The cost of War

The dialogue about Ukraine is set to widen to include the issue of economic resources and how they will be financed. If Ukraine is to be a viable buffer state between us and Russia, its economy must be viable too. It matters to portfolio managers for several reasons: it will cement the redistribution of profits towards social and political aims; it will increase Western budget deficits and debts; and it is likely to result in the creation of pan-EU joint liabilities (as the EU Next Generation Fund did). It makes any meaningful return to the fiscal limits of the social and stability pact unlikely.

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