Germany sovereign pension fund is sound but small 3 Apr 2024 Berlin will borrow to invest up to 200 bln euros in global equities to help pay for the retirement of the country’s fast-ageing population. The vehicle’s modest size will limit its long-term impact, but Europe can learn from this blend of public and private schemes.
LNG angst seeps from consumers to producers 27 Mar 2024 A few years ago, supplies of liquefied natural gas were scarce and prices sky-high. Extra capacity arriving this decade means there could soon be a price-sapping glut. Big suppliers like Qatar and Shell have long-term contracts that can ease the pain, but only up to a point.
Lower taxes would cripple Europe’s growth 26 Mar 2024 The bloc needs new public investment of about 3% of GDP for the green transition, defence, infrastructure, education and health. High debt loads limit borrowing and spending cuts hurt the economy. Instead of pledging lower levies, governments have to raise them.
Ukraine loan is matter of politics and accounting 25 Mar 2024 Lending the country $300 bln backed by its claim for war damages against Russia has several benefits compared to rival ideas for unlocking support. Kyiv’s allies would still need to find the cash, though. Here is how they could navigate the political and financial obstacles.
Hong Kong property tycoons send warning by waiting 22 Mar 2024 A home price slump has left blue-chip real estate firms like New World trading at their lowest valuation since 2003. Back then, it sparked a rash of shareholder buyouts. This time round, property magnates remain on the sidelines, suggesting the market has further to fall.
Macron’s fiscal chickens come home to roost 21 Mar 2024 The French president is scrambling to deal with an official report likely to show dismal public finances and a deficit near 6% of GDP. He ignored warnings as debt topped 110% of economic output. Bond investors are relaxed but spending cuts will be the price of his insouciance.
‘Twin peaks’ can keep EU capital market push alive 21 Mar 2024 A two-pronged approach can aid Europe’s drive for a single financial market. By splitting oversight of the system’s safety from the policing of daily operations, Brussels can avoid a David Lynch-style mystery on who killed its plan to boost investments and savings across borders.
BoE gears up to unnecessarily prolong worker pain 20 Mar 2024 The Bank of England is set to keep rates steady because it wants to see slower wage growth before easing policy. But pay rises are already falling and won’t cause inflation. The central bank could help 30 mln employees, and 11 mln borrowers, by cutting borrowing costs sooner.
Japan’s first step to new normal is the easiest 19 Mar 2024 The central bank raised interest rates, ending 26 years of unconventional stimulus. Policymakers hinted they will keep borrowing costs steady for a while but the pressure to curb inflation, rather than unleash its virtues, may rise fast. The hard work for the country starts now.
Only an oil slump can stop Vladimir Putin 18 Mar 2024 To keep pumping money into his Ukraine war, the newly re-elected president will have to squeeze Russians. Nobody can prevent him from further unpopular measures. A sharp drop in oil revenue might force him to change course, but that is hard and risky for the West to bring about.
ECB’s money drain has silver lining for markets 14 Mar 2024 The European Central Bank is ready to exit its huge stimulus programme. With 4.7 trln euros of bonds on its books, that will take time but policymakers want few surprises. A new regime of setting rates and relying on banks to ask for loans will wean them off cheap money.
Japan’s rate shift will hit zombie firms hardest 14 Mar 2024 The central bank could end an era of negative borrowing costs as early as next week. In this Viewsroom podcast, Breakingviews columnists argue that large companies are ready for the tightening, but many struggling small businesses could hit the wall even if policymakers go slow.
UK monarchy suffers an impairment to its goodwill 13 Mar 2024 A poorly edited photo of the Princess of Wales has fanned a firestorm of speculation about her health. If Britain’s royal family were a listed company, it would have a fiduciary duty to provide more detail. While the hit to its brand equity is not visible, it’s still tangible.
Capital Calls: Small Fed windows 12 Mar 2024 Concise views on global finance: US consumer prices rose 3.2% year-on-year in February, above the Federal Reserve’s 2% target, prompting traders to rein in hopes for rate cuts. The agency’s Chair Jerome Powell could have avoided that by guiding markets towards a higher number.
Korea Inc’s Japan makeover only scratches surface 12 Mar 2024 South Korea is copying its neighbour's corporate reform drive to lift anaemic valuations. But voluntary disclosures and tax breaks are unlikely to spur change among chaebol like Samsung which dominate the $1.9 trln stock market. Seoul's push requires more stick than carrot.
IMF’s Egypt bailout chooses hope over experience 11 Mar 2024 Cairo has received an $8 bln IMF loan after a $35 bln cash injection from the United Arab Emirates. If President Sisi does not justify the Fund’s optimism about reforms, a painful restructuring of the $165 bln external debt lies ahead.
Biden’s imperfect pitch is pleasantly concrete 8 Mar 2024 The US president made a strong case in his annual address that his tenure saved the economy. Distinctly Democratic initiatives were surprisingly effective, but the next four years may leave less in any president’s control. At the very least, Biden has set the terms of the debate.
Slow growth puts ECB before Fed in rate-cut line 7 Mar 2024 The European Central Bank held borrowing costs but President Christine Lagarde suggested it might lower them in June. That could make her the first major central banker to ease policy, ahead of US Federal Reserve boss Jay Powell. Sadly, that’s only due to dire euro zone growth.
UK ‘non-dom’ slap is right move for wrong reason 6 Mar 2024 Finance minister Jeremy Hunt scrapped tax benefits for people living in the UK but officially domiciled abroad. That improves fiscal fairness and may raise over $3 bln per year. But the benefits are uncertain and the funds went to pre-election giveaways, not public services.
Taylor Swift is Thai economy’s antihero 6 Mar 2024 Singapore's exclusive deal to host the pop star's Southeast Asia concerts has irked its neighbours. Thailand, with the slowest post-pandemic recovery, is upset at missing out on the spoils. Those are debatable and in any event wouldn't shake off the $500 bln economy's malaise.