The difference between junk and triple A rated debt is these days little more than 300 basis points, against 850 only a few years back.There has been an equally dramatic narrowing of the spreads between developed and emerging market debt. One of the other consequences of the exceptionally loose monetary conditions of the past five years is that traditional standards of risk assessment are being progressively thrown to the winds.This has manifested itself not just in rapidly rising house prices and growing levels of household debt, but in a steady erosion of interest rate spreads. The exceptionally loose US monetary conditions which have helped bring about this strangely anomalous state of affairs are being steadily withdrawn. The upsurge in US consumer prices announced yesterday means the Fed will remain in tightening mood for some months to come yet.More importantly, there is every reason to believe that Asia will itself eventually develop decent levels of domestic demand, making its further development and growth less dependent on exports.Yet this is plainly still some years off, and in the meantime there is some risk of the imbalances correcting more violently. Britain would meanwhile seem to face its own particular challenges, with a fast-expanding public sector crowding out a once-vibrant private sector.Yet the biggest threat is the one that economists have been complaining of for many years now - the growing imbalance in global trade and capital flows.

This finds its most obvious manifestation in America's yawning current account deficit, which just gets bigger by the day.The only reason it hasn't already self corrected with a violent collapse in the dollar and an equally dramatic rise in American interest rates is that it is supported by massive inflows of capital from Asia and the rest of the world. Implausible though it may seem, excessive consumption in the world's richest nation is being paid for by the savings of some of the poorest nations. Though this relationship has persisted for some years now without calamity, nobody could believe it remotely sustainable.The best hope is that it corrects slowly and in an orderly fashion Such an outcome is still in my view the more likely one. Nothing has obviously changed to make us think that this time might be different.

This seems a rather more potent cause for concern than the possibility of a human variant of avian flu, for Europe has a long and distinguished history of stalled economy recovery. Yet these are risks that are always with us and by their very nature are largely unpredictable. We can put in place crisis management plans to confront them should the worst come to the worst, but it would be pointless trying to predict them.Then there is the risk that Europe's still-fragile economic recovery won't continue as predicted. The Governor, Mervyn King, has been careful to warn against complacency, yet it's hard to find cause for concern when the outlook is painted as rosy as this.So where do the risks lie? Well of course there is always the possibility of catastrophe - another terrorist atrocity, meltdown in the Middle East, a pandemic of avian flu, or a sudden acceleration in climate change. Only one member of the MPC, Stephen Nickell, voted for a rate cut, as he has done for some months now. City speculation that he had been joined by others turned out to be ill founded. To the contrary, sentiment seemed to be almost hawkish, with members worrying that a reduction in rates at this stage might provide further support for the housing market and consumption at a time when GDP growth was already strengthening. Far from showing a strengthening of the case for more interest rate cuts, as many in the City had expected, they instead show the committee in surprisingly upbeat mood and virtually unanimous in voting for rates to be left on hold.

Is this really what the Bank of England's Monetary Policy Committee believes? If there was any room for doubt, it was laid to rest yesterday by publication of the minutes for the MPC's last meeting. In any case, he could scarcely have hoped for a better write up, with inflation bang on target for the next three years and growth returning to a little above trend and then staying there. So everything's fine in the macroeconomy, is it? That was the outlook postulated in last week's Inflation Report, whose three to four-year forecasts painted a picture of such benign stability that they might have been penned by the Chancellor himself. A final dividend of 62 cents is 22 per cent higher than in 2004.Nick Hatch, an analyst at Investec, said: "The restructuring is pretty much in line with recent market rumours The earnings are broadly in line.