The EU has released its latest consumer price survey, which found prices in Ireland are about 18% above the EU average – although that varies by sector, with clothes and footwear below average and food (and alcohol) significantly more expensive. This post tracks European countries’ changing competitiveness over time, with Ireland’s readjustment sizeable but not yet complete. Indeed a contrast with Iceland and the UK highlights the stark difference between countries that are forced to devalue and those than cannot.
This post reviews the most recent IMF World Economic Outlook, the benchmark outlook on the global economy. A three-tier world economy is emerging, with China and India leading the way, and advanced economies bringing up the rear. For countries with high debt and shrinking and ageing populations, export growth is the key. Looking at the last few and next few years in Europe, a gap has emerged between leading exporters, such as Germany & Ireland, and straggling exporters, predominantly in the Mediterranean.
This post looks at the case for allowing the international bondholders of Irish banks to get away scot-free from their responsibilities as lenders and finds it wanting. It outlines the two great excuses that have emerged since the “Great Financial Crisis”, one by borrowers and the other by lenders. Neither rings true in the case of Ireland, a microcosm of the global finance environment over the past ten years. Irish banks stand in the middle of a sandwich between Irish households and international bondholders. Each must pay their price, including bondholders.
This post examines the so-called “web of debt” across the EU, a graphic published in a recent New York Times article. By using gross debt statistics, and regardless of the borrower’s sector, the chart misses the obvious point that the markets are worried primarily about government debt. Indeed, the logic of the chart forces the authors into almost the completely wrong conclusion about the UK!
With so much of the focus of the media and markets on Greece and its PIGS neighbours in the eurozone, one could easily forget that the UK will have the largest deficit in the EU this year and next. This post suggests that being outside the eurozone is a two-way street for the UK. The lack of restraint on its fiscal policy is already showing, with a simple index of government finance statistics placing the UK finances as the weakest of 24 developed countries.
