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This is the Bloomberg Surveillance Podcast.

I'm Jonathan Ferro, along with Lisa Abramwitz and Anne-Marie Hordern.

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Terminal and the Bloomberg business app. Joining us now to extend some of this conversation,

not the last bit, but the bit about foreign exchange and politics. George joins us now.

George Sarajevoz of Deutsche Bank. George, welcome to the program, sir. This EM-type dynamic,

which keeps gripping developed markets over the past, I'd say 12 months,

maybe even longer, George. How are you explaining that to clients at the moment?

Well, our view is it has more to go. It's here to stay. And I think the critical driver of all

of this is that fiscal deficits everywhere are going

up.

And of course, this was the case for the US over the last two, three years.

But the really big shift since the start of the year is if you look at all the countries

outside of the US, with the UK being one exception, but everyone's increasing fiscal spending

again.

Canada, Germany, China's front-loading, we're seeing discussions in Japan.

And I think it's this global increase in deficits combined sticky inflation that is creating these tensions as far as this discussion goes.

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