World economy faces inflation fears
by Brian Turner
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The world economy is finally showing cracks in confidence, as inflation continues to threaten while consumer spending continues to be lacklustre.
Over this week, stock markets around the world have seen big falls as investors turn bearish.
These fears are being raised as US consumer prices see a continued rise, highlighting fears that inflation will force the US Federal Reserve will bring in further interest rate hikes.
Concerns about the state of the UK economy have already been raised, and this week’s job totals showed a continued increase in unemployment - the highest since 2002.
The overall picture isn’t good - while the world economy has so far looked healthy, it has been very much powered by debt. Now the US government has been forced to increase it’s own debt limit to almost $9 trillion, and UK consumers have themselves amassed debts of over £1 trillion.
While energy prices continue to remain high, inflation is beginning to really bite. If economic conditions continue downwards, the real costs of government and consumer debt are in danger of being uncovered.
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[…] And the combined impact of the interest rate rises to combat inflation inflames an already disturbing trend of falling consumer spending and rising unemployment. Yet as we’ve already seen, even the recent string of interest rate rises in the UK and US have done little to correct inflation, while continuing to inflame negative economic indicators. […]