Reuters blog archive
France is unveiling its 2015 budget right now and it’s not making pretty reading, confirming that Paris will not get its budget deficit down to the EU limit of three percent of GDP until 2017, years after it should have done.
The health minister has said the welfare deficit is expected to run nearly one billion euros over budget this year and data on Tuesday showed France's national debt hit a record high in the second quarter, topping two trillion euros for the first time. It will near 100 percent of GDP next year.
All this is predicated on growth picking up and the proportion of national income going on public spending will fall only glacially.
French President Francois Hollande and Italy’s Matteo Renzi are leading a drive to use the maximum amount of flexibility within EU rules to allow a bit more spending or lower taxes to get growth going – French Finance Minister Michel Sapin has just said the pace of budget consolidation in the euro zone must be adapted to reflect the reality of a stagnant economy.
Germany, as usual, is sceptical and is making great play of the fact it will have no net new borrowing next year for the first time since 1969 even though its economy is barely growing. European Central Bank President Mario Draghi has also called for more active fiscal policy from euro zone governments, a hint perhaps that he thinks the ECB has done as much as it can.
Euro zone inflation figures are due and after Germany’s rate held steady at 0.8 percent the figure for the currency bloc as a whole could marginally exceed forecasts and hold at 0.4 percent.
One upside for the currency bloc is the falling euro which has broken below its 2013 lows and is down almost nine percent from the peak it hit against the dollar in May. With U.S. money printing about to end next month and speculation intensifying about the timing of a first interest rate rise from Washington, there are good reasons to think that this trend could continue.
from The Great Debate:
President Barack Obama’s speech at the United Nations Wednesday offered to roll back the U.S. sanctions if Russia takes the “path of diplomacy and peace.” This overture comes on the heels of an emerging ceasefire between Russia and Ukraine and continuing discussions in Minsk to find a political solution to the turmoil in eastern Ukraine.
Obama’s U.N. speech, however, opens up the possibility of creating some daylight between the United States and the EU sanction programs. The European Union remains openly divided over the current sanctions -- and far more economically bruised than the United States.
The latest Scottish opinion poll puts the unionist camp ahead by 52 points to 48 – still way too close to call given the statistical margin for error.
The last two polls have given the “No” campaign clinging to a narrow lead following a dramatic narrowing of the gap and one survey giving the separatists a lead. So has the “Yes” momentum stalled? If you chart the numbers over the past two weeks you might think so but if you did so over the past two months you would say emphatically not.
from Global Investing:
By Alexander Winning
What are the chances that Western investors will rush back to Russia if a shaky ceasefire in Ukraine leads to a more lasting peace? Pretty slim, judging by a keynote speech at a recent Russia-focused investment conference in London.
Dmitri Trenin, director of the Carnegie Moscow Centre, told the conference organised by Sberbank CIB, the investment-banking arm of Russia's top state-controlled lender, there was little prospect of significant Western investment in Russia over the next 5 years:
Having woken up to the very real possibility of Scotland going it alone, the leaders of Britain’s main parties have scrapped their parliamentary business and headed north to campaign in what amounts to a huge gamble.
The “No” campaign has been criticized for many things – being too negative (though no is negative by definition), being too aloof, failing to address the hole’s in Alex Salmond’s manifesto. The question is whether it is too late to do anything about it. It is risky to deploy Prime Minister David Cameron who, by his own admission, is not catnip to the Scots.
A second opinion poll in three days has put the Scottish independence vote as too close to call.
TNS gave the “No” vote 39 percent support and “Yes” 38. Its last poll in late July gave the “No” campaign a 13-point lead. Taking only those who are certain to vote, the two camps are tied at 41 percent.
The earthquake may be about to happen. Over the weekend the first opinion poll putting the independence campaign ahead landed with a resounding thump.
That prompted the UK government to rush forward to this week plans to spell out what further devolved powers Edinburgh would get if the Scots vote to stay on Sept. 18.
Ukrainian President Petro Poroshenko and the main pro-Russian rebel leader said they would both order ceasefires on Friday, provided that an agreement is signed on a new peace plan to end the five month war in Ukraine's east.
Talks are due to resume in the Belarussian capital Minsk. On Wednesday, following a string of aggressive statements in previous days, Vladimir Putin put forward a seven-point peace plan, which would end the fighting in Ukraine's east while leaving rebels in control of territory.
Barack Obama is in Estonia before the NATO summit in Wales intending to pressure Vladimir Putin to back off in Ukraine. The rhetoric will be strong – not least about protecting the Baltics under NATO’s umbrella.
But with zero chance of western military action in Ukraine the hope is that economic pain via sanctions will bring Moscow to heel. Existing sanctions are clearly hurting the economy – the rouble has plumbed record lows as capital flees or shuns the country – but that hasn’t stopped Putin so far.