As we start the new year, things are definitely not looking too bright financially for many countries, with gross domestic product forecasts pretty flat and inflation common. The UK recently announced average annual household fuel bill increases of £500 ($601), although Europe’s recent mild weather has led to a drop in gas demand and a subsequent drop in the wholesale gas price in the region. Europe certainly must be breathing a sigh of relief, as governments had warned last year that this winter might see citizens experience planned power cuts due to insufficient gas supply caused by the conflict in Ukraine. For some countries, this would be for the first time in 50 years. Nonetheless, inflation is still an issue. This reduces the value of people’s savings and pensions, which can be problematic if people are about to retire. Likewise, for people wishing to buy property, particularly first-time buyers, mortgage interest rates are far higher, while banks are no longer willing to bail out failing businesses or individuals or indeed create new money to add into the market. Higher interest rates are the banks’ way of discouraging those without the means to pay back loans or mortgages to take them out in the first place. However, it is inevitable that there will always be those who either cannot bring themselves to wait until the uncertainty levels off or perhaps need a loan to manage the harder times or to invest to keep their business engaging to the market. Of those, there will be a proportion who will default on these higher-interest loans. This will drive a more distinct wedge between those with expendable income and those who are just managing. Young professionals, newlyweds, people who might have been about to buy a home or invest in new business would be wise to wait until the market stabilizes and interest rates drop. But even for renters, the hiked-up interest rates on mortgages will necessitate landlords raising rents. This can only increase the recent trend of people staying at home with their parents into their 30s and reverting to a more traditional multigenerational family home. Nations need to work together more than ever before to support one another and make the best use of global resources Dr. Bashayer Al-Majed This puts economies on the downturn, as money has less value if wages do not increase proportionally, people have less disposable income and they are more selective over where they spend it, reducing spending on frivolous or nonessential items, which may be considered luxuries. Of course, this can be a vicious cycle — as people spend less, local economies can suffer. Local businesses with less income may reduce staff numbers or at least reduce the working hours they offer for zero-hours contracts, increasing unemployment and preventing wage increases. People with reduced employment will spend less, particularly those already on the breadline. On the broader scale, inflation destabilizes the value of the currency or currencies in question on the international market, so imported products or the raw materials for home-manufactured products may greatly increase in price due to exchange rate differences. Occasionally, as seen in the lifting of lockdowns, these downturns can help local economies. Instead of splashing out on big holidays abroad, people take weekend breaks locally or treat themselves more frequently to little luxuries to raise their spirits. Good news for those wanting a stable, modest investment, governments needing to borrow money to pay off COVID-19 costs and other overspending have increased the repayment yield on 10-year gilts (government bonds), many to over 200 percent, over the past year. Of course, even with this increase, bond yields are low compared to the stock markets. But observing some of the devastating losses on the cybercurrency market last year, not least FTX’s unexpected failure due to Sam Bankman-Fried’s blatant disregard for his investors, deceptively using their funds to ill-advisedly reinvest elsewhere, a modest interest rate may be just right for some. After the past couple of years, with the pandemic and its related lockdowns, an unexpected increase in the effects of global warming (plus more to come with the costs of preventive measures and damage control), the invasion of Ukraine pushing up gas and oil prices and resultantly the cost of grain and logistics (which depend on gasoline), and the crashing of the cybercurrency market, the global market could do with some financial stability and security. It will be interesting to see how the global powers play this out, with forecasts predicting strong GDP growth for India, South Korea and Indonesia. With severe downturns in growth in the richer nations, they could really play well and drive for financial and power equality, but being more vulnerable to the effects of climate change, they will need to push for good deals for support. Nations need to work together more than ever before to support one another and make the best use of global resources, while building viable solutions for peace, energy, crop production and transport, and mitigating the impacts of climate change. Let us hope our governments can introduce sensible fiscal policies and that nations worldwide can put their differences aside and build an equal, safe and financially stable and prosperous future for us all. Dr. Bashayer Al-Majed is a professor of law at Kuwait University and visiting fellow at Oxford. Twitter: @BashayerAlMajed