In 2009, 31.3% of the French GDP has been spent on welfare payments. Those include spending by the State-managed health care system, unemployment benefits and social benefits. The government agency in charge of those payments has tripled its deficits during the past 3 years reaching a record 28 billion € in 2010. The annual amount of welfare payments reached 597,5 billion € in 2009, which is largely superior to the whole amount of the Greek debt (€328 billion).
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This article first appeared in the Wall Street Journal
Markets always make good scapegoats. When they do well, they are populated by profiteers. When they do badly, they are accused of causing trouble for everyone else.The denizens of the Dow, Nasdaq, CAC and DAX floors may be speculators and myopics. Yet it’s hard to find even the most reckless private participant who behaves as though his credit is limitless.
The world is probably going to change after the recent downgrading by Standard&Poor’s of the US debt rating from triple A to AA+. Beyond the disturbing loss of the landmark Treasuries represented for global finance, what is important here is the awareness that even the biggest world economy is not allowed anymore to do just anything with public spending. The message is clear. The current crisis is actually giving the opportunity to put the political genie back in the bottle. It is now time to grasp this chance, but will political decision makers have the will to do it?
After a huge transfer-loan of €110 billion last year, Greece is once again pending on EU-IMF charity in order to avoid default, or at least, to benefit from a smooth default (assuming such a thing exists). Meanwhile, the Greek economy is paralyzed and tensions grow inside Greece as well as in other EU member states.
Portugal has undergone a huge change. There is a completely new political leadership: younger, better prepared, and much more open to the civil society. But even this “right wing” government lack the theory to understand the causes of the crisis Portugal currently faces, and thus seem unable to deliver real change.
After being seriously blamed by Italian Minister of finances Giulio Tremont last month, Switzerland finally finds itself largely approved on its private savings policy in the recently revealed by the EU Commission report on enforcement of taxation on savings regulation. As a matter of fact, France is the only EU country to accuse Swiss banks to implement mechanisms allowing some of the savings on Swiss bank accounts to avoid taxation in accordance with the agreement signed with the EU in 2004. The conflict opposing Switzerland and the EU on savings taxation lasts from several years now. Here is a brief history of the issue by Pierre Bessard, IREF fellow.
Moody’s rating agency warned on Friday on Italy’s public debt and mentioned the reviewing of Italy’s credit rating for a possible downgrade. This change, if it happens, would increase the government’s borrowing costs and have a very negative impact on public finances.
Portugal is the third EU country after Greece and Ireland to need financial bail-out in order to avoid bankruptcy of the State. How did things go so wrong and for what reason – is it only the fault of the international financial crisis, or – more probably – bad management of public finances from the Potuguese government? Ricardo Campelo de Magalhães answers those questions in the light of a detailed analysis of Portuguese fiscal policy.
In January 2010, the largest tax reform in Denmark in more than ten years began taking effect, shifting some DKK 30 billion (€ 4.0 billion) of tax revenue when fully implemented in 2019. Of this, more than DKK 25 billion (€ 3.4 billion) is used to lower the marginal tax on income in order to encourage work and investment. In 2010 the top marginal tax rate was lowered from 63 percent to 56.1 percent – its lowest level in at least 40 years.
France’s government presents a project to introduce several modifications in the fiscal law; a project to be validated by the National Assembly before the symbolic date of July 14.