EcoWeek

- Overview: "A G20 to cover up disagreements?"
- Japan-Q1 2010 Flow of Funds Accounts point to surge in private savings: "Strong overseas demand and very accommodative policies resulted in a widening of the financial deficit of both the rest of the world and the government to 3.2% and 6.1% of GDP, respectively, in Q1 2010. By contrast the surplus of the private sector widened to 9.3% of GDP. In the coming quarters, the government’s financial balance is expected to improve gradually due to higher tax receipts, while the financial surplus of the private sector might decline modestly. Recently, Prime Minister Naoto Kan unveiled a fiscal strategy to reduce government debt. The plan aims to take the primary balance in positive territory again by 2020.
- United Kingdom-Austerity: The new Chancellor presented his first budget on Tuesday, 22 June. He predicted that the budget would return to balance in five years. This target is expected to be achieved thanks to major cuts in spending, with tax increases making only a modest contribution to the fiscal consolidation effort. On the revenue side, the totemic measures include raising VAT from 17.5% to 20% and levying a tax on banks; on the spending side, public sector wages are to be frozen and there will be a 25% real-terms cut in current spending by ministries. However, the Chancellor seems to be minimising the effect of the austerity plan on domestic demand, and in particular on household consumption. The success of the British public finance consolidation plan is largely dependent on returning to sustained growth from 2011.
BNPParibas_EcoWeek_20100625