Government & Agencies

Germany’s fiscal obsession leads to bad deals

24 Sep 2024

Finance Minister Christian Lindner is rushing to plug short-term budget holes with a privatisation spree. But he is leaving money on the table. UniCredit only paid a 4.7% premium to buy a stake in Commerzbank. To feed its debt-reduction addiction, Berlin needs better M&A advice.

Beijing partially shuts door to big bang stimulus

24 Sep 2024

The central bank surprised markets with sweeping rate cuts and hinted at more easing. It's a sign that planners are leaving the heavy-lifting to monetary policy. Piecemeal fiscal measures may come later this year, but the window for Beijing to hit its GDP target is closing.

EU deforestation ban creates a hazy trade future

23 Sep 2024

The European Union wants to ban agricultural imports from deforested land. The rules have laudable aims but will impact $400 bln worth of goods. Developing nations are already exporting elsewhere. To avoid losing vital supplies, Brussels can compensate farmers or lower standards.

China-EU trade spat’s next swipe may hit LVMH

23 Sep 2024

Beijing is weighing up retaliating against EU tariffs on electric cars. Targeting the French luxury giant and its rivals would cause minimal strategic pain and hit Paris rather than Berlin. Higher consumption taxes, rather than import duties, could also fit with domestic reforms.

Chip halt flags EU’s also-ran status – and Intel’s

20 Sep 2024

The troubled US chipmaker has paused a 30 bln euros semiconductor factory in Germany. Weak demand is hampering Europe’s hopes to close the semiconductor gap between itself and the US. But another leg of the problem is that Intel itself lags rivals like Nvidia and TSMC.

India’s open for business push has local quirks

20 Sep 2024

Prime Minister Narendra Modi’s government lowered barriers to foreign investment. Yet BlackRock, BMW and others are choosing to expand in partnership with powerful families. It tightens tycoons’ grip on the world’s fifth-largest economy, and sets them up as future global rivals.

Europe’s CO2 fines undermine carmakers’ progress

19 Sep 2024

An auto lobby group called on governments to ease 2025 carbon penalties. Modest relief would help. With EU electric-vehicle sales down 8% year-on-year, Europe’s plan to end combustion engines looks dicey. That’s more down to government inaction than big-spending carmakers.

The Fed gives China several helping hands

19 Sep 2024

The 50-basis-point cut to US rates is taking pressure off the yuan, giving the People's Bank of China room to reduce borrowing costs, too. That could deflate the bond bubble, help Beijing hit its annual GDP target, and even spur more liquidity to mop up excess housing inventory.

BoE bond tinkering offers Labour a fiscal lifeline

18 Sep 2024

Governor Andrew Bailey will this week say by how much he wants to reduce the Bank of England’s balance sheet in 2025. If he sticks to 100 bln pounds, higher gilt redemptions and fewer sales will cut the BoE’s losses. That would give the government a much-needed fiscal boost.

Commerzbank’s UniCredit defences are built on sand

17 Sep 2024

German politicians fret that a key domestic lender may end up under foreign control, now its Italian rival holds 9%. Berlin’s 12% stake complicates that. But it has no legal mechanism to block a deal the ECB may support, and Deutsche Bank makes for a problematic white knight.

Under-fire workers spell trouble for US and Europe

17 Sep 2024

Unemployment remained low in both blocs even as interest rates rose. Staff hoarding and healthy profits averted layoffs. Now, though, US job vacancies are at the lowest since 2021 and euro zone CEOs want to hire less. If labour markets crack, recessions will be harder to avoid.

Beijing’s pension plan grasps at a utopian reality

17 Sep 2024

China is raising the retirement age for the first time since the 1950s, and increasing the number of years workers must contribute to receive payouts. Both thresholds remain low but policymakers are right to tread cautiously. Boosting the workforce in a slowing economy is risky.

ASML faces bigger problems than China

16 Sep 2024

Fears of US tech export curbs have pummelled the $320 bln Dutch firm’s shares. A longer-term worry is that the growth of AI leads to new technologies, and less need for ASML’s machines that make chips smaller and efficient. That, more than trade wars, may hurt its rich valuation.

The European Union risks a sad, bad future

16 Sep 2024

The EU economy is stagnating, while Russia, China and even the United States may bully the bloc. There are potential fixes, as former European Central Bank boss Mario Draghi set out last week. But the EU and its members are currently in no position to implement them.

The UK’s finance-business chasm is as wide as ever

13 Sep 2024

British investors and regulators are fretting that capital markets do not adequately serve local companies. The long-running issue is rooted in the country’s outsized financial sector, which brings in 12% of GDP. Recent reforms will struggle to address the underlying problem.

China mortgage cut is start of confidence rebuild

13 Sep 2024

Beijing may significantly lower rates on existing home loans, per Bloomberg. That might convince property owners that there are better alternatives than stepping up mortgage repayments. It is a step toward fixing a $1 trln headache for officials, and improving consumer sentiment.

Telegram and X expose tech platforms’ new reality

12 Sep 2024

The arrest of Pavel Durov, founder of the controversial messaging app, and the ban of X in Brazil shows state officials are not afraid to intervene in Big Tech. In this Viewsroom podcast, Breakingviews columnists debate what it means and how CEOs should manage the threat.

Germany gives DSV a sweet deal on freight takeover

12 Sep 2024

The Danish group will acquire Schenker, the logistics arm of indebted German railway operator Deutsche Bahn, for 14 bln euros, beating a higher CVC offer. Berlin may be hoping that an industry player will be a more stable owner. But DSV’s share price jump shows it got a bargain.

There’s no debate: big US spending is a tough sell

11 Sep 2024

Donald Trump and Kamala Harris squared off on immigration, abortion and, strangely, pets. Missing, however, were any grand fiscal plans. Promises of tax cuts and tariffs would cost the government less, after infrastructure, Covid-19 and other initiatives chewed up some $13 trln.

Orcel uses hammer to unpick UniCredit-Commerz lock

11 Sep 2024

The Italian bank’s CEO is eyeing a full takeover of the $16 bln German lender. Andrea Orcel is taking a blunter route than past M&A talks between the two banks, which used structures like a Frankfurt-listed subsidiary to appease Berlin. His way is more rewarding, but riskier.