While growth and recovery are back as buzzwords in European budgets for next year, rigor and austerity still remain hard at work in several countries.
Eurozone finance ministries had until Tuesday last week to send the European Commission in Brussels their draft budgets for next year and show that they respect the new rules known as the “Two Pack.”
One of the reforms in response to the eurozone debt crisis, is greatly increased policing of EU rules to contain public deficits to 3 percent of GDP.
The public deficit covers the budgets of governments, welfare programs and local authorities.
And for the first time, the European Commission can demand that a government change its budget if it appears lax or unrealistic.
The term “Two Pack” refers to this right to police budgets, and also to strengthened supervision of countries in trouble or at risk of being so.
They form part of a “Six Pack” of new measures which tighten penalties for all 28 EU members if they breach budget rules, and an obligation for 25 of them to balance budgets in the medium term.
The measures, together with a new framework to strengthen banks, caused great controversy because they imply dilution of sovereignty and re-ignited debate about the need for a common economic policy, and a so-called transfer union in which rich countries would automatically support the weaker.
However, despite the new EU budget powers, the governments have made a point of insisting that the commission had not dictated their choices, and they put the emphasis on supporting growth.
Germany, the eurozone’s biggest economy, came top of the class of 17, presenting a balanced budget, and raising the possibility of a small structural surplus at federal state level.
Italian Prime Minister Enrico Letta, whose government recently survived an abortive attempt to topple it, expressed satisfaction at meeting the deadline in time, albeit at the last minute.
Letta emphasized that his budget for next year was the first for some time which “does not begin with cuts by the scissors or new taxes to satisfy Brussels.”
Italy is to ease taxation on workers and employers by 27.3 billion euros (US$37.3 billion) over three years, and to finance investment.
Belgium has submitted a budget showing a deficit of 2.15 percent of GDP, owing to cuts in expenditure and extra tax on biofuels.
However, France will not cross the 3 percent line before 2015. The government has made much of its “sovereignty” and of going for “growth and jobs,” but has also stressed it will cut public expenditure by 15 billion euros.
However, for members rescued by the IMF and the EU, budget rigor is still the guiding factor.
Portugal, still struggling hard to meet rescue conditions, is to cut its public deficit by 3.9 billion euros.
However, the government has also set in motion a progressive reduction of corporate taxation, lowering the rate from 25 percent this year to 17 percent to 19 percent in 2016.
Ireland, with growth on the horizon, hopes to emerge from its rescue program next year. The government has outlined the seventh austerity budget in a row to reduce the deficit by a further 2.5 billion euros.
However, it is holding to its markedly low, and controversial, corporate tax rate of 12.5 percent.
Spanish Budget Minister Cristobal Montoro has painted the budget in the colors of “economic recovery.”
However, in reality, the country which has received eurozone help for its banks, is squeezing the budget harder to reduce the public deficit to 5.8 percent of GDP next year. Spending by ministries is being cut by 4.7 percent, and pensioners will also suffer.
The Netherlands, for long regarded as virtuous, has also laid out measures to strengthen its finances to the extent of 6 billion euros.
“Overall, the budgets are rigorous, but less aggressively so,” BNP Paribas bank economist Dominique Barbet said.
Bond portfolio manager Remi Lelu De Brach at Quilvest Gestion said: “The budgets have more room for growth.”
However, they said that budgetary measures will not be enough to ensure recovery.
“What we really have to achieve is growth driven by exports,” Barbet said.
The real problem was not the budgets, but an over-valued euro, he said.
“All the others are worried about their currencies, so that they are not over-valued. Everyone except us,” he said.
At Berenberg Bank, senior economist Christian Schulz said “the gradual fading of austerity will be one of the drivers of growth for the eurozone.”
The single currency area overall “is already in better shape” than Britain, the US and Japan.
The zone had “a projected fiscal deficit of 2.5 percent of GDP next year” as estimated by the IMF, and a debt-GDP ratio of 96.1 percent although this had to fall to 60 percent over 20 years under the new rules, he said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”