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from Hugo Dixon:

Now on to the Brexit referendum

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

With Scotland voting to stay part of the United Kingdom, attention will turn to the next potential British referendum: on whether the country will remain in the European Union. David Cameron has promised to hold an In/Out referendum on the EU if he is re-elected as prime minister in next year’s general election. There are comparisons and contrasts between the two votes, as well as lessons to be learned.

If Scotland had voted to quit Britain, the influence of both Scotland and the rump UK would have been diminished. Scotland’s economy would have been damaged. The divorce would also have been acrimonious.

Many British politicians have been happy to deploy such arguments when seeking to prevent a schism with Scotland. But some are so deeply eurosceptic that they are not willing to take on board parallel arguments about the effect of a schism between the UK and the EU.

from MacroScope:

Europe looks again to Draghi

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Surprisingly low take-up at last week’s first round of cheap four-year loans by the European Central Bank begs a number of questions – How low is demand for credit and what does that say about the state of the economy? Are banks cowed by the upcoming stress tests? Does this make an eventual leap to QE more likely?

The ECB is playing up the prospects of a second round in December after the stress tests are finished. But having pledged to add the best part of 1 trillion euros to its balance sheet to rev up the euro zone economy, it can’t have been happy to see only 83 billion euros of loans taken. ECB President Mario Draghi testifies at the European Parliament today.

from Breakingviews:

Scots’ no to independence still leaves UK in limbo

By George Hay

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Scotland’s landmark decision to reject independence is not the end of British uncertainty. The 55:45 split, with almost all the votes counted early on Sept. 19, leaves the UK intact. But the terms of the unionist victory introduce tensions which could yet lead to a national division.

from MacroScope:

Not really that close

Scotland's First Minister Alex Salmond speaks at the "Yes" Campaign headquarters in Edinburgh, Scotland

So what was all the fuss about?

A first rough draft of history would suggest the one opinion poll that gave the independents a lead nearly two weeks ago scared the Bejesus not only out of the British establishment but a significant chunk of Scottish voters too.

Prime Minister David Cameron has addressed the nation, promising to deliver new powers to Edinburgh to a very tight timetable, drafting laws in January in order to have it done after the 2015 general election.

from Counterparties:

MORNING BID – Apres Fed, le Deluge

The Kremlinologists turned out to be right, and the Federal Reserve left its "considerable time" language in its statement to assure the markets that it would be around for a while longer with rock bottom rates. It's the divergent (to a point) reaction out of the markets themselves that is interesting to parse, and will be key to watch in coming weeks and months. The action in the stock market was to suggest the entire exercise was a snooze-fest, with stocks ending marginally higher (yes, the Dow at a new record) but not too far from where the major averages were trading just before the news. Which is to say the equity market, always the most optimistic of U.S. markets, has it in mind that low rates stay for now, and until "now" is "then," it's time to party.

Bond markets, inflation-protected securities and the currency markets saw things differently, and it's those markets that may be more instructive to watch as the days and months go on and on. The five-year TIPS note saw its yield break above zero for the first time in ages, a sign that investors are starting to worry more about inflation, or higher Fed rates, which is interesting as consumer price data showed year-over-year inflation fall to a 1.7 percent rate earlier in the day. The dollar put together another strong rally, meanwhile, with the dollar index hitting highs not seen in 14 months and big rises against its main companions, the euro and the yen. And this is where the dot matrix comes in.

from Counterparties:

Economies of scale

For the economically nerdy among us (probably you, if you’re reading Counterparties) the key question in Thursday’s Scottish referendum is the economic viability of an independent Scotland. That’s probably not what most Scots are thinking about this week, but it’s an important question for the nation’s future, should they decide to go it alone.

Scale is a big deal for Scotland, with its 5.2 million people (out of the UK’s 64 million). Politically, “the creation of the EU created a safe space for small independent countries, especially after the Cold War ended,” say Felix Salmon. However, he writes, “in terms of economics, bigger is nearly always better.”

from Edward Hadas:

The economic lessons from Scotland

Adam Smith, one of the leading figures of the 18th century Scottish intellectual enlightenment, liked free markets and restrained governments. The 21st century campaigns for and against a Scottish political liberation show that governments have acquired an economic importance which Smith could hardly have imagined.

If the government’s economic role was as limited as Smith would have liked, the debate preceding the Sept. 18 independence referendum would mostly have been about national identity and the advantages and difficulties of becoming a small country in a big world. The economy would hardly be an issue, since only the most rabid Scottish nationalist would accuse the English of cruelty in that domain.

from MacroScope:

The final lap

A "Yes" campaign poster is displayed on the Isle of Lewis in the Outer Hebrides

Three opinion polls last night all put Scotland’s anti-independence vote at 52 percent, the secession campaign on 48. If accurate, the “Yes” camp will have to move heaven and earth in the next 24 hours to turn the tables despite having dramatically narrowed the gap.

The towering caveat is that no one knows if the polls are accurate and if not, in which direction they have got it wrong. The latest trio showed between 8 and 14 percent of Scotland's 4.3 million voters at least say they are still undecided.

from Breakingviews:

Applying corporate finance to nations

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

It is generally accepted on Wall Street that breaking up bloated and unwieldy companies is a good thing. Division makes them easier to manage, more accountable and allows them to deliver greater value to their many constituents. On the eve of Scotland’s historic vote on independence, it’s worth considering whether the same logic might also be applied to nations.

from MacroScope:

Showdown for Hollande

French President Hollande and Finance Minister Sapin take part in the assizes for financing and investment at the Elysee Palace in Paris

The French government faces a confidence vote in the national assembly after President Francois Hollande and his prime minister, Manuel Valls, ousted dissident ministers in a signal perhaps that they are prepared to push ahead with unpopular structural reforms to breathe life into a moribund economy.

Rebel lawmakers in Hollande’s Socialist party say they may abstain. On top of the reshuffle, they are angry at Hollande's policy switch in January to favour tax cuts to business in a bid to revive the economy - a move that has failed to kickstart a flatlining economy.

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