Tax

Capital Calls: Bank of England, Wonder drugs

23 Mar 2023

Concise views on global finance: The UK central bank has joined peers in raising rates, but there’s not much room to keep hiking. Meanwhile, a drug that might help smokers’ lung is could be good for makers Regeneron and Sanofi, but even better for society.

UK fiscal austerity may not survive next election

15 Mar 2023

Finance minister Jeremy Hunt used 24 bln pounds of budget headroom to boost investment and incentives to work. He also set a trap for the opposition: accept spending cuts after 2024 or be tagged as a high-tax party. Labour Party leader Keir Starmer doesn’t have to take the bait.

UK growth demands better-directed fiscal fireworks

13 Mar 2023

Finance minister Jeremy Hunt’s March 15 budget may feature 30 bln pounds of headroom to ease headaches like workers’ pay. But Britain’s real malaise is a lack of long-term business investment. To keep pace with foreign largesse, Hunt needs to deploy significant tax breaks.

Green subsidy race may be what the world needs

6 Feb 2023

High carbon taxes would be the best way to combat climate change. In their absence, subsidies are a good second best. As the global elephants – the U.S., EU and China – roll out financial aid, the key will be to ensure some fair play so others don’t get trampled, says Hugo Dixon.

Republican tax fantasy cements ugly fiscal reality

20 Jan 2023

U.S. lawmakers are set to vote on a silly plan to phase out the IRS and impose a 30% sales tax that would balloon the federal deficit. It’s going nowhere, but exposes the twisted economic logic in Washington. Small wonder it’s costing more to insure against Uncle Sam defaulting.

Britain can afford to pay nurses and teachers more

20 Jan 2023

UK public workers want a big raise from the government. An inflation-matching pay rise would cost 18 bln pounds; growing state employees’ salaries in line with the private sector around half that. Downing Street could fund it with a 1p rise in VAT and closing tax reliefs.

Capital Calls: Satellites deal, EU gas price cap

16 Dec 2022

Concise views on global finance: Private equity firm Advent is paying a 129% premium for Maxar, indicating that the volatile, costly satellite construction business could soar away from public markets; the EU is edging towards a controversial cap for gas future contracts.

The world can harness trade to save the planet

21 Nov 2022

Trade is a major cause of global warming. The solution is to tax commerce in carbon-intensive goods and remove tariffs on clean ones, to support low-carbon technologies, and to do all this fairly. It’s a priority for next year’s COP28 conference in Dubai, says Hugo Dixon.

Fiscal “black hole” obsession adds to UK problems

16 Nov 2022

Prime Minister Rishi Sunak’s government is set to tighten the public finances by about 50 bln pounds, equivalent to 2% of GDP. Yet the case for such a large package is based on dubious logic. If it’s front-loaded and overly reliant on spending cuts, it will also hurt growth.

Capital Calls: Centrica

10 Nov 2022

Concise views on global finance: The 5 bln pound UK energy group launches a 250 mln pound buyback despite a struggling supply business and windfall tax threats.

BP is case study in global windfall-tax quandary

1 Nov 2022

The $100 bln oil major wants to produce more green energy and less crude. Yet a British windfall tax risks pushing it in the opposite direction. A better levy design would hit outsized profit in both fossil fuels and renewables, while still incentivising investment in the latter.

Italy’s new premier starts with a big faux pas

27 Oct 2022

Giorgia Meloni vowed to hike a 2,000 euro cap on cash payments, reversing attempts to boost electronic transactions. That will make it harder to track 100 bln euros of annual untaxed revenue. With debt at 147% of GDP, Italy cannot afford to be complacent on chronic tax evasion.

Italy’s new boss is missing a trick on tax evasion

24 Oct 2022

Public debt at 147% of GDP and a slowing economy limit Prime Minister Giorgia Meloni’s scope to curb an energy crisis and keep spending promises. Tackling endemic tax evasion would give her more fiscal ammunition. Yet promoting the use of cash and tax amnesties will not help.

Truss’s exit highlights America’s free pass

21 Oct 2022

U.S. fiscal policies, based on tax cuts for the rich and widening budget deficits, have been fairly similar to those of Britain’s ousted prime minister. Only the dollar’s status as the world’s reserve currency keeps the laws of economics from applying in the United States, too.

Britain’s next leader will be on a short leash

20 Oct 2022

Prime Minister Liz Truss is out after just 44 days in office. Whoever replaces her will have to endorse fiscal discipline or risk a similar fate. The ruling Conservatives have little in common except fear of an early election. But only a national vote can restore political order.

Massive fiscal U-turn leaves UK in political funk

17 Oct 2022

New finance minister Jeremy Hunt soothed investors by reversing most of Prime Minister Liz Truss’s “growth plan” and cutting short her generous energy subsidies. But he still needs extra tax hikes or spending cuts. Persuading parliament to support the switch will be a challenge.

UK still two U-turns away from financial stability

14 Oct 2022

Prime Minister Liz Truss sacked her finance minister after less than six weeks because his unfunded tax cuts roiled markets. She will now attempt a more fiscally sound approach. But her party may decide it needs another leader, while voters may prefer a change of government.

UK mess bolsters case for Italian budget prudence

6 Oct 2022

Market turmoil forced British Prime Minister Liz Truss to partly ditch unfunded tax cuts. The humbling saga should help Italian would-be premier Giorgia Meloni resist her allies’ spending requests. Picking a technocrat as finance minister would give investors further comfort.

Tax U-turn leaves UK’s Truss with credibility gap

3 Oct 2022

Prime Minister Liz Truss’ move to scrap a tax cut for high earners lowered government bond yields and boosted the pound. But her policies still rely on unfunded giveaways and rosy growth hopes. Investors’ loss of confidence from the crisis makes her agenda even harder to achieve.

“Help to Refi” could be UK’s next financial wheeze

30 Sep 2022

Prime Minister Liz Truss’s rash tax cuts have rattled the government bond market. She needs to attract investors and bring yields back down. The “Help to Buy” scheme to subsidise mortgages offers a template. Breakingviews imagines a fictional adviser taking up the challenge.