The collapse in January of Carillion PLC, the UK’s second largest construction and outsourcing company has attracted considerable media coverage. Carillion was principally engaged in public sector contracts to build (and in some cases operate) hospitals, prisons, roads, and part of the new (...)
Deal protection measures aim to limit the costs of negotiation in mergers and acquisitions. By voluntarily stipulating a certain breakup fee in the event a higher bidder arises, the target company will only violate the contract in the event the higher bid is above the deal value plus the (...)
The Chancellor of the Exchequer, Phillip Hammond, presented his Autumn Budget to Parliament on 22 November 2017. Compared to what happened in Spring 2017, this time the Chancellor described a rather uncontroversial nor surprising set of measures. What has instead inspired a national debate is (...)
The European Commission has made a commitment to evidence-based policy making when designing regulations to improve Europe’s environmental conditions. The stated objective is that “Commission initiatives and proposals for EU legislation are prepared on the basis of transparent, comprehensive and (...)
The size of the digital economy The digital economy represents a relevant quota of global wealth. According to Accenture, it counted for 22.5% of worldwide GDP in 2015, with a forecast of 25% by 2020. Facebook totals 2 billion users, while WhatsApp and YouTube more than 1 billion. Similarly, (...)
Of all the economic implications the European Union has on the world market, few policies have been debated and criticised more than the EU’s Common Agricultural Policy (CAP). Through this policy, farmers within the EU receive €45 billion in subsidies each year, with the intention of keeping (...)
WP 2017-05. Executive summary.
Discussions on the optimal level of government intervention in the economy have become very intense in recent years, especially following the 2008 financial and economic crisis. The hardships produced by this temporal economic downturn have led to some very (...)
The two major Parties in UK have recently concluded their annual conferences.
After the positive performance in the last election, the Labour Party appears to have found internal cohesion and a credible leader in Jeremy Corbin. In line with their manifesto, the conference offered a clear, and (...)
Although there never seemed much doubt that Mrs. Merkel would be elected for a fourth term as Chancellor of Germany on September 23rd, it is not clear whether she will be strong enough to help the EU authorities push through banking union before any pro-nationalist political parties gain real (...)
WP 2017-04. Executive summary.
In many countries around the world, lottery services are provided by government-owned firms that are equipped with (regional) monopoly privileges. The official argument for lottery monopolies by state-owned firms as, for instance, in Germany regularly point to (...)
In April, the European establishment and business communities welcomed the election of Emmanuel Macron as President of the French Republic. The election was interpreted as a positive sign for the future of an integrated and liberal EU. Indeed, in his electoral campaign the (...)
In many markets, there is a common phenomenon that, for a given change in costs, prices tend to rise more quickly when costs increase than they fall when costs decrease. As evident in some recent price rises in the UK energy market, this "rockets and feathers" pricing pattern is often claimed (...)
Competitive pressure is changing the landscape of air travel and traditional national airlines need to adapt to the new environment. The situation is particularly complex and uncertain in Europe due to the Brexit talks. However, if the outcome of the negotiations will be a truly liberalized (...)
Robots will significantly alter the working life over the coming decades and will take over many tasks which are currently performed by humans, for example in care and nursing, in the logistics sector or in legal counselling. Undoubtedly, humankind benefits if robots take over other tedious (...)
Kevin Dowd is professor of finance and economics at Durham University. Kevin has written extensively on the history and theory of free banking, central banking, financial regulation, and monetary systems.
The Adam Smith Institute have recently published my report “Killing the Cash Cow: Why (...)
Greece’s government debt keeps Europe busy for almost 7 years now. The government debt ratio adds up to almost 180% of the GDP. According to Transparency International, Greece is ranked 69th globally for corruption – a serious obstacle. Also, Greece is the most regulated country in Europe. (...)
In February 2017, the Italian government defused a heated confrontation with the representatives of licensed taxi drivers. They were asking for protection against forms of allegedly unfair competition, such as the platform Uber. The solution has been found when the government promised to put (...)
Governments around the globe are trying to limit the use of cash by their citizens. Most European countries already implemented upper limits for the amount of cash that can be used for payments. The German government is currently considering prohibiting citizens from paying bills of more than (...)
WP 2017-01. Executive Summary
Since the financial crisis, government debt ratios have increased in many countries. Most studies indicate that there is a negative association between high medium- and long-term debt ratios and growth, although the exact magnitude of the relationship is being (...)
Has the European Court of Justice interrupted a honeymoon between Gazprom and the EU?
The energy giant Gazprom has been investigated by the EU Commission over an alleged abuse of dominant position and anticompetitive practices. At the end of 2016, Gazprom submitted a proposal with changes to (...)
The creation of a European Digital Single Market is moving forward, but the risk of regulatory capture is significant and it is undermining the success of the project.
The reduction of roaming costs Consistent with the EU strategy of creating a Digital Single Market, the abolition of roaming (...)
The Italian Prime Minister, Matteo Renzi, has recently announced the intention of the government to invest 13 billion euros to help modernizing Italian manufacturing. Leaving aside reasonable doubts regarding how the government will manage to raise these funds, it appears evident that Mr Renzi (...)
The EU Commission’s investigation
After a three-year investigation, on the 30th of August 2016 the European Commission has concluded that Ireland should recover up to €13bn (£11bn) from Apple. The Commissioner, Margrethe Vestager, said that Ireland allowed Apple to pay substantially less than (...)
Commercial property sector in UK after the Brexit referendum The UK’s choice to leave the EU triggered great instability on the financial markets resulting in currency value shocks and asset volatility while both businesses and consumers’ confidence fell sharply. Commercial property has been amid (...)
In May 2016, the Ministry for Universities and Science of the UK Government published the white paper “Success as a knowledge-economy”. The explicit intention of the document is to indicate a path of reform for higher education in the country. The proposal argues in favour of a series of (...)
On the 5th of July, just a few days after the UK expressed its intention to regain trade negotiation autonomy with the Brexit referendum, the EU has found itself in a pivotal position. It had to take an important decision regarding the nature of the Comprehensive Economic and (...)
Something is rotten in Italy, namely Italian bank loans amounting to € 360 billion. For around one out of five loans payback is doubtful. Such an imbalance in the Italian banking sector is a reminder of the financial crisis in 2008. In response to the crisis the European Single Resolution (...)
Some figures on the sharing economy
The sharing economy is a market system that requires peer-to-peer-based sharing of access to goods and services. The sharing is possible thanks to the use of digital platforms that allow peer-to peer transactions. The phenomenon (gross revenues were (...)
On Monday the 6th of June 2016 an IREF workshop in cooperation with St. Mary’s University took place in London. International academic presenters gave talks on their recent research articles, providing stimulating and interesting insights on issues that are at the centre of the IREF proposals. (...)
The BBC Charter
The British Broadcasting Corporation, BBC, is the oldest and largest broadcasting corporation in the world. It is funded (partially) by annual licence fees charged to all households possessing any type of equipment to receive TV broadcasts. BBC shows, documentaries and TV (...)
In less than a month, UK voters will be asked to express their intention to leave the EU in a referendum. The UK Prime Minister David Cameroon has strongly argued in favour of staying. However there is disagreement among Conservative MPs, and a few Ministers of his Government have spoken in (...)
2016 is going to be a crucial year for Royal Mail, RM, the 500 year old British postal operator whose privatization process (started in October 2013) was finally completed in October 2015. In a broad sense, it is a decisive time for the entire sector of delivery services in Great Britain. The (...)
Addictive Manufacturing (AM) is the name adopted in industries whose production is defined by the use of large scale 3D printing techniques. 3D printing is a technology which builds three-dimensional objects from a digital prototype. Today AM represents the foremost level of digitalisation in (...)
The Nobel-Laureate Douglass North passed away at the end of November. Though he didn’t specialise in fiscal questions, his analysis of institutions in early modern Europe reveals that actual fiscal choices about how to finance an army help to determine the fortunes and falls of European powers. (...)
A successful integration of asylum migrants arriving in Europe will largely depend on their success on the European labour arket. In a new Policy Paper we investigate the labour market barriers faced by asylum migrants in Germany, France and the UK. We recommend a full elimination of barriers (...)
In an alarming trend, individuals, companies and institutions that have committed no crime are increasingly finding themselves subject to public witch-hunts on ill-defined ‘ethics’ charges. The practice is gaining traction in several countries, though it remains unclear who has the authority to (...)
An essential component of a free society is independent press. It plays a central role in preventing both state actors and private interest groups from pursuing their own interests through state power too aggressively. Journalists independent from political and economic power work effectively (...)
Each employed Slovak worker will pay about a week’s take-home pay in extra taxes so that their government can bribe Jaguar into creating a few jobs located in Slovakia (for a while). We present lessons this teaches us, one for each day of such (...)
Economists are often accused (especially by other disciplines) of exaggerating the virtues of the market and of systematically downplaying the chances of a successful government intervention. In this view, economists are "market believers" and “state sceptics”, which is then reflected not only in (...)
Earlier this week, Russian borrowers with Euro or Dollar mortgages called upon Putin to relieve them of their now increased interest payments. Banks should bear the costs, whilst the borrowers bore the benefits until now. We show that this bailout is just a repeated story of bank and government (...)
According to several reports, EU Commission President Jean-Claude Juncker is planning to introduce a 300 billion-euro investment package this Wednesday (November 26th). The idea is to establish a European fund that will assume liability risks on behalf of private investors. Only profitable (...)
The new Nobel Memorial Laureate is one of prime architects of modern regulation of markets. To many that will make him a social engineer. However, as modern EU governments’ budgets are increasingly suffering from similar problems of failed previous regulation and self-regulation, his voice (...)
A famous economist, author of even more famous economics textbooks, is calling for an end to corporate taxation. Not because he has been bought by the corporate world and multinational companies, but because it makes economic sense. Perhaps most surprisingly – it should make sense even to (...)
After many Occidental countries imposed sanctions on some Russian businesses, Russia has retaliated by restrictions on some Occidental ones. Trade wars rarely work. However, a new fiscal phenomenon has appeared: affected EU companies seek compensation from the state for loss of markets. Should (...)
Confidence in the ECB wobbles as commentators on all sides question the effectiveness of supposedly growth stimulating new policies.
Markets and Investment
At least two big takeover deals are being negotiated in Europe now, both with heavy government involvement. The strategies (...)
The concept of Living wage is gaining popularity throughout the EU. The social pressure of its advocates probably stands behind the recent proposals to increase substantial minimum wages. Closer scrutiny of the proposed levels of living wages by the IREF reveals, however, that the relationship (...)
If the Yes campaign wins today, Switzerland will have by far the biggest minimum wage on this planet. We analyse this trend in a wider context of contemporary European popular movements. We suggest that the Swiss Minimum wage proposition has actually very little to do with the traditional (...)
Three fundamental questions have emerged, but clear answers still have not:
Free floating for the hryvnia?
New bureaucrats in Brussels?
New rules for high-frequency trading?
The latest Scorsese blockbuster is still making the headlines for its novel artistic work with timelines. Does the Wolf, however, have anything whatsoever to say about Wall Street? Very little, and it may actually work to strengthen and entrench any bad practices that remain in the financial (...)
In his new book Capital in the 21st century (Belknap Press, April 2014), French economist Thomas Piketty presents a mass of data on asset growth in several European countries and the United States. This information improves the knowledge of our society’s relationship to capital and the divide (...)
European growth stutters along as fear of deflation exerts pressure on the ECB to loosen monetary policy further.
It is not forbidden to former socialist countries to reduce the weight of the state and drastically reduce taxes, especially on businesses. This was done in Sweden and Denmark, where unemployment is lower than in France .
Here is a relevant remarks from Professor Florin Aftalion: the word "profit" has disappeared from the public debate to be replaced by the word "margin". This semantic shift is not trivial: the profit goes to CEOs and shareholders while the margin is under Government (...)
A little more than 30 years ago, George Gilder published a book titled: “Wealth and Poverty”. This book became a worldwide bestseller. As a researcher, an economist and an investor, the author showed that government intervention cannot reduce poverty, but economic growth and economic development (...)
GDP in the EU area seems to be growing, but at a very slow pace. Although financial market remain sanguine, the real estate sector presents a mixed picture, with bad news coming from heavily indebted countries. While waiting for better news, the authorities are devoting their attention to the (...)
And in France, there is a high level of unemployment whereas it is low elsewhere. And elsewhere, there is no Labor Code, no unions, no judges, and everybody is satisfied with the freedom of work, as reported by IREF European (...)
This is the transaltion of an article published by Nicolas Lecaussin on August 14th, 2013
What is the common point between Socialists as Claude Bartolone, President of the French National Assembly, Pierre Moscovici, the Finance Minister, MP Jérôme Guedj, Conservatives as Xavier Bertrand, Health (...)
This little county on the shores of the Baltic Sea will become the 18th member of the Eurozone. That is well deserved since Latvia meets all of the Maastricht criteria. Its public debt amount to 40% of its GDP compare to 70% in Germany and 90% in the Eurozone. The maximum public debt rate (...)
Fortune has ranked the 50 most admired companies worldwide. Of course, Apple, Google, Amazon and Coca Cola are above all others. Among non-US companies can be found two German companies (BMW and Volkswagen), one Swiss (Nestlé), one from South Korea (Samsung) and one Irish (Accenture). But none (...)
The French Government supporting private companies thanks a system of financial assistance: what an economic heresy! Yet, over the last thirty years, it has become the creed for French Governments, whether conservative of leftist. Four figures are to be pointed (...)
Why would you stay in a country where there are more than 200 types of taxes? And in which taxes are piled up and never removed. If French President François Hollande and his government want to fight against tax havens, French taxpayers and entrepreneurs are battling against the daily tax hell (...)
Since events related to financial, banking, and debt crises regularly make it into the news, a term that seemingly originated from the Bank for International Settlements (BIS) in the late 1970s has become more popular: macroprudential supervision. Whereas microprudential supervision relates to (...)
In a recent post, Nicolas Lecaussin is pointing out that tax consequences can be studied as in a lab: some American States can be observed. Taxes were lowered in thirty States. If they gather only 20% of the US population, they have created 65% of US (...)
Germany and Finance Minister Wolfgand Schäuble do not press for setting up a banking union and rejects a centralized authority whereas France and Finance Minister Pierre Moscovici are urging to set up the banking union through centralization. The latter position is also the Commission’s. The (...)
Big Governments usually do not trust people or companies to improve living conditions. That is why notions of “social justice”, “solidarity”, “equality” and above all “sharing” were hijacked by Governments and turned into an economic principle: redistribution. Since it is believed the Government is the (...)
Knowledge has now become a capital investment and no longer a cost of producing goods. This change has been announced by Brent Moulton, head of national accounts at the Bureau of Economic Analysis (BEA), on April 22nd, 2013. This will change the way gross domestic products are calculated. It (...)
The new IREF paper of Stefan Lutz, from the University of Manchester, UK, and the Universidad Complutense de Madrid, Spain, points out that if it is apparent that companies do not welcome taxation, the main reason is that taxes reduce profits: shareholders are disappointed and the prospects for (...)
France is the best example of this economic truth. The French public sector is undermining the economy. It must be pointed out that in Spain and Ireland the crisis was due to a real-estate bubble. In France, the crisis is worsened by an obese bureaucracy. The trend is striking: the French (...)
Here is a new and big campaign against tax havens. But tax exile will last as long as confiscatory and arbitrary taxes will last. It is the case in France. Should not a tax amnesty be proposed? The IREF is making the proposal that all sorting out that has begun this year should reach an (...)
Bumpy springtime for the ECB: no recovery, another major blunder and more regulation. Times ahead are becoming increasingly hard as more EU countries are in trouble, new regulations are being introduced and banking and sovereign borrowing are (...)
“She did not just lead our country; she saved our country” said British Conservative Prime Minister David Cameron as a tribute Margaret Thatcher who died at 87, on April 8th, 2013. Tony Blair, former British Labor Prime Minister, declared: “Very few leaders get to change not only the political (...)
WP2013-01. Executive Summary
This working paper explores the notion of personal responsibility by considering people’s attitude towards redistribution. In particular, the authors run a controlled experiment by offering a representative group of people the possibility of choosing a proportional (...)
This is an unexpected outcome of the Cypriot “bail out – bail in”. The fact that the Cypriot Government is now able to control money transfers and cash withdrawals is a threat for the European market. Can it still be called a free market if restrictions are applied on the ability to move money? (...)
The Cypriot crisis has enthroned Germany has the leading European country. European economics are likely to be German driven from now on. Thus, fiscal profligacy or faulty business models are considered to have caused the recent crisis and the German cure to this is clear: austerity and (...)
6 lines against 20! In Germany, the gross salary is taxed by only few contributions (tax on salaries, solidarity, pension fee, Church). It was understood that flexibility is much more efficient with a fiscal and regulatory simplification.
In France, it is the exact opposite. The French pay (...)
This 3rd newsletter, written by Kevin Dowd and Gordon Kerr with Enrico Colombatto, is pointing out the auterity consensus tested as the Irish liquidation of Irish Bank Resolution Company, anayzing also further Collapses, Poor Results and Regulatory Arbitrage in (...)
Gilles Hennesy, an LVMH director who is executive vice-president of commercial at Moët Hennesy, and Christophe Navarre, chief executive of Moët Hennesy, are both moving to London. Bernard Charlès, chief executive of Dassault Systèmes, declared that some Dassault’s top managers already from France to (...)
The European Union is about to bail out Cyprus but no details on how it could be done are released yet. Joerg Asmussen, ECB board member, announced that “the troika of European Union, International Monetary Fund and the European Central Bank would send a mission of experts to Cyprus on Tuesday (...)
The “Personal Professional Training Account” is one of the most interesting measures taken in the reform of the professional training sector announced by President François Hollande on March 4th in Blois, France. It is the first time that the “voucher principle” would be applied for the use of (...)
Are there as many foreign investments in France as Arnaud Montebourg claimed in his letter to Maurice Taylor? In his article, Lucas Léger, IREF researcher, analyzed statistical data and concluded that Montebourg was wrong. The truth is that, compared to the United Kingdom and Germany, France is (...)