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Early signs of distressed borrowing by the private sector across the major developed markets are now visible in the bank lending data for Q1. It is not clear thus far how much of the uptick in bank lending to the private sector is underwritten by the government, but the synchronised pickup is striking. On this occasion it does not suggest stronger growth in aggregate demand, rather the reverse — a shortfall in income that leads firms and households to borrow more. It is likely that distressed borrowing will increase further from here.
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