Financing the capex boom

The ability to finance the great reindustrialisation will be a key driver of national economic performance: only some economies are positioned to benefit

For the full version of this note, with extended analysis and insights, implications, and supporting charts, do get in touch at david.skilling@landfallstrategy.com

I recently argued that a ‘great reindustrialisation’ process was likely across advanced economies, after a few decades of broadly declining capital investment.  There are several reasons for substantially increased capex: industrial policy and global economic fragmentation; technology and the net zero transition; as well as an aging population.  This will be positive for growth, including (hopefully) productivity growth.   

But there will be winners and losers in terms of who benefits from these investment dynamics.  Capex is not self-financing.

There are several economic/policy factors that will shape the ability of economies to attract and mobilise the capital to finance increased productive investment: the size of the domestic market; the sectoral and firm mix; fiscal space and industrial policy; as well as national savings…