Fiscal Policy

Turkish lira will stick with FX underdog role

24 Jan 2017

Rate-setters passed up the chance to give the battered currency even a brief respite. Investors’ doubts about the central bank’s independence show how political concerns are breeding economic ones. Steep market losses can entice bargain hunters, but not when worse may lie ahead.

Europe leaves Italian bullying to markets

18 Jan 2017

The European Commission wants Italy to cut its budget deficit. But the cut looks gentle compared with Brussels' rules, probably because elections are looming and anti-establishment forces gathering. In any case, as ECB bond-buying ends, markets will be less lenient.

Britain’s Brexit cliff: how big is the drop?

16 Jan 2017

As Theresa May prepares to reveal details of the UK’s post-EU objectives, the risk of a clean break in 2019 has risen. Such an outcome is suboptimal. But Britain’s negotiating position is far from hopeless, and the scale of the pain from “hard Brexit” can be overstated.

Politics could flatter or flatten global growth

16 Jan 2017

Last year the world economy grew at its slowest rate since 2009, the IMF reckons. Stimulus in China and the promise of Donald Trump’s tax cuts mean the next two years should be better. However, increased risks of protectionism make forecasts even more tentative than usual.

Hadas: The new autocratic economics is still fuzzy

12 Jan 2017

Muscular leaders have diverging concerns. Oil-dependent Putin does little to promote Russian growth. China’s Xi puts expansion above financial stability, while Turkey’s Erdogan risks the economy for political strength. The common factor is state control, greased with corruption.

India’s next big experiment could be basic income

10 Jan 2017

A direct cash transfer to citizens could replace a plethora of subsidies and benefits. That would reduce corruption and waste, especially if the handout only goes to the poor. But identifying the worthy will be tough, even with India’s impressive biometric identity database.

Euro zone revival carries sting in tail

4 Jan 2017

After years in the doldrums, increased business activity and slightly rising prices are good news for the single currency area. Besides, inflation is still a long way below the European Central Bank target. But a sustained pickup would expose the euro zone's two-speed recovery.

Trump stimulus will only delay next U.S. recession

3 Jan 2017

The president-elect inherits an economy that's in fairly good shape. His planned tax cuts and infrastructure spending will give growth an added short-term boost. Though that may postpone an overdue downturn, Trump is still likely to face a crunch before the next election.

Millennial princes snatch at power in Gulf

3 Jan 2017

Ageing monarchs may hand greater powers to a younger, more progressive generation in 2017. Falling oil revenues and ballooning budget deficits are forcing sheikhdoms to make overdue economic and social reforms or risk financial meltdown. Millennial thinking could help.

Hadas: Four resolutions for a more humane economy

3 Jan 2017

Brexit and Donald Trump’s election are part of a rebellion against the social and economic establishment. Changes are needed to prevent a dangerous disintegration. Here are some suggestions: forget GDP, fight alienation, support communities and promote local decision-making.

Italy’s Monte dei Paschi bail-in is a bailout

23 Dec 2016

EU rules require states that rescue banks to force losses on creditors, or convert them into shares. Italy's MPS rescue allows retail investors to swap bonds for safer ones, leaving the government holding the bag. It's a 2008-style bailout, complete with financial engineering.

JPMorgan’s Monte Paschi flop is in eye of beholder

23 Dec 2016

The U.S. bank led the attempted private rescue of Monte dei Paschi and thus shares some of the blame for its failure. But lost fees hurt it too. Delaying a bailout until after Italy's referendum also means the career of ex-PM Matteo Renzi may have a second act.

South African debt will be downgraded before Zuma

21 Dec 2016

After legal and political setbacks, the country’s president is more vulnerable than ever. Yet Jacob Zuma’s power base makes removing him difficult. The longer he clings to office, the bigger the chance that South Africa loses its investment-grade credit rating in 2017.

Gulf bank mergers will solve an oily problem

20 Dec 2016

Three Qatari banks have become the latest in the region to explore merging. They won't be the last. Exposure to volatile crude and hard-up state owners could trigger more consolidation of the sector in 2017. Governments will exit their charges - and ease their budgetary holes.

Ukrainian bank clean-up comes at a cost

19 Dec 2016

The war-torn country will rescue the largest private lender PrivatBank. It suggests Ukraine’s banks are emerging from the shadow of oligarch owners and bad lending. Yet the deal hurts Ukraine’s shaky finances, and may inflame political opposition to the IMF-dictated austerity.

Italy will find itself in market crosshairs again

19 Dec 2016

With rates rising, countries with high debt and fragile growth are vulnerable. Italy's political weakness makes tough choices on reform or spending cuts even harder. Even though the European Central Bank will keep buying government bonds in 2017, investors' nerves will be tested.

Brazil’s Temer puts country on knife’s edge

14 Dec 2016

The unpopular leader has won a key victory, securing constitutional reform to cap public spending for the next 20 years. That's necessary but insufficient if he is to fix Latin America's largest economy. Pension reform will be harder, though, and a corruption probe spells danger.

Small step for some is giant leap for Uzbekistan

14 Dec 2016

The landlocked central Asian country has poor human rights and low foreign investment. But new President Shavkat Mirziyoyev has made encouraging changes, like restoring air links with Tajikistan and scrapping visas for some foreigners. There is far to go, but it’s a start.

Greece turns from Sisyphus into Hercules

6 Dec 2016

Euro zone lenders agreed to rejig some of its debt, which adds to the likelihood that future financial support isn’t just good money thrown after bad. Greece is no longer pushing a rock up a hill, but some pretty hefty tasks still stand between it and economic recovery.

Italian assets too sanguine on referendum risks

29 Nov 2016

Bruised Italian markets are clawing back some losses even though Prime Minister Matteo Renzi risks losing a constitutional referendum. Rejection would usher in a period of weak government. The rebound is premature and shows markets' struggle to prepare for extreme outcomes.