Fiscal Policy

Hugo Dixon: Spain is a troubled country

10 Nov 2014

Reform has ground to a halt, unemployment is way too high, corruption scandals are popping out of the woodwork, many Catalans want independence, and a new left-wing populist party is leading in the opinion polls. The traditional political class is at a loss over what to do.

Review: The secret cause of economic crises

7 Nov 2014

Trust, not self-interest, is the main support of market economies, says Geoffrey Hosking. He persuasively argues that widespread trust is crucial for growth. He explains how business cycles are propelled by mutual confidence, too little at the bottom and far too much at the top. 

Aggressive tax planning is retreating, not beaten

7 Nov 2014

The details of Luxembourg’s “comfort letters” will add to the pressure on companies which push profits into low-tax jurisdictions. Personal tax havens are also looking much less safe. But national arbitrage will continue as long as countries have different tax rates and rules. 

End of U.S. QE is actually good for world economy

4 Nov 2014

Investors worry about the end of America’s quantitative easing but global consumers, especially the poor, can welcome it. The halt has helped make oil and food cheaper, lowering inflation. That will also keep interest rates down. In all, it may be more stimulating.

Global tax transparency deal will be hard to copy

29 Oct 2014

The 50-country accord to share bank account data isn’t merely a breakthrough in the fight against tax evasion. It’s a rare example of successful global public policy cooperation. But such deals face powerful obstacles. Don’t expect repeats in climate change or monetary policy. 

Sweden’s bold zero rate won’t fix deflation

28 Oct 2014

While other countries mess with tiny numbers, the Swedish central bank has set its policy rate at an unequivocal zero. The boldness is striking, but the Riksbank hasn’t resolved the global mystery of inflation falling when growth is reasonable. Nor will zero reverse the trend.

Germany’s economic miracle is past its peak

22 Oct 2014

Germans are flirting with a recession that may usher in a new era of feeble growth in Europe’s largest economy. Many reasons for past performance are fading away, and misguided policies add extra burdens. Angela Merkel can still change tack before it’s too late.

Review: The worst of both Mao and markets

17 Oct 2014

Nicholas Lardy’s new book describes a China in which the state is retreating. He has the numbers to demonstrate the private sector’s steady gains, but official statistics are deeply misleading. In the PRC, the public-private line is blurred by the triumph of crony capitalism.

Greece between ECB good-cop and markets bad-cop

17 Oct 2014

Athens’ threat to leave its bailout programme sent its yields shooting up. The euro zone central bank relaxed its collateral requirements for Greek lenders, but the assistance is contingent on Greece toeing the line. The tension isn’t over.

Japan index: Economy stumbles on faltering wages

10 Oct 2014

The Breakingviews Abenomics Index fell for a second month in August. Consumer spending, output and wages sputtered. A six-month-old sales tax increase and a weak yen have pushed prices higher, but household incomes aren’t rising in tandem. Private demand has turned sluggish.

Edward Hadas: Call that money-printing?

8 Oct 2014

The supply of the raw material of finance can be varied far more easily than any physical commodity or human skill. If central bankers really grasped that, monetary policy could have been far more radical – both pre- and post-crisis.

German love of austerity trumps downturn angst

8 Oct 2014

Europe’s largest economy is shaken by a bout of bad data. But economic woes aren’t yet serious enough to trigger a rethink of priorities putting budget consolidation first, both at home and in the EU. Only a full-blown employment crisis would usher in looser fiscal policies. 

Asian fight against capital flight helps dollar

8 Oct 2014

The region’s central banks fear foreign capital will flee when U.S. rates start rising. They hope higher rates at home will stem the flow. But domestic investment dips when interest costs rise. The result: spare Asian savings go into safe dollar assets, pushing the greenback up.

France needs deficit relief to save reform

7 Oct 2014

Manuel Valls wants to convince international investors that the country is serious about growth-friendly policies. But the French prime minister can’t win at home unless Brussels is flexible on fiscal discipline. He has his priorities right, but he’s racing against time.

Banking quandary weighs on Catalan debate

3 Oct 2014

Catalonia’s independence looks remote. But Spain’s central bank has already said secession would mean the region losing the euro. Top domestic lender Caixabank would find it hard to relocate, as Scotland’s banks warned ahead of the recent referendum. But it would have little choice.

ECB keeps hands free with proxy QE

2 Oct 2014

President Mario Draghi gave little new detail on the ECB’s private debt purchase programme, and no hints that sovereign bonds will ever follow. Yet the central bank’s asset purchases could be large, and have major “spillovers.” That would indirectly help governments too.

Deficit-worry is so last decade

2 Oct 2014

David Cameron talks fiscal restraint, but the British PM is dangling tax cuts as a vote-winner. Other EU leaders are also eyeing political gains in unbalanced budgets. They’re not in denial. Rates are low and unemployment is high. For now, there’s room and reason to spend.

Edward Hadas: In praise of restrained enterprise

2 Oct 2014

Business bosses tend to admire free enterprise. But in a complex economy, too much freedom leads to ruinous competition and persistent under-investment. Corporates appreciate the value of controlled rivalry. That’s why episodes like the current UK supermarket price war are rare.

Governments are real targets in Apple’s tax case

30 Sep 2014

The European Commission thinks that the iPhone maker has received preferential treatment from the Irish government. Both Apple and Dublin beg to differ. At least Brussels has put member governments on notice that tax leniency could amount to state aid.

Sometimes business can’t avoid talking politics

30 Sep 2014

A British lawmaker reckons business should stay out of the debate over UK membership of the EU. Staying above politics may usually be the mark of a good board. But it would be negligent to ignore any material impact on owners and workers from a one-issue referendum.