Protesters unhappy with the shock result of the UK referendum on EU membership. Fallout from the vote is just one of many global challenges. Credit:Getty Images This has helped squeeze implied returns on bonds - yields drop as demand-driven prices rise - to below zero in many cases. In Germany, the benchmark 10-year bund yield recently dropped below zero for the first time ever; in Australia, the corresponding government bond dipped below 2 per cent for the first time in history. So if central banks are in effect penalising lenders for not extending credit, why haven't companies and consumers filled their boots with cash and gone on a spending spree? Supply outstripping demand

The answer, according to economists, is complex and nuanced. GDP is expanding, but real net national income has been depressed by falling commodity prices. Credit:ABS, ANZ In general, though, with the globalised supply of many commodities, goods and services outstripping demand, there is little incentive for companies to invest in new capacity. Instead, they are using cheap credit to buy back their own shares or reward investors with higher dividends. This helps explain the popularity of equity investing over the past year, although the fact that most of the world's stock indices are now below where they were 12 months ago attests more to companies' struggle to find real revenue - known as top-line growth - amid oversupply and subdued consumer spending.

Australia's S&P/ASX 200, for example, ended the year down 4.1 per cent. That consumers remain cautious despite all the central bank stimulus owes a lot to low wage growth, job insecurity and, in some countries, over-indebtedness. Consumer spending patchy In Australia, where consumer spending has also been patchy and business investment dire, this global picture is best reflected in what is called real net national disposable income, which measures residents' share of the proceeds of the country's productive output. The fact that this fell 1.3 per cent between the end of March last year and the same time this year, while gross domestic product expanded 3.1 per cent, shows that Australian governments, companies and households are producing more but receiving less.

This, in turn, reflects the continued fall in commodity prices and government revenues and the share of profits and investment returns that go abroad. Wages, too, have been held down by globalisation, digital disruption and the shift from high-paying mining and manufacturing jobs to low-paying, and often casual, positions in healthcare, hospitality and tourism. While Australia's official unemployment rate has held steady at 5.7 per cent for the past three months, most of the jobs created these days are part-time. 'Lot of confusion' "There is a lot of confusion about the Australian economy because production is strong but incomes are weak," AlphaBeta.economist Andrew Charlton said a month ago. "That's why we can simultaneously have record export growth with falling company profits, strong employment growth with low wages, and strong GDP growth with a crippled budget deficit."

Low wages and prices are a global phenomenon, which means the disinflation and deflation that have bedevilled most the of developed world in recent years has finally washed up on Australian shores. A shock below-forecast first-quarter consumer price index forced the Reserve Bank of Australia to cut the cash rate to 1.75 per cent in May, and most economists expect it to do the same in August, after the second-quarter figures confirm the trend. This is likely to jar with the RBA, says Commonwealth Bank's chief economist Michael Blythe, as it has appeared relatively happy with the the shape of the jobs market, the economy's transition away from resource-related investment to a broader mix of economic activity, and the related adjustment of the Australian dollar to falling commodity prices Low inflation "If you just listen to this story, you'd be thinking 'well, there's no chance of a rate cut coming through, because the economy doesn't really need it'," said Blythe on Thursday. "But we have seen a shift in focus coming through from the Reserve Bank: while the real economy is fine, the focus very much at the moment is on inflation.

"I think, like everyone else, the [RBA] has been surprised at how low inflation is, particularly in an environment where growth is running above potential and unemployment is falling." Loading This apparent anomaly, added to the global challenges thrown up by the fallout from Britain's shock vote to leave the European Union, slowing growth in China, the US central bank's apparent reluctance to continue lifting interest rates and the threat of a Donald Trump presidency, make at least one more cash rate cut this year a near-certainty. "Most of the risks we are facing in the next 12 months will come from offshore; the problem there is trying to work out where to begin," said Blythe.​