Dollar strength spells more U.S. bond weakness 30 Nov 2016 As emerging market currencies wilt against a resurgent greenback, countries like India are dipping into their war chests to sell dollars. More may have to follow suit. Sooner or later, this will involve selling Treasuries. It’s more bad news for the battered U.S. bond market.
Trump can make or break global growth hopes 28 Nov 2016 Tax cuts and more spending in the United States could help lift world growth to 3.6 pct by 2018, the OECD reckons. But President-elect Donald Trump could reverse the boost with protectionist policies. The rosy scenario rests on shaky assumptions about international cooperation.
Brexit transition headache has EEA painkiller fix 28 Nov 2016 UK courts could rule that Britain can stay part of the European Economic Area when it quits the EU. If so, ongoing single market access could numb Brexit's impact. If lawmakers also pledged to quit the EEA in, say, 2025, the more rational Brexiteers might even support it.
Too soon for Spain to be a role model for others 25 Nov 2016 The country's deputy prime minister thinks others see the domestic economy as a case study for its rapid recovery. GDP has risen and Madrid deserves credit. But with growth likely to slow and unemployment and a big budget deficit both problems, there's no room for complacency.
UK’s independent institutions face stress test 24 Nov 2016 Attacks on Britain’s official economic forecaster follow those on the judiciary and the central bank. Critiques of powerful public bodies are vital for democracy. With a growing debt and a big current account deficit, so is accepting the integrity of their judgments.
Brexit means UK is wise to defer budget handouts 23 Nov 2016 Leaving the European Union means lower growth and more borrowing. Dumping previous constraints enabled Chancellor Philip Hammond to invest a bit more in housing and research. Though he has wiggle room, Brexit negotiation uncertainty means there are grounds to hold back for now.
EU’s “Chapter 11” bankrupts Brexit assumptions 23 Nov 2016 Brussels wants to introduce protection for bust companies, similar to the U.S. model. British lawyers have tended to be dismissive of continental restructuring laws. If these changes go through, the UK may have to copy its neighbours to keep up. So much for sovereignty.
EU unwise to play at banking tit-for-tat 22 Nov 2016 Brussels could insist foreign lenders trap more capital locally. There's logic from a stability point of view in forcing U.S. banks to do what European lenders already have to in New York. The risk is that American lenders don't see the EU as quite so integral to their business.
Britain’s brave new world hits post-Brexit reality 21 Nov 2016 Prime Minister Theresa May wants capitalism to work for the little guy. But in a speech to UK business she softened ideas like putting workers on boards, while promising low corporate taxes. Pressure to rein in the deficit and migration leaves less room for policy innovation.
Merkel can win new term, but won’t finish it 20 Nov 2016 The German chancellor's decision to run for re-election in 2017 is a gesture of much-needed stability. Angela Merkel is likely to win despite the rise of the right-wing AfD party. After that, her best bet is to quit while she is ahead.
Review: A prophet for the age of endarkenment 18 Nov 2016 John Gray foresaw the Trump era. "Enlightenment's Wake", published in 1995, predicted that grand ideas would be replaced by ethnic and religious conflict, authoritarian regimes and great power rivalries. Still, the newly-relevant book offers some hope for despairing liberals.
Dollar, rates or rules could zap EU bank rally 16 Nov 2016 The Euro Stoxx banks index is up 11.5 pct since the U.S. election. Expectations for higher interest rates and watered-down Basel capital rules could be too rosy. Meanwhile, the stronger dollar may reduce EU bank appetite for leverage, and presage wider financial instability.
Clearers’ worst-case scenario requires EU own goal 14 Nov 2016 A London Stock Exchange-commissioned report reckons Brexit could lead to the loss of up to 83,000 market infrastructure jobs in the UK. This most painful outcome might cost banks at least $77 bln, says a UK data provider. It's in European interests to avoid that outcome.
London visa idea is clever but quixotic 10 Nov 2016 A business lobby wants a post-Brexit visa valid only in the capital for roles that can't easily be filled by UK workers. That would be good for the economy, but politically tricky. It would worsen divisions and jeopardise Prime Minister Theresa May's pledge to slash immigration.
Politics-scarred investors will deploy new tactics 9 Nov 2016 After Brexit, Donald Trump's U.S. presidential win is another surprise that leaves money managers clueless about future policies. With more ballots ahead in Europe, waiting for post-event buying opportunities is increasingly less risky than betting the consensus will prevail.
Trump gives Europe’s iconoclasts fresh credibility 9 Nov 2016 Anti-establishment politicians in Germany, France and the Netherlands hailed the next U.S. president. He shows inexperience and nationalism are no barrier to victory. Mainstream parties could borrow their rivals' clothes before elections next year. But time is not on their side.
Putin gains Trump card in geopolitical poker game 9 Nov 2016 The election of America's new president leaves Ukraine, the Baltic states and Russian sanctions up in the air. A falling oil price and Syrian engagement limit Russia's options, and Trump's true views are unclear. But the electoral outcome leaves Putin with more freedom to act.
Britain’s Brexit airbag can’t cushion everyone 28 Oct 2016 Nissan’s UK plant will get state help if its competitiveness is harmed by Britain leaving the EU. Offsetting potential tariffs is unorthodox, but feasible and not especially expensive, even if rolled out to the whole industry. But picking winners also means picking losers.
Resilient UK growth adds to policymakers’ quandary 27 Oct 2016 GDP rose by 0.5 pct in the third quarter as the economy barely broke its stride after Britain voted to leave the EU. The good news makes it harder for the government and Bank of England to justify a hefty stimulus. But if things do get worse their response may come too late.
Free trade can survive its Wallonian wobble 25 Oct 2016 The tiny Belgian region is holding up a trade pact between Europe and Canada. That doesn’t mean such deals are impossible, though - they just need even more time and creative thinking. The messy process also undermines the notion that ordinary people have no say in globalisation.