Mnuchin and Dudley exemplify a political dilemma 12 Jan 2018 The U.S. Treasury secretary, contradicting forecasts, expects tax cuts to pay for themselves. The New York Fed chief fears growing deficits and debt. Republicans may nod to the former but enough probably worry about the latter to hamper new outlays on infrastructure and the like.
Markets start doing Mario Draghi’s job for him 12 Jan 2018 The euro hit three-year highs and government bond yields rose after a hint the ECB boss may rethink how long ultra-loose policy will last. The moves amount to tighter monetary conditions. That buys rate-setters time to phase out negative rates even though growth is picking up.
German economic success lays trap for Merkel 11 Jan 2018 The strongest growth in six years and the rude health of public finances may tempt a weakened Chancellor Angela Merkel into budget giveaways. But low interest payments flatter the fiscal picture and won’t endure. Better to invest in infrastructure and education than to cut taxes.
Trump will be party pooper-in-chief at Davos 10 Jan 2018 The U.S. president’s “America First” agenda is the antithesis of the Swiss conflab’s global ethos. His visit to the mountain resort may be a bid for reconciliation, or a pitch for strongman status. Either way, his presence is a stark rebuke to Davos elites who got him badly wrong.
Cold snap chills prospects of U.S. coal subsidies 9 Jan 2018 The federal energy regulator nixed Energy Secretary Rick Perry’s proposal to prop up nuclear and coal power. Instead grid operators will be asked how to improve energy reliability. That’s more logical, especially after bad weather showed no fuel source is immune from disruption.
German workers may frustrate ECB’s inflation hopes 9 Jan 2018 Industrial staff in Europe’s biggest economy are striking for higher pay. They may, however, trim wage demands in return for flexible working. If pay pressures fail to flare in such a tight labour market, the European Central Bank can hardly count on them surfacing elsewhere.
Rising won could help drive change in South Korea 9 Jan 2018 Seoul appears to be reverting to a tired pattern and intervening to cap a surging currency. The authorities should instead welcome the rise as prodding big exporters to raise their game. While growth might take a hit, the long-term gains in competitiveness could be considerable.
Steyer’s largess a double-edged sword for Democrats 8 Jan 2018 Billionaire Tom Steyer plans to shower $30 mln on Democratic candidates this year. That might help the party take control of the House in the U.S. midterm elections. But the hedge funder’s parallel campaign to impeach President Trump could complicate their task if they win power.
Sutherland embodied ups and downs of globalisation 8 Jan 2018 Former European Commissioner, trade chief and BP chair Peter Sutherland, who has died at 71, worked to make it easier for goods, capital and people to cross borders. His triumphs were blotted by corporate failures. Yet his legacy deserves to survive the current backlash.
Trump would be wise to ease up on Seoul 8 Jan 2018 Talks just kicked off to amend a trade pact with South Korea, one the U.S. president has threatened to terminate. The original deal did not live up to American expectations, but there are bigger items on the export agenda. And a united front against North Korea is more important.
Anti-euro debate rears its head in Italy 5 Jan 2018 Northern League leader Matteo Salvini has reiterated his opposition to the single currency. Growing Italian discontent with the EU could make an anti-euro stance a vote-winner in upcoming elections. Despite Europe’s economic revival, monetary union remains a political target.
Investors will only curb CEO pay if forced 4 Jan 2018 The bosses of top UK companies have on average taken a pay cut, according to a new report. Fears of a political backlash made investors more apt to vote against chunky remuneration packages. The restraint may be fleeting unless a weakened government can keep up the pressure.
Germany will follow money in EU top jobs carve-up 4 Jan 2018 Jockeying to replace the region’s most powerful people, including European Central Bank boss Mario Draghi, will begin in earnest in 2018. Proposed new posts like a euro zone finance minister complicate the contest. Berlin will prefer control of purse strings to interest rates.
EU’s market big bang offers clear pain, fuzzy gain 3 Jan 2018 Reforms bundled in the MiFID II directive aim to make finance fairer and safer. Rules that put a price on bank research and force trading out of opaque venues will cost over 2 bln euros to implement. Yet some exchanges face delays. In a global market, loopholes may also open up.
Duterte’s infrastructure push needs more than cash 2 Jan 2018 A new revenue-raising tax bill will help Philippines President Rodrigo Duterte pay for a “golden age of infrastructure” to increase competitiveness and living standards. The challenge will be to deploy the proceeds efficiently and without fostering corruption.
Italy will go back to its old ways in 2018 2 Jan 2018 The country’s flawed electoral law will produce a hung parliament in national polls. Reformist forces will be weaker while former Prime Minister Silvio Berlusconi will gain traction. A return to the frail coalitions of the past makes it harder to cut public debt and red tape.
Fewer fines are upside of bank compliance drive 2 Jan 2018 The UK’s Financial Conduct Authority collected 230 million pounds in penalties in 2017. Though that’s a big increase on 2016, the haul was skewed by a record fine for Deutsche Bank. It suggests hefty spending on tightening up controls is finally delivering some benefits.
China will pull private capital into state orbit 27 Dec 2017 Beijing's mixed-ownership policy push will see private firms fed shares in government-owned enterprises like oil giant CNPC. Further blurring lines between public interest and profit won't do much for efficiency, but buyers will get insurance against political risk.
Xi’s tighter grip will tax Chinese real estate 26 Dec 2017 The president will sideline traditional policy shops, in particular the Ministry of Finance, and assign policymaking to opaque smaller groups. That will accelerate some reforms, in particular the long-discussed national property tax, which could squeeze the housing market.
Britain will take the high road out of the EU 22 Dec 2017 Leaving the European Union will hurt manufacturing and financial services and make the government more willing to explore controversial ideas to help the economy. Legalising cannabis would help employment, lift tax revenues and reduce law enforcement costs.