The UK government announced looser fiscal conditions over the medium-term. The Autumn Statement forecasts greater deficit over the next five years, with additional borrowing of GBP 122 bn. The commitment for a balanced budget is postponed after the current parliament, and the debt-to-GDP ratio will start decreasing later than expected. The main announcements were a higher minimum wage, an infrastructure spending plan and a stronger and faster cutin the corporate tax rate. Doubts over the plan are numerous. First, economic assumptions are quite optimistic, even though both growth forecasts and potential growth rate estimates have been revised down. Second, even if the plan is for more borrowing than previously planned, austerity is not reversed, just softened. The cyclically adjusted deficit is still planned to be reduced, each year a bit more. Over the next five years, it would be reduced from3.8% of GDP (FY 2015-16) to 0.7%. This remains a huge drag, especially at a time of turbulences. The question is about the credibility and/or the opportunity of such apolicy. The hardest the Brexit will be, the hardest the economy will be hit. As the Bank of England might end up constrained by the value of the pound (too easy a policy would strengthen downward pressures and upward pressures on consumer prices) as its tolerance for inflation overshooting target is not infinite, fiscal policy would prove the only game in town. The choice will be whether to support a weakened economy (and abandon austerity) or to obey the sound-finances dogma and let the economy fall...
BNP Paribas SA published this content on 25 November 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 25 November 2016 16:37:11 UTC.
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BNP Paribas is France's largest banking group. Net banking product (NBP) breaks down by activity as follows:
- retail banking (54%): retail banking activity in France (24.1% of NBP), in Belgium (14.6%), and Italy (10.2%). The remainder of the NBP (51.1%) is from international activities and specialized financial services activities (consumer loans, real estate credit, leasing credit, car fleet management, computer equipment leasing);
- finance and investment banking (34.4%): consulting and capital market activities (83.7% of NBP; merger-acquisition consulting, activities related to the stock, interest, and exchange markets, etc.) and financing (16.3%; financing for acquisitions, projects, raw material transactions, etc.);
- institutional and private management and insurance (11.6%): asset management, private banking activity (No. 1 in France), real estate and on-line brokerage services, insurance and securities services (No. 1 in Europe for retained securities).
At the end of 2023, BNP Paribas was managing EUR 988.5 billion in current deposits and EUR 859.2 billion in current loans.
Net banking product is distributed geographically as follows: Europe, Middle East and Africa (82.9%), America (9.8%) and Asia/Pacific (7.3%).