Fiscal Policy

Germany’s Greek bullying can be a one-off

14 Jul 2015

The Athens diktat is a risky deviation from German self-constraint in Europe, and would be toxic if it became a new leitmotif. But Berlin’s brute force method was provoked by a misguided Greek strategy that hit trust. German over-assertiveness can remain the exception.

Hugo Dixon: Greek deal leaves bitter aftertaste

13 Jul 2015

Berlin was right to point out that Athens had lost Europe’s trust. But by pushing the Greeks so hard, Germany is also losing Europe’s trust. The summit’s eventual outcome is reasonably fair if tough. But both leaders, Merkel and Tsipras, need to work hard to rebuild trust.

Greek bank salvation may still have sting in tail

13 Jul 2015

Greece’s lenders are getting another 25 billion euros in bailout recap money. With a deal in place, more ECB crisis loans should also materialise. But the central bank may not provide them today, and a new Greek bail-in regime raises uncertainty for depositors.  

Hugo Dixon: Syriza split best outcome for Greece

11 Jul 2015

PM Alexis Tsipras secured overwhelming parliamentary backing for his U-turn on austerity and reform, but his party has splintered. A new government, which is more serious about implementing whatever bailout programme is negotiated with creditors, will now probably be formed.

Tsipras U-turn only lowers short-term Grexit risks

10 Jul 2015

Greece’s latest bailout plan accepts most of what its July 5 referendum rejected. Creditors will have to actively want a Greek exit from the single currency for it to happen now. Yet fresh austerity, capital controls and Athens’ weak reform record mean the truce may not last.

Hugo Dixon: Tsipras has to break party or country

8 Jul 2015

The Greek prime minister’s victory in Sunday’s catastrophically timed referendum has reduced Greece to a meek supplicant suing for peace. Alexis Tspiras now has to choose between splitting his Syriza political party or taking his nation into an economic abyss.

UK Tories pinch some choice left-of-centre ideas

8 Jul 2015

Britain’s budget saw hikes to the minimum wage, a slowing of austerity, and hits for banks and non-doms. That isn’t the usual domain of British Conservatives. Yet deep welfare cuts, higher inheritance tax thresholds, and falls in business tax show the clothes-stealing has limits.

Lloyds may be the victim of UK bank levy rejig

8 Jul 2015

The 2.5 bln pounds the bank tax raises from domestic players would suffer if HSBC relocates its head office. Chancellor George Osborne may use the upcoming budget to put the levy on a more stable footing. The least-bad option could be to shift the burden to UK-dependent Lloyds.  

Heta deal puts EU bank bail-ins back on track

7 Jul 2015

Austria has offered 1.2 bln euros to Bavaria to compensate for state bank BayernLB’s investment in the remains of Hypo Alpe Adria. Given Heta is a test case for rescuing banks without taxpayer cash, that’s just as well. It implies not all bail-ins need to end in court.

ECB’s Greek bank haircut leaves room for deal

7 Jul 2015

The euro zone central bank has forced Greek lenders to put up more collateral to access emergency loans. That reflects the increased risks of Greece leaving the single currency. But the move looks calibrated to keep the banks afloat while the country seeks a last-ditch rescue.

Greece more likely to hurt than help Podemos

7 Jul 2015

The future of Spain’s radical newcomer party is inevitably tied to its Greek peer Syriza. Podemos will get a boost if the Greeks are able to negotiate a better deal with creditors. More likely, a period of prolonged chaos will hurt support for Podemos in the upcoming general election.  

Hugo Dixon: Blame game is spur for any Greek talks

6 Jul 2015

Athens and its euro zone creditors may restart negotiations in the next few days. But the gap between them is huge. The protagonists may go through the motions to show they have tried rather than because they expect a deal will be clinched.

What does that Greek "No" mean, again?

6 Jul 2015

The referendum question was as unclear as the consequences of each answer. A solid majority backed the government’s position against a deal with European creditors – but the deal wasn’t really on the table. Whatever does happen, it’s a poor electoral example for others to follow.

Tsipras departure could unlock Greek debt relief

3 Jul 2015

European creditors are wary of writing off Athens’ debts because it could set a precedent. Yet if Prime Minister Alexis Tsipras resigns after the referendum, a deal should be doable. Few politicians would follow his path of capital controls, economic strife and career implosion. 

Hugo Dixon: How to jump Greece’s next debt hurdle

3 Jul 2015

Even if the Greeks vote “Yes” in Sunday’s referendum, the country will struggle to pay a bond owned by the ECB on July 20. Failing to pay could trigger the bankruptcy of the country’s entire banking system. Financial engineering may provide a solution.

Hugo Dixon: Greeks choose between bad and terrible

2 Jul 2015

Voting “Yes” in Sunday’s referendum would mean Greece suffers at least two years of recession. Voting “No” would bring financial havoc in the short run followed by the return of the drachma, hyperinflation and deep-seated economic depression. The right answer is “Yes”.

Greece makes IMF stooge in game-theory drama

30 Jun 2015

Athens probably won’t pay the IMF debt due on June 30. It’s a tactic - the Greek government can and will honour the debt eventually. But non-payment puts pressure on the euro zone to sweeten its deal – or to collapse Greek banks and accelerate euro exit. 

Capital controls hit Greek economy at worst time

29 Jun 2015

Closing the stricken state’s banks would be a disaster at any time of year. But Athens’ capital controls are kicking in just as one of Greece’s main drivers – tourism – hits peak season. Even if Greeks don’t leave the euro, 2015 will be a writeoff.  

Muted markets validate EU hardball with Athens

29 Jun 2015

Next Sunday’s referendum could force Greece to leave the single currency. Yet bond markets are trading shy of full crisis levels. If things stay that way it eases the pressure on euro zone politicians to offer sweeter terms to the country’s leader, Alexis Tsipras. 

BoE has severe case of central banks’ new dilemma

24 Jun 2015

The UK economy has been growing for a while and wages are finally picking up. But inflation is still pitifully low. And if a rate rise chokes growth, there’s little room for stimulative cuts. It’s a far cry from the clear choices the monetary authorities faced during the crisis.