Italy’s first female leader, Amazon’s monopoly 22 Sep 2022 Far-right leader Giorgia Meloni is favourite to become prime minister after Sunday’s election. In this Viewsroom podcast, Breakingviews columnists debate how she will handle Rome’s debt, which is expected to reach 148% of GDP. And: the online retail giant’s antitrust battle.
UK tax cut drive has narrow path to avoid big mess 30 Aug 2022 Candidates to replace Prime Minister Boris Johnson are debating lowering levies by up to 30 bln pounds. Inflation may help by raising tax revenue faster than spending. But future receipts are uncertain, and a likely energy bailout will add to the burden. It’s an ill-timed gamble.
Japan’s Kishida inherits growing China headache 11 Jul 2022 The Prime Minister’s party increased its majority in Sunday’s election after former leader Shinzo Abe was shot. It’s now easier for Fumio Kishida to crank up defence spending and attack waning competitiveness. The former will anger China’s leaders; the latter will amuse them.
Capital Calls: Amazon/Just Eat Takeaway 6 Jul 2022 Concise views on global finance: The $1.2 trillion e-commerce giant is reprising its deal offering Prime subscribers membership of UK food delivery outfit Deliveroo with the U.S. arm of its $3 billion Dutch rival.
Henan displays China’s economic cracks all at once 6 Jul 2022 The province of 100 million is clumsily covering up economic stress. Local officials hacked Covid-19 tracking apps to conceal bank runs and silence investors even as they report rosy data. Beijing’s push to deliver 5.5% GDP growth this year implies more misdirection to come.
Macron’s travails could turn into fiscal mess 5 Jul 2022 The French president’s electoral platform was bound to stress the state budget. Now a deadlocked parliament may only agree on increased spending and more tax cuts. With borrowing above 110% of GDP, and no credible plan to control public finances, Paris’s debt looks vulnerable.
German fiscal obsession is ill-timed and untenable 19 May 2022 Finance Minister Christian Lindner is keen to reinstate a debt limit that was waived during the pandemic. The Ukraine war means the economy is facing new problems. And massive investments are needed in the green transition. This is no time for fiscal fetishes.
Germany and France could make ECB’s life easier 16 May 2022 Inflation is surging in Europe’s biggest economies and the central bank is keen to avoid a wage-price spiral. If Berlin and Paris help the poorest households cope with rising costs, there may be less pressure for hefty pay rises. That would be a big help for rate-setters.
Spendthrift Macron will hit harsh fiscal reality 21 Apr 2022 The French president must attract left-leaning voters to win a second term, and then a parliamentary majority. But financing pledges, like big investments in green energy, will mean choosing between higher taxes and worsening public debt levels. He’s likely to opt for the latter.
U.S. states bestow inopportune tax cuts 31 Mar 2022 U.S. states' coffers did surprisingly well during the pandemic and federal aid helped them build big fiscal buffers. Now many, like California, plan tax cuts. That may fuel even more inflation and prove unsustainable as more than $900 billion of support from Washington winds down.
Joe Biden nods at fiscal discipline 28 Mar 2022 The U.S. president is pitching a 2023 budget that would make America's deficit about $1 trln smaller than it would otherwise become over a decade. One proposal is a billionaires’ tax. Though that's a tough political sell, the package is a modest tilt toward a healthier ledger.
ECB squeeze leaves room for fiscal war response 24 Mar 2022 The central bank is fighting inflation and cutting bond purchases, leaving European governments to shoulder the cost of the Ukraine war. That may add up to 4% of GDP to public debt loads inflated by the pandemic. But even with rising yields, national budgets can afford it.
Emmanuel Macron changes stripes as election nears 15 Mar 2022 The French president’s chances of winning a second term have been boosted by his performance during the pandemic and since Russia’s attack on Ukraine. But the main plank of his platform is to “protect” the French. That’s a far cry from the bold reformer who ran five years ago.
Germany is turning fiscal exceptions into the rule 28 Feb 2022 Chancellor Olaf Scholz will hike defence spending to 2% of GDP and invest 100 bln euros in the military. A historic foreign-policy shift is just the latest instance of Berlin finding ways around its budget rules. Scrapping them would be simpler given a looming energy transition.
IMF’s economic crystal ball is cracked 25 Jan 2022 The Washington-based lender slashed global growth forecasts and hiked inflation predictions. The IMF has been too late to admit that Fed policy tightening is needed. That’s damaging for an institution that doles out economic advice and monitors financial stability risks.
The Fed is lowballing the path of interest rates 18 Jan 2022 Pundits love to guess when Chair Jay Powell will tighten monetary policy. But that matters less than where rates end up. Most Fed officials think this so-called terminal rate is around 2.5%. Given higher inflation, that’s probably too low. Markets are starting to realise that.
Rishi Sunak picks bad time to play Scrooge 21 Dec 2021 Britain’s finance minister has offered 1 bln pounds to companies hit by the new Omicron variant. The package looks meagre compared to his previous offerings and France’s support measures. Given the UK is raising rates, Sunak could have deployed a bit more fiscal firepower.
Xi’s 2022 GDP target will be moment of truth 20 Dec 2021 One of the Chinese president’s signature policy initiatives was to curb property-related risks. That implies slower but higher quality growth: 4% or so in 2022. Outside advisers are pushing for more. The final economic decision will signal the extent of Xi Jinping’s power.
Take China’s easing signals with a grain of salt 7 Dec 2021 Beijing is flagging a fresh focus on economic stability as growth slows, dropping tough talk about tech monopolies while pumping $188 bln into banks. Some battered sectors will get political breathing room, but this probably isn’t the sort of stimulus investors are looking for.
China property market faces more nationalisation 6 Dec 2021 Evergrande, the country’s most indebted developer, has admitted it might formally default. With $10 bln in property bonds maturing in January alone, officials are under pressure to keep the sector from collapsing. The most expedient solution is to put more housing in state hands.