The clamour is growing for more spending

REAL economic growth rates have been stuck in the slow lane.

There has been growing clamour for a new approach, and this has been building on two fronts.

One school of thought suggests it would be almost criminal not to spend more now, given that funding is almost free owing to current bond yields, but I would hesitate to be quite so aggressive.

After all, the debt will (theoretically) have to be repaid at some point in the future, so any investment needs to make a reasonable return rather than just be spent digging holes in the ground and filling them in again.

The other source of pressure comes from a restive electorate, a growing and vocal segment of which is demanding action to create more employment opportunities and higher incomes.

Opposition and anti-establishment parties have been most adept at jumping on to this bandwagon, but that has also forced incumbent governments to react.

So, let us just assume for a moment that all this pleading and intent actually leads to some action. What are the consequences likely to be for financial markets?

From a pure demand perspective, it has to be good news for companies exposed to various types of infrastructure – the likes of road and bridge-building, universal high-speed broadband access, renewable energy and infrastructure to support electric vehicles.

It will be interesting to see how easy it is to turn good intentions into positive actions.

The vexed question of another runway/airport for London has been in the air for decades, and the Hinkley Point nuclear power station was first proposed in the early 1990s!

Theresa May threw out the baby and the bathwater when ditching both George Osborne and his commitment to austerity. Hillary Clinton has committed to increased spending on infrastructure if elected and Donald Trump has said he will spend even more.

And talking of Trump, can anyone tell me what is it about walls – Hadrian’s Wall, the Great Wall of China, the Berlin Wall and now the proposed Mexican border wall – that so fascinates politicians? John Wyn-Evans is head of investment strategy at Investec Wealth & Investment