Saudi Aramco IPO is exercise in reverse valuation 22 Jun 2017 The oil producer is worth $2 trillion, say its owners. The question might not be whether that valuation is right, but what Aramco’s owners and bankers will have to do to get it. A Breakingviews calculator suggests this will be a stretch of reason.
Theresa May’s plan still has hard Brexit core 21 Jun 2017 The quest for a parliamentary majority has forced Britain’s prime minister to curb her ambition. Planned reforms to pensions, schools and company pay have been shoved aside. Support for her Brexit-heavy agenda is uncertain, though. The government’s future remains in the balance.
Greece still dancing to Europe’s political discord 16 Jun 2017 Euro zone governments have rewarded Greek reforms and austerity with 8.5 bln euros of loans and promises of future relief. Political factors, including German elections, mean losses must remain vague. The lack of clear debt restructuring denies Greece the boost it needs.
Hadas: Free university for all is good policy 14 Jun 2017 The UK Labour party promised to abolish the current tuition-plus-loan system for tertiary schooling. That’s normal in most of Europe. It’s also fair and enriches society, whereas student debt does the opposite. Clever use of taxation might offer an answer.
Snapchat populism is new political battleground 9 Jun 2017 Millennial-friendly Labour leader Jeremy Corbyn hit the party’s highest vote share since 2001. It may be partly an anti-Brexit backlash from a pro-EU age group. Yet what looks like a swerve away from populism may just be the beginning of a new kind of grievance pandering.
Weak government may be just what Britain needs 9 Jun 2017 A hung parliament promises months, or years, of political instability. For finance and industry, though, this may mean freedom to carry on without major interventions. The worst manifesto ideas, on migration, Brexit and nationalisation, are likely to end up in the policy dustbin.
British election offers business only bad choices 7 Jun 2017 If the Labour party wins on June 8, companies face higher taxes and wage bills. If the ruling Conservatives retain power, expect more meddling and talent shortages. On balance, companies may prefer the incumbents – if only because they are less likely to carry out their promises.
Europe is a fertile petri dish for GDP-linked debt 6 Jun 2017 Linking national debt payments to economic performance could help countries cope with downturns. There are many obstacles. Bad governments might fiddle statistics; good ones may be reluctant to pay a premium for flexibility. Even so, the euro zone is a good place to test the idea.
Hadas: Ending the hyperbole over pension savings 31 May 2017 The World Economic Forum wants all workers to put more aside for retirement. That may be conventional wisdom, but it is economic nonsense. For a nation, current savings cannot reduce the burdens of future pensions: if anything such reliance risks worsening the social challenge.
Review: A premature requiem for the liberal order 26 May 2017 Globalisation is in retreat and democracy under attack. Two new books foresee a gloomy future for the Western-led economic and political system. Yet just as some were too quick to proclaim its triumph in 1989, the obituaries sparked by Donald Trump’s election may prove too hasty.
Post-election Merkel might change her spots 25 May 2017 Angela Merkel may have the option to pick the right-of-centre FDP as her new coalition partner in September, polls suggest. The FDP advocates low taxes, fiscal discipline and a euro zone without Greece. That could be an obstacle to euro reform, or a grand bargain with France.
Sovereign downgrade will keep Beijing on its toes 24 May 2017 Moody’s has downgraded China for the first time since 1989, now ranking it below Taiwan. It is mostly symbolic as foreign debt ownership is minimal and local corporate ratings follow their own logic. But the public reprimand will check Beijing's ambition to attract funds onshore.
India’s RBI risks a reputational downgrade 23 May 2017 The central bank may pick credit agencies to rate stressed loans, and help pay for the job. It is a bid to stop borrowers shopping for good scores. That could force agencies to adapt. But the idea may lead the regulator further into commercial decision-making.
Trump’s fanciful budget relies on voodoo economics 22 May 2017 Paid parental leave and caps on repaying student loans sound appealing. But the rest of the president’s budget plan to cut $3.6 trln relies on pie-in-the-sky assumptions about employment rates and reforming Obamacare and welfare. It’s a non-starter even for a Republican Congress.
Time for UK to lose timidity on taxing property 22 May 2017 Theresa May has backed down on a so-called “dementia tax” following a backlash against older Britons using their homes to fund social care. How much the state should subsidise these costs is up for debate. But unearned housing equity should be taxed more.
Spain is beginning to look more like Italy 22 May 2017 Pedro Sanchez’s unexpected victory in Socialist primaries could weaken the already fragile minority government. The risk of a crisis is low, but a more fragmented parliament, similar to Italy, makes economic reforms harder, and undermines Spain’s call for European integration.
Review: Democrats’ chief firebrand fumbles message 19 May 2017 Elizabeth Warren's "This Fight is Our Fight" reads like a marker for a 2020 White House run. The senator from Massachusetts targets Donald Trump, lobbyists and Wall Street. Tales of struggling Americans are engagingly woven into the outrage. But her rote views limit her appeal.
Theresa May’s manifesto leaves Brexit wiggle room 18 May 2017 Britain’s Tory party will slash migration and quit the EU without a deal if need be should it win a June 8 election. But its leader has left herself room to make Brexit very hard or relatively soft. That’s artful, but ensures adherents of one or the other will be disappointed.
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.
Lloyds bailout bill still isn’t paid in full 17 May 2017 The UK has recouped its 20.3 bln pounds on the once-failing lender. It wouldn’t matter if it hadn’t, since rescuing Lloyds helped save the banking system. Still, just as the real returns outweigh the financial ones, so do the costs: austerity and mistrust of the industry.