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Greeks politicians pass austerity package

The 2012 BAFTA best film, The Artist, was set around the time of the Great Depression. This may chime with a Greek population that fears it will suffer something similar as it strives to deal with its debt. But another BAFTA nominee, The Help, seems more relevant right now. Greek politicians passed the austerity package required to secure the help it needs to avoid default. And it’s not before time. Talks have been going on since July. There will…

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Policymakers need to push forward with conviction

At the start of the Six Nations rugby tournament many would be hoping that the European policymakers would take a leaf out of the players’ books and just get on with it. Unlike good rugby, when passing the ball leads to success, too many of the European policymakers’ passes have led nowhere. Greece has to find €14bn by 20 March to avoid a default. Without help it won’t have the funds to do this, and this is casting a shadow over the Eurozone…

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Annual World Economic Forum

It was never going to be a particularly jolly affair, but the mood at this year’s annual meeting of the World Economic Forum was much gloomier than previous years. The IMF announced a substantial reduction to its 2012 global economic forecast. No surprises about where it laid the blame - Europe. And the Brussels summit this week will address how to improve growth in the Eurozone. Confidence needs to be restored to achieve this, but for this to happen…

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Private investors shy away from a haircut

Private investors in Greek government bonds shied away from an agreement to accept just half of the capital they lent in the first place and take a lower interest return on the remaining debt. The haircut alone was less of a trim than a short back and sides, but if Greece defaults these investors risk a scalping, in the form of losing all of their money. Whether Greece will qualify for the bailout it needs is now in question and has unsettled markets…

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Rating downgrades turn the heat up

The loss of France’s cherished AAA rating was a particular blow to President Sarkozy in his election year. But there is more to worry about than a politician’s feelings. Eight other Eurozone members, including Austria, Italy, Spain and Portugal, were also downgraded. Standard & Poor’s (S&P) decision froze out hopes that sentiment towards the Eurozone was beginning to thaw after the successful bond issues in Spain and Italy during the week. The…

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2012, a year of hope and fear

The optimism at the start of 2011 was founded on strong global economic growth, but developments throughout the year mean that we enter 2012 in a much gloomier mood. Inflation, rising unemployment and much weaker than expected growth outturns in 2011 mean that meeting the austerity challenge is going to be painful in 2012. But there is some good news. The US economy seems to be dragging itself out of the doldrums and global manufacturing surveys have…

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Christmas wish list ...

The Christmas wish list will be particularly long and heart felt this year, for politicians, businesses and households alike. First placed will be an orderly resolution to the Eurozone debt crisis, and, since it’s Christmas, some measures thrown-in to encourage long-term growth. The UK, like most of the western world, will also be asking for a little more economic growth next year. This will be tricky – Santa is good, but perhaps not that good.…

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Eurozone takes giant stride to becoming both a monetary and fiscal union

While it has been another gloomy week, there are some signs of hope. The OECD revised down its forecasts of global growth and warned about the risks of Eurozone for the future. In the UK the Chancellor’s Autumn Statement was more downbeat, while the new Governor of the European Central Bank, Mario Draghi, highlighted his concerns of sovereign debt for the banking sector. The seriousness of the situation was not lost on the world’s major central…

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