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October

Sun 30 Oct 2016 / Europe

Carney, May and the sterling imbroglio

The imbroglio over suspicions the UK government is seeking to tamper with monetary policy has plenty of fresh potential to derail sterling. Theresa May, the British prime minister, made an error earlier this month by appearing to lecture Mark Carney, the Bank of England governor, at the Conservative party conference in Birmingham. This could be one of the reasons why, when Carney makes up his mind about his future at the UK central bank, he may decide to step down in 2018 after only five years.

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Fri 21 Oct 2016 / Africa

Slow return in Africa confidence

Africa for years has been the swing player in the world economy, with investors veering regularly between enthusiasm and disdain – widely differing sentiments illustrated by the notorious fluctuations in past years' cover stories of The Economist magazine. There are now signs, after a rollercoaster ride in which sub-Saharan economies’ GDP growth has fallen to just 2.5% this year (half the rate in 2013), that Africa may be past the worst.

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Wed 19 Oct 2016 / Europe

Nous regrettons le Brexit, but...

One of the sillier things written about Brexit is that Europeans want to ‘punish’ the UK or that there is any belief that, being rid of Britain, Europe can now fulfil its destiny of ever closer union and move towards a single unified entity. Nothing is further from the truth. Brexit accelerates the centrifugal forces already present in Europe. It gives a huge boost to the kind of protectionism apparent in the decision to veto the planned EU-Canada trade deal by the parliament of Wallonia, one of Belgium’s five regional legislatures.

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Tue 25 Oct 2016 / Europe

British PM's downward learning curve

Theresa May, the British prime minister, has been on a steep learning curve since being catapulted into office in July just three weeks after the British No vote to European Union membership. Over the last month the curve seems to be heading downwards. If she wants to get back to a positive territory, she will need better advisers. A clear indication has come from the weakness of the pound. There is one lesson from successive sterling crises over the past 100 years that governments ignore at their peril.

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Mon 24 Oct 2016 / North America

New chapter for US democratic system

On 8 November, voters in Maine will have the option to introduce a relatively new system to American politics: ranked choice voting. RCV has the potential to foster a more flexible national discourse and alleviate the extremism seeping into mainstream politics. Far from a novel concept, RCV is used in 24 cities across the US, including San Francisco and Minneapolis. Also known as ‘instant run-off voting’, it is used in Ireland and Australia, as well as in London’s mayoral election.

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Mon 3 Oct 2016 / Europe

Bad banking news for Angela Merkel

Deutsche Bank's fall from grace has brought it to one of its lowest points since its establishment in 1870. Deutsche’s share price has gyrated in recent days as investors digest the impact of a fragile capital base and a heavy impending fine from the US justice department over mortgage securities mis-selling. The affair, posing a possible dilemma for Chancellor Angela Merkel if the government is forced to consider some form of formally outlawed state aid, has strong implications for pan-European policies on banking and economics.

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Thu 6 Oct 2016 / Europe

On the road to a sterling crisis

The UK has been no stranger to wrenching sterling crises in the post-war period. Indeed, it experienced such turmoil in 1967, 1976, and 1992. This makes it all the more difficult to understand current complacency in British academic and policy-making circles surrounding the likely fallout from a ‘hard’ Brexit – particularly at a time when the UK is suffering from acute external vulnerabilities that are heightening the prospects of yet another sterling crisis.

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Mon 31 Oct 2016 / Europe

Making haste on Brexit

Four months after the UK referendum we know one thing. The Brexiteers had no idea how to exit the European Union. What is more, having said ‘Brexit means Brexit’, Prime Minister Theresa May has also indicated that no one in David Cameron’s cabinet made the slightest preparation for the contingent possibility that the Leave vote might win. The government must firmly entrench the objective of invoking Article 50 before the end of March 2017. The government must create clarity, too, about the destination.

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Wed 12 Oct 2016 / Europe

Steering a path away from Europe

As state secretary in Denmark’s foreign ministry in 1989-97, I observed first-hand how the Danish government responded in 1992 when a small majority of Danes rejected the Maastricht treaty on European union. I believe Denmark's experience has important lessons for Theresa May's government as it attempts to negotiate the UK's path through Brexit. If forced to choose, core EU countries will opt to maintain treaty provisions they view as vital to their future, even if the result is Britain leaving the EU without agreement on most issues.

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Mon 3 Oct 2016

Dead end for central banks

Current central bank policy is rapidly resembling a dead end. It is not working, it is not stable, and it is not sustainable. Their balance sheets are bloated, their position in financial markets uncomfortable. Negative interest rate policies are causing mounting damage to banks, pension funds, insurance companies, and the workings of capitalism itself. Not a single person in all of finance believes that a situation in which large swathes of government bonds have negative yields is either sensible or healthy.

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