Fiscal Policy

Trump lays out gluttonous tax-break smorgasbord

25 Sep 2024

The US presidential candidate has floated an array of handouts for all. His latest giveaway: unwinding the same cap on state and local deductions that he himself enacted. Add exemptions on worker tips, overtime and Social Security, and the sum exceeds $7 trln of fiscal ruin.

BoE bond tinkering offers Labour a fiscal lifeline

18 Sep 2024

Governor Andrew Bailey will this week say by how much he wants to reduce the Bank of England’s balance sheet in 2025. If he sticks to 100 bln pounds, higher gilt redemptions and fewer sales will cut the BoE’s losses. That would give the government a much-needed fiscal boost.

Trump’s SWF size envy not grounded in reality

6 Sep 2024

Sovereign wealth funds are created when countries run consistent budget surpluses and cash can be redirected towards creating long-term income. That’s not even close to a luxury the US has. Done poorly, they become a honey pot for politicians to reward the connected.

Sunbird momentum trade could go into reverse

22 Aug 2024

Americans moved in their millions from cold states to hot, but climate change is making that trend less durable. Florida, a $1.6 trln economy underpinned by inflows of young retirees, is one state that could start feeling the heat, in a bad way.

Kamalanomics contains too much of some good things

16 Aug 2024

Ahead of the Democratic convention next week, Kamala Harris is unveiling plans to unstick the housing market, curb food prices and lower taxes. Cutting red tape and other steps to encourage more homebuilding is sensible, but excessive goodies for buyers risks stoking inflation.

Dueling US tax ideas miss $4 trln elephant in room

15 Aug 2024

Both leading presidential campaigns have floated exemptions for tip income and higher credits for parents. Donald Trump also wants to move Social Security checks out of Uncle Sam’s reach. Such populist pitches pale next to expiring 2017 cuts, which will anchor the policy debate.

Flying PIIGS nations stir rethink in Europe’s core

12 Aug 2024

Former crisis economies like Spain, Greece and Italy have outpaced France and Germany by up to 20% since the pandemic. Lower exposure to manufacturing, a tourism boom and Brussels funds all helped. The role reversal may push Berlin to tolerate looser fiscal and monetary policy.

China’s luxury push paves way for sin tax rejig

5 Aug 2024

Beijing unveiled a 20-point plan targeting consumption of things like yachts and cruise ships. It looks underwhelming as spending remains anaemic in the $17 trln economy. Yet local governments have incentive to step up: a potential luxury goods and services tax windfall.

China looks to the little guy for spending boost

31 Jul 2024

Beijing wants to raise wages for low- and middle-income groups to lift consumption. Combined with higher taxes on the wealthy, that's wise. Yet those policies are unlikely to deliver immediate growth. Officials will have to lean on fiscal expansion to hit their GDP target.

UK’s half-empty fiscal glass is slowly filling up

30 Jul 2024

Finance minister Rachel Reeves announced public spending cuts to fill a 22 bln pound hole left by the old government and raise pay for teachers and doctors. She will also need to hike taxes. But a better financial picture in future years tempers her gloomy narrative.

India’s water stress is a growing sovereign risk

29 Jul 2024

Erratic rainfall is one reason the country's economic growth may slow to 7% this year. Too much and too little H2O affects everything, from cities to power plants to farming. Climate change coupled with weak state capacity is making it worse. Yet it's an underappreciated problem.

Donald Trump may dent but not dethrone King Dollar

26 Jul 2024

The US currency’s long-predicted demise has so far failed to materialise. The former president’s possible return to the White House is a reason to reconsider. While the greenback remains unassailable as the de facto global standard, its days of cyclical strength may be numbered.

China’s leaders pitch their tent in a rainstorm

25 Jul 2024

The five-yearly Communist Party meeting known as the Third Plenum is historically tied with economic policy shifts. Slowing growth and rising trade tensions make the timing apt. In this Viewsroom podcast, Breakingviews columnists discuss what the event means for China’s future.

Public investment dearth is Europe’s growth killer

17 Jul 2024

Germany will spend a paltry 0.15% of GDP on new government-backed projects in 2025. Other European countries are tightening their belts for fear of having to raise taxes. But failing to invest enough in the green transition, infrastructure or defence will cripple their economies.

Ozempic may gift US a $3 trln benefit

16 Jul 2024

Tech advances are the unpredictable joker of healthcare spending, sometimes adding to outlays. Recent estimates to the United States' medical bill suggest costs will rise, even with the new obesity drug. But previous technological advances in medicine have been underestimated.

China’s weak economy awaits new remedies

15 Jul 2024

Growth slowed to 4.7% in the second quarter. Real estate woes endure and lacklustre consumption points to a greater reliance on exports. Policymakers can still hit their annual GDP target, but the sobering data ups the stakes for fresh fixes from this week’s Third Plenum.

Global economy finds new ways to keep growing

8 Jul 2024

Despite fears of a slowdown, world GDP is expanding at 3.5% a year, faster than in 2023. As the US engine loses thrust, Europe and emerging markets are picking up. A sluggish China and geopolitical confrontations are risks. But for now, investors can enjoy a Goldilocks moment.

New UK government can claim competence dividend

2 Jul 2024

Eight years of political upheaval and economic uncertainty raised the risk premium for investors. Now the centrist Keir Starmer is set to take over, while France and the US face electoral turmoil. For the first time since the Brexit vote, the country looks a relative safe haven.

China’s Third Plenum will jolt the economy, again

28 Jun 2024

Xi Jinping has a chance to lay out his answer to major issues including weak consumption at July’s five-yearly huddle of top officials. Previous meetings set the tone for the country. This one is much delayed and will determine China’s interest in making itself “investible”.

UK investment crisis calls for taxes and U-turns

25 Jun 2024

Budget strictures could see public expenditure sink from 2.4% of national income now to 1.8% by 2029. Businesses are unlikely to pick up the tab. The winner of Britain’s July 4 election can redress domestic underinvestment by taxing more – and moving the fiscal goalposts.