Blair and Boris – who would have thought it?

At last, a glimpse of bipartisan analysis in the chaos engulfing Boris Johnson’s premiership.

Say what you like about Tony Blair, but he is a serious politician.  What he says is worth taking seriously.  

It is also not great for Boris.  And worse for everyone else.

Continue reading “Blair and Boris – who would have thought it?”

Which is bigger: the risk to China’s property market; or to the CCP’s reputation?

China’s central bank turned on the monetary taps, after property company Evergrande (dubbed the world’s most indebted developer) announced further difficulties in meeting its obligations.  The beleaguered company’s share price and credit rating plumbed new depths.

The company also informed the world that state representatives had taken a majority of seats on a new risk management committee.

Continue reading “Which is bigger: the risk to China’s property market; or to the CCP’s reputation?”

While Robertson warbles about a robust economy, critics sound a sour note by measuring the debt

Finance Minister  Grant  Robertson  is  still  singing  heartily from the  same  songbook, as he has  done  through   most  of  the  pandemic:  the  economy  has  remained  resilient,  the  government  is  working  closely  with  business,   we  are  well placed for  recovery, the  Crown accounts show  revenue  above   budget  forecasts, the economy’s  performance  has  exceeded the  expectations of  most  economists.

Pause   for  a  roll  of drums….

Robertson has  been careful  to  throw  in  a  caveat , as  he  did  after  singing this  particular  hymn  in   the  House:

“ The recovery is uneven for some sectors and regions, while the pandemic continues to disrupt global supply chains, which is affecting the New Zealand economy”.  

 But, again, the  Ardern   government   is  on  the  job:

“Key government actions to reduce the impact of the supply chain disruption is being led by the Ministry of Transport with an inter-agency forum, where we are working with both importers and exporters. But there is no quick fix to these global issues”.

 And  then  the  final   stanza:

“The government will continue to take a balanced approach and invest in supporting the recovery and meeting other challenges while carefully managing our resources”. Continue reading “While Robertson warbles about a robust economy, critics sound a sour note by measuring the debt”

Two perspectives on the NZ economy – the business outlook (grim) and Robertson’s emphasis on resilience (ebullient)

Listen  to  economists, and  you  will hear  that New Zealand is ploughing through rough  waters. Inflation expectations  are soaring, business  confidence   is  falling, investment intentions   are  down.

In fact, the  ANZ  Business  Outlook data  for  November record declines in all forward-looking activity indicators except employment intentions.  A net 9% of firms expect lower profits ahead.

This is likely related to extreme cost pressures, with a net 89 % of  firms   reporting   higher  costs.

If you want an antidote to this pessimism, listen  to  Finance Minister  Grant  Robertson in Parliament – the  story he tells is very  different.

Answering  a  “patsy” from Mana  MP Barbara Edmonds,  Robertson  celebrated the  resilience of  the  NZ  economy  which – he  said – had been demonstrated by last week’s Statistics New Zealand job figures for the September 2021 quarter.

The data showed the unemployment rate fell from 4%  in June to a record-equalling low of 3.4% in the September quarter, last recorded in December 2007.

Whoopee. Continue reading “Two perspectives on the NZ economy – the business outlook (grim) and Robertson’s emphasis on resilience (ebullient)”

How can NZ get the most from immigrants? Teach them te reo and bring the Treaty into policy considerations, report says

If  the government believed   it   would  gain  some profound insights   into immigration  policy  when  it  sought  a  report from  the  Productivity  Commission,  it  may  have  to look  elsewhere.

ACT leader David  Seymour  was one  of  the  first  out of the  blocks  to  give the  report  (and  the  government)  a  whack, saying   the Productivity Commission’s latest report confirms Labour isn’t seriously committed to growing productivity.

The commission has proposed that migrants should learn te reo to gain

“… insights into te ao Māori and tangata whenua […] promote better understanding of New Zealand’s bicultural nature [and] acknowledge the status of te reo as an official language and taonga.”

Seymour said this is a nice-sounding idea, but the purpose of the commission is to lift productivity, not to improve race relations. Continue reading “How can NZ get the most from immigrants? Teach them te reo and bring the Treaty into policy considerations, report says”

The IMF is still optimistic.  Someone needs to be

Britain’s latest irritation is a shortage of drivers.  What could it be: foreign truckers repatriating to Bulgaria post-Brexit; a shortage of motorway lavatories?  

The Daily Telegraph thinks it might also have something to do with the backlog of 56,144 licence applications that built up during Covid.

Which persists because staff at the licensing agency don’t want to go to the office.  And management can’t let them handle personal data at home.  An upsurge of strikes certainly isn’t helping either.

Not everyone responded with due gravity.  When the government issued a friendly reminder to existing licence holders, one German-qualified holder let it be known: 

I’m sure pay and conditions for HGV drivers have improved, but ultimately I have decided to carry on in my role at an investment bank”

Welcome to the post-Covid world.  Not just in Britain – supply disruption, rising inflation and interest rates creaking upwards are global phenomena.

The IMF has issued a double adverb warning for central banks to be “very, very vigilant” over inflation risks.

The job of markets is to adjust.  This is how economic growth happens.  

And after a global disruption of supply and demand on the scale of the 1970s oil price shocks, or the exit from controls after the second world war, it looks like there is lots of adjustment to be done.  

Which is perhaps one reason the IMF is a little less optimistic in its latest World Economic Outlook:

“The global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022, 0.1 percentage point lower for 2021 than in the July forecast.”

It says:

“The downward revision for 2021 reflects a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics.”

And:

“The fault lines opened up by COVID-19 are looking more persistent—near-term divergences are expected to leave lasting imprints on medium-term performance.”

No wonder it feels:

“Policy choices have become more difficult, with limited room to maneuver.” 

Which is worth some reflection.

Politicians everywhere might feel that their policy choices have always been more difficult, particularly after the global financial crisis.  But for the last ten years, they have had the benefits of low interest rates, rising house prices and easy debt increases.

Now they are reliant on the workers and businesses in the private sector to deliver the necessary productivity growth, while also absorbing the costs of more regulation (that’s you climate change) and higher taxes.

While keeping the workers (when they are working) at Britain’s licensing agency happy.

The IMF is optimistic. Policy choices may be getting more difficult yet.

Perhaps most difficult in those countries where government policy has so far been most successful in cushioning voters against change.

Lift in commodity prices gives boost to the economy – here’s hoping we can keep on shipping our goods to market

New Zealand’s Covid-battered  economy  is  once  more sustained   by  its  primary  industries, as  international tourism languishes  and  earnings  from  its  international education arm are  all  but  invisible.

Despite  high  charges    for   shipping,     an  exchange   rate stronger  than   exporters  would  like   and  (some  would  say)  a  government   which  does  little  to  encourage  farmers, output  from the  rural  regions   is   again pumping  the  lifeblood   into   an  economy  which might otherwise be  gasping for air.

News  from  the  ANZ  this  week indicated  its  World Commodity Price Index lifted 1.5% in September, partially unwinding the previous month’s fall. The lamb sub-index is now at a record level, driven by stronger prices for all cuts.

ANZ Agri Economist Susan Kilsby reported dairy and forestry both regained some ground and aluminium and meat prices  were strong. Continue reading “Lift in commodity prices gives boost to the economy – here’s hoping we can keep on shipping our goods to market”

Boris keeps on gambling

Boris Johnson has done a great service for politicians everywhere by testing the political waters for tax increases.  He and his Chancellor of the Exchequer, Rishi Sunak, are ratcheting up Britain’s taxes to pay for care homes.  And Covid of course.  Pretty much everything it seems.

The new tax is not really that new: a levy on labour incomes (i.e., salaries, wages and self-employment) of 2.5 percentage points, with an increase in dividend taxes of half that. Boris – with flagrant disregard for Econ 101 – claims that business will share this burden. Sorry Boris and Rishi – labour taxes fall on labour.

Meanwhile, the Financial Times gloomily opines that the move will raise the UK’s tax burden to the highest level since 1950 – about the time when Boris’s hero, Winston Churchill, was heading for a second term as PM.

Boris has a reputation for being better on the strategic than the tactical decisions.  So, will the tax increase work?

Continue reading “Boris keeps on gambling”

NZ economy must remain nimble and agile, says Robertson – but then NZ went into lockdown and a hobble was applied

It   seems   an aeon  ago,  but it  was  only  last  week that  New Zealand’s wellbeing-focused government was  contemplating   how  to connect the country safely   with the rest  of the  world.   Now, achingly,  the  question is how  long the  lockdown  will last.

Whereas  last  week   the  headlines (like   this one from Newsroom) chorused “Covid success  weighs on Ardern’s  shoulders”, feelings among the  team  of  5 million might now be  deepening over why  such  a  relatively  small percentage  of  the population  is   fully  vaccinated. 

Or  why  the  elderly, in particular, are  not  queueing  for  booster  shots.

NZ,   by  some counts, has  had the slowest  vaccination rollout in the developed world.

The  PM’s  insistence that her government’s Covid response and recovery path has been dictated by the “best evidence we have about how to protect people’s lives and livelihoods’’  accordingly rings  a  bit  hollow. Continue reading “NZ economy must remain nimble and agile, says Robertson – but then NZ went into lockdown and a hobble was applied”

Robertson relishes the patsy questions – when the Opposition quiz him, he is not quite so ebullient

Finance   Minister  Grant  Robertson  can’t  resist  seeing  the  sunny side of  the  economy.  When Parliament  resumed  this  week, he  was   first  up  at  question  time  to  tell  New Zealanders that –  thanks to a strong  export  performance – the economic  recovery  is  going  well.

But  Robertson  didn’t  sound  quite   so  ebullient  when later  he  faced  some  harder  questions  from the  Opposition   benches.

Clearly  the party’s  internal  polling  has  shown rising  dissatisfaction on issues  outside  the Covid  realm, a trend reflected in  polls  like  those  of  Newshub  Reid Research,  which indicated  support  for  Labour had  fallen  nearly  10 points  from  the previous  sampling.

Even  inside Labour there  have  been  rumblings, as  indicated  by its elder  statesman Sir Michael  Cullen contending  the  $15bn  Auckland light  rail  project could be a disastrous waste of taxpayer  money.  And it has been  followed by suggestions the  government itself  is  backpedalling  on the proposed  $700m  Auckland bridge for  cyclists  and  walkers. Continue reading “Robertson relishes the patsy questions – when the Opposition quiz him, he is not quite so ebullient”