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.
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.
UK mess bolsters case for Italian budget prudence 6 Oct 2022 Market turmoil forced British Prime Minister Liz Truss to partly ditch unfunded tax cuts. The humbling saga should help Italian would-be premier Giorgia Meloni resist her allies’ spending requests. Picking a technocrat as finance minister would give investors further comfort.
Tax U-turn leaves UK’s Truss with credibility gap 3 Oct 2022 Prime Minister Liz Truss’ move to scrap a tax cut for high earners lowered government bond yields and boosted the pound. But her policies still rely on unfunded giveaways and rosy growth hopes. Investors’ loss of confidence from the crisis makes her agenda even harder to achieve.
“Help to Refi” could be UK’s next financial wheeze 30 Sep 2022 Prime Minister Liz Truss’s rash tax cuts have rattled the government bond market. She needs to attract investors and bring yields back down. The “Help to Buy” scheme to subsidise mortgages offers a template. Breakingviews imagines a fictional adviser taking up the challenge.
German energy bailout belatedly outclasses Europe 30 Sep 2022 Berlin will borrow 200 bln euros to help consumers cope with rocketing energy prices. It’s not the first state to go for a shock and awe approach, but Germany’s ample fiscal space gives it way more scope to go big. Unlike the UK, it can also do so without spooking investors.
BoE remedy can only be partial cure for UK ills 29 Sep 2022 The UK central bank launched $70 bln of bond-buying after PM Liz Truss’s budget triggered market chaos. That has stemmed a financial crisis among indebted pension funds. Stopping the market exerting economic pain requires a fiscal rethink from politicians, not more BoE action.
Behind Britain’s self-inflicted financial crisis 28 Sep 2022 Sterling fell to a record low and gilt yields soared after finance minister Kwasi Kwarteng unveiled a raft of unfunded tax cuts. In this Viewsroom podcast, Breakingviews columnists explain the long-term damage to the UK’s credibility and what will rebuild investors’ confidence.
BoE’s bond-buying U-turn is worth the risk 28 Sep 2022 The Bank of England will buy UK sovereign debt and delayed sales of its $915 bln bond portfolio due to market “dysfunction”. The danger is Governor Andrew Bailey looks too close to the government whose tax cuts caused the turmoil. Yet calmer markets make it easier to hike rates.
UK swaps one cost-of-living crisis for another 27 Sep 2022 The Bank of England may raise rates past 5% to stem the inflationary effect of Chancellor Kwasi Kwarteng’s tax cuts. Homeowners, saved by the government’s energy price cap, now face a surge in mortgage costs. That will sap growth and add to pressure for banks to help customers.
Capital Calls: Byju’s revenue fail 15 Sep 2022 Concise views on global finance: Byju’s topline shrunk after its auditor advised it to recognise its revenue differently.
Capital Calls: U.S. railways steer clear of crisis 15 Sep 2022 Concise views on global finance: Major U.S. railroads and unions reached a tentative deal, avoiding a shutdown that could have widespread consequences on the U.S. economy.
Chinese audits, Vaccine wars, UK tax cuts 1 Sep 2022 Beijing will let companies submit to U.S. audit requirements. In this Viewsroom podcast, Breakingviews columnists argue only weak firms will comply. Also, Pfizer and Moderna’s legal battle is unlikely to create a winner, and Britain’s prime ministerial hopefuls debate handouts.
Biden’s buyback tax shows who really runs America 31 Aug 2022 Companies prefer buying back shares to paying dividends, and still will after a $74 bln levy on repurchases kicks in. Although it throws grit in the wheels, the wrinkles that save a minority of investors billions of dollars in tax remain intact, as do more egregious loopholes.
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.
Private jet crackdown is idea that could fly 25 Aug 2022 The French government is mulling clamping down on corporate flights, on both environmental and societal grounds. Whether it imposes punitive taxes or strict restrictions, the plan has few obvious downsides. It would be even more effective if other European countries hop aboard.
Paris and Berlin’s windfall tax timidity is futile 19 Aug 2022 France and Germany oppose a raid on firms profiting from the energy crisis. Berlin could borrow more, and President Macron has pledged not to hike taxes. Yet given it won’t make investors see either country as way more business-friendly, the reluctance makes little sense.
Japan’s sober youth gives its brewers a headache 19 Aug 2022 A decline in drinking among the country’s young has driven the national tax agency to try to boost alcohol’s popularity. No wonder Asahi boss Atsushi Katsuki is eyeing the U.S. market. Yet previous overseas adventures by Japanese booze giants make for a sobering read.
Reality will tame next Italy PM’s spending plans 11 Aug 2022 Giorgia Meloni is on track to lead Rome’s next government. Her rightist political alliance favours big tax cuts, fiddling with 200 bln euros of European recovery funds and state intervention in Italy Inc. High public debt and EU vigilance will puncture its wildest trial balloons.
Spain’s ropey bank tax will have European copycats 13 Jul 2022 The country’s left-wing government is raiding banks for 1.5 bln euros a year. Taxing lenders based on their future benefits from rising interest rates represents shaky logic. But with inflation soaring across Europe, such populist measures will become more enticing.