By Kerin Hope
© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Sooner or later, the “hawks” at the European Central Bank were going to turn up the volume. Jürgen Stark, executive board member, has just given a characteristically cautious speech in Washington. Much of it was about the threat of global imbalances to the recovery (which appears to be the ECB’s theme of the day). But Mr Stark also saw worrying implications for inflation. Whereas the ECB, officially, still sees risks to the inflation outlook as “broadly balanced” (a phrase repeated in its monthly bulletin today), Mr Stark said they “seem to be tilted to the upside”.
He explained: “A multi speed recovery of the world economy, with some regions growing fast, while the recovery in others remains rather slow, has the potential to exert upward pressure on prices. In the same vein, we also need to monitor very closely the possible adverse impact from fiscal developments on the inflation outlook.”
The Chinese government has raised the deposit requirement to 50 per cent (from 40) on purchases of second homes, in an apparent bid to dampen enthusiasm for property speculation. First-time buyers will also need bigger deposits – a minimum of 30 per cent, up from 20 per cent – where the property covers more than 90 square metres.
In unusually blunt language, the ECB has made clear its fear that governments are not doing enough to put the global economy back on a sustainable growth path – despite international policy initiatives in the past year.
“At the current juncture, global imbalances continue to pose a key risk to global macroeconomic and financial stability . . . The stakes are high to prevent a disorderly adjustment in the future that would be costly to all economies,” it concludes in a special article in its monthly bulletin published on Thursday. Read more on ft.com.
Now that all the party manifestos are out, they make pretty rum reading. Those outside the UK might think that when you are running an 11 per cent-of-national-income budget deficit, this might dominate politics and the parties would be falling over themselves to tell the public how they planned to sort it out. Not a bit of it. Today’s FT shows the main parties are all at least £30bn short of describing the public spending cuts that will be needed in the first three years of government alone, just to meet the Treasury’s forecasts. And a longer piece goes into the detail of Britain, a country drenched by the deficit.
The trouble is, as an economist friend of mine told me yesterday, this is an equilibrium position. If one party conceals the truth from the electorate or thinks the others will, it makes sense for them all to follow. No one wants to be portrayed as offering misery and gloom if they win.
|About this blog||Blog guide|