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I moderated a group of women yesterday at the Corporate State Canada conference. Sherry Cooper of BMO gave the keynote address to open the day’s discussions. I was really taken with her concern over austerity programs across Europe.
She worries that clawing back government spending now, at such a fragile time in the economy, could make recovery prospects much worse. Cooper says there is no doubt that the U.K. deficit must be fought with muster in the longer term – but firing a half million government employees over the next four years will significantly crimp spending and put more people on unemployment insurance.
I guess we’ll witness whether the business-led recovery can shoulder more burden. Are tax cuts enough incentive for beleaguered businesses? And Ms. Cooper’s question - Will a wobbly UK economy hit by unsettling cuts slow growth so much as to make austerity counterproductive? - I think, gets even the bulls pondering. What is the price of an austerity program failure? A European double-dip?
Yesterday, Ms Cooper didn’t have all the details of the UK austerity plans – but today we see the nation's banks about to get hit with a new tax.
A permanent tax on UK banks will be released in a document tomorrow, but back in June, Chancellor of the Exchequer George Osborne said he planned to raise more than 2 billion pounds per year via the banking tax (or, the equivalent of $3.25 billion Canadian).
Does Zurich need to become the ‘new’ City as this sort of austerity bears down on Europe?
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