Britain
Gambling on Fiscal Restraint
June 22, 2010
One of the greatest uncertainties faced by policymakers concerns whether economies that are now recovering can tolerate fiscal restraint. Expert opinion is divided on this question, and historical precedents provide conflicting answers. Fiscal cutbacks in 1937 and a VAT increase of two percentage points to 5% in April 1997 respectively pushed the U.S. and Japanese [...] More
Euro Retaining Firmer Tone
June 18, 2010
The euro touched $1.2416, best since May 28, and on balance has given up just 0.1% from Thursday’s close. Europe’s common currency has risen 2.3% so far this week. In a quiet end to the week, the dollar otherwise shows losses today of 0.5% against the yen and 0.2% versus the Swiss franc but is [...] More
British and German Growth
May 25, 2010
Global financial markets have been unnerved by concern about the impact of the sovereign debt problems of several countries in Europe. Governments failed to downsize their full-employment deficits when growth was expanding decently in the middle of the last decade, and fiscal deficits shot up as tax revenues plunged during the great recession. Premiums that [...] More
A Benign Market Environment for Economic Recovery
April 26, 2010
Yes, you read my headline correctly. This certainly has not been true about Greece, and financial markets in other peripheral members of the common currency bloc are at risk. But the statement does fit the situations pretty well for key advanced economies such as the United States, Germany, Britain, and Japan. At noontime in New [...] More
Bank of England Preview
April 7, 2010
The Bank of England will not be changing policy this month. An announcement will be made at 11:00 GMT on Thursday. The asset purchase facility was suspended but not subsequently wound down after hitting a ceiling authorization of Gbp 200 billion at end-January. The bank rate target of 0.5% since March 2009 represents a practical [...] More
British Budget Didn’t Wow Markets
March 24, 2010
Government budgets are always pitched to two often-conflicting audiences, the public and investors. When elections are near, pleasing both groups takes on even greater delicacy. British elections will probably be held seven weeks from tomorrow, and U.K. public finances are in shambles in the wake of and 8% drop in nominal GDP since 2007 and [...] More
British Budget Preview
March 23, 2010
Chancellor Alistair Darling will deliver a pre-election budget on Wednesday starting at 12:30 GMT. This will be a pre-budget budget, as parliamentary elections are seen likely on May 6 and mandatory by June. Britain seems poised for a change of power, but the margin of victory could be too narrow to secure a majority for [...] More
Commercial Trade Flows in November
January 12, 2010
Monday brought news that Chinese exports in November were 17.7% larger than in November 2008 level, including advances of 15.9% in sales to the United States and 10.2% to the EU. There had not been an on-year increase in total exports since September 2008. Imports shot up 55.9% in the latest statement year. China’s economy [...] More
Bank of England Preview: No Changes This Time
January 6, 2010
British monetary policy is on hold until at least February and possibly beyond midyear. The last base rate cut occurred in March 2009 and culminated 450 basis points of reduction from 5.0% to 0.5% squeezed into five months. Additional easing since then has been engineered via quantitative purchases of assets, mostly gilts, that will reach [...] More
Dollar Reversal Gaining Momentum
December 15, 2009
The dollar has risen 1.1% against the Australian dollar, 0.8% versus the Swiss franc, 0.7% relative to the euro and kiwi, 0.5% against sterling and 0.4% against the Canadian dollar. USD/JPY slid 0.2%. Investors are scrambling to unload short dollar positions, believing the U.S. will grow faster than thought previously and fearful about the Greek [...] More
