Last year, the United States ran a budget deficit equivalent to 7% of GDP, a figure that could soon increase due to President Trump’s proposed legislation extending tax cuts and increasing social payments. This trend of rising deficits is common across wealthy nations, with countries like France, Britain, Germany, and Canada also borrowing heavily despite strong economic growth and low unemployment. Governments are increasing spending on defence, social benefits, and tax cuts, reversing previous austerity measures.
While historically governments could manage deficits during economic downturns, today’s high borrowing comes at a time of rising interest rates and slowing growth, making debt more difficult to sustain. Demographic pressures from retiring baby boomers will further strain public finances, risking a surge in debt levels. The article warns that unchecked government borrowing is unsustainable, comparing it to overfeeding a goose, with potentially serious consequences ahead.

The annual SIMPPAR fragrance-ingredient expo in Paris showcased both natural and synthetic materials used in the perfume industry. While natural ingredients like the centifolia rose remain popular, synthetic molecules offer benefits such as ethical sourcing and longer-lasting scents. The industry is dominated by four major companies -IFF, Symrise, dsm-firmenich, and Givaudan - which control about two-thirds of the market and create scents for luxury brands and everyday products alike.
However, these giants are currently under scrutiny from antitrust regulators in the EU, Switzerland, and the UK over allegations of price-fixing and customer allocation. Legal actions and investigations have increased, with major clients like Unilever even investing in their own fragrance production. Despite these challenges, the market continues to grow, driven especially by younger consumers, with perfume sales booming globally.

Accenture, the world’s largest publicly traded consulting firm, has delivered strong returns to shareholders over the past decade but recently faced a sharp decline in its market value following a disappointing earnings report. While revenues and profits grew slightly, new bookings and major client deals have fallen for two consecutive quarters. This downturn reflects broader economic uncertainties and deeper challenges posed by generative AI, which threatens to reduce demand for traditional consulting services.
Accenture’s CEO, Julie Sweet, maintains that the firm is well-positioned to help clients navigate AI adoption, but scepticism remains. Technology providers are increasingly embedding AI directly into their products, potentially bypassing consultants. Accenture’s growth in AI-related contracts is slowing, suggesting that AI may not deliver the same boost as previous digital revolutions.
The firm’s strategy has focused on acquiring smaller consultancies rather than investing heavily in deep technology, leaving it vulnerable to disruption by tech innovators like Palantir. In response, Accenture has reorganised its business around “reinvention services,” aiming to offer integrated solutions - but whether this will protect it from AI-driven change remains uncertain.

Dealmaking in the US is off to its strongest start since 2022, with total deal value up about 10% year-on-year and at a three-year high, despite market volatility, global conflicts, and shifting tariffs under President Trump. Although the second quarter began slowly following new tariffs that unsettled markets, activity has since rebounded. Major deals in sectors less affected by tariffs - such as Charter’s $22 billion acquisition of Cox Communications and Salesforce’s $8 billion purchase of Informatica - have driven this momentum.
However, the overall number of transactions is down 16%, mainly due to a decline in smaller deals under $1 billion. Many buyers are holding back, awaiting greater economic certainty. Private equity remains active, with deal value up nearly 21% despite fewer transactions, as firms seek to deploy capital and meet investor demands.
The equity market is also showing renewed vigour, with recent IPOs performing well and major US stock indices recovering since the tariff announcement. Experts suggest dealmaking could accelerate in the second half of the year if inflation eases and interest rates fall.

The recent summer stock rally is broadening beyond big technology firms like Nvidia, Microsoft, and Broadcom. Initially led by these megacap tech stocks, the market recovery has now extended to other sectors including financials, industrials, and utilities, as fears over trade tensions ease and optimism grows over a milder US trade stance.
Indicators such as the number of S&P 500 stocks trading above their 50-day moving average and the ratio of advancing to declining stocks have reached levels not seen since before Trump’s 2016 election, signalling healthier market breadth. Analysts suggest this broader participation may support further gains through the summer.
While tech remains influential, investors who missed out on the initial rebound are increasingly seeking opportunities in more defensive and less volatile sectors, such as defence contractors and financials. However, small-cap stocks continue to lag, and a stronger risk appetite may be needed for their recovery.
Despite rising valuations in big tech - some trading at over 30 times expected earnings - there is growing interest in cheaper stocks outside the sector, offering more value and diversification as the rally matures.

Japan’s industrial production saw a modest 0.5% increase in May, following a 1.1% decline in April, but the rebound is expected to be short-lived amid growing concerns over US tariffs and a global economic slowdown. The rise was weaker than economists had predicted, and production is forecast to slow in June and July as tariffs weigh on exports and Japanese companies become more cautious with investment.
Economists warn that corporate profits, especially in the automotive sector, will suffer as firms absorb higher duties by cutting prices. Trade negotiations between Japan and the US remain uncertain, with President Trump threatening steep tariffs on Japanese cars. Despite this, talks continue and are said to be at a “critical juncture.”
Analysts expect the Bank of Japan to keep monetary policy steady for the rest of the year, citing trade-related risks. This outlook has supported gains in Tokyo’s stock market, with the Nikkei rising 1.6% recently.

Environment Secretary Steve Reed has warned Thames Water’s owners there will be no leniency on environmental fines despite creditors’ requests, as the government prepares for possible temporary nationalisation of the company through a special administration regime (SAR). Thames Water faces a crisis after years of mismanagement and mounting debts of around £20 billion, with current creditors - including major investors like BlackRock and Elliott Management - seeking to take ownership following the collapse of a US bidder.
The SAR would prioritise maintaining water services rather than selling assets immediately, with government funding potentially reaching £4.1 billion, though experts believe costs would eventually be recovered through an eventual sale. Some argue SAR is necessary to prevent regulatory leniency and ensure a strong balance sheet for vital infrastructure repairs.
However, Thames Water and its creditors oppose SAR, warning it would delay improvements, increase costs, and risk destabilising the company. They favour a private-sector solution with regulatory support. While Thames has funds to last until next year, if no deal is reached, nationalisation may become the government’s only option.

Since the launch of ChatGPT in November 2022, vacancies for graduate jobs, apprenticeships, internships, and junior roles not requiring degrees in the UK have fallen by 32%, according to research by job site Adzuna. Entry-level positions now make up 25% of the job market, down from 28.9% in 2022, as companies increasingly adopt artificial intelligence (AI) to improve efficiency and reduce workforce sizes.
Industry leaders warn that AI could eliminate up to half of entry-level office jobs in the next five years, potentially raising unemployment by 10 to 20%. Major firms like Klarna and IBM are already using AI to handle tasks traditionally performed by humans, though this shift is also creating demand for new skills, particularly in programming and sales.
Reports indicate that workers skilled in AI earn significantly higher wages, while the pace of skill changes in AI-exposed jobs is accelerating rapidly, posing challenges for workers to keep up. Technology Secretary Peter Kyle urged businesses and workers to embrace AI to avoid falling behind, noting that initial fears often give way to enthusiasm once people engage with the technology.

A forthcoming UN summit in Seville will address the challenge of financing development in poorer nations, but must first acknowledge that traditional approaches have failed. Developing countries, especially in Africa and small island states, are burdened by soaring sovereign debt—now nearly 30% of global debt—at costs far higher than those faced by wealthier nations. This debt restricts growth and forces cuts to essential services like healthcare and education.
Decades of policies driven by Western institutions, such as IMF and World Bank structural adjustment programmes, have imposed austerity and economic models that stifle true development, leaving many countries trapped in cycles of dependency and inequality. Foreign aid has often undermined sovereignty, favouring foreign contractors and interests over local needs.
Meanwhile, multinational corporations exploit resources with little accountability, and global trade rules and credit ratings remain biased against the global south. Climate change adds further strain, with vulnerable nations facing severe environmental damage and inadequate support.
The article calls for profound reforms: debt forgiveness, fair financing, climate reparations, and most importantly, the ability for developing nations to define development on their own terms—focused on equity, sustainability and sovereignty—if global poverty and injustice are to be genuinely addressed.

The article examines China’s ongoing efforts to overcome critical industrial “choke points” that have long hindered its technological independence. Despite being the world’s second-largest economy and a military superpower, China still relies on imports for essential components like advanced semiconductors and high-precision ball bearings. However, under President Xi Jinping’s leadership, the country is investing heavily in self-sufficiency, employing technologies such as AI to improve manufacturing quality and efficiency.
While foreign firms from Europe, Japan, and the US still lead in many advanced sectors, Chinese companies are rapidly closing the gap, particularly in areas like lithium battery separators and radio frequency components. Yet, some highly specialised technologies, notably in aerospace and chipmaking, remain difficult to replicate due to complex processes and proprietary knowledge.
The article highlights how export controls and trade tensions with the US have accelerated China’s push for industrial autonomy. The ultimate aim is not simply to outpace competitors but to boost productivity, economic growth, and political legitimacy through greater technological self-reliance.

Investors are rapidly withdrawing from long-term US bond funds at levels not seen since the peak of the Covid-19 pandemic, driven by concerns over America’s growing debt burden and fiscal outlook. Net outflows from funds investing in long-dated government and corporate bonds reached nearly $11 billion in the second quarter, signalling a sharp reversal from steady inflows over the previous three years.
Worries centre on the impact of rising debt, particularly if proposed tax cuts increase government borrowing, alongside fears that tariffs may fuel inflation - both factors that undermine the appeal of long-term bonds. In contrast, short-dated bond funds continue to attract substantial inflows, benefiting from higher short-term interest rates set by the Federal Reserve.
While some investors are considering diversifying internationally, experts caution that US Treasuries remain a core component of global fixed income portfolios, though investors may soon demand greater compensation for holding longer-dated debt amid ongoing uncertainty.

The number of UK investment trusts has declined by nearly 20 per cent over the past four years, falling from 337 in 2021 to 275, as the sector faces challenges from low-cost index funds, rising interest rates, and takeovers. Investment trusts, which pool investors’ money to buy a range of assets, have struggled with widening discounts to their net asset values, reflecting investor concerns over performance and market outlook.
Many smaller trusts have merged or been wound up due to limited investor interest, while higher borrowing costs have added pressure on those with debt. The rate of mergers and acquisitions in the sector has increased significantly, particularly in property trusts affected by higher interest rates. Despite these challenges, the Association of Investment Companies highlights that investment trusts have shown resilience over their 150-year history and continue to adapt to changing market conditions.