Italy’s new boss is missing a trick on tax evasion 24 Oct 2022 Public debt at 147% of GDP and a slowing economy limit Prime Minister Giorgia Meloni’s scope to curb an energy crisis and keep spending promises. Tackling endemic tax evasion would give her more fiscal ammunition. Yet promoting the use of cash and tax amnesties will not help.
Xi’s contract with China needs more signatures 23 Oct 2022 The president has effectively secured a third term. His prize: a country traumatised by pandemic lockdowns and crashing real estate. There are some relatively easy things Xi Jinping can do to compensate his citizens; the next five years will test whether he can grasp them.
Truss’s exit highlights America’s free pass 21 Oct 2022 U.S. fiscal policies, based on tax cuts for the rich and widening budget deficits, have been fairly similar to those of Britain’s ousted prime minister. Only the dollar’s status as the world’s reserve currency keeps the laws of economics from applying in the United States, too.
Delusions of grandeur are root of Britain’s chaos 21 Oct 2022 “Trussonomics” followed hot on the heels of Brexit. Both are symptoms of a country that hasn’t fully come to terms with the loss of its empire, says Hugo Dixon. If the UK now realises it can’t defy the laws of economics and geopolitics, it may emerge wiser albeit weaker.
Britain’s next leader will be on a short leash 20 Oct 2022 Prime Minister Liz Truss is out after just 44 days in office. Whoever replaces her will have to endorse fiscal discipline or risk a similar fate. The ruling Conservatives have little in common except fear of an early election. But only a national vote can restore political order.
Britain’s bond crisis reverses over the government 20 Oct 2022 New finance minister Jeremy Hunt has scrapped most of his predecessor’s unfunded tax cuts, scuppering Prime Minister Liz Truss’s growth plan. In this Viewsroom podcast, Breakingviews columnists debate what the U-turn means for markets – and whether Truss can survive.
Time for Europe to tame its energy cravings 19 Oct 2022 After paying through the nose to fill its gas storage reserves to 92%, the bloc is seeking to secure more affordable fuel. Measures like curbing price volatility, club purchases or flexible caps will be no panacea. While supply is tight, curbing demand is the key.
Brain drain solution is staring Hong Kong in face 19 Oct 2022 Leader John Lee hopes lower property taxes and a new visa scheme will persuade foreign talent not to move to destinations like Singapore. But it’s piecemeal stuff and ignores what’s easily the biggest cause of foreigners fleeing: the city’s increasingly nonsensical Covid policy.
Time for Britain to try technocratic government 18 Oct 2022 Liz Truss’s authority has shrivelled and her government is under intense scrutiny from investors. In similar crises, Italy and Greece turned to non-political leaders to restore calm. After four prime ministers in just over six years, Britain should consider the same approach.
China GDP delay amplifies economic distress signal 18 Oct 2022 Beijing postponed releasing its most-watched quarterly data at the 11th hour amid a Party Congress already putting politics above all else. It was unnecessary: investors have probably priced in slowing growth. And the lack of communication does more harm than ugly numbers.
Massive fiscal U-turn leaves UK in political funk 17 Oct 2022 New finance minister Jeremy Hunt soothed investors by reversing most of Prime Minister Liz Truss’s “growth plan” and cutting short her generous energy subsidies. But he still needs extra tax hikes or spending cuts. Persuading parliament to support the switch will be a challenge.
China’s next big trade is nationalism 17 Oct 2022 President Xi Jinping opened the twice-a-decade Party Congress with a speech focussed more on security and stability than in the past. That means state-led, inward-looking policies like self-sufficiency and zero-Covid will trump economic growth. Investors need a new playbook.
Xi Jinping has silver linings for rest of world 17 Oct 2022 A third term for China’s nationalistic leader would risk a cold war or even a hot one. But Xi’s policies are hurting the globe’s second-largest economy. That will make it harder for China to throw its weight around – and helps fight climate change, says Hugo Dixon.
UK still two U-turns away from financial stability 14 Oct 2022 Prime Minister Liz Truss sacked her finance minister after less than six weeks because his unfunded tax cuts roiled markets. She will now attempt a more fiscally sound approach. But her party may decide it needs another leader, while voters may prefer a change of government.
Capital Calls: Italy’s next finance minister 14 Oct 2022 Concise views on global finance: Rightist leader Giorgia Meloni is likely to pick a pro-European politician as finance chief.
Bank mortgage tweaks presage bigger political hit 14 Oct 2022 Spain’s CaixaBank proposed a rate freeze, while UK lenders favour ad hoc relief for struggling borrowers. As interest costs soar, these won’t be enough to avoid a mess. Since cash-strapped governments can’t help, they may hammer banks with Polish-style blanket payment holidays.
Sovereign debt greens yet net-zero pledges darken 13 Oct 2022 Saudi Arabia’s wealth fund is the latest public body to issue securities to fund renewable assets. Strong buyer demand and the chance to flaunt action on climate change explain the boom. Yet national decarbonisation targets remain weak, and green bonds do little to improve them.
Monte Paschi life raft has yet to reach safe port 13 Oct 2022 Five years after a state bailout, the lender has secured last-minute backing for a new 2.5 bln euro rights issue. Stronger capital and fewer costs will make MPS a more palatable target. But buyers would need hefty profit assumptions to pay anything other than a lowball price.
Capital Calls: Trustbusters’ metaverse gambit 10 Oct 2022 Concise views on global finance: The Federal Trade Commission dialed back some of its arguments against Meta’s latest VR deal – but still faces a difficult needle to thread.
How West can mobilise trillions to help save Earth 10 Oct 2022 On top of stopping global warming, rich nations have geopolitical reasons to help the countries in the Global South transition from fossil fuels. America’s call for the World Bank to focus more on global needs like climate change is a step in the right direction, says Hugo Dixon.