AltAusterity Digest #78 December 6-12, 2018

The European Central Bank (ECB) is set to meet on December 13th to discuss monetary policy. Since 2015 it has stimulated the euro-zone economy through its €2.6trn ($3trn) quantitative-easing programme. The ECB is expected to announce this week that they will stop buying bonds by the end of the year even as economic growth has slowed. Inflation has also remained low despite wage growth and declining unemployment. With German core-inflation at 1.5% in October, other countries in the currency area have had to limit price increases in an attempt to regain competitiveness against Germany.

Following four weeks of mass protest in France, the country’s central bank has revised its fourth-quarter growth forecast down from 0.4% to 0.2%. In an effort to appease protestors, President Macron has offered tax cuts and financial support for low income individuals. Despite this announcement, Macron did not mention that his administration plans to change course on plans for increased labour market flexibility. With the scrapping of the gas tax increase and some taxes on low-income workers and retirees, the French government will probably lose between €10 billion to €15 billion in revenues. In response, and to keep within the EU deficit guidelines, French ministries have been ordered to find cuts in their budgets, and the government could delay tax cuts for some companies.

A survey in the UK has shown that younger adults are much less in favour of raising taxes to fund public services than those aged over 45. Support for tax rises to fund the NHS were at 33% for 18 to 24-year-olds and only 30% of those aged 25 to 44. Support was strongest among those aged 45-54 (42%), 55-64 (46%) and over 65 (54%). Overall, 41% of the public backed increased taxes for the NHS. According to the survey, under-45 adults listed priorities higher on their list than healthcare including climate change, Brexit, and technological change. Those over 45 prioritized inequality, social isolation and mental health.

The Conservative government in New Brunswick is scaling back its infrastructure spending with a capital budget that is one-third lower than what the previous Liberal government had planned. The total spending for 2019-2020 will be $600.6 million, a hefty reduction from the $865.5 million that the Liberals had planned to spend. Among the most prominent cuts are a reduction of over $45 million for schools, from $105.8 to $60.2 and a cut from $458.1 million to $321.1 million for roads and bridges. Several major projects have also been postponed.

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