Economy

This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to get the newsletter delivered every weekday morning. Explore all of our newsletters hereGood morning and welcome back to FirstFT Americas. Here’s what we’re covering today: Auditors launch AI assurance services OECD warns of threat to global growthCarney promises ‘grand bargain’ with Canada’s oil industryBig Read on the future of the private equity industryThe Big Four accountancy firms are racing to create a new type of audit that verifies the effectiveness of artificial intelligence tools as the companies seek to profit from clients’ demand for proof that their AI systems work and are safe.Auditing AI: Deloitte, EY and PwC told the Financial Times that they were preparing to launch AI assurance services as they hope to use reputations gained in financial audits to win work assessing whether AI systems, such as those in self-driving cars and cancer-detecting programmes, perform as intended.The context: The audits would open another revenue stream for auditors, similar to when the firms cashed in on the trend for companies to buy assurance for their environmental, social and governance metrics. The move comes as some insurers have begun offering cover for losses caused by malfunctioning AI tools such as customer service chatbots. Ellesheva Kissin has the exclusive story.Warning from AI “godfather”: Yoshua Bengio says the latest models are displaying dangerous characteristics such as lying to users.xAI seeks $113bn valuation: Elon Musk returns to business with a new share sale for his AI start up. Here’s what else we’re keeping tabs on today:Economic data: The US publishes April job openings and factory orders data while Brazil’s statistics agency publishes industrial output data for the same month. Results: Dollar General and Hewlett Packard Enterprise report earnings. Harvey Weinstein trial: Lawyers are set to make their closing arguments in the movie mogul’s retrial on rape and sexual assault charges.South Korea: Voters go to the polls in a pivotal election after the former president was removed over his attempt to impose military rule.Five more top stories1. The global economy is heading into its weakest growth spell since the Covid-19 slump as President Donald Trump’s trade war saps momentum in leading economies including the US, OECD forecasts showed. The organisation slashed its outlook for global output and the majority of the G20 leading economies. Read more on the OECD’s new growth projections.2. Far-right leader Geert Wilders has quit the Dutch government, plunging the country into political uncertainty. Wilders, whose Freedom party was the biggest in a four-party coalition, said he could no longer support its failure to crack down on asylum applications. 3. Israeli soldiers have killed more than two dozen Palestinians near an aid centre in Gaza, the local health ministry said, the latest in a string of deadly incidents since a controversial US-backed aid scheme was introduced in the enclave last week. Follow this developing story.4. Private credit is now so intertwined with big banks and insurers that it could become a “locus of contagion” in the next financial crisis, a group of economists, bankers and US officials has warned. The report is one of the most comprehensive analyses to date on how private credit would affect the broader financial system during a period of market upheaval.5. Mark Carney has vowed to work with Canada’s oil industry on a “grand bargain” to boost production and reduce emissions after a meeting with senior oil industry executives in recent days. The overture to the oil sector, a key driver of Canada’s economy, marks a shift for Carney.The Big Read© FT montage/GettyThe difference among private equity’s Big Three is becoming stark in terms of their business models. Blackstone is sticking to a traditional fee-based approach, while rivals Apollo and KKR embrace an insurance-powered model that provides long-term funding but comes with bank-like risks. Which version will prevail?We’re also reading . . . Larry Fink: The first draft of globalisation created enormous wealth that was unevenly distributed, argues the chief executive of BlackRock. It’s time for the second draft.‘Taco trade’: Trump always chickens out on foreign policy too, writes Gideon Rachman. Vibe coding: Creating apps using large language models may go the same way as DIY, with some people enjoying success while others rue their very costly mistakes, writes Sarah O’Connor.Poland: The country’s ruling coalition is bracing itself for a confidence vote after Donald Tusk’s party suffered a bruising defeat in the presidential race.Chart of the daySome content could not load. Check your internet connection or browser settings.Walmart is the US’s biggest private sector employer and while sales and profits are rising the number of employees is not. In the past five years Walmart’s workforce shrunk by 70,000 even as revenues expanded by $150bn. Walmart’s payroll trend stands in contrast to its peers. Here’s why. Take a break from the newsAs the industry faces falling demand, Oyster Yachts has found a novel way to build orders. The UK maker of luxury “blue water” sailing boats offers its 1,200 owners a mid-life challenge and a collective thrill by helping them to sail around the world together, writes John Gapper. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Mongolia’s prime minister has resigned after losing a confidence vote, amid public anger at his son’s lavish spending, fuelling political uncertainty in a central Asian economy with vast mineral wealth.Luvsannamsrain Oyun-Erdene, the Harvard-educated reformist who has led Mongolia since 2021, gained only 44 of the 64 votes he needed from lawmakers in a vote held in the early hours of Tuesday. Oyun-Erdene called the vote last week amid divisions in his party and as protests erupted over his son’s luxury lifestyle.His Mongolian People’s party, which has been in a coalition government with two other parties since elections a year ago, is expected to try to form a government in the coming days.The political turmoil leaves much at stake for Mongolia, which emerged from a single-party political system under socialist control in the 1990s and only enlarged its parliament last year. Oyun-Erdene has long sought investment from western mining groups to tap the country’s vast deposits of copper, uranium and other critical minerals, backing that could also give Ulaanbaatar a buffer against Beijing and Moscow. Crowds gathered last month in Ulaanbaatar in protest against the lavish lifestyle of the prime minister’s son More

The Organisation for Economic Co-operation and Development on Tuesday downgraded its growth forecasts for both the U.S. and global economy.
The U.S. growth outlook was revised to just 1.6% this year and 1.5% in 2026.
Tariffs and policy uncertainty were among the key factors cited by the OECD to explain the reductions.

Old Navy and Gap retail stores are seen as people walk through Times Square in New York City on April 9, 2025.
Angela Weiss | Afp | Getty Images

Economic growth forecasts for the U.S. and globally were cut further by the Organisation for Economic Co-operation and Development as President Donald Trump’s tariff turmoil weighs on expectations.
The U.S. growth outlook was downwardly revised to just 1.6% this year and 1.5% in 2026. In March, the OECD was still expecting a 2.2% expansion in 2025.

The fallout from Trump’s tariff policy, elevated economic policy uncertainty, a slowdown of net immigration and a smaller federal workforce were cited as reasons for the latest downgrade.
Global growth, meanwhile, is also expected to be lower than previously forecast, with the OECD saying that “the slowdown is concentrated in the United States, Canada and Mexico,” while other economies are projected to see smaller downward revisions.
“Global GDP growth is projected to slow from 3.3% in 2024 to 2.9% this year and in 2026 … on the technical assumption that tariff rates as of mid-May are sustained despite ongoing legal challenges,” the OECD said.
It had previously forecast global growth of 3.1% this year and 3% in 2026.
“The global outlook is becoming increasingly challenging,” the report said. “Substantial increases in barriers to trade, tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty will all have marked adverse effects on growth prospects if they persist.”

Frequent changes regarding tariffs have continued in recent weeks, leading to uncertainty in global markets and economies. Some of the most recent developments include Trump’s reciprocal, country-specific levies being struck down by the U.S. Court of International Trade, before then being reinstated by an appeals court, as well as Trump saying he would double steel duties to 50%.
“The reasons why we downgraded almost everybody in our forecast is that trade uncertainty and economic policy uncertainty has reached unprecedented levels,” OECD Chief Economist Alvaro Pereira told CNBC’s “Squawk Box Europe” Tuesday.
“As a consequence, we’ve been seeing that consumption and investment has come down, and in fact, activity indicators also have come down. And if you take this into account, and we also try to estimate in our models, you see that there’ll be less growth, less jobs, and more inflationary pressures going forward.”

U.S. inflation to rise

The OECD adjusted its inflation forecast, saying “higher trade costs, especially in countries raising tariffs, will also push up inflation, although their impact will be offset partially by weaker commodity prices.”
The impact of tariffs on inflation has been hotly debated, with many central bank policymakers and global analysts suggesting it remains unclear how the levies will impact prices, and that much depends on factors like potential countermeasures.
The OECD’s inflation outlook shows a notable difference between the U.S. and some of the world’s other major economies. For instance, while G20 countries are now expected to record 3.6% inflation in 2025 — down from 3.8% in March’s estimate — the projection for the U.S. has risen to 3.2%, up from a previous 2.8%.
U.S. inflation could even be closing in on 4% toward the end of 2025, the OECD said.

‘On the cusp of something quite significant’

The OECD’s Pereira also discussed developments in technology such as AI, and how they are impacting productivity — and giving the U.S. an advantage.
“Productivity has been very strong in the United States, and we expect that likely this will widen the gap between the United States [and] the rest of the world, exactly because the exposure to AI by sectors in the U.S. are higher,” he said. 
With technology like AI, robotics and quantum computing, there is the possibility of a “significant productivity revival,” he said — but only if trade barriers are lowered and investment and consumption increase.
“I think if we are able to get trade agreements between countries, not only between China, United States, but also other parts of the world and if we are able to reduce uncertainty, we do believe that we might be on the cusp of something quite significant,” Pereira said. More

Euro zone inflation fell by more than expected to 1.9% in May according to flash data from statistics agency Eurostat.
This is below the European Central Bank’s 2% inflation target.
Economists polled by Reuters had expected the May reading to come in at 2%.

Shoppers buy fresh vegetables, fruit, and herbs at an outdoor produce market under green-striped canopies in Regensburg, Upper Palatinate, Bavaria, Germany, on April 19, 2025.
Michael Nguyen/NurPhoto via Getty Images

Euro zone inflation fell below the European Central Bank’s 2% target in May, hitting a cooler-than-expected 1.9% on sharp declines in services, flash data from statistics agency Eurostat showed Tuesday.
Economists polled by Reuters had expected the May reading to come in at 2%, compared to the previous month’s 2.2% figure.

The closely watched services inflation print cooled significantly to 3.2% last month, compared to the previous 4% reading. So-called core inflation, which excludes energy, food, tobacco and alcohol prices, also eased, falling from 2.7% in April to 2.3% in May.
“May’s steep decline in services inflation, to its lowest level in more than three years, confirms that the previous month’s jump was just an Easter-related blip and that the downward trend in services inflation remains on track,” Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics said in a note.
Inflation has been moving back towards the 2% mark throughout 2025 amid uncertainty for the euro zone economy.
The latest figures will be considered by the European Central Bank as it prepares to make its next interest rate decision later this week. Back in April, the central bank took its key rate, the deposit facility rate, to 2.25% — nearly half of the high of 4% notched in the middle of 2023.
Markets were last pricing in an around 95% chance of interest rates being cut by a further 25-basis-points on Thursday. Given the widely anticipated upcoming interest rate trim, the Tuesday data might not strongly influence this week’s ECB decision, Allen-Reynolds said.

“But May’s inflation data strengthen the case for another cut at the following meeting in July,” he noted.
But the global economic outlook remains muddied. U.S. President Donald Trump’s protectionist tariff plans have been casting shadows over the global economic outlook, with his so-called “reciprocal” duties — which are also set to affect the European Union — widely seen as harmful to economic growth. Their immediate potential impact on inflation is less clear, with central bank policymakers and analysts noting that it could depend on any potential countermeasures.
Despite the transatlantic tumult, the Organisation for Economic Co-operation and Development in its latest Economic Outlook report out on Tuesday said it was expecting the euro area to expand by 1% in 2025, unchanged from its previous forecast. Euro area inflation is meanwhile projected to come in at 2.2% this year, also in line with the March report.
Euro country bond yields were last lower after the fresh inflation data, with the German 10-year bond yield falling by over two basis points to 2.499%, while the yield on the French 10-year bond was last down by more than one basis point to 3.169%.
The euro was meanwhile last around 0.3% lower against the dollar. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The global economy is heading into its weakest growth spell since the Covid-19 slump as President Donald Trump’s trade war saps momentum in leading economies including the US, OECD forecasts showed. The organisation on Tuesday slashed its outlook for global output and the majority of the G20 leading economies as it warned that agreements to ease trade barriers would be “instrumental” in reviving investment and avoiding higher prices.Global growth is expected to be 2.9 per cent in 2025 and 2026, the OECD said in its latest full outlook. The figure has exceeded 3 per cent every year since 2020, when output plunged because of the pandemic.US growth will slow particularly sharply, sliding from 2.8 per cent last year to just 1.6 per cent in 2025 and 1.5 per cent in 2026, while a bout of higher inflation will prevent the Federal Reserve from cutting rates this year, the OECD said. The latest assessment represents a downgrade to its March interim forecasts, which preceded Trump’s “liberation day” tariff announcements on April 2. Even then, the OECD warned of a “significant toll” stemming from the levies and associated uncertainty over policy. Trump has since partially climbed down on some duties, but the increase in the average US effective tariff rate is still “unprecedented”, from 2.5 per cent to above 15 per cent — the highest since the second world war, the OECD noted. The Paris-based body also trimmed 2025 forecasts for G20 countries, including China, France, India, Japan, South Africa and the UK, compared with its March interim outlook.  Some content could not load. Check your internet connection or browser settings.Álvaro Pereira, the OECD’s chief economist, said countries urgently needed to strike deals that would lower trade barriers. “Otherwise, the growth impact is going to be quite significant,” he said. “This has massive repercussions for everyone.” Compared with the OECD’s last full outlook in December, growth prospects for almost all countries have been downgraded, said Pereira. “Weakened economic prospects will be felt around the world, with almost no exception,” the OECD said. Adding to the drag on growth and investment is uncertainty about the direction of global trade policy. US tariff moves have fluctuated wildly, with Trump imposing swingeing levies on China before partially dialling the measures back, while threatening hefty tariffs on other economies including the EU. Trump has also vowed to impose a range of sectoral barriers, including a doubling of levies on steel and aluminium imports to 50 per cent. The OECD prepared its forecasts on the assumption that tariff rates as of mid-May would be sustained, despite setbacks including a court judgment last week that found Trump had exceeded his authority in imposing “liberation day” duties. Partly as a result, US inflation is now expected to rise to nearly 4 per cent by the end of 2025 and remain above the Fed’s target in 2026, meaning the central bank will probably wait until next year before lowering interest rates, the OECD said. Recent indicators pointed to a “notable cooling” of real GDP growth in the US alongside a significant increase in inflation expectations, it warned. Altogether, the OECD’s outlook for this year has been trimmed for about three-quarters of the G20 members compared with its March interim forecast. Chinese growth will slow from 5 per cent last year to 4.7 per cent in 2025 and 4.3 per cent in 2026, according to the new outlook, while the Eurozone will expand by just 1 per cent this year and 1.2 per cent in 2026. Japan’s economy will grow by just 0.7 per cent and 0.4 per cent this year and next respectively. The UK economy was predicted to expand by 1.3 per cent this year and 1 per cent in 2026, a downgrade on expected rates of 1.4 and 1.2 per cent respectively in March. Global trade will expand by 2.8 per cent in 2025 and 2.2 per cent in 2026, sharply lower than OECD predictions in December. Fiscal risks are rising along with trade tensions, the OECD warned, with demands for more defence expenditure set to add to spending pressures. “Historically elevated” equity valuations are increasing vulnerabilities to negative shocks in financial markets. A long spell of weak investment has compounded the longer-term challenges facing OECD economies, and this is further sapping the growth outlook. “Despite rising profits, firms have shied away from fixed-capital investment in favour of accumulating financial assets and returning funds to shareholders,” the OECD said. “Boosting investment will be instrumental to revive our economies and improve public finances.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.This article is an on-site version of our Unhedged newsletter. Premium subscribers can sign up here to get the newsletter delivered every weekday. Standard subscribers can upgrade to Premium here, or explore all FT newslettersGood morning. The US dollar weakened again yesterday, and (as Robin Brooks of Brookings noted) this happened even as Treasury yields rose, increasing the spreads over other developed countries’ bonds. This is an unusual combination, and suggests global repositioning and hedging of dollar assets is continuing. But perhaps you have a different explanation? If so, email it to us: [email protected] slightly ominous manufacturing reportThe dip in the ISM Manufacturing index, to 48.5 in May from 48.7 in April, was mild (levels under 50 indicate contraction). But as we look at the data more closely, we detect a whiff of stagflation on the goods side of the economy.The survey showed a big fall in inventories, which could signal an end of companies’ frontloading orders to avoid the price impact of tariffs. If so, it won’t be too long before manufacturers and merchants will have to restock at higher prices, and pass on the increased costs to consumers.Meanwhile, the employment and new orders indices ticked up slightly but stayed in contraction territory. The prices paid index, while pulling back 0.4 percentage points from April, still clocked in at a feverish 69 per cent. Raw materials prices are still rising fast. Manufacturers highlighted the rise in steel and aluminium prices, even before President Donald Trump doubled tariffs on the two major inputs to 50 per cent from 25 per cent on Friday. Lower energy prices have helped offset some cost pressures on businesses, but this only has so much room to run, Matthew Martin at Oxford Economics points out.The price index is “consistent with core goods inflation reaccelerating from around zero in April to 2 per cent to 3 per cent later this year”, according to Oliver Allen of Pantheon Macroeconomics. That means the Federal Reserve is also unlikely to come to the rescue of the sector.Overall, the numbers are softish but not terrible, and manufacturing is a much smaller portion of the economy than services. But the trends are poor, and come at a moment when other soft spots are appearing in a generally solid economy, in areas from housing to durable goods orders. Someone bring us some good news, please. (Kim)Quantitative easing by bankLast week we wrote about proposed reforms to the supplementary leverage ratio, which would allow US banks to hold less capital against Treasuries. But we didn’t talk about the implications for inflation and the money supply, which matter. New money is mostly created by commercial banks. When they lend, they create money in the form of a deposit in the borrower’s account. The bank’s balance sheet increases on both sides: the new deposit liability and a new loan asset. Some economists have argued that bank capital rules, such as the SLR, slow commercial bank money growth. Here’s Steve Hanke of Johns Hopkins:In the 60 years prior to the great financial crisis, financial assets in the banking system were growing 7-8 per cent a year. What has happened since the GFC . . . the growth in financial assets in the banking system has shrunk, and averaged 4.4 per cent growth per year . . . [Because of regulations like Dodd-Frank and Basel III] banks stopped extending as many new loans, and were not rolling over old loans . . . That is why we had quantitative easing . . . the Fed stepped in to mitigate the damage that had been done by the regulations, because money supply growth had been slowing.It is possible that, were the SLR requirements loosened, banks would simply buy more Treasuries. But the banks could also put the freed-up capital behind new loans, leading to more economic activity. Brian Moynihan, CEO of Bank of America, says this is what would happen in a recent call with investors:The SLR requires us to hold capital at a level against riskless assets and Treasuries and cash. That doesn’t make a lot of sense . . . [reform] will help us provide liquidity to our clients, both in good times and times of stress. Our cash and government-guaranteed securities and government-issued securities is $1.2tn of our balance sheet right now. So think about capitalising that under the SLR at 5 per cent or whatever it is, and that’s a big number.Many observers (including several conspiracy-minded Unhedged readers) believe that SLR reform is quantitative easing by other means. If it leads to banks holding more Treasuries, it would depress yields; if it led to more lending, it would provide an economic stimulus. Both would add to the money supply.But there are important differences. To the degree SLR reform incentivises bank Treasury purchases, it will probably mostly affect short-duration Treasury yields, as opposed to the benchmark 10-year Treasury yield, due to banks’ preference for buying shorter-duration securities and the Treasury’s present preference for issuing them. And the 10-year yield has an important link to the real economy because it helps determine (among other things) mortgage rates.And bank Treasury buying will not sway the Treasury market in the same way as Fed buying, says Joseph Wang at Monetary Macro:When the Fed does QE, they are essentially saying to the market: “We will buy $100bn a month.” The Fed doesn’t care what the rate is when they do that. But if banks were to do this they would be more discretionary. There would be no rule about $100bn a month. They would buy more opportunistically . . . meaning the interest rate impact would be smaller.Remember, as well, that banks’ commercial lending decisions are determined not just by capital roles but by the economy. They will only lend when there are creditworthy companies that need more credit. Regulators can’t create more of those by fiddling with a ratio.(Reiter and Armstrong)Two good readsTacos económicos y tacos politicos.FT Unhedged podcastCan’t get enough of Unhedged? Listen to our new podcast, for a 15-minute dive into the latest markets news and financial headlines, twice a week. Catch up on past editions of the newsletter here.Recommended newsletters for youDue Diligence — Top stories from the world of corporate finance. Sign up hereThe Lex Newsletter — Lex, our investment column, breaks down the week’s key themes, with analysis by award-winning writers. Sign up here More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Chinese tech companies designing their own advanced chips for manufacturing in Taiwan are set to be the hardest hit by new US restrictions on software tools.Smartphone maker Xiaomi is first in line to be affected, according to people with knowledge of the matter, after a US directive last month instructed electronic design automation (EDA) groups to stop supplying their technology to China.Xiaomi unveiled a breakthrough self-designed mobile processor in May. Its chip is on a leading-edge 3-nanometre node of miniaturisation and is made in Taiwan with a mix of licences and tools from now-restricted US EDA companies. The world’s third-largest smartphone maker has spent years developing its proprietary silicon, produced by Taiwan Semiconductor Manufacturing Company. Xiaomi chair Lei Jun said at a launch event that its new XRING O1 chip would be used in the group’s latest smartphones. While such chips will only account for a small portion of handset sales initially, he envisions using them for all future high-end smartphones and tablets, according to people familiar with the company’s plans.Other Chinese companies also using US EDA tools and TSMC’s contract manufacturing for their self-designed chips include the world’s biggest computer maker Lenovo and bitcoin mining specialist Bitmain, according to industry insiders.Xiaomi, Lenovo and Bitmain did not respond to requests for comment.Full details of the ban are yet to be released, but it is unlikely to lead to existing licences being revoked. Instead, Chinese companies would be cut off from future updates and the technical support crucial for their chips to continue being manufactured at Taiwanese factories that use the latest US systems, according to the same people.TSMC is, in effect, banned by US restrictions from making advanced AI chips for Chinese companies, but smartphone and tablet categories, and other less advanced processors, have generally been exempted.Big Tech groups in China, such as Alibaba and Baidu, have also designed their own chips, but the impact of the EDA ban on them is at present unclear.The latest move by the Bureau of Industry and Security, the arm of the US commerce department that oversees export controls, extends chip industry restrictions to design software and represents a further tightening to restrict China’s ability to develop advanced technologies. However, some industry observers argue that the restrictions may have come too late, as Chinese EDA makers, led by Empyrean Technology, have already developed a rival ecosystem of software increasingly used by Chinese chipmakers.Huawei, the Chinese tech group that has been under US sanctions since 2019, has invested heavily in developing its own EDA tools in its chip development work, as well as supporting local suppliers such as Empyrean to build alternatives. While these are not yet as mature as the products from EDA suppliers Synopsys or Cadence of the US, they are “usable”, especially for chip production at 7nm and above, say industry insiders.The new ban means Empyrean can expect higher demand for software tools that cover the full circuit design process, including editing, simulation and optimisation. Primarius Technologies is another Chinese EDA provider, while Semitronix specialises in electrical testing to improve production yield. The share prices of all three jumped after the Financial Times reported the new restrictions.Meanwhile, Chinese start-ups have been using localised versions of hacked US EDA software.“It is very easy to hack into the system to get the support you need, and the underlying algorithm to build innovation on top of it,” said one semiconductor analyst, who declined to be named. “This is the reason why Synopsys and Cadence have seen weaker China demand than capacity growth. Lots of customers have been using it without paying,” he added. The latest US restrictions are expected to push more Chinese companies into using hacked software, as well as switching to local suppliers for both EDA and chip manufacturing.Additional reporting by Ryan McMorrow in Beijing More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is the chair and chief executive of BlackRockThe global economy is in a strange place: we know more about the next seven years than the next seven days. For nearly two months, I’ve been travelling around the world and hearing the same question: what’s going to happen with tariffs? There are only guesses. The worst-case scenario is bleak: supply shocks, spiralling inflation, economic slowdown. But at this point, the guessing itself has become a commodity, priced in, speculated to death, endlessly churned through headlines.That’s the seven-day story. The seven-year story is quieter, but far more consequential. The Trump administration’s tariffs are the symptom of a backlash to the era of what might be called “globalism without guardrails”. Global GDP grew more since the fall of the Berlin Wall in 1989 than in all recorded history before it. But the benefits weren’t evenly shared. S&P 500 investors saw a return of more than 3,800 per cent. Rustbelt workers did not.So it’s no surprise that this model of globalisation is now coming apart. But its proposed replacement — economic nationalism behind sealed borders — isn’t any more convincing. The real question here is what replaces the model that led us to this point. And the answer is coming into focus. It’s neither globalism nor protectionism, but a blend: open markets with national goals — and workers — in mind.At the heart of this new model are the capital markets: exchanges where people invest in stocks, bonds, infrastructure, everything. Why? Because markets are uniquely suited to transforming global growth into local wealth — even though, historically, that hasn’t always happened. Under globalisation, money often chased returns around the world without necessarily benefiting the people back home. We should still want capital to move freely towards opportunity — that’s what makes markets efficient. But that doesn’t mean countries can’t steer more of that capital home. In a more nationally attuned model, markets channel citizens’ savings into local businesses and infrastructure. The gains flow back to people, helping them afford homes, education, retirement. Put simply: people will fuel their country’s economic growth, and own a piece of it.   The first step? Helping more people become investors. This is the deeper shift I’m seeing in the economy. Governments are rethinking whom markets are for. For decades, they primarily served countries’ wealthiest citizens and largest institutions. Now, countries are democratising markets recognising that the same factory worker left behind by globalisation can be an investor, too.Take Japan. Until recently, it had no tax-incentivised way to invest for retirement. Now its Nisa programme is booming — enrolment surpassed 25mn last year. Meanwhile, lawmakers in the US are weighing a market-based twist on baby bonds: an investment account for every American at birth. Even a modest deposit could grow, by the age of 50, into a retirement cushion or college fund.But creating more investors is only half the battle. Every market has two sides: the people who invest, and the places where capital gets put to work. Ensuring it’s put to work domestically is hard, and in Europe, for instance, it has triggered an economic reckoning. Capital can’t fuel growth if it’s trapped in bureaucracy. Yet the EU operates under 27 different legal systems. And even if you navigate that red tape and decide to invest — say, in an energy company — it can take 13 years just to permit a power line. You might back that project to meet soaring demand from data centres, but if those centres are training artificial intelligence, it triggers an entirely new layer of regulation. The result is paralysis. Europeans save more than three times as much of their income as Americans, but invest far less of it. However, the ground in Europe is shifting. There’s growing momentum to remove the barriers holding capital back: faster permitting, less red tape on AI, a single regulatory framework instead of 27, and, most critically, a true savings and investments union. If I were an EU politician, that union would be my top priority. Investors will be watching closely to see if the reforms stick. Of course, expanding markets won’t fix everything. Unchecked, financialisation can fuel inequality. That was the first draft of globalisation: enormous wealth, unevenly distributed, with little thought for who benefited — or where. What’s emerging now is globalisation’s second draft, a re-globalisation built not just to generate prosperity, but to aim it towards the people and places left behind the first time.  More