Warning: members of the public are being contacted by people claiming to work for AXA Investment Managers UK Limited.  Find out more information and what to do by clicking here.

Investment Institute
Macroeconomics

Individual government challenges and the Covid-19 debt surge


Considering the rise in government debt in key developed markets

Key points

  • The re-emergence of coronavirus across Europe threatens the pace of global recovery and will stretch government purses further. This paper focuses on individual countries and shows that each faces its own limits.
  • Germany has the lowest debt to GDP ratio of its peers and amongst the highest debt limits. Italy has amongst the highest debt in Europe, but a new government and the ECB have helped keep rates low. Spain and France face different political challenges to their debt outlooks.
  • Japan has the highest recorded debt, but it is held largely domestically, where there is a large appetite to save.
  • The US requires a medium-term adjustment to address its debt outlook, but this may follow after the upcoming election. Otherwise the growth and rate outlook should be favourable to lowering debt in the long-term.
  • Deterioration of the UK growth outlook after Brexit and with adverse demographics poses additional challenges to reducing the UK debt profile.

    Not for Retail distribution

    This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date.

    All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.

    Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

    Risk Warning

    The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested.