Politics

Britain’s Brexit airbag can’t cushion everyone

28 Oct 2016

Nissan’s UK plant will get state help if its competitiveness is harmed by Britain leaving the EU. Offsetting potential tariffs is unorthodox, but feasible and not especially expensive, even if rolled out to the whole industry. But picking winners also means picking losers.

Emperor Xi gets new clothes

28 Oct 2016

China's Communist Party named President Xi Jinping as its "core" leader - a title previously granted to icons like Mao and Deng. But Xi needs more than titles to implement tough reforms; he needs provincial allies and a viable vision for economic policy. He may have neither.

Resilient UK growth adds to policymakers’ quandary

27 Oct 2016

GDP rose by 0.5 pct in the third quarter as the economy barely broke its stride after Britain voted to leave the EU. The good news makes it harder for the government and Bank of England to justify a hefty stimulus. But if things do get worse their response may come too late.

South Africa’s real ratings test is yet to come

26 Oct 2016

Finance Minister Pravin Gordhan has cut GDP forecasts and predicted a higher deficit. His mini-budget shouldn’t heighten the risk of a sovereign downgrade. But if Gordhan’s Nov. 2 court appearance on questionable fraud charges prompts his resignation, junk status may soon follow.

Europe pushes Renzi in dangerous direction

26 Oct 2016

The European Commission is questioning Italy's 2017 budget, just ahead of a key referendum. Capitulation might weaken Prime Minister Matteo Renzi, who has little to lose by flouting Europe's rules. If Renzi falls or takes a pugilistic position, Europe is in for bigger battles.

Gutsy MPS turnaround tackles problems it can

25 Oct 2016

Italy’s sickly bank has devised an ambitious scheme to boost profitability and coax investors to back a 5 billion euro recapitalisation. There are some missing details, such as how a debt swap will work, but it’s a valiant turnaround plan. The main risks are outside MPS’ control.

Free trade can survive its Wallonian wobble

25 Oct 2016

The tiny Belgian region is holding up a trade pact between Europe and Canada. That doesn’t mean such deals are impossible, though - they just need even more time and creative thinking. The messy process also undermines the notion that ordinary people have no say in globalisation.

Berlin’s U-turn over Chinese bidders is worrying

24 Oct 2016

The government reversed its approval of the 670-mln-euro takeover of chip equipment-maker Aixtron. That looks like an attempt to protect Germany's tech industry, and backs up previous rhetoric. Shooting down the deal would hurt Aixtron, but the apparent wavering is more damaging.

Spanish government begins to make up for lost time

24 Oct 2016

The country's Socialist Party will allow acting Prime Minister Mariano Rajoy a second term, ending 10 months of political deadlock. His minority administration will now begin arduous tasks like cutting the budget deficit as the economy slows. A fractured parliament won't help.

Defiant losers are becoming a costly problem

20 Oct 2016

Pro-EU campaigners and Britons who live near airports have challenged the will of the majority. Donald Trump may not accept U.S. election results. In finance, companies regularly face and resolve such insurrections. Solutions are similar in politics, but harder to implement.

Final debate leaves American assets less secure

20 Oct 2016

The candidates faced off for the last time before the election. The event was supposed to focus on entitlements and the economy. Instead, voters got little substance, more rancor – and no commitment by Donald Trump to accept the will of the people. America just got a bit riskier.

Italy’s flawed hero needs more than Obama backing

19 Oct 2016

Prime Minister Matteo Renzi's reforms have been praised by the outgoing U.S. president. Yet polls suggest he may soon lose an important constitutional referendum. That would be a shame: Renzi has made mistakes, but his reforms are needed, and a divided Italy needs his dynamism.

RBS’s Russian goof sets tone for UK state meddling

18 Oct 2016

The UK lender is reviewing a decision to stop banking a supplier of Russian broadcaster RT. It could just be a business matter, but RBS’s 73 pct state holding makes it seem political. If a post-EU Britain is heading for more use of subsidies, such confusion will recur.

Inflation shows up at wrong time for Mark Carney

18 Oct 2016

UK consumer prices are rising at their fastest pace in nearly two years. It should be a proud moment for the Bank of England chief, who has been struggling to achieve exactly this. Unfortunately, the pound’s fall is going to give him a bit too much of what he wanted.

Thailand can ride out succession pain

13 Oct 2016

The late King Bhumibol was a unifying force in a divided nation. Yet the military has tightened its grip of late. That makes a fresh power struggle, and accompanying economic turmoil, less likely. It also means the junta's grand public-spending plans should survive.

China’s “social credit” makes for fearful economy

13 Oct 2016

China wants to use big data from courts, banks and government bureaus to purge miscreant firms and people from economic life. Better credit scoring would help cut fraud, but this proposal blurs social, political and economic criteria. The results will be unfair and inefficient.

Infidelities and Buffett dominate U.S. debate

9 Oct 2016

Donald Trump sought to deflect criticisms of his comments about women by citing the Oracle of Omaha as a rich sycophant of his rival, Hillary Clinton. The IMF called on nations to do more to spur growth. The candidates focused more on past transgressions than the future of the economy.

British bosses threatened with velvet handcuffs

6 Oct 2016

Theresa May will soon make it easier to hold firms liable for staff wrongdoing. Jittery board members will have kittens. Yet an analogous development - the scope for UK firms to agree U.S.-style deferred prosecution agreements rather than enduring guilt - could soften the blow.

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.

Deutsche’s pain a sign bank regulation is working

4 Oct 2016

Jitters about the German lender have revived memories of the 2008 crisis. But eight years of reform have left Deutsche - and the rest of the banking system - better equipped to absorb a shock. The relative calm in financial markets suggests that regulators got some things right.