operators responsible.

Court documents state that the government is requesting USD 2 billion in back taxes for 2022 and 2023 as well as USD 791.5 billion for alleged economic losses.

Authorities detained two Binance executives in 2024 after accusing the company of facilitating naira trading, and they blamed Binance for Nigeria’s currency problems.

Although Binance, which is not registered in Nigeria, has not yet commented, it has previously declared that it would work with the Federal Inland Revenue Service (FIRS) of Nigeria to address potential historical tax liabilities.

Because of its “significant economic presence” in the nation, according to the FIRS, Binance is subject to corporate income taxes, a 10% yearly penalty, and a 26.75% interest rate on overdue taxes based on Nigeria’s lending rate.

The cryptocurrency exchange is already facing four tax evasion-related charges, including non-compliance with tax return filings, corporate income tax, and failure to pay value-added tax (VAT).

Additionally, it was charged with allowing users to use its platform to avoid paying taxes. In March 2024, in response to increased scrutiny, Binance suspended all naira transactions and is still contesting the accusations.

Nigeria’s anti-corruption agency has also filed separate money laundering accusations against the company, which it has continuously refuted.

In a related development, Binance executive Tigran Gambaryan is the target of an A1 billion defamation lawsuit brought by Philip Agbese, a member of Nigeria’s House of Representatives.

Agbese claimed that Gambaryan had harmed his reputation by unjustly linking him and two other lawmakers to a USD 150 million bribery scandal.

The post Nigeria government vs Binance: All you need to know appeared first on International Finance.

Professor Reed teaches FIN 40640 Applied Investment Management (AIM) and FIN 40610 Security Analysis. He has recently been awarded the Rev. Edmund P. Joyce, C.S.C., Award for Excellence in Undergraduate Teaching (2023), the James Dincolo Outstanding Undergraduate Professor Award (2023), and the James Dincolo Outstanding Undergraduate Finance Professor (2018).

Reed’s research focuses on the integration of behavioural economics into the fields of macroeconomics and finance. His papers have been published in the Journal of Macroeconomics, and his comments have been cited in the Wall Street Journal, Fox News Business, and The Guardian.

In an exclusive interview with International Finance, Professor Jason Reed discusses a range of topics, including the US economy, the job market, proposed tariffs on Canada and Mexico, the Fed’s recent policies, and more.

Recent reports indicate that the US economy could face new inflationary pressures if the administration fully implements tariffs on Chinese imports. How do you assess the potential impact of these tariffs on consumer prices and overall inflation?

President Donald Trump’s economic agenda recently included another 10% tariff on Chinese imports, set to go into effect on March 4th. For products that can’t be easily reshored, American consumers will bear the burden of higher prices. We must remember that tariffs are simply taxes on imported goods, and like a sales tax, the cost falls to consumers, not businesses. The Tax Foundation recently estimated the long-term impact would be a decline in GDP of 0.1% per year, or $374 billion over 10 years. American families are expected to see reductions in their income of 2.2% through 2026, compounding the impact.

Despite low unemployment rates, securing jobs has become increasingly difficult, especially for young college graduates. What factors do you believe are contributing to this “Big Freeze” in the job market, and what measures can be taken to address it?

American firms have resorted to eliminating open positions, reducing hiring, and shrinking labour hours before laying off workers. New entrants into the labour market are considered frictionally employed, adding to what economists view as the natural unemployment rate. Young college graduates and MBA alums alike are finding it harder to gain employment. Typically, there is an ebb and flow to employment, where new workers slot into jobs that were left voluntarily; however, workers aren’t confident in the labour market and are staying at their jobs longer than in recent history. This has been a trend since the middle of 2022 when the labour market saw a record high of over 12 million job openings. The unemployment rate has remained relatively low and constant because of the excess supply of openings. Recent data shows that we’re almost back to pre-COVID levels, suggesting that if current trends continue, the unemployment rate may begin to tick upward. Another fiscal layer putting upward pressure on the unemployment rate is the efforts of D.O.G.E. and their reduction of the federal workforce. It’s not clear what the full ramifications of austerity will be, but I believe it will profoundly impact the growth and health of the economy.

The administration is considering imposing fees on Chinese-built or Chinese-flagged ships visiting US ports to counter China’s dominance in global shipbuilding. What are the potential economic implications of such fees on US retailers and manufacturers?

In the best-case scenario, imposing fees on Chinese-built or Chinese-flagged ships will immediately increase shipping costs, adding another price increase, borne by consumers. The most likely scenario, however, is that not only will we see prices increase, but we will also see short-term congestion in ports and shifts in global trade patterns, likely compounding the price increases. Estimates suggest that this import tariff will impact about 80% of cargo ships calling at US ports, which may lead to containerships porting in Mexico and Canada, further impacting consumers. This proposal seems to be driving more imports through Mexico and Canada, which runs against President Trump’s goal of reducing imports from these nations.

Some market analysts have become more cautious about US stocks, citing weak economic data and policy uncertainty. How do you interpret the current stock market trends, and what advice would you offer to investors?

Throughout the second half of 2024 and into 2025, economic data has mostly come in better than expected, according to Citigroup’s economic surprise index, with the S&P 500 trending up over this time until reaching all-time highs in December 2024. Since then, President Trump’s inauguration and the flurry of executive orders that followed, US and global equity markets have reflected the volatility in fiscal policy and are in a holding pattern right now, trading sideways year-to-date. Markets are waiting to see if the Canadian, Mexican, and Chinese tariffs go into effect on March 4th or if there will be another round of delays and negotiations. Long-term investors can take advantage of this situation to invest capital back into this asset class, as long-term average returns have outpaced most other available asset classes. Short-term investors will continue to find attractive risk-adjusted returns in US Treasury bonds, taking advantage of short-term mispricings in UK and EU equity markets.

Recent surveys indicate that inflation fears, partly due to tariffs, are affecting consumer confidence. How do you perceive the current state of consumer confidence, and what steps can be taken to restore it?

Consumers are acutely aware of grocery store and gasoline prices and use those price changes as their inflation gauge. Since last year, consumers have seen a 53% increase in the price of eggs versus an overall 2.5% increase in food prices. The avian flu continues to contribute to pricing pressure, with the Trump administration outlining fiscal relief for farmers. Over the same time, consumers are struggling to unwind long-term inflation expectations, with expectations reaching roughly 3.5%, a 30-year high, which significantly outpaces the Federal Reserve’s target inflation rate of 2%. With new tariffs thrown into the mix, consumers are likely bracing for the worst. For consumers to regain confidence in the economy, the White House would have to peel back inflationary efforts, especially the stimulus refund that D.O.G.E. is planning.

Proposed tariffs on Canada and Mexico are expected to impose significant costs on the US economy, potentially driving up prices for essential goods. What is your stance on these tariffs, and how do you anticipate they will affect the broader economy?

I think these tariffs will be inflationary in the short run. There’s almost no economic theory that suggests otherwise. In the long run, however, the broader impacts are yet to be seen. If businesses believe that tariffs will be repealed after President Trump’s term, they may choose to weather some revenue declines rather than reinvest into lower-returning reshored production. Another likely outcome will be that businesses will use countries’ production capabilities that bypass the import taxes. The Trump administration is already planning for these changes by proposing taxes on Chinese-owned and operated cargo ships. I think customers will be worse off overall. We’ve already heard from some tech CEOs, and businesses, indicating consumers should expect price increases in the coming months. As these price increases begin to compound, voters will begin to question the choices of the current administration.

Despite recent challenges, the US economy has shown resilience with a 2.3% growth in the October-December quarter. What is your outlook for the US economy in the coming months, and what factors will be most influential?

Businesses almost surely will have expected President Trump’s tariff message, as it was a key campaign goal for his term. Firms that are dependent on imported inventories will likely get ahead of the March 4th deadline, while those that cannot will just have to price in the expected taxes. Current estimates for Q1 2025 suggest steep declines in real GDP, a sharp departure from the growth the US economy has seen in recent years. Part of this may be due to an import imbalance, as firms pull forward inventories ahead of the tariffs, but the larger factor will be consumers feeling the pinch and deciding to forgo purchases.

The Federal Reserve has been actively involved in managing inflation and economic stability. How do you evaluate the Fed’s recent policies, and what role do you see it playing in addressing current economic challenges?

The Federal Reserve, our nation’s central bank, is committed to stable prices, targeting a flexible average inflation rate of 2% and maximum employment. In response to recent inflationary pressures, Jerome Powell and the Federal Open Market Committee (FOMC) have decided on a series of hikes to the federal funds rate, which helps to determine mortgage and credit card rates, among others. Hiking from March 2022 to August 2023, until rates reached the target range of 5.25 to 5.5%, it wasn’t until a year later that rates began to decline by 100 basis points. The Federal Reserve still sees inflation as its primary concern and believes the labour market can withstand persistently higher rates. The Federal Reserve aims to act independently from the White House. Jerome Powell and the Fed are committed to being reactionary to changes in fiscal policy rather than proactive in their approach to managing rates and will take a wait-and-see approach. If inflation materialises, as I and many economists predict, the Fed will likely delay rate cuts. The market is still pricing in about three rate cuts in 2025, even with inflation looming. If the Fed cuts rates, it won’t be until the second half of 2025 when more inflation data has landed. Treasury yields falling by 50 basis points from January 2025 should provide some slack for the Fed having to make immediate policy decisions. The market expects rates to remain steady at the March FOMC meeting. The Fed will continue to be data-dependent but is certainly cautious of the inflationary fiscal policy measures taken by President Trump.

The post Consumers will bear the burden of new tariffs: Professor Jason Reed appeared first on International Finance.

This remarkable achievement highlights the effectiveness of Norway’s EV policy framework, which combines forward-thinking goals with comprehensive incentives. As the nation races towards its target of selling only zero-emission vehicles by 2025, ten years ahead of the European Union’s similar goal, it is setting a precedent for the world.

Ambitious Goals Drive Policy

Norway has one of the most aggressive zero-emission vehicle policies in the world. The country’s 2025 goal is key to combating climate change and reducing greenhouse gas emissions.

Norway’s ambitious target is ahead of that of the European Union, which aims for the same target by 2035, demonstrating the country’s commitment to taking the lead on sustainable mobility.

Central to this vision is the government’s recent pledge to make sure that by 2026 more electric vehicles are bought than diesel-powered ones. This interim target will ensure gradual progress towards total electrification while also keeping Norway aligned with its higher-level goals.”

The Incentive Ecosystem

One of the cornerstones of Norway’s success has been its robust incentive framework. Recognising that affordability and convenience are critical to electric vehicle adoption, the government has implemented a range of measures to make electric vehicles competitive with traditional internal combustion engine (ICE) cars.

Electric vehicle buyers benefit from significant tax rebates, making EVs more accessible to a wider segment of the population. These rebates often offset the higher upfront costs associated with electric vehicles, making them comparable in price to petrol-powered vehicles.

EV owners are exempt from a variety of fees, including registration taxes and annual road taxes. This exemption provides long-term cost savings, further incentivising the shift towards zero-emission vehicles. Electric vehicle drivers enjoy free or reduced-cost access to public parking, toll roads, and ferries.

In addition, Norway has invested heavily in an expansive charging infrastructure, ensuring that electric vehicle owners have access to fast and reliable charging networks nationwide.

Incentives alone are not enough to drive transformative change. Norway has also focused on creating a cultural shift towards electric mobility. Through public awareness campaigns and partnerships with automakers, the government has educated citizens on the environmental and economic benefits of EVs.

The result is a population that is not only aware of the advantages of zero-emission vehicles but is also enthusiastic about adopting them.

Results And Challenges

Although almost all new car buyers in Norway have switched to electric vehicles, there are still some exceptions.

“The main buyers of ICE (internal combustion engine) cars in Norway are rental companies because many tourists are not familiar with EVs,” Hekneby stated.

However, other industries must adjust to the growing number of EVs on Norwegian roads. Fast electric chargers are gradually replacing gasoline pumps at gas stations. Anders Kleve Svela, a senior manager at Circle K, the biggest fuel store in Norway, stated, “We will have at least as many charging stalls as we have fuel pumps within the next three years.”

“In just a few years, over half of Norway’s automobiles will be electric. In light of that, we must build up our charging park,” he continued.

Because of the cold, drivers may have to wait a little longer to charge their EVs throughout the winter months.

Desire Andresen, 28, an in-home caregiver, remarked, “Sometimes I miss that I just can pump it full and drive off five minutes later,” as she charged her vehicle at a Circle K station outside of Oslo.

However, I feel more at ease in an electric vehicle… In addition to being better for the environment, diesel cars emit many odours.

Global Implications

Norway’s success story offers valuable lessons for other nations aspiring to accelerate EV adoption. Key takeaways include policy consistency, which provides clarity to automakers, investors, and consumers, fostering confidence in the transition to electric vehicles.

Combining financial incentives with infrastructure investments ensures that EVs are both affordable and practical. Engaging citizens through education and awareness campaigns is essential to building widespread support for sustainable transportation.

As Norway approaches its 2025 goal, the focus is shifting to sustaining momentum. Promoting second-hand EV markets can ensure inclusivity and broaden adoption among lower-income groups. Supporting research and development in battery technology and sustainable materials will address long-term resource challenges. Norway is leveraging its position as a pioneer to influence global policy discussions on zero-emission mobility.

As the world grapples with the urgent need to combat climate change, Norway’s model serves as a beacon of hope and a blueprint for success. By fostering innovation, ensuring affordability, and engaging its citizens, the country is proving that a zero-emission future is not only achievable but also within reach.

With its unwavering commitment to sustainable mobility, Norway is not just redefining transportation but also inspiring the world to envision a cleaner, greener tomorrow.

Christina Bu, who chairs the Norwegian EV association, said, “Norway will be the first country in the world to pretty much erase petrol and diesel engine cars from the new car market.”

The post IF Insights: Norway’s EV success story becomes policy blueprint for future appeared first on International Finance.