Bank of England Governor Andrew Bailey warned that if the economy recedes again, governments may be helpless because weak economic growth and a series of severe shocks will reduce their ability to cope. On the day of his speech on the 8th, the fall in bond prices once again raised concerns about energy prices and pressure on the French budget. He said that fiscal policy must convince the market of its credibility. “Higher borrowing costs and weaker economic growth are driving up debt as a share of GDP, while calls for more spending are getting louder. If the market has doubts about the direction of fiscal policy, the yield will rise further, which in turn will be counterproductive.” At an event in Turkey, Bailey said that although the government can usually cushion a severe recession by increasing borrowing and then rebuild fiscal space when the economy improves, this is more difficult in a turbulent economic environment.

Bank of England Governor Andrew Bailey warned that if the economy recedes again, governments may be helpless because weak economic growth and a series of severe shocks will reduce their ability to cope. On the day of his speech on the 8th, the fall in bond prices once again raised concerns about energy prices and pressure on the French budget. He said that fiscal policy must convince the market of its credibility. “Higher borrowing costs and weaker economic growth are driving up debt as a share of GDP, while calls for more spending are getting louder. If the market has doubts about the direction of fiscal policy, the yield will rise further, which in turn will be counterproductive.” At an event in Turkey, Bailey said that although the government can usually cushion a severe recession by increasing borrowing and then rebuild fiscal space when the economy improves, this is more difficult in a turbulent economic environment.