Category: Economy news

Luisa Liu

LONDON – Just yesterday it was launched 440 million new plastic -£5- notes, which are defined indestructible -even in the washing machine; they have already succeeded in the durability test on a trial run, due to their quality of a flexible thin plastic called polymer. Therefore these notes are resistant to dirt, durable and secure. In fact they mainly aim at preventing the -made in Italy- counterfeit pounds.

No country’s economy is truly independent. International factors are always at play, and trade ensures that states are often reliant on one another. This is particularly true for members of the Eurozone. With one currency uniting most member states, and the European Central Bank, Europe’s economies work as parts of a whole. If one part is sick, then so is every other part. Which is why an economic slowdown in Germany can hurt Italy – badly.

Germany has the biggest economy in Europe and accounts for the creation of a large proportion of European wealth. Germany has long been dragging the Eurozone ahead, even as the Italian, Spanish and Greek economies have struggled.

Without Germany’s help, the Eurozone would probably not have survived its recent debt crisis. And when European consumers are out of pocket, German shoppers fill the void.

A German economic meltdown could be disastrous for the rest of Europe. It would pull many other economies down with it.

Unfortunately, 2016 has not been a strong year for the leading economy.

Germany’s economic slowdown

Germany’s economic woes are closely linked to China’s slowdown. Germany relies on trade of important goods and technology. Machinery, cars, and high-tech energy equipment have been bringing in billions, filling the needs of emerging countries.

But the emerging markets have struggled lately. Middle Eastern countries usually kept afloat by oil money are no longer riding the waves. Russia, facing Western sanctions, is unable to buy expensive equipment.

Germany’s industrial production at the start of the year was at 0%, with customer confidence plummeting. France, one of Germany’s closest trading partners, is struggling economically. The German economy is being weighed down from all sides.

Italy’s debt crisis

Italy has still been unable to rebound from the sovereign debt crisis. This is in large part due to challenging economic conditions and a lack of fiscal stimulus measures, but there are also signs that aspects of the debt crisis remain intact, including nonperforming loans and high unemployment.

Stimulus from the European Central Bank increased optimism, but failed to have the impact hoped for. It is a particularly vulnerable time for Italy’s economy. Headline consumer inflation is currently printing at -0.30%, with falling prices a strong indication of weak demand. Unemployment is at 11.5%, which detracts heavily from GDP growth, as well as consumption.

The German effect

In this context, Germany’s economic slowdown is particularly harmful for Italy. The vulnerable Italian economy is relying on its usual helping hand to pull it forward until it can get back on its own feet. But Germany needs its own help.

Germany’s troubles have a chain reaction. The rest of the Eurozone panics in response with consumer confidence plummeting, leading to more problems for Germany. Already struggling economies confront further unfulfilled expectations, creating a heavier burden for Germany to carry.

It remains to be seen how Germany will recover from this slowdown. Italy’s economy will have to carry itself in the meantime, a feat that will not be straightforward.

 London – on Saturday 20 February at the University of Westminster, ABC ECONOMICS held its first Understanding Brexit conference.

Approximately 70 people attended the event, comprising working professionals, entrepreneurs, academics, students and members of MIE (Movimento Italiano in Europa) and the London European Club.

The event – moderated by Paola De Pascali – was also broadcasted live by LondonOneRadio, with an average of 100 people tuned in at all times.

The conference featured a number of keynote speakers.

Luigi Jacopo Borrello, an academic lecturer, outlined the reasons for a in-out referendum, analysing the political scenarios and how the EU-UK relationship is likely to change in case of Brexit.

Giulia Carnà, a contract lawyer, described the framework around Article 50 of the Lisbon Treaty, explaining the procedures the EU members need to adhere to in order to terminate their membership.

After the coffee break (courtesy of Luadan Future Trade), Stefano Francesco Fugazzi (founder of ABC Economics and author of the bestseller ‘Brexit?’) spoke on the impacts of immigration on occupational wages, presenting the conclusions of a recent Bank of England research paper. Mr Fugazzi observed that “if the UK were to leave the EU, the costs arising from EU regulations would not disappear at all as actually much would depend on what path Britain took outside the EU.

If the UK were to leave the EU to join the European Economic Area (the EEA), it is believed that approximately 93 per cent of the EU’s key regulations would continue to apply.”

Claudio Calogiuri (Solicitor, Partner of Mentor Legal LLP Solicitors) illustrated how immigration law and policies may change under a Brexit scenario. Additionally, Mr Calogiuri remarked on the role of EU nationals in supporting the UK economy.

Conference contents will be published by ABC Economics in due course.

ABOUT ABC ECONOMICS

ABC Economics has been cited on several occasions by the media, making a splash on the front pages of Il

Sole 24 Ore and Il Giornale, mentioned by Otto e Mezzo (a TV programme) and by a handful of Italian blogs,

in addition to Wikipedia and a number of US news portals e.g. Zero Hedge, TV channels and UK radio

stations. Additionally, some of our ABC Economics work was translated into and reported by French and

Russian news portals.

abceconomics.com

2015 ended with the Federal Reserve (Fed) raising rates for the first time in nearly a decade, a move which intended to signal the end of the so-called “zero lower  bound era”.

My belief is that the US rate hike came too early. True. The economy is expanding; however, inflation is still significantly below the 2% target. Additionally, the remaining US macroeconomic indicators have behaved quite erratically over the past year.

Maybe I am turning into a younger version Dr. Doom – American economist Nouriel Roubini – but I am not optimist at all for 2016.

If things turn nasty, then Fed Governor Janet Yellen may indeed be forced to roll back the rate increase just like former Ecb governor Trichet did in 2011 when he mistakenly thought that a hike would have sustained economic growth.

Here are three patterns to watch out for.

THE CHINESE ECONOMY CONTINUES TO SLOW DOWN. If China slows down, the US economy will slow down and play a knock-on impact on the World Economy. With the eurozone growth being already fragile, it would take very little to wipe out any (small) progress.

A BANKING CRISIS ERUPTS IN THE EUROZONE.

2016 could expose some weaknesses in the European banking sector as higher Basel III capital and liquidity requirements continue to be implemented. Watch-out for the Italian regional and cooperative banks. They are under pressure and could crack like German landesbanks did few years ago.

RUSSIA, MIDDLE EAST AND COMMODITIES. The third element to be wary of arises from geopolitical uncertainties. Brent oil, historically a geopolitical thermometer, and other energy commodities are currently (and many believe ‘artificially’) kept low.

Many countries that rely massively on natural resources could begin to struggle and implode if commodity prices do not return to mid-2014 levels. I am not a meteorologist. However I can see storm clouds gathering. Can’t you?

 [foto businessinsider.com – sputniknews.com ] 

Under the streets of London is hidden one of the bigger gold reserve of the world.
We are talking about the wealth of the English empire which amount at lots of billions. It is contained in the dungeon of the Bank of England, in a rich zone of London: Bank.

This gold is used as guarantee of the moneys in circulation, so the sum of the banknotes values corresponds to the gold value.
During the worst period of the English economy the queen Elizabeth II showed her people the wealth of the reign reassuring them about the situation.

There is also a museum behind the main office of the bank where there is a collection of all the banknotes that have been ever used in Britain included the “ one pound banknote ” existed till 1984. Thanks to this collection one can follow step by step the story of the National Bank of England.

There is also one of the several ingots that appertain at the British gold reserve and you can touch it: a piece of gold which weighs more than thirteen Kilos… but no, you can not stole it.

George Osborne, today delivered his first Budget from the new Conservative majority Government.

 8th July 2015Personal Allowance to be increased to £11,000 in April 2016

Chancellor, George Osborne has moved quicker than expected to increase the tax-free Personal Allowance from £10,600 in 2015-16 to £11,000 in April 2016.

Previous forecasts were that the allowance would be raised from the current £10,600 to just £10,800 but an additional £200 of tax free income has now been formally granted.

During his Summer Budget 2015, Mr Osborne reaffirmed his commitment to raising the tax-free Personal Allowance to £12,500 by the end of the Parliament, whilst also pledging to increase the allowance in line with inflation during the next five years.

The Chancellor labelled the move as “a down payment for a country on the up”.

“Our priority is not to raise taxes for working people but to cut them,” said Osborne.

“These were our priorities at the election and they are the priorities of this Budget. Rates of income tax in this Budget remain unchanged but the thresholds do not.”

Increases to the main rates of income tax have been ruled out by the Chancellor, but the higher rate tax threshold will rise from £42,385 in 2015-16 to £43,000 in 2016-17 and to £43,600 in 2017-18.

The move in itself could save £1,300 a year for workers earning between £50,000 and £100,000, according to reports.

8th July 2015Mortgage interest tax relief limited for buy-to-let landlords

Buy-to-let landlords will only be able to offset mortgage interest at the basic rate of tax by 2020, Chancellor, George Osborne has announced at today’s Summer Budget 2015.

At present, landlords pay income tax on the rent they recoup by declaring the amount they earn on a Self-Assessment tax return.

The tax is charged in line with their normal income tax banding – which stands at 20 per cent for basic-rate taxpayers, 40 per cent for higher rate taxpayers and 45 per cent for additional-rate payers.

The wealthiest landlords receive tax relief at 40 per cent and 45 per cent but the Chancellor’s rule change means tax relief will be capped at 20 per cent for all landlords.

Mr Osborne says the move has been made to create a “level playing field” between prospective landlords and those buying their homes to live in.

“Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot,” said Osborne.

“And the better off the landlords, the more tax relief they get.”

The Chancellor said this had contributed to the rapid growth in buy-to-let properties across the country, which reportedly accounted for 15 per cent of all mortgages taken out this year.

“So we will act – but we will act in a proportionate and gradual way, because I know that many hardworking people who’ve saved and invested in property depend on the rental income they get,” added Osborne.

Osborne also confirmed that from April 2016, the existing ‘wear and tear’ allowance will also be replaced. The allowance lets landlords reduce the tax they pay whether or not they replace furnishings in their property.

A new system will be implemented in its place to only allow tax relief for landlords when they actually replace furnishings.