Events illustrate the consequences of inaction rather eloquently—be it in the socio-political arena, or in the political economy that informs the social geography of nations.
The rise of angst after Charlie Kirk’s murder symbolises the impotence of haplessness. The data is stark. Every hour, two lives are lost in the US to wilful and malicious gun violence—one every 11 minutes, if one includes all shootings. The toll exceeds 10,411 for the 250 days of 2025. Gun violence has claimed over 160,000 lives between 2015 and 2024. Verily the second amendment to the US Constitution, often deemed to guard rights, is overwhelming the first amendment.
Ideally, the data should compel introspection and propel action. But as Immanuel Kant observed, the moral construct of ‘ought to’ is a synthetic proposition; and the expectation of ‘ought to’ does not imply that politicos or the state can or will. Not even in the oldest democracy, which is a superpower and the world’s largest economy at $30 trillion. ‘Ought to’ is a politically expedient construct. Poor rich G7 countries are haunted by their version of third world troubles.
The phenomenon is vividly illustrated by headlines across advanced economies that appear more like emerging markets. On Tuesday, Kemi Badenoch, leader of the opposition in the UK, observed that Britain may have to go “cap in hand to the IMF for a bailout”, as it did in 1976 following the sterling crisis. The headline-grabbing observation brought back memories of the lettuce moment from the Liz Truss budget.
The UK economy, which saw zero growth in July, is forecast to grow at 1.2 percent through the year. It borrows around $540 million a day. Inflation, at 3.8 percent, makes borrowing costlier; the deficit is 4.8 percent of GDP and debt is growing faster (net financial liabilities of the public sector are around $5.2 trillion over 130 percent of GDP). Chancellor Rachel Reeves must find money to fill the hole in the bucket. Among the ideas on the board is a tax on property ownership!
On Wednesday, France got its fifth prime minister in two years—the seventh in Emmanuel Macron’s presidency. The rapid exits via revolving doors are fuelled by the state of the economy. The exit of François Bayrou was triggered by an attempt to cut $52 billion in debt amid protests titled ‘Block everything’. The rationale for austerity was the rise in debt to over $3.8 trillion, of which over 54 percent is held by foreigners. France, it is estimated, borrows over $510 million a day, has a fiscal deficit of 5.8 percent, and a debt-to-GDP ratio that’s expected to touch 121 percent soon. GDP growth is tepid at 0.6 percent.
On Friday, Fitch Ratings downgraded France to A+ from AA-. The fallout of politics on the economy underlined the rating action. Fitch stated that the fall of governments “illustrates the increased fragmentation and polarisation of domestic politics”. The review cited lower economic growth and sustained increase in government debt, and that chances of improvement are daunted by “the run-up to the presidential election in 2027”. France has a tax-to-GDP ratio of 45.6 percent—the highest in Europe—and this limits its ability to tax its way out of the crisis.
France and the UK represent a larger malaise of falling growth and growing debt afflicting the G7 economies. Take the European Union as an entity. On Thursday, the European Central Bank held rates and forecast inflation would hover at around 2.1 per cent, while GDP growth for the Eurozone would be under 1.2 percent for the current year and 1.0 percent for 2026. The EU must now fund its own defence, and much of what the Draghi Report diagnosed as an ‘existential challenge’ is playing out.
The economy across the Atlantic in the US is, prima facie, faring better than its G7 peers in terms of growth and worse in terms of deficit and debt, resulting in a downgrade by Moody’s. GDP is set to grow at 1.9 percent as per the IMF, and as per the US Federal Open Market Committee at 1.6 percent. Retail inflation is up at 2.9 percent—thanks to uncertainty and tariff tantrums—and forecasters expect it to stay above the 2 percent target and top out at 3.2 percent by the end of 2025.
The dollar is down 11 percent this year—the biggest drop in 50 years. Central banks are weaning off dollar addiction and punting on gold. The US government debt is $37.4 trillion, the deficit is around $1.9 trillion—it borrows around $5.2 billion a day, of which $2.9 billion goes towards interest payments. Unemployment is inching up to 4.4 percent amid a political pushback on immigration, and the number of unemployed new entrants is over 780,000.
A combination of factors has rendered the G7 countries into high-cost, low-growth economies—GDP growth for five of the economies is forecast at sub-1 percent and six have debt-GDP ratios exceeding 100 percent. This has propelled a binary discourse and protests. Even though theory underlines labour output and consumption as critical for sustaining economic growth, ageing societies across Europe and the US are raging against migration.
The circumstance calls for a new template for global collaboration; yet, isolationism is the new cornerstone. As the confluence of ageing and expansion of AI-enabled technology retrenches jobs, the cost of mitigating pain could render the spectre more challenging. And that may worsen social schisms. We are, to paraphrase the Chinese adage, living in interesting times.
Read all columns by Shankkar Aiyar
Shankkar aiyar
Author of The Gated Republic, Aadhaar:
A Biometric History of India’s 12 Digit
Revolution, and Accidental India
(shankkar.aiyar@gmail.com)