Millennial princes snatch at power in Gulf 3 Jan 2017 Ageing monarchs may hand greater powers to a younger, more progressive generation in 2017. Falling oil revenues and ballooning budget deficits are forcing sheikhdoms to make overdue economic and social reforms or risk financial meltdown. Millennial thinking could help.
Hadas: Four resolutions for a more humane economy 3 Jan 2017 Brexit and Donald Trump’s election are part of a rebellion against the social and economic establishment. Changes are needed to prevent a dangerous disintegration. Here are some suggestions: forget GDP, fight alienation, support communities and promote local decision-making.
Italy’s Monte dei Paschi bail-in is a bailout 23 Dec 2016 EU rules require states that rescue banks to force losses on creditors, or convert them into shares. Italy's MPS rescue allows retail investors to swap bonds for safer ones, leaving the government holding the bag. It's a 2008-style bailout, complete with financial engineering.
JPMorgan’s Monte Paschi flop is in eye of beholder 23 Dec 2016 The U.S. bank led the attempted private rescue of Monte dei Paschi and thus shares some of the blame for its failure. But lost fees hurt it too. Delaying a bailout until after Italy's referendum also means the career of ex-PM Matteo Renzi may have a second act.
South African debt will be downgraded before Zuma 21 Dec 2016 After legal and political setbacks, the country’s president is more vulnerable than ever. Yet Jacob Zuma’s power base makes removing him difficult. The longer he clings to office, the bigger the chance that South Africa loses its investment-grade credit rating in 2017.
Gulf bank mergers will solve an oily problem 20 Dec 2016 Three Qatari banks have become the latest in the region to explore merging. They won't be the last. Exposure to volatile crude and hard-up state owners could trigger more consolidation of the sector in 2017. Governments will exit their charges - and ease their budgetary holes.
Ukrainian bank clean-up comes at a cost 19 Dec 2016 The war-torn country will rescue the largest private lender PrivatBank. It suggests Ukraine’s banks are emerging from the shadow of oligarch owners and bad lending. Yet the deal hurts Ukraine’s shaky finances, and may inflame political opposition to the IMF-dictated austerity.
Italy will find itself in market crosshairs again 19 Dec 2016 With rates rising, countries with high debt and fragile growth are vulnerable. Italy's political weakness makes tough choices on reform or spending cuts even harder. Even though the European Central Bank will keep buying government bonds in 2017, investors' nerves will be tested.
Brazil’s Temer puts country on knife’s edge 14 Dec 2016 The unpopular leader has won a key victory, securing constitutional reform to cap public spending for the next 20 years. That's necessary but insufficient if he is to fix Latin America's largest economy. Pension reform will be harder, though, and a corruption probe spells danger.
Small step for some is giant leap for Uzbekistan 14 Dec 2016 The landlocked central Asian country has poor human rights and low foreign investment. But new President Shavkat Mirziyoyev has made encouraging changes, like restoring air links with Tajikistan and scrapping visas for some foreigners. There is far to go, but it’s a start.
Greece turns from Sisyphus into Hercules 6 Dec 2016 Euro zone lenders agreed to rejig some of its debt, which adds to the likelihood that future financial support isn’t just good money thrown after bad. Greece is no longer pushing a rock up a hill, but some pretty hefty tasks still stand between it and economic recovery.
Italian assets too sanguine on referendum risks 29 Nov 2016 Bruised Italian markets are clawing back some losses even though Prime Minister Matteo Renzi risks losing a constitutional referendum. Rejection would usher in a period of weak government. The rebound is premature and shows markets' struggle to prepare for extreme outcomes.
Irish lack ammo in corporation tax battle 22 Nov 2016 Theresa May and Donald Trump’s plans to slash UK and U.S. corporation tax rates are ominous for Ireland. Cutting its headline rate further is toxic politically and would reduce a key source of revenue. It leaves Dublin reliant on EU access as competition for investment grows.
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.
Russia cracks down on economy minister at a cost 15 Nov 2016 Alexei Ulyukayev may or may not be guilty of accepting a $2 mln bribe. But the detaining of the economy minister means Russia loses one of its more rational government voices. It also raises the risk of reduced fiscal caution that the domestic economy can ill afford.
Infrastructure dream grounded by Heathrow reality 25 Oct 2016 Britain has finally agreed to add a runway to London’s main airport. Even now, the plan may yet founder. Western democracies face challenges when launching big projects. The benefits of a renewed splurge of infrastructure spending will take decades to materialise.
Saudi can’t have cheap oil and a war in Yemen 12 Oct 2016 The kingdom's fight against Houthi militants in Yemen is a burden on finances strained by cheap crude. Persisting with its expensive military adventure may require Riyadh to let oil prices rise further. Otherwise real-world battles may spill over into the economic kind.
Nervous markets shrink UK’s post-Brexit handout 10 Oct 2016 Finance minister Philip Hammond may boost public investment to cushion the blow of leaving the European Union. Infrastructure projects take time to get going, and the falling pound puts a limit on extra borrowing. Meanwhile, higher inflation will leave many feeling worse off.
British PM’s attack on QE sends wrong signal 6 Oct 2016 Theresa May has criticised the effects of ultra-low interest rates and promised changes. She's right that monetary policy alone cannot revive growth. If the government wants to boost the economy, the solution isn’t to undermine the Bank of England - but to lift spending.
Guest view: A new blueprint for corporate tax 29 Sep 2016 Europe's complaint against Ireland and Apple reflects a problem bigger than any one company or country. The global approach to tax is past its sell-by date. A system based on revenue location, and that treats multinationals as single entities, could share the pie more fairly.