Government & Agencies

France heads toward aimless short-term austerity

11 Oct 2024

PM Michel Barnier’s deficit-reduction plan mostly relies on 30 billion euros of tax hikes next year. That will hit growth just as corporate investment and consumer demand are flat. Long-term spending cuts would be a better solution. But this weak government cannot provide them.

UK government can still trip over lower fiscal bar

11 Oct 2024

Chancellor Rachel Reeves needs an extra 31 bln pounds in public investment by 2029 to boost the country’s anaemic growth. Easing the spending rules is a start. But without a clear plan and return targets, the Labour administration will fall into a debt trap of its own making.

China’s stock market bazooka is yet to fire

10 Oct 2024

The People’s Republic recently unveiled a raft of measures to solve a housing bust and support the market, producing a pop of post-vacation enthusiasm. That’s now waning as investors await a bigger move. In this Viewsroom podcast, Breakingviews columnists discuss what comes next.

China’s EU reply cuts odds of damaging tit-for-tat

8 Oct 2024

Days after Brussels voted for electric-vehicle tariffs, Beijing penalised European brandy. Pork, dairy and pricey cars may be next. Yet the moves are well-flagged. And more damaging retorts, like hitting luxury or $9 bln of aircraft-linked imports, seem unlikely for now.

Ireland spins global tax mess into $28 bln of gold

8 Oct 2024

Dublin expects a 2024 budget surplus worth 8% of gross national income, thanks to the presence of US companies lured by low levies. It’s evidence that profit shifting lives on despite a landmark OECD deal. The good news for Ireland is that there’s little chance of that changing.

Tokyo Metro IPO is a big deal with big caveats

7 Oct 2024

Japan’s largest listing in half a decade comes to market with rising passenger traffic and solid earnings to back its $2 bln share sale. The subway operator also carries a sizable debt load and a massive stock overhang that raises questions about the government's ownership.

EV tariffs are only the first step in EU-China war

4 Oct 2024

Despite internal squabbles, member states voted for levies on imported Chinese battery cars. That may help onshore production, but doesn’t tackle China’s clout in hybrid vehicles and batteries. New trade battles are likely: autos and their supply chains are in the firing line.

French PM has a plan but lacks time to fix budget

4 Oct 2024

Michel Barnier is proposing 30 billion euros of spending cuts and tax hikes to shrink the country’s deficit. Even if a divided parliament approves, he will have to repeat the feat in future years to fill the fiscal hole. This government’s weak hold on power makes that unlikely.

China and India reveal emerging market mistakes

3 Oct 2024

Investors often assume stocks in developing countries track economic growth, while valuations are a guide to future returns. The diverging path of Chinese and Indian equities over the past decade shows the flaws in this approach. Better to pay attention to capital efficiency.

Greece is unlikely victor in bank selldown race

3 Oct 2024

Athens sold 10% of National Bank, effectively ending the privatisation of the major lenders it rescued. Germany, the Netherlands, the UK and Ireland still own bank stakes. Greeks can thank continued government support and a strong economy, fuelled by rising investment.

Gulf turmoil will leave ratesetters on edge

2 Oct 2024

Israel’s riposte to Iran’s missile strike may see oil prices spike. The Fed, the ECB and peers struggled to contain inflation in 2022. A new energy crisis, along with a US docker strike, would force central banks to rethink rate cuts just as markets price them in.

New UK government is mired in unreal vibecession

2 Oct 2024

After winning the election, Labour leaders repeatedly warned of financial pain ahead. That helped drag consumer confidence to a six-month low in September. The economy is actually improving but this month’s budget will have to raise both much-needed money and rock-bottom morale.

Saudi oil may keep a lid on Middle East fallout

30 Sep 2024

Israel’s killing of Hezbollah’s leader invites a response from its backer Iran, which could cause crude prices to spike. Yet Riyadh may also soon start pumping a lot more oil. That could prolong the extent to which the economic impact of seismic Middle East events stays regional.

How US foreign policy could produce better results

30 Sep 2024

With conflict raging in Lebanon, Gaza and Ukraine, it is easy to paint pessimistic scenarios for the globe. But there is a more positive outcome where the United States works with other countries to solve common problems. Kamala Harris might just do that if she becomes president.

Thames creditors face messy flush, or deep rinse

30 Sep 2024

The UK water company is running out of cash and racing to raise equity. A new investor would want a big chunk taken out of its 16 bln pound debt load, which may fall heavily on bondholders who can’t put up new money. Even that may be preferable to a government-led overhaul.

China plays perilous game of pump the stock market

30 Sep 2024

Shares in consumer and real-estate firms have jumped more than a fifth after the latest round of state support raised hopes of a broad recovery. The risk is that when policymakers in Beijing flesh out their plans, the details will fall short of what investors are expecting.

Commerzbank fight is stress test for EU bank union

27 Sep 2024

Regulators spent years trying to level the playing field for euro zone banks. That should clear the way for UniCredit CEO Andrea Orcel’s mooted bid for the $20 bln German lender. If Chancellor Olaf Scholz thwarts the Italian group, new barriers may soon spring up elsewhere.

Beijing directs fiscal firepower at itself

27 Sep 2024

The government may sell $284 bln of special bonds. Part of that will be to boost consumption while a huge chunk will probably support indebted local provinces and state banks. That'll help GDP hit the official target this year but won't do much to alter the longer-term picture.

Arcane signal flags an ill-starred economic shift

26 Sep 2024

Borrowing costs are falling in major economies. But a pointy-headed academic concept which indicates the equilibrium level of interest rates – “R-star” – suggests they are unlikely to revert to pre-pandemic lows. Investors should brace for a future where money is more expensive.

Commerz ills make M&A a question of when not if

25 Sep 2024

The German government backed the $20 bln bank’s quest to stay independent amid UniCredit’s approach. But lower rates and a lack of scale mean new CEO Bettina Orlopp will struggle to earn a good return, and so need a merger partner. Patience may reward would-be buyer Andrea Orcel.