French fiscal policy: A timing issue

- "France’s upcoming parliamentary discussion of the budget bill for 2011 probably is the last window of opportunity to set the country’s public finances on a sounder footing before the perspective of the presidential and parliamentary elections of 2012 starts affecting fiscal decisions too directly to make bold decisions likely."
- "The French government seems intent on delivering only a modest structural consolidation for next year. The political cost of the pension reform – which seems to be on track – add to a generally diminished popularity of the current administration and make any bolder effort very difficult."
- "In our Euroland Review and Outlook, we look at Ireland’s efforts to burnish its early-move advantage. Ireland followed up the well-received Anglo restructuring statement with a signal of a larger than expected savings package in the approaching 2011 Budget. We also look at this week’s euro area data which point to the emerging slowdown."
- "We highlight the so-called ‘European Semester’ element of Europe’s ongoing fiscal and economic government reform process. This includes the prescreening of budgets before they are approved in national parliaments."
- "In our UK Review & Outlook we look at the latest data, including retail sales, and the latest commentary from MPC members. The possibility of further policy easing was mentioned. While our view is for the beginning of a gradual rise in UK interest rates during the course of 2011, continued weakening in the global and domestic economy could raise the risk of another round of quantitative/credit easing."
- "Finally, we review the latest inflation news across the euro area, UK and US and look at the SNB’s decision to leave rates on hold. The SNB statement was, in our view, dovish, supporting the view that the central bank will not tighten policy until the start of next year at the earliest."

DeutscheBank Focus Europe 20100917

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