Fiscal Policy

Irish lack ammo in corporation tax battle

22 Nov 2016

Theresa May and Donald Trump’s plans to slash UK and U.S. corporation tax rates are ominous for Ireland. Cutting its headline rate further is toxic politically and would reduce a key source of revenue. It leaves Dublin reliant on EU access as competition for investment grows.

Britain’s brave new world hits post-Brexit reality

21 Nov 2016

Prime Minister Theresa May wants capitalism to work for the little guy. But in a speech to UK business she softened ideas like putting workers on boards, while promising low corporate taxes. Pressure to rein in the deficit and migration leaves less room for policy innovation.

Russia cracks down on economy minister at a cost

15 Nov 2016

Alexei Ulyukayev may or may not be guilty of accepting a $2 mln bribe. But the detaining of the economy minister means Russia loses one of its more rational government voices. It also raises the risk of reduced fiscal caution that the domestic economy can ill afford.

Infrastructure dream grounded by Heathrow reality

25 Oct 2016

Britain has finally agreed to add a runway to London’s main airport. Even now, the plan may yet founder. Western democracies face challenges when launching big projects. The benefits of a renewed splurge of infrastructure spending will take decades to materialise.

Saudi can’t have cheap oil and a war in Yemen

12 Oct 2016

The kingdom's fight against Houthi militants in Yemen is a burden on finances strained by cheap crude. Persisting with its expensive military adventure may require Riyadh to let oil prices rise further. Otherwise real-world battles may spill over into the economic kind.

Nervous markets shrink UK’s post-Brexit handout

10 Oct 2016

Finance minister Philip Hammond may boost public investment to cushion the blow of leaving the European Union. Infrastructure projects take time to get going, and the falling pound puts a limit on extra borrowing. Meanwhile, higher inflation will leave many feeling worse off.

British PM’s attack on QE sends wrong signal

6 Oct 2016

Theresa May has criticised the effects of ultra-low interest rates and promised changes. She's right that monetary policy alone cannot revive growth. If the government wants to boost the economy, the solution isn’t to undermine the Bank of England - but to lift spending.

Guest view: A new blueprint for corporate tax

29 Sep 2016

Europe's complaint against Ireland and Apple reflects a problem bigger than any one company or country. The global approach to tax is past its sell-by date. A system based on revenue location, and that treats multinationals as single entities, could share the pie more fairly.

Italy can be bolder with its budget laxity

28 Sep 2016

Rome will delay its deficit goal next year, citing emergency factors like refugees. Brussels may quibble, but Italy needs growth, and a fiscal crunch could hurt Prime Minister Matteo Renzi's chances in a critical referendum. The leeway is too modest and fleeting to ensure either.

Trump would follow in Obama’s debt footsteps

22 Sep 2016

The Republican presidential nominee's economic plan would add $5 trln in U.S. borrowing, a new study estimates. Barack Obama tallied about $8 trln during his two terms. Adding debt for infrastructure makes more sense than for cutting taxes on the rich. Both kick the can, though.

Freak euro bonds show ECB’s power – and its limits

8 Sep 2016

The central bank’s negative rates and bond-buying have forced down borrowing costs: German bearing maker Schaeffler is paying around 3 pct on risky notes that roll up interest payments. Yet smooth credit markets have not boosted investment. Europe’s governments need to step up.

Saudi faces choice of austerity over indulgence

7 Sep 2016

Falling oil prices may lead Riyadh to cut up to $20 bln of infrastructure projects. The risk is it might trigger a construction slump. Of course, Saudi could just increase borrowing and continue building in the desert. Restraint is perilous but would make more financial sense.

State spending revival would be good for growth

2 Sep 2016

As central banks struggle to boost economies, world leaders meeting at the G20 are once again looking to government-led investment. Ultra-low sovereign yields make borrowing to spend look a no-brainer. But even a small stimulus can face formidable political hurdles back at home.

Apple’s tax spat could blight European banks

31 Aug 2016

The tech giant’s $14.5 bln EU tax bill has shades of a $9 bln U.S. fine handed to BNP Paribas in 2014. Despite big differences, both have the whiff of a transatlantic raid on those deemed able to pay. EU banks awaiting U.S. fines, like Deutsche Bank and RBS, have cause to fret.

Europe’s bite at Apple could leave bad aftertaste

30 Aug 2016

The European Commission wants companies to pay their fair share of tax. Zeroing in on Apple’s alleged sweetheart deal with Ireland fits that agenda. But it could misfire. Reeling from Brexit, Dublin might feel pressure to make itself even more friendly to corporate taxpayers.

UK fat-busting plan is incoherent

18 Aug 2016

A tax on sugary drinks is good for the public health and purse but may hit poorer families in the short term. Yet the government shirked another trade-off: restricting advertising of unhealthy foods, which could have changed consumer behavior at the expense of company profits.

Portugal’s three bad B’s: banks, budget, Brexit

22 Jul 2016

Lisbon’s banks are saddled with bad loans, and need capital. The government is caught between Brussels’ fiscal rules and a weak coalition. And the UK vote to leave the EU may hurt already grim growth. The three B’s may imperil Portugal’s BBB rating, and blow up its bond yields.

China can afford to quit infrastructure binge

13 Jun 2016

State backed enterprises stepped up fixed-asset investment by a fifth in the year to May. Much of this spending will be wasteful and will add to the country’s huge debts. Given a fairly robust labour market, China could safely take a much harder line on inefficient SOEs.

Money-for-nothing idea will survive Swiss rebuff

6 Jun 2016

Welfare systems once seemed as outlandish as the proposed guaranteed basic income for all that has been rejected by Swiss voters. Advocates must provide more details on funding and the potential social impact. Other countries, such as Finland, will be the lab for the experiment.

“Because it’s France” no basis for EU budget rules

1 Jun 2016

Jean-Claude Juncker used that to explain why France wins more fiscal leeway. This might be worrying coming from the head of the European Commission, which enforces budget discipline, if it weren't already plain. Blindly applying rules is foolish, as is regular failure to do so.