Monthly Budget Watch

The Global Budget Watch Monitor is a monthly analysis of fiscal data from the world's largest economies, created by Tim Congdon and Ewen Stewart from the Institute of International Monetary Research.

July 2026 summary

While all jurisdictions examined have budget deficits, the changes in these deficits vary greatly. Some places have reduced their deficits (as measured by the moving average of the cumulative 12-month total) so far in 2026, notably the USA, China, the UK and France. However, Germany and Italy have had rising deficits, and the increase in Japan’s deficit has been dramatic. The Japanese vast swing into a first-quarter deficit reflected the announced policy intentions of the Takaichi government, but front-loading of the Keynesian “stimulus” may have occurred. Keynesian economists have to expect Japan’s economy to boom, given the scale of the fiscal so-called “stimulus”. This is a fascinating experiment and the Q2 number will need to be watched. The USA has had a higher bill for debt interest (and inflation compensation on inflation-protected bonds), but total Federal spending is down on a year earlier in nominal terms. By implication, discretionary Federal spending has been cut sharply. The US deficit/GDP ratio is down in 2026, although the debt/GDP ratio continues to climb. Financial market confidence remains fragile everywhere, with substantial upwards shifts in government bond yield curves in the Eurozone and Japan in particular over the last year. (Tim Congdon and Ewen Stewart)