The Malta Independent 27 March 2017, Monday

Comeback?

Alfred Sant Monday, 20 March 2017, 08:00 Last update: about 6 days ago

Is inflation making a comeback?

We have spent quite some time regretting its absence. The European Central Bank would regularly announce that the target of a 2 per cent inflation rate still needed to be reached.

But now we seem to be there. The contra claim is that this does not apply to all, since there are countries like Germany where the target is within reach, and others where it is still not in sight.

ADVERTISEMENT

Interest rates on bank deposits and lending are still very low. In the US, the Federal Reserve has begun to jack them up. In contrast, the argument being made in Europe is that the rise in the price index is too much due to the surge in the oil price. In other core areas, prices have remained turgid.

But millions of people, especially pensioners, are still complaining that they have taken a big hit. Their income has shrunk as interest payments on their bank deposits evaporated.

The problem is acute in Germany, which holds federal elections later this year.

***

One size fits all

Last week, I took part in an interesting discussion. On which European companies that carry out cross border business, should the obligation be set to publish their accounts on a country by country basis?

One proposal is to apply this for companies with a turnover of more than 40 million euros. Another idea is to apply it to companies with turnover in the hundreds of millions. Though the latter proposal is being made by the right, I find myself in agreement with it. The first one, I believe, discriminates against the economies of the smaller countries.

Given their small size, Malta, Cyprus and Croatia for instance, stand a bigger chance of having companies that with a 40 million euro turnover, would need to sell outside the country. By contrast, similar companies with such a turnover operating in the bigger economies, like France, would more likely be still operating in the national economy. They would not need to carry the expense of preparing country by country reports regarding where and how they earned their income.

This point was not taken on board. One size fits all remains quite a strong instinct in Europe. We then express surprise about Brexit!

***

Vicious

The game was to show how the Prime Minister had found a sponsor to finance his holiday abroad. It collapsed when evidence was provided showing he had paid for it himself.

So the story morphed into a scandalised murmuring about the “unsocial” choice he had made for his family holiday. Can things get more vicious? Since economic controversies will not win points for the Opposition in the coming election campaign, it seems as if there will be no limits to the invasion of Labour leaders’ private space.

I well remember once the breaking information made available about some holidays that then Prime Minister Fenech Adami had taken, and which some wanted to develop into a big story...

Today it seems as if even when there is no real story, the attack still proceeds. Which is why the political scenario is becoming so vicious.

  • don't miss