The writer is an FT contributing editor and global chief economist at KrollAs the era of cheap money comes to an end amid a global central bank tightening cycle, UK pension funds have been among the first bodies to float to the surface. I am certain they will not be the last. Margin calls sparked by the funds’ liability-driven investing (LDI) forced the Bank of England back into quantitative easing. And on Tuesday the BoE widened its bond-buying programme, warning of a “material risk to UK financial stability”.

The troubles brought on by Chancellor Kwasi Kwarteng’s “mini” Budget are a harbinger of unfortunate events to come across developed markets in the next year. Governments will spend more; investors will be the dominant disciplining force; and central banks will break other things in trying to break the back of inflation.

Even as monetary authorities withdraw liquidity, war and the energy crisis will require developed markets to spend much more in the coming year. At the end of September, Germany, the pillar of fiscal rectitude, announced a €200bn investment package to cap gas prices for industry and consumers into 2024. While finance minister Christian Lindner insisted the extra euros will not be inflationary, German CPI soared to a 70-year high last month and bund yields have followed. Credit default swaps rose to the highest since April 2020 even as Lindner insisted Germany is “expressly not following Britain’s path” by committing to a new level of borrowing.