Markets snooze their way to Le Pen showdown 5 Apr 2017 French government bond prices suggest a lower probability of far-right Marine Le Pen winning the presidential election than bookies do. Markets may be too calm about the disruptive potential of voter apathy, or a left-wing alliance. That limits their ability to reassure.
Britain is appropriate spearhead for bonus rethink 5 Apr 2017 UK ministers want to cut so-called long term incentive plans from executive pay. Such schemes can work, but all too often don’t. Turning them into less opaque deferred bonuses could preserve domestic competitiveness, while aligning Britain with peers that value greater clarity.
Brexit forces issues that are best left murky 4 Apr 2017 A phony battle over how Spain and Britain might treat tiny Gibraltar is a distraction, and a warning. If Britain’s exit from Europe becomes a mechanism for settling old scores, it could kill the constructive ambiguity on which the UK, the euro and the single market all depend.
ITV takeover is a hard story to pitch 4 Apr 2017 The UK free-to-air broadcaster’s shares have risen more than 15 pct in the last six months, partly on bid speculation. But ITV’s high margins and exposure to fickle TV advertising make a potential 12 bln pound price tag hard to justify – even for top shareholder Liberty Global.
Iceland needs euro peg like cod needs bicycle 4 Apr 2017 The North Atlantic state’s finance minister suggests fixing the crown’s value to its euro zone peer. Iceland’s economy could use cooling. But its volatility means that focusing attention on inflows – or even pegging to a more appropriate currency – makes more sense.
Dixon: Start preparing for fourth Greek bailout 3 Apr 2017 Despite a last-minute wrangle over pensions, Greece is likely to get the next chunk of the money due under its current bailout plan. But this will only buy Athens time until the middle of 2018. After that, a new programme, and more fraught negotiations, will probably be needed.
Review: A flawed compass for post-Brexit Britain 31 Mar 2017 The vote to leave the European Union exposed a new political fault line, David Goodhart argues in “The Road to Somewhere”. The solution is for cosmopolitan elites to share more power with those left behind. The tension is real, but the distinction too broad to be a useful guide.
ECB’s mandate is best left murky 30 Mar 2017 Two members of the central bank's executive board have mused on its accountability, after a report criticised the ECB for overreach. It indeed pulled some pretty off-piste moves during the euro zone crisis. Yet clarity could constrain its ability to fight future crises.
Lloyd’s exemplifies London’s phantom Brexodus 30 Mar 2017 The insurance marketplace is creating a new company in Brussels. Yet safeguarding access to European clients only means moving a maximum of a tenth of staff. Companies are readying their parachutes, but this is a long way from threatening the city’s pre-eminence.
LSE-Deutsche Boerse failure merits only fake tears 29 Mar 2017 Brussels has blocked the European exchanges’ $30 bln merger. The LSE’s reluctance to sell a trading platform looks like a fig leaf. A cautiously positive market reaction flags that both groups have dodged the trials of steering the deal through Brexit.
Market’s vision of Brexit is too rosy 29 Mar 2017 As Britain triggers the process for leaving the EU, investors are more phlegmatic than they were six months ago, a Breakingviews index based on asset prices shows. There is plenty of scope for that to change if hard bargaining coincides with slowing growth.
Return on equity is fair game for bank regulators 27 Mar 2017 The Bank of England's next stress test will assess if lenders’ earnings exceed their cost of equity. That might sound like statist meddling, or doing investors’ job for them. But as a way to stop banks taking silly risks to offset low rates, it makes sense.
German voters deal early blow to upstart Schulz 27 Mar 2017 The small state of Saarland backed Chancellor Angela Merkel’s CDU, while the SPD, led by the charismatic Martin Schulz, did less well than expected. Voters may tire of Merkel after 12 years, but seem inclined to prefer her stable, predictable government over the alternative.
Markets can ease Bank of England inflation dilemma 21 Mar 2017 Prices rose 2.3 pct in February, surpassing the central bank’s target for the first time since 2013. Market rates and sterling rose. This tightening in monetary conditions might allow Governor Mark Carney to defer a hike in official rates until the economic outlook is clearer.
Brexit could weaken Britain’s puny productivity 21 Mar 2017 As in most developed countries, UK companies are struggling to produce more with the same workers. Exporters and foreign-owned firms are the notable exceptions. If leaving the European Union squeezes trade and shrinks foreign investment, living standards will suffer.
France’s Macron passes first of three big tests 21 Mar 2017 The independent presidential hopeful was, according to a poll, the most convincing candidate in a debate where he had the most to lose. His next challenge is to win the election. Even if he does, legislative ballots will decide whether the ex-banker can deliver promised reforms.
Market angst about France infects whole of EU 17 Mar 2017 Far-right leader Marine Le Pen has promised to reshape French ties with the European Union if elected president. That would be an existential test for the whole bloc. Currency options prices show investors have rarely been so anxious about the EU-wide impact of a single event.
Dutch deliver conventional protest vote 16 Mar 2017 The country’s governing coalition suffered heavy losses in Wednesday’s election. But right-wing firebrand Geert Wilders picked up fewer seats than expected and finished a distant second. The setback for extremism leaves mainstream political parties more fragmented than ever.
Britain’s budget U-turn merits Brexit deal alarm 15 Mar 2017 Chancellor Philip Hammond has reversed last week's tax hike for self-employed workers. As EU exit negotiations begin, the UK critically needs a united government that can be firm in the face of political pressure. Ditching a defensible reform implies the opposite.
Bad bank is poor solution for Europe’s dud loans 14 Mar 2017 Policymakers have called for a pan-European fund to soak up the region’s dud assets. But the record for such schemes is mixed, and hard to tailor to Europe’s diverse problems. The risk is that it becomes a backdoor bailout. Governments would be better off fixing bankruptcy laws.