Archive - January 2013

London Wall Partners have plenty to say on a wide number of economic and financial matters. This section provides a list of our news and views on a historic basis.

All three of the major credit rating agencies, Standard & Poor’s, Moody’s and Fitch, have the UK rated at AAA but with a negative outlook. A fourth, Dagong, a Chinese-owned rating agency, already has the UK at only A+, four notches below AAA.

Germany, the powerhouse economy of the Eurozone, recently announced 2012 GDP growth of only 0.5%, and that it expected 2013 to deliver only 0.4% growth. At a time when most of rest of the Eurozone is undergoing policies of austerity and reductions in private sector wage costs, they are looking to Germany to be the source of demand for their goods and services, which their own economies are currently unable to provide.
The US fiscal cliff agreement, which passed through Congress on the first day of the year, showed most US politicians in a bad light. Only at the very last minute before significant tax increases and spending cuts would have taken effect, did all participants agree to (i) a deferral of these measures for two months, (ii) a 4.6% tax increase on all incomes over $450,000, and (iii) a 2% payroll tax increase on all incomes up to $107,000. Obama got the tax increase for the top 1% of earners that he had campaigned for, which will raise about $60bn a year, and the Republicans demanded no further extension of the payroll tax cut, which will raise about $125bn a year. Together these measures will reduce US consumer incomes by a little over 1% of GDP in 2013.