The battle over exchange rates between Beijing and Washington is warming up nicely after a few years’ hiatus, only with a bit more urgency this time. Today’s hearing at the House Ways and Means committee canvassed proposals for what to do about it. Interestingly, there was more consensus among the experts testifying than previously that China holding down the renminbi was a serious problem. But the solutions all seemed less than forceful: call China a currency manipulator, go to the IMF, go to the WTO.
The more confrontational solutions, like imposing anti-subsidy duties to combat currency undervaluation, didn’t get much support. Sandy Levin, the Michigan Democrat who currently chairs the committee, has a reputation as a sceptic of free-trade purists, but he sounded pretty cautious about anything that might touch off a direct confrontation. Read more
Ben Bernanke, Federal Reserve chairman, heads to Capitol Hill on Thursday for a hearing on the US central bank’s exit strategy.
With the latest FOMC statement out only a week ago, few economists are expecting any significant changes to the monetary policy outlook of “exceptionally low” rates for an “extended period”. But that does not mean there won’t be news coming out of Mr Bernanke’s mouth. One guess of several economists, such as Michael Feroli of JPMorgan, is that the headlines could be made by a discussion of the discount rate – the rate at which commercial banks can borrow from the Fed in a pinch.
References to the discount rate were notably absent from the FOMC statement last week – but that doesn’t mean the committee did not discuss it. Read more
Alistair Darling said today the Ministries would provide details on £11bn savings by 2012/13. Below is a breakdown by Ministry. But you can save yourself the detail: almost all of the departments list the same cost reduction plans (with worrying similarity). Almost all of the savings are expected to come from:
- Reducing the cost of procurement, often via ‘collaborative procurement’
- Reducing the cost of arms’ length bodies
- Streamlining back-office functions
- Reducing the use of consultants
- Property/estates costs
- Energy savings
In savings-size order:
Click on the chart to see some full size, interactive charts. This is Chris’s data, collected from pre-Budget Reports and Budgets over the past few years.
Alistair Darling will allocate £100m to fill in potholes. That small sum got into his speech. But what new did we learn about filling in the £167,000m black hole in public finances? Nothing.
Yesterday, I wrote a courage checklist for Mr Darling to see whether he had the balls and integrity to tell the British public the implications of his own deficit reduction plan. The scorecard is as follows: Read more
Mr Cameron’s says Budget is “pitiful”.
Claims stamp duty cut has been Conservative policy for three years. Cider plans likewise claimed as Tory policy. Labour officials have historically opposed the policies they now embrace.
- Conservatives will set up an independent budget board
- Freeze council tax
- Lower small business tax
On specific policies:
- Budget shows slew of new taxes, tax bombshells timed to go off after election
- Growth forecasts too optimistic -
Chris Giles will be posting later. Meanwhile, you can watch the budget. Or read Alistair Darling’s speech.
- Winter fuel payment will be guaranteed for another year - £250 or £400 to be received by pensioners, paid for by closing tax loopholes
- No-one over 75 will pay tax on the first £10k of income, from next year
- Extra £4 per week for all children whatever the marital status of their parents
- Tax evasion: £0.5bn extra revenue expected
German chancellor Angela Merkel’s hard-line stance on Greece has come under attack from a top European Central Bank policymaker, who warned that the cost of inaction could be far worse than offering temporary financial support.
The unusually strong criticism by Lorenzo Bini Smaghi, an ECB executive board member, highlighted frustration in Frankfurt at Berlin’s intransigence, which is threatening a showdown among eurozone political leaders at their summit in Brussels starting on Friday. Read more
Japan’s export figures for February are out today and they show that recovery is continuing. Fine.