Leader: The economic news from the US and France is worrying

At the turn of the year, the American government paid just over 4 percent in interest on its ten-year bonds. Now it has risen to a little over 5 percent. There is no indication that the interest rate has hit a ceiling. Instead, it is driven steadily upward by elevated inflation, and by the fact that Finance Minister Scott Bessent appears to lack control over the government's finances. The national debt exceeds 100 percent of GDP, the deficit is 6 percent of GDP. In practice, Congress cannot be persuaded to do anything other than cut taxes.

Bessent shakes it all off with the fact that growth is competent and that the stock market is breaking all records. On the whole, that's certainly true, but in both cases it's about the tech sector riding high and making huge investments in AI infrastructure. In order for this to be a source of reassurance, it is necessary that the artificial intelligence gives a quick impression in the form of productivity increases, the value of which corresponds to the resources that are currently being plowed down. Otherwise, it's a bubble.

Here in Europe, the trend for government bonds is the same – and growth figures cannot be comforted.

In France, the ten-year interest rate has risen the most of all G7 countries, from 3.5 percent at the turn of the year to around 5 today. Here, too, the national debt amounts to over 100 percent of GDP, the deficit is 5 percent and there are protests in the streets for more money for schools.

It hasn't exploded, but we have been pushed into a vicious spiral of rising debt and interest rates.

France's central bank governor warns of a debt crisis: "We are not Greece during the euro crisis," he noted with a "but" hanging in the air that feels anything but reassuring.

Italy has also seen interest rates rise sharply since the turn of the year. Things don't look much better in the UK.

Certainly, one can find a measure of confidence in the fact that the global economy has been astonishingly resilient over the past half-decade or so: Pandemics and shutdowns, Russia's full-scale invasion of Ukraine and extensive sanctions against the Russian energy sector, the attack on Iran and the blockade of the Strait of Hormuz - it has weathered most of it.

But it is also the case that the problems we see now are a consequence of these shocks and how governments have dealt with them. When the supply of oil and gas has been cut off, it has pushed up energy prices, which then pushed up other prices. And the large deficits, yes they are a consequence of governments opening the fiscal faucet to protect households against cost increases and pay for the rearmament that a more dangerous world requires. It hasn't exploded, but we have been pushed into a vicious spiral of rising debt and interest rates.

Can we get out of it?

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