In the era of globalisation when most countries lived under the strict rules of the World Trade Organisation, developed economies moved in close step with each other. However, now the US is increasingly deciding to go its own way, which is opening a gap between its economy and the rest.
All the spending on fiscal stimulus is causing the US economy to diverge from the UK. Last week, a recent IMF report forecast the US economy to grow 2.7 per cent in 2024, more than double the pace of any G7 economy and way ahead of the UK’s 0.5 per cent prediction.
These forecasts aren’t hugely surprising. The Squeeze recently promoted the theory AI would increase capital spending and stimulate economic growth, pushing up demand for borrowing and contributing to higher interest rates. Since then, a couple of US news stories have increased our conviction in this theory.