Austria warrants a less sanguine market reaction 9 May 2016 Chancellor Werner Faymann has quit amid populist gains and shrinking regard for his grand centrist coalition. Yet the spread of Austrian debt over German bunds narrowed. The migrant crisis may push Vienna further right. If Poland and Hungary are guides, business could suffer.
Who’s London’s next mayor? It doesn’t matter 5 May 2016 Neither Sadiq Khan nor Zac Goldsmith, frontrunners for May 5’s vote, have the tools to fix London’s housing shortage. That’s a national issue. The question for businesses isn’t who runs the capital after Boris Johnson, but whether expansion elsewhere in the UK makes more sense.
LSE investors look even more bearish on merger 4 May 2016 The UK exchange’s shares dived after U.S. rival ICE said it wouldn’t submit a bid. Investors weren’t giving an LSE-Deutsche merger much credit for potential revenue synergies as it was. Now, fear a deal could get blocked may be prevailing over value creation from cost savings.
UK slowdown has a silver lining for Cameron 3 May 2016 An unexpected contraction in manufacturing is the latest sign that growth is losing momentum. Usually such a slowdown would be unmitigated bad news for the government. Right now, it’s all useful PR fodder for Prime Minister David Cameron in his battle to keep Britain in the EU.
Investment is real star of strong French growth 29 Apr 2016 GDP increased by a surprisingly robust 0.5 percent in the first quarter, boosted by the biggest rise in household spending in more than a decade. Nationwide shopping sprees may just be the flipside of the frugal end to last year. The pickup in investment is far more cheering.
Lloyds’ dividend promise has Brexit caveat 28 Apr 2016 The UK bank’s payout growth hinges on keeping its capital ratio at 13 percent - which it barely managed in the first quarter. Lloyds’ potential to generate lots of capital is undimmed. But if Britons vote to quit the EU, those earnings may have to be diverted to running repairs.
Euro zone cracks show in QE plaster 27 Apr 2016 The ECB’s money printing has squashed interest rates for countries and companies, even in the south. Yet the difference in borrowing costs between riskier sovereigns and Germany is rising. Bond-buying has not made investors insensitive to risk. It may not prevent default either.
Sterling and UK economy tell different stories 27 Apr 2016 British growth slowed in the first quarter and negative economic surprises are surpassing positive ones by a fair margin. Yet Brexit-focused traders have pushed up the pound. The problem is that sterling’s bounce hinges on politics, which is even more fickle than economics.
EU budget delinquents have the upper hand 26 Apr 2016 The European Commission is considering penalising Spain and Portugal for flouting budget rules designed to underpin the euro. Doing so would risk a political backlash. Letting them off sends a signal EU budget rules are toothless. It hardly helps that the rulebook is so complex.
Chernobyl is symbol of shaky EU-Ukraine ties 26 Apr 2016 Thirty years after the disaster at the nuclear power station, EU money has helped build a structure to contain further reactor fallout. But Ukraine will have to sort any future issues by itself. Efforts to bring Kiev and Brussels closer suffer from a similar risky dynamic.
Obama view on UK-EU can sway minds but not hearts 21 Apr 2016 The U.S. president, visiting London, could speak in favor of Britain staying in the EU. The big-picture economic case, in particular, is hard to dispute. But just as Donald Trump’s supporters defy logic, disengaged Brits may be ready to blow a raspberry at the establishment.
Google and EU fight losing battle for good reasons 20 Apr 2016 European trustbusters have accused the tech titan of abusing its dominance in smartphones by tying services together. The case is solid but a tortuous process limits deterrent value. And Google probably can justify the cost of a brawl even if it doesn’t win.
Pain-free post-Brexit trade deal is a pipedream 20 Apr 2016 Britain’s justice minister says leaving the European Union won’t harm trade. Michael Gove reckons the self-interest of German carmakers and French farmers will force their governments to keep the free-trade status quo. Trouble securing an EU-U.S. trade deal suggests otherwise.
Brexit Index: The “Out” case gets a media boost 20 Apr 2016 Breakingviews’ Brexit Index shows an ever-higher risk of a UK exit from the European Union in June’s referendum. Unlike the adverse economic figures seen in previous months, the key driver in the newest data is anti-EU media coverage. This isn’t going to go away.
Pro-Brexit camp learns risky lesson from Scotland 19 Apr 2016 Leave campaigners aren’t responding in kind to a weighty government analysis predicting economic doom post-exit. True, Scotland’s pro-independence camp made itself look silly due to forecasts that relied on heroic assumptions. But saying nothing risks surrendering the argument.
Time for banks to go cold turkey on sovereign fix 18 Apr 2016 Europe is considering tightening rules that make it easy for lenders to own government debt. Banks addicted to sovereign punts would suffer, and governments lose wiggle room. Yet reform could hasten euro area integration, while ECB bond-buying makes it a less scary prospect.
Dixon: Vote to quit EU could tip UK into recession 18 Apr 2016 A victory for Brexit will trigger political turmoil and acrimonious divorce talks. Investment will grind to a halt as firms wait for the fog to clear. That could cause a recession.
Brexit job risk threatens more than just bankers 15 Apr 2016 The UK might miss out on 100,000 finance roles by 2020 if it quits Europe, a trade group says. The reason those outside the City should be concerned is that the real impact could be wider and more prolonged. The trouble is, immediate job losses elsewhere may seem a bigger risk.
Italy’s bad bank needs a fireman’s lift from Renzi 13 Apr 2016 The government wants banks and funds to pay 6 billion euros for weak lenders’ non-performing loans. If Prime Minister Matteo Renzi delivers on his boast to reform Italy, they might make a decent return. If not, a Breakingviews calculator shows the bad bank is in for a bad deal.
Schaeuble plays risky political games with ECB 13 Apr 2016 Low European rates fuel support for the far right, Germany’s finance minister says. Such sniping jars with Germany’s usual passion for central bank independence. Wolfgang Schaeuble may be aiming to attract disgruntled voters rather than slam the ECB. His strategy could backfire.