Britain’s joyless job boom is nothing to celebrate 17 May 2017 A record three of every four working-age Britons is employed. But prices are rising faster than wages, and a post-Brexit crackdown on immigration threatens to limit further expansions in the workforce. That makes declining productivity an even bigger cause for alarm.
Hadas: Puerto Rico, Greece and bad-faith debt 17 May 2017 Both the U.S. territory and the euro zone laggard have fine beaches, irresponsible governments and a debt crisis. The most just and helpful response to such debacles is to force reckless lenders to write off loans. That’s a hard sell. Thankfully, few sovereigns are so careless.
Euro zone bonds are taboo worth breaking 17 May 2017 Spain wants the bloc’s 19 governments to pool their debt. That idea is likely to be shunned by Germany. Yet mutualisation is happening anyway through bailouts and central bank largesse, and countries are less profligate than they were. Common bonds needn’t mean wayward spending.
Labour’s risky UK manifesto requires Brexit context 16 May 2017 Britain’s opposition party has outlined tax rises for companies and the rich to pay for higher spending. Potential payers could get around them. Yet what Labour is proposing isn’t that much more risky than the “hard Brexit” the ruling Conservative party may deliver.
EasyJet gives lesson in counter-cyclical aviation 16 May 2017 As European airlines engage in a costly battle for market share, the UK no-frills carrier is buying ever-larger aircraft. EasyJet’s cost advantage and the impending demise of weak rivals suggest boss Carolyn McCall is right to look beyond the short-term clouds.
Britain gears up for immigration self-harm 15 May 2017 Theresa May is likely to stick with a vow to reduce annual net migration below 100,000, despite failing to hit it so far. The election gives the prime minister a golden opportunity to show the UK will keep growing post-Brexit. Renewing the pledge would apply an unhelpful brake.
Macron inherits healthy economy – and will need it 12 May 2017 The French president-elect is taking over at a propitious time. Growth is picking up, unemployment has probably peaked and the budget deficit is expected to fall under the EU limit for the first time in a decade this year. That gives him some scope to sweeten unpalatable reforms.
EU could spoil Uber’s cross-country road trip 12 May 2017 Travis Kalanick’s ride-hailing service can be regulated like any other transport firm, according to an EU legal opinion. That actually changes little – many member states already do. The big difference is that it would puncture Uber’s fantasy of European single-market protections.
German bonds are caught between Mario and Macron 12 May 2017 Euro zone yields have risen in anticipation of tighter policy from ECB President Mario Draghi. But the euro zone’s fragility puts a cap on long-term rates. Changing that would require the kind of common fiscal policy imagined by new French President Emmanuel Macron.
If Britain cools on markets, others lose too 11 May 2017 The country’s two main political parties are both promising to intervene in high household electricity prices. In energy, market forces haven’t worked as they should. Yet if Britain backs away from its instinct to be mostly hands-off, other countries lose a reason to go forward.
BT valuation gap will outlast post-scandal reset 11 May 2017 The 30 bln pound UK telco is cutting jobs and executive bonuses after an accounting mess and a profit warning tanked its shares. The moves clean up the past, but BT's future depends heavily on regulators. That should keep the incumbent trading at a discount to nimbler rivals.
Italian banks offer way to play Macron boost 11 May 2017 Both Credit Agricole and UniCredit beat first-quarter expectations and have more to come. Yet the French bank trades above tangible book value, while its Italian peer languishes. If the new president reforms both France and Europe, UniCredit’s shareholders could get more upside.
Commerzbank limbo underscores its need for a deal 9 May 2017 The German bank’s first-quarter return on equity was a pitiful 3 pct, and its targets are uninspiring. In most sectors, a company destroying value for shareholders would be taken over. In banking, regulatory and practical uncertainties still stand in the way of logical tie-ups.
What’s Britain’s real Brexit bill? 9 May 2017 Negotiators may demand the UK pay 100 bln euros as part of an orderly EU exit. Avoiding this would mean leaving without a trade deal, which would hit future growth. This Breakingviews calculator estimates how much output and tax revenue Britain stands to lose in a chaotic Brexit.
Italy adds bum note to Macron’s ode to joy 8 May 2017 Emmanuel Macron took the French presidency, but that still leaves Italy as Europe’s other crisis-in-waiting. Elections are coming, disruptive parties are stronger and unemployment higher than in France. Growth-friendly policies and more fiscal leniency could mitigate the risk.
Macron has bigger fish to fry than Brexit 8 May 2017 Negotiating Britain’s exit from the EU will no doubt guzzle the incoming French president’s time and energy. But knitting the euro zone closer together will absorb his political capital. Punishing or pleasing the UK will be an outcome not an objective.
Macron may change France in unintended ways 7 May 2017 Luck as much as talent has propelled Emmanuel Macron to the presidency. He will need both if he wants to achieve more than seeing off the far-right Marine Le Pen. The ex-banker will at best deliver piecemeal reforms. At worst, he risks undermining the Fifth Republic.
Britain’s Brexit bill is worth the money 8 May 2017 An orderly departure from the EU may cost the UK as much as 100 billion euros. A chaotic exit that permanently lowered the growth rate of its 1.9 trillion pound economy would be much more expensive. Better to hand over a hefty sum if it means avoiding that outcome.
Greek bonds are the last of the ECB free rides 5 May 2017 Athens has pledged to cut pensions and raise taxes, and could soon be eligible for European Central Bank bond purchases. That would push up prices just as other euro zone bonds start going the other way. Europe could drag its heels, but the likelihood of a messy default is low.
Death of diesel will contaminate German carmakers 5 May 2017 Sales of new diesel cars are falling sharply in Europe, as talk of selective driving bans in polluted cities is unsettling drivers. Market pressure may force carmakers to phase out diesel much quicker than planned, with negative effects on VW, BMW and Daimler.