BCR Publishing
We are the leading provider of news, market intelligence, events and training for the global receivables finance industry.
Working with industry leading organisations, experts, governments and universities, BCR Publications delivers expertise in factoring, receivables and supply chain finance to a global audience.
BCR has long been a beacon of innovation and excellence in the realm of receivables finance, playing an instrumental role in shaping the industry’s international landscape. Through its comprehensive conferences, insightful publications, and thought leadership, BCR has facilitated crucial dialogues and connections among industry professionals, driving forward the development of receivables finance globally.
High Road or High Horse?
| 21-02-2018 | Pieter de Kiewit |
Now I am not known for being politically active or interested. Many of my clients are corporates that are in the line of fire following the whole Panama Paper affair. So understanding what is happening would make sense, perhaps I could even form an opinion. So far, this is what I see and think:
• Newspapers created news by publishing what has been known for a long time. As far as I can oversee there were no convictions in The Netherlands based upon the Panama Papers;
• Poor countries are put in off side position when it comes to receiving taxes;
• Politicians created the rules and now shout from their high horse that corporates, following their rules, lack proper business ethics;
• Large corporates are able to hire the best tax lawyers and enjoy the largest tax cuts;
• Newspapers pick the corporates with the most prominent brands as an example and do not tell the story of both sides.
This equation has (too) many variables. I think Joris Luyendijk’s remarks about being immoral or amoral (https://www.theguardian.com/sustainable-business/2016/jan/18/big-banks-problem-ethics-morality-davos) are very relevant. The difference between “I follow the rules” and “I follow the rules and think about if they are right and enough”.
Given the fact that the revenue of the large corporates is bigger than the GDP of many countries, we cannot solve the problem locally. We cannot decide for other countries but we can decide for our own. Do we want to be on our high horse and economically weak? Would that be taking the high road? I am afraid I do not oversee the full picture. If I do, am I willing to accept the consequences as a consumer, entrepreneur and employer?
Would you?
Pieter
Pieter de Kiewit
[email protected] / +31 6 1111 9783
Pieter de Kiewit
Owner Treasurer Search
EU Budget – the effects of fiscal policy
| 20-02-2018 | treasuryXL |
Furthermore, there are a number of correction mechanisms designed to rebalance excessive contributions by certain member states, including – the UK rebate, lump sum payments, and reduced VAT (BTW) call rates. On the expenditure side, Growth and natural resources – which include the common agricultural and fisheries policies – account for more than 90% of expenditure. Every country within the EU makes contributions and receives expenditure within their state from the EU. The difference represents the net contribution per country per year.
When a country pays a net contribution, the excess funds are redistributed within the EU to other member states. This payment to other member states is a fiscal transfer. Information relating to the sum of fiscal transfers used in this blog were sourced at – www.money-go-round.eu
This website shows gross payments, gross receipts and net balance per country per year from 1976. The top 5 net payers since 1976 have been Germany, France, the united Kingdom, Italy and the Netherlands. These 5 countries have contributed a net balance of EUR 925 billion. Conversely, the top 5 net receivers since 1976 have been Greece, Spain, Poland, Portugal and Ireland. These 5 countries have received a net balance of EUR 410 billion. This is a redistribution of both income and wealth.
Classically, the objectives of redistribution of incomes are to increase economic stability and opportunity for the less wealthy members of society. This should lead to a society where financial wealth is more evenly divided, increasing the standard of living among the poorer members. Without this mechanism, there is more risk of economic crises and less harmony between citizens of different social classes. One of the main questions has always been how long and beneficial this transfer should be. There is a danger that some people become permanently dependent on the transfer and do not actually improve their own living standards – they are seen to consume more, but not to improve their standard of living.
So how does it look within the EU?
The country that has received the most from fiscal transfers has been Greece. They ascended to the EU (in its previous incarnation) in 1981. They have been a net receiver of the EU budget for every year since 1981. In total, they have received EUR 118 billion in transfers. What Greece ever did with all this money is the subject of many articles – but it does not appear that the money was used to raise the living standards of the poor or invest in the infrastructure of Greece.
And therein lies the major problem for the EU – the mechanism used for redistribution has had no long term beneficial effect on the economy. There is no system of checks and balances to control what is done with the money. The ECB published a report at the start of 2017 about household finance and consumption in the EU. Its findings were that disparity was growing within the EU. Other reports have highlighted that whilst eastern Europe has seen large rises in GDP per capita growth, this added wealth has not been distributed evenly among all residents.
The ideals of the EU are worthy and noble – their implementation and management however, are not creating the society that they dreamt and spoke about.
Next – can fiscal union work?
If you want more information please feel free to contact us via email [email protected]
Are public debts sustainable?
| 19-02-2018 | treasuryXL |
Any forecast is open to different interpretations, especially one that looks 15 years into the future. At the end of 2017, 15 of the 28 countries within the EU (in other words more than 50%) have Government debt that exceeded 60% of GDP. The average ratio for all 28 countries – on the basis of the sum of all Government debt and all GDP – is 83%. Let us focus on those 15 countries who, currently, do not meet the criteria. The figures for this article have been taken from the following website – debtclocks.eu
This shows the countries – ranked by the current Debt to GDP ratios – from high to low. 3 countries have been highlighted in yellow as their figures have been originally shown in their own currencies. For the sake of comparison these figures have been converted into EUR.
Assumptions
Results
The top 7 countries have debt ratios around 100% or higher of GDP at the end of 2017. The constant annual growth rates that they would have to achieve under the scenario shown above are all greater than 3% per annum.
Annual growth rate since 1996 for the EU have averaged 1.7% – before the financial crisis there was an annual growth of 2.5%. For the last 10 years since the crisis, the average annual growth rate within the whole EU is just 0.8%. Even in 2017, the growth was just 2.5% – back at the same level as before the crisis. The data for this part came from tradingeconomics.com
It would be appear to be presumptuous to expect future annual GDP growth to consistently exceed the current long term trend. Of course this is a scenario relying on only 1 factor – namely growth in GDP to meet the 60% criteria – whilst ignoring any other possible factors.
Conclusion
As constant growth, as shown above is, not realistic, then other factors will have to come into play if the long term scenario relating to debt criteria is to be achieved. If not through growth, then either through increases in Government receipts (more taxes or selling of national assets) or decreases in Government expenditure (less subsidies, pensions, smaller investments).
Or……………..through fiscal union leading to transfers from the “richer” countries.
Next we will look at the history of fiscal transfer within the EU.
If you want more information please feel free to contact us via email [email protected]