Here is the downloadpage of our first podcast
http://rapidshare.com/files/318042190/definitief.mp3.html
Wouter Van Caenegem
Gerty Rigaux
Jens Van Nieuwenhove
Bart Lammens
Tim De Backer
dinsdag 8 december 2009
vrijdag 13 november 2009
Metals and mining: Government intent on more control
The Brazilian mining and metal industries have been in the middle of a conflict between the government and Vale, a privatised mining giant. The conflict started with the decision of Vale to cut production and fire 1,300 people while putting another 5,500 on paid leave. The government was upset by this decision because there was no advance warning and the government believes Vale should have done the opposite during the crisis to save the economy of Brazil.
Vale is a private company but the government still has some influence trough shares and pension funds of public sector companies. The company has been hesitant towards expressing their opinion in public, but Vale has made clear that their strategy remains the same, that is being a world supplier. This strategy has paid up impressive results, and has given Vale the ability to invest in the steal industry for several years but in a limited manner. Also in the future Vale wants to keep up the investments and encourage new projects in Brazil.
But in spite of the investments of Vale the government is still not satisfied, the situation is okay but they want more influence in the decision making. Main point of disagreement with Valve is that they should invest in steel plants to add value to the home iron instead of exporting it to foreign countries. Because now the risk exists that Brazil will become an exporter of iron ore but an importer of steel, which demand will rise due to building projects in the near future.
The steel industry is making investments of its own, but none of the steelmakers has enough financial power to invest in the projects of the size Brazil will soon need, and so the pressure on Vale will continue.
Because of the crisis a lot of economies suffer, and economies are recovering very slow at this moment. Companies such as Vale can play a crucial role for a countries economy. Brazil is a big world economy and will need a lot of capital to boost its economy. Small companies don’t always have the financial strength to invest and therefore bigger companies need to help.
But these bigger companies have an own role to play and will often look to try and make more profit and secure their own financial situation. In this example we see that Vale is playing a smart strategy by combining the two. They try to please the government by investing in different projects but they also stay true to their own company strategy.
I also believe that companies have a responsibility towards a country’s economy. Because when you help and invest in the economy, your own results will improve as well on a long term base, and is what I believe to be the best solution.
Source: http://www.ft.com/cms/s/0/e82513b6-c8d9-11de-8f9d-00144feabdc0.html november 13, 2009
Vale is a private company but the government still has some influence trough shares and pension funds of public sector companies. The company has been hesitant towards expressing their opinion in public, but Vale has made clear that their strategy remains the same, that is being a world supplier. This strategy has paid up impressive results, and has given Vale the ability to invest in the steal industry for several years but in a limited manner. Also in the future Vale wants to keep up the investments and encourage new projects in Brazil.
But in spite of the investments of Vale the government is still not satisfied, the situation is okay but they want more influence in the decision making. Main point of disagreement with Valve is that they should invest in steel plants to add value to the home iron instead of exporting it to foreign countries. Because now the risk exists that Brazil will become an exporter of iron ore but an importer of steel, which demand will rise due to building projects in the near future.
The steel industry is making investments of its own, but none of the steelmakers has enough financial power to invest in the projects of the size Brazil will soon need, and so the pressure on Vale will continue.
Because of the crisis a lot of economies suffer, and economies are recovering very slow at this moment. Companies such as Vale can play a crucial role for a countries economy. Brazil is a big world economy and will need a lot of capital to boost its economy. Small companies don’t always have the financial strength to invest and therefore bigger companies need to help.
But these bigger companies have an own role to play and will often look to try and make more profit and secure their own financial situation. In this example we see that Vale is playing a smart strategy by combining the two. They try to please the government by investing in different projects but they also stay true to their own company strategy.
I also believe that companies have a responsibility towards a country’s economy. Because when you help and invest in the economy, your own results will improve as well on a long term base, and is what I believe to be the best solution.
Source: http://www.ft.com/cms/s/0/e82513b6-c8d9-11de-8f9d-00144feabdc0.html november 13, 2009
woensdag 11 november 2009
Government gives £37bn of new bail-out cash to RBS and Lloyds
The government of Great-Britain invested £37bn in RBS and Lloyds. Last year they injected the same sum of money in these two companies. This new injection of money makes RBS the world's biggest government rescue. They have now received £53.5bn of state money.
Lloyds has launched £13.5bn rights issue to emphasise its commercial viability. The government pays £5.9bn of these rights issues because they are stakeholder with 43.5 per cent. They have also a plan to switch their existing debts into £7.5bn of contingent capital instruments. In case of crisis Lloyds will be able to sell them.
These actions have had in impact on the stock market.
The share of Lloyds rose by 3 per cent, while the share of RBS lost 7 per cent.
The government demanded that the companies don’t give anymore bonuses the their employees who earn more than £39,000. Other bonuses must be delayed or must be smaller than usual.Some people say that’s it is just for getting votes the government make these demands because it isn’t possible to receive these actions.
In my opinion it is a good job from the government the help those two banks. They have become stake holder and when the market revives they could sell their shares. Their demands for cutting off the bonuses is also a good point. I think some of the top employees earn to much bonuses compared the their work.
source: http://www.ft.com/cms/s/0/cf70e030-c8e2-11de-8f9d-00144feabdc0.html
Lloyds has launched £13.5bn rights issue to emphasise its commercial viability. The government pays £5.9bn of these rights issues because they are stakeholder with 43.5 per cent. They have also a plan to switch their existing debts into £7.5bn of contingent capital instruments. In case of crisis Lloyds will be able to sell them.
These actions have had in impact on the stock market.
The share of Lloyds rose by 3 per cent, while the share of RBS lost 7 per cent.
The government demanded that the companies don’t give anymore bonuses the their employees who earn more than £39,000. Other bonuses must be delayed or must be smaller than usual.Some people say that’s it is just for getting votes the government make these demands because it isn’t possible to receive these actions.
In my opinion it is a good job from the government the help those two banks. They have become stake holder and when the market revives they could sell their shares. Their demands for cutting off the bonuses is also a good point. I think some of the top employees earn to much bonuses compared the their work.
source: http://www.ft.com/cms/s/0/cf70e030-c8e2-11de-8f9d-00144feabdc0.html
Government takes over East Coast rail service
On November 13, the government takes over the control of the East Coast rail service from the National Express and the franchise will be hold until 2011. Next year the government will begin searching for a new operator. The winning bidder will receive the franchise. The line goes from London to Edinburgh. The train transports 17 million passengers and gives work to 3,100 employees a year.
The National Express did a lot of efforts to take over the train line in 2007. The revenues were decreased because the company was hit by the credit crises. Thousand business travellers switched from first to standard class and other passengers travelled off-peak to pay less. The company had also difficulties with their payments to the government. They weren’t capable to pay the high premium in order to win the contract.
The company tried to change the terms of the contract with the government, but the result was negative. So the government decided to re-nationalise the service. The takeover wouldn’t affect any employees, the services would continuous without interruption and the already bought tickets would still be valid. The Department of Transport expected to make a profit because the service is not longer obliged to pay a premium to operate the franchise.
The board of National Express has come under pressure of the shareholders because they weren’t informed about the takeover.
I have a separate opinion about this subject. It’s a smart decision of the government to take over East Coast rail service from the National Express. The company had financial problems because their revenues were decreased and they had also difficulties with their payments. If the government didn’t take over the rail service, there was a chance that a lot of people will lose their job. But now the takeover wouldn’t affect any employees. But on the other side, the re-nationalise is not the solution. In my option, the rail service should become part of the new London Overground Network.
I hope that the government would found a new operator within 2 years. Now with the financial problems, it’s difficult to found a new investor.
5 November 2009
Source: http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6904034.ece
The National Express did a lot of efforts to take over the train line in 2007. The revenues were decreased because the company was hit by the credit crises. Thousand business travellers switched from first to standard class and other passengers travelled off-peak to pay less. The company had also difficulties with their payments to the government. They weren’t capable to pay the high premium in order to win the contract.
The company tried to change the terms of the contract with the government, but the result was negative. So the government decided to re-nationalise the service. The takeover wouldn’t affect any employees, the services would continuous without interruption and the already bought tickets would still be valid. The Department of Transport expected to make a profit because the service is not longer obliged to pay a premium to operate the franchise.
The board of National Express has come under pressure of the shareholders because they weren’t informed about the takeover.
I have a separate opinion about this subject. It’s a smart decision of the government to take over East Coast rail service from the National Express. The company had financial problems because their revenues were decreased and they had also difficulties with their payments. If the government didn’t take over the rail service, there was a chance that a lot of people will lose their job. But now the takeover wouldn’t affect any employees. But on the other side, the re-nationalise is not the solution. In my option, the rail service should become part of the new London Overground Network.
I hope that the government would found a new operator within 2 years. Now with the financial problems, it’s difficult to found a new investor.
5 November 2009
Source: http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6904034.ece
G8 leaders should focus on fighting protectionism
The leaders of rich countries are together in Italy to discuss the economic situation. The whole world got some difficulties with their economy so they all got the same economic concerns.
They all have different economic models or economic systems so it would be good if they can discuss the economic situation with some different views. It also would be good if they might listen to leaders from China, India, Brazil, Mexico and South Africa. Because it’s a world wide crisis and every country got another view on it. The G8 also need to know that the economic problems won’t be solved unless the rest of the world’s are too. Only when there is confidence it the whole world we can come out of this crisis.
Robert Zoellick, the World Bank president, and Pascal Lamy, head of the World Trade Organization wrote a letter to the G8. They want to warn them for protectionism. They don’t like what they see on this moment, there are a lot of people who say that it’s the end of the recession and that’s to early according Zoellick and Lamy. Because the economy still need to be stimulated word wide.
Protectionism is a risk to world trade, it’s still a threat and a terrible disease according to Zoellick and Lamy.
I think protectionism is a danger for the economy in these days. Ofcourse I understand there point of view, you have to protect your own economy but I think that you can protect your economy with help of other countries. We need to talk to each other to find a solution for our economy. For example: when Germany invest a lot of money to hold their Opel manufacturers open, this would be negative for the Belgian economy, and off course also the European economy.
Europe is also stronger than only the Belgian economy, we learned to be less independent from America during this crisis and if you cooperate with whole Europe it would be possible to be less independent from America.
Obama's health insurance reforms clear first hurdle on way to becoming law
The House of Representatives approved a bill on health insurance. This means a major breakthrough in history. It is also the most important thing that Obama achieved since he became president.
Because of this measure, the health insurance will be accessible for 96% of the US people. If this bill passes, still 18 million people wouldn’t have any health coverage by 2019. Larger companies would have to offer insurance to the employees. Also individual people will be obliged to be insured. If they don’t do it, they will have to pay the consequences. The government will only subsidize those who can’t afford.
It was very close. The bill passed with only a little bit, 220 times ‘YES’ and 215 times ‘NO’. Obama calls it ‘a historical moment’.
The Senate still has to approve the bill, before it becomes a law. They will need 60 votes to get it passed. But it will be difficult to do so because of the many conservative Democrats.
If the Senates goes along with it, both versions will be put together.
There are groups of people in the Us that think that this bill is not so good because it helps ‘to clear the way’ to abortion rights. But under the compromise, it would not be allowed for health insurance companies to offer abortion services. But pro-choice groups think that because of this restriction, a lot of women would lose the abortion rights they now already have.
In my opinion, I personally think that this bill is a very good thing, a real breakthrough for the health insurance in the United States. I really hope that the Senate approves so it can become a law.
It is absolutely necessary because a lot of US people don’t have a health insurance just because it isn’t accessible enough. And that’s why going to the doctor or hospital is so expensive. Because of the law, this can become better.
I think we can say that in Belgium the health care is very good. We all have an insurance to lower the costs.
It is a pity that there still will be people without any coverage, and that is why I think that the United States government has to subsidize the health insurance more than they already do now. But I realize this will be very difficult because it is so expensive.
Source: Obama's health insurance reforms clear first hurdle on way to becoming law (9 November 2009) -
http://www.guardian.co.uk/world/2009/nov/08/us-healthcare-insurance-reform-obama
maandag 12 oktober 2009
Building contractors face tax crackdown
The UK government had proposed to reform the income tax for self-employed construction workers. With this new measure, they would have to pay taxes on a ‘pay-as-you earn basis’. The result is that the construction companies will have more administrative work. The construction workers will have to pay almost 13% extra taxes. But they also would not get any benefits packages that are connected with their job, such as pensions,..
According to tax experts this rule will affect a lot of contractors, because the industry in the UK consists of a lot of self-employed labour. Also the hire-agencies of contractors will be affected.
The government has taken many rules in the past years, but none of them seemed to work effectively. By introducing the new legislation, they hope to receive more income from this sector, that was down because of the crisis.Another reason for the new law, is to ensure that the self-employed construction workers pay all the taxes they are due.
In our group we have separate opinions about this subject. Some of us think it is good for the government to receive extra capital to invest in the economy to recover from the crisis. But we also think that these taxes will lower the purchase power of the employees. This is negative for the UK economy. This industry is now the only victim in this crisis. We think all industries should participate for an equal part in the extra taxes. Another advantage of these taxes is that they can contribute in the battle against moonlighting.
Source: http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article6865978.ece
October 8, 2009
Tim De Backer, Bart Lammens, Gerty Rigaux, Wouter Van Caenegem and Jens Van Nieuwenhove
According to tax experts this rule will affect a lot of contractors, because the industry in the UK consists of a lot of self-employed labour. Also the hire-agencies of contractors will be affected.
The government has taken many rules in the past years, but none of them seemed to work effectively. By introducing the new legislation, they hope to receive more income from this sector, that was down because of the crisis.Another reason for the new law, is to ensure that the self-employed construction workers pay all the taxes they are due.
In our group we have separate opinions about this subject. Some of us think it is good for the government to receive extra capital to invest in the economy to recover from the crisis. But we also think that these taxes will lower the purchase power of the employees. This is negative for the UK economy. This industry is now the only victim in this crisis. We think all industries should participate for an equal part in the extra taxes. Another advantage of these taxes is that they can contribute in the battle against moonlighting.
Source: http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article6865978.ece
October 8, 2009
Tim De Backer, Bart Lammens, Gerty Rigaux, Wouter Van Caenegem and Jens Van Nieuwenhove
zondag 4 oktober 2009
Government intervention ends Air India strike
The management of Air Indie decided last week to cut in to the wages of their best-paid employees. That measure has lead to an strike. This week the government ended this four day strike by overruling this management decision.
The intervention of the government was due to the fact many pilots took sick leave after the decision of their management. At this moment the travelling season in India is very busy. This leaded to chaos on the airport.
The strike was not the only problem of Air India. The company have a losses of around $3bn. Now they have to make a good turnround plan for receiving fresh government funds.
Kapil Kaul, chief executive for India of the Centre for Asia Pacific Aviation said the fundamental problem of Air India is not resolved. The company has a bad cost structure and now with redrawing the cost-cutting measure it will not become better. Along Kapil Kaul, Air India has twice as much employees as it must have to run their operations.
I think the government did a good job by putting an end to the strike. It could have leaded to great losses for the country if the tourist stayed away. Now the government have to help Air India by finding a solution for the financial problems. Otherwise all the problems stay.
source: http://www.ft.com/cms/s/0/452294f2-ae23-11de-87e7-00144feabdc0.html
September 29 2009
The intervention of the government was due to the fact many pilots took sick leave after the decision of their management. At this moment the travelling season in India is very busy. This leaded to chaos on the airport.
The strike was not the only problem of Air India. The company have a losses of around $3bn. Now they have to make a good turnround plan for receiving fresh government funds.
Kapil Kaul, chief executive for India of the Centre for Asia Pacific Aviation said the fundamental problem of Air India is not resolved. The company has a bad cost structure and now with redrawing the cost-cutting measure it will not become better. Along Kapil Kaul, Air India has twice as much employees as it must have to run their operations.
I think the government did a good job by putting an end to the strike. It could have leaded to great losses for the country if the tourist stayed away. Now the government have to help Air India by finding a solution for the financial problems. Otherwise all the problems stay.
source: http://www.ft.com/cms/s/0/452294f2-ae23-11de-87e7-00144feabdc0.html
September 29 2009
Standard income tax ‘raised by 10%’
The Department of Finance concluded the equivalent of an increase of 5.5 % points in the tax rate and a two-point in the standard rate. They also compared the increase incomes taxes to a 46,5% marginal tax rate and a 22% standard tax rate.
Brain Lenihan, the finance minister, is prepared to include the levies into the tax code. But some government sources speculate that payroll staff are wrestling with the system of calculating the impact of it.
An accountancy expert came to an argument that these levies would decrease the level of tax, paid by low and high earners. But the officials will examine the reduce. Due to the raise of the standard income tax, the government will earn an 1.1 billion extra this year and 1.6 billons across a full calendar year. But the calculation doesn’t apply the public pension sector.
The admission of the levies and the tax code would have a positive influence on the business world mentioned Brain Keegan, CAI director of taxation. Not only for employees but also for contributors.
The budget of 2009 showed in October a tax of 1% on low earners, 2% on medium and 3% on high earners. In April they were raised to 2%, 4% and 6%. But the finance minister will not have further increases. In difficult economic situations, the population avoid more taxes. When the government increase the taxes, they won’t necessarily see a rise of revenues.
Now the government departments preparing the budget for December. An Bord Snip Nua recommended to the ministers to avoid the implementations of various spending.
To include the levies into the tax code is a good strategy because it will have a positive influence especially for the employees. But now with the crises, the financial situation of the people will only get worse. The percentage of a medium earner is doubled so I think that here will be more moonlighters at the end of this year.
The cause of the financial crises is the fault of the financial institutions. Instead of paying out dividends to the shareholders, they have to pay back their debts to the government. So the government don’t have to increase the taxes.
The financial minister is determined to avoid any further rises. But what will be his plan to avoid this?
27 September 2009
Gerty Rigaux
Source: http://www.timesonline.co.uk/tol/news/world/ireland/article6851044.ece
Brain Lenihan, the finance minister, is prepared to include the levies into the tax code. But some government sources speculate that payroll staff are wrestling with the system of calculating the impact of it.
An accountancy expert came to an argument that these levies would decrease the level of tax, paid by low and high earners. But the officials will examine the reduce. Due to the raise of the standard income tax, the government will earn an 1.1 billion extra this year and 1.6 billons across a full calendar year. But the calculation doesn’t apply the public pension sector.
The admission of the levies and the tax code would have a positive influence on the business world mentioned Brain Keegan, CAI director of taxation. Not only for employees but also for contributors.
The budget of 2009 showed in October a tax of 1% on low earners, 2% on medium and 3% on high earners. In April they were raised to 2%, 4% and 6%. But the finance minister will not have further increases. In difficult economic situations, the population avoid more taxes. When the government increase the taxes, they won’t necessarily see a rise of revenues.
Now the government departments preparing the budget for December. An Bord Snip Nua recommended to the ministers to avoid the implementations of various spending.
To include the levies into the tax code is a good strategy because it will have a positive influence especially for the employees. But now with the crises, the financial situation of the people will only get worse. The percentage of a medium earner is doubled so I think that here will be more moonlighters at the end of this year.
The cause of the financial crises is the fault of the financial institutions. Instead of paying out dividends to the shareholders, they have to pay back their debts to the government. So the government don’t have to increase the taxes.
The financial minister is determined to avoid any further rises. But what will be his plan to avoid this?
27 September 2009
Gerty Rigaux
Source: http://www.timesonline.co.uk/tol/news/world/ireland/article6851044.ece
JAL requests government rescue.
Last week, Japan Airlines (JAL) has asked the government to intervene by giving them an emergency capital of $2.5bn-$3bn. If the government agrees to this bailout, Tokyo will tighten its grip on the Japanese company.
According to the chief executive of JAL and sources from the company, they need approximately $1.1bn just to keep flying until the end of the year. The capital they ask from the government would consist of new equity and loans. The bailout would re-boost the confidence in JAL after having great debts and a record loss of about $1.1bn last year. Next to the bailout plan, JAL is also planning to sell a minority stake to a foreign partner, this would give JAL an extra $0.33bn.
The money JAL is asking from the government would be provided from a fund that was created earlier in the year as support for companies who had suffered under the credit crunch, such as Elpida Memory, a troubled chipmaker. But taxpayers are already under a lot of pressure and current rumors of JAL cutting of 14% of its workforce and 50 work routes don’t exactly stimulates the confidence.
But there are also other rumors that say that there is a possibility that there will be a partial liquidation of JAL’s assets. But these rumors are denied.
In my opinion it is up to a government to help the companies in their country, but I don’t believe that the governments can keep up with this. Due to the credit crunch, a lot of companies are having trouble sustaining their position. In this particular case I believe it is up to the government to examine the situation of JAL very precise, because it is a company that has already known some difficult times. If the government would decide to agree on the bailout plan, they would have to be sure that JAL has a future. I think that this bailout plan would be a good opportunity for JAL to keep its operations going for a while, but when the credit crunch doesn’t come to an end, JAL will keep having troubles in the future.
Source: http://www.ft.com/cms/s/0/a1e5f35c-a8e5-11de-b8bd-00144feabdc0.html Viewed October 1 2009
According to the chief executive of JAL and sources from the company, they need approximately $1.1bn just to keep flying until the end of the year. The capital they ask from the government would consist of new equity and loans. The bailout would re-boost the confidence in JAL after having great debts and a record loss of about $1.1bn last year. Next to the bailout plan, JAL is also planning to sell a minority stake to a foreign partner, this would give JAL an extra $0.33bn.
The money JAL is asking from the government would be provided from a fund that was created earlier in the year as support for companies who had suffered under the credit crunch, such as Elpida Memory, a troubled chipmaker. But taxpayers are already under a lot of pressure and current rumors of JAL cutting of 14% of its workforce and 50 work routes don’t exactly stimulates the confidence.
But there are also other rumors that say that there is a possibility that there will be a partial liquidation of JAL’s assets. But these rumors are denied.
In my opinion it is up to a government to help the companies in their country, but I don’t believe that the governments can keep up with this. Due to the credit crunch, a lot of companies are having trouble sustaining their position. In this particular case I believe it is up to the government to examine the situation of JAL very precise, because it is a company that has already known some difficult times. If the government would decide to agree on the bailout plan, they would have to be sure that JAL has a future. I think that this bailout plan would be a good opportunity for JAL to keep its operations going for a while, but when the credit crunch doesn’t come to an end, JAL will keep having troubles in the future.
Source: http://www.ft.com/cms/s/0/a1e5f35c-a8e5-11de-b8bd-00144feabdc0.html Viewed October 1 2009
zaterdag 3 oktober 2009
Magna seeks added German government help for Opel: report
Magna can get a multi-billion euros support from the German government when they try to take over the General Motors’ Opel unit. Der Spiegel, a German magazine, published it.
There are 3 parties that can take over the Opel unit. There is Fiat, RHJ and Magna. Magna is a Canadian car parts group and they are the favourite to take over the Opel unit because they published a better plan than their rivals.
The deal with the German government would be a covering of the 3-billion euro pension obligations. There is also a plan that Magna wants Germany to provide loan guarantees of 4.5 billion euros.
The Magna co-Chief Siegfried Wolf said that he will explain the plans of Magna in Germany and that he wants to avoid mass job cuts. Also because there are federal elections in September. They government said that the plan from Magna is to most substainable among the three.
The U.S. government has given a deadline to General Motors. On June 1 they have to prove that they can be viable without state aid and avoid bankruptcy. If they can’t proove this, there will be help needed from Magna, RHJ or Fiat.
With this decision of the German government they play an important role in who gets Opel.
According to me it’s dangerous from the German government. They just try to save their own establishments but they forget that we are living in Europe. We need to do the best for Europe and try to save as much jobs we can in Europe.
Offcourse this is negative news for Opel Antwerpen, the plans of Magna are to close the establishment. But I guess if the Belgium government would get the same resources as the German government we would try to do the same. But now we can’t compete with Germany.
I hope Europe will say that this is not the best solution but I think that what choice Europe take, the establishment in Antwerpen will be closed.
Source: http://www.reuters.com/article/businessNews/idUSTRE54M0LW20090523
woensdag 30 september 2009
Sarkozy hands business €10bn tax cut
The French government has decided to cut taxes, more specifically, a tax on fixed investments or the ‘taxe professionnelle’ for the ‘bigger’ enterprises. Each year, this has become a much bigger cost for these companies. Smaller corporations will receive a reduction in social costs if they hire new people.
The tax cut will amount to € 10 bn. In total, it will cost up to € 12 bn, but it will only be recovered for a small part by a new tax on fuel and energy.
Off Course, the companies are really pleased with this proposal, because there’s a big cost going away. On the other side, this measure is not that interesting for the government itself. Because of it, they can’t do as much efforts as before to reduce the country’s public deficit. This will rise to more than 8%.
The government hopes that this level stabilises in 2010. In order to do so, they will for example cut more than 30,000 jobs. Besides this last one, there are no other measures to restore the deficit in the next coming years. Although, economists say that they should think of some in order to decrease the rising debts, and not to end up as bad as countries as Italy and Spain.
But Nicolas Sarkozy, the president of France, has other plans. He also wants to insert an extra ‘welfare-to-work benefit’ for young people, which will cost about € 500 million a year.
I am not really pro or against this measure. I think it has both up and downsides.
It is indeed a good thing for the companies that they don’t have to pay this tax anymore. That way, I think corporations will be stimulated more to reserve money for new investments.
On the other hand, we recently have had a crisis and we still see some effects right now. Every government that helped the banks in their country from going bankrupt, has an enormous public deficit. So, if this measure comes through and the companies don’t have to pay this tax anymore, they lose a lot of income.
If the government can find new ways of receiving income, this tax cut can come through. And it will be a good thing. It is necessary that companies invest to stimulate the economy.
Source: The Financial Times – “Sarkozy hands business €10bn tax cut” –
29 September 2009
http://www.ft.com/cms/s/0/4c0da02a-ad0d-11de-9caf-00144feabdc0.html
dinsdag 29 september 2009
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