Time to take a hint: A weak currency means a weak country October 11, 2016 As the global elite (the “dirty” word du jour) descended on Washington on Friday, working the corridors of the International Monetary Fund and World Bank, there was one thing they couldn’t ignore. It wasn’t weak growth, it wasn’t negative rates. It wasn’t even Donald Trump. It was Brexit and the pound’s dramatic flash crash. In [...]
EU financial transaction tax to be unveiled this year October 11, 2016 Plans for an EU financial transaction tax (FTT) could be published by Christmas after politicians in 10 Eurozone countries agreed to push ahead with plans. After a meeting in Luxembourg late last night, officials declared this morning they would start drafting the legislation which will allow them to place a levy on the trading of financial [...]
Banks’ profitability to be hit by Brexit fears over risky assets October 11, 2016 Market volatility will sap the efforts of Europe's biggest banks to offload their riskiest assets, and continue to drag on their profitability, a new study has warned. Moody's said this morning that the five largest investment banks – Barclays, Credit Suisse, Deutsche Bank, RBS and UBS – will have to accept discount prices for so-called [...]
Bank of England rate-setter thinks sterling could fall further October 11, 2016 The newest member of the monetary policy committee (MPC) has said the pound could continue to fall given inherent weaknesses in the UK economy. Michael Saunders, who joined the Bank of England's rate-setting committee over the summer, told MPs today: "Given the scale and persistence of the UK's current account deficit, I would not be [...]
Business rates that hit London need reform October 11, 2016 Business rates are a blunt instrument, one which is set to deliver a heavy blow to London’s retailers, offices and hotels. Rates are due to rise from next April after a revaluation of rateable values for England’s 1.85m commercial properties by the Valuation Office Agency. It is the first such revaluation since 2010. Analysis by [...]
Is the tumbling pound providing a correction, or are we losers now? October 11, 2016 A strong currency can be a sign of a country’s economic success. When a currency rises against another, those earning income in it have greater spending power. Equally, a weaker currency is considered by some to be a source of national embarrassment. Last week’s sterling crash was rather embarrassing for Britain – the pound fell 4.2 [...]
Done right, fiscal policy can act as a channel to direct monetary stimulus into the real economy, not asset prices October 11, 2016 It's scarcely possible to read about global economic policy these days without hearing that central banks have run out of ammunition and a call to open the fiscal floodgates. But is fiscal policy really the answer to whatever is ailing the global economy? And has the great monetary experiment really reached the end of the road? [...]
Oil price gush lifts FTSE close to a record high October 11, 2016 Oil prices hit a 14-month high and the FTSE 100 recorded its second-highest close on record yesterday after Vladimir Putin suggested Russia would take part in a production cut alongside the Organisation of the Petroleum Exporting Countries (Opec). The Russian President told the World Energy Congress in Istanbul he supported the agreement reached by Opec [...]
Theresa May should use Nobel-winning insights – not anecdote – to guide executive pay reform October 10, 2016 The 2016 Nobel Memorial Prize in Economics was awarded yesterday to Harvard’s Oliver Hart and MIT’s Bengt Holmstrom for their ground-breaking work on contract theory. Their work has profound implications for contracts in many fields: financing contracts between investors and firms, business contracts between customers and suppliers, and – most topically – employment contracts between [...]
The Single Market battle is the Remainers’ last stand in the Brexit war October 10, 2016 It has all the hallmarks of a last stand. Having abandoned resistance to the referendum result itself, Remainers are rallying to the cause of staying in the Single Market. Re-using the referendum hymn sheet, the same politicians, businesses and pressure groups who predicted doom and gloom from the decision to vote Brexit are now forecasting postponed doom [...]