Temporary slowdown

The 3% of GDP limit: how accurate?

Being far from the 3% of GDP deficit target doesn’t prevent France from borrowing at low cost.But increases the debt ratio

Temporary slowdown

Activity remains very volatile. After dropping in the first quarter, markedly rebounding in the second, GDP growth is set once more to slow down in the third quarter. The main source of weakness is private consumption, as income stalled, taxes went up and Americans still are willing to repair their balance sheet. The recent weakness seems temporary, but since it happens at the beginning of the quarter, it will result in a limited growth rate. For 2014 as a whole, it looks now rather impossible to match the 2013 performance.

Back to work on fiscal policy

A very fragile economic outlook has rekindled debate over the need for fiscal stimulus in the Eurozone. The President of the ECB, Mario Draghi, argued for a more accommodative policy mix as well as greater coordination of national policies. On the whole, fiscal policies are likely to remain moderately restrictive next year. Countries will apparently take advantage of the existing margins of flexibility. The launch of a European investment programme is welcome news, but definitely not a game-changer.

A “No” vote is better than a Disunited Kingdom

In a referendum on 18 September 2014, the Scots will declare their position on independence, or their continued membership of the United Kingdom. Unionists and nationalists are neck and neck in the polls. Although we expect the no side to win, the scenario of a vote for independence has become sufficiently credible for us to explore its consequences. Apart from the choice of currency, other questions include the division of closely intertwined debts and assets, Scotland’s future position within Europe, or even the eurozone, and the sharing of oil revenues.