I dislike the V.A.T. hike tremendously.
Britain has learned that there is no harm is selling your local champions to foreigners.
Lafontaine was seen as the arch-exponent of the hard left in Germany.
A rise has become a real possibility.
We won't see any steps backwards, but the tempo of reforms will slow. Germany won't be able to tap into its full potential. The economy is improving, it'll simply improve more slowly.
The bank hiked rates aggressively in late 2003 and early 2004 to cool down an economic boom fueled by an explosive rise in house prices, and clearly attained that goal.
While the surge in key leading indicators strengthens the case for a further rate hike in the near future, the absence of second round effects from the oil price spike and the decline in headline inflation in late 2005 argue against any haste.
This has weakened his claim to be the one who could lecture other financial ministers on how to run their economies. He should publicly apologize to the IMF staffers whom he scolded last time for being too pessimistic on the U.K.
The figures are not proof yet of an economic slowdown as they are being distorted by cutbacks in work creation programs.
The evidence on U.K. consumption remains contradictory. Some data such as weak consumer confidence and the reluctance to use credit cards point to further weakness ahead. However, the modest rebound in the real estate market and anecdotal evidence of satisfactory Christmas indicate a modest strengthening in spending.
Germany is reaping the fruits of wage restraint and painful structural reforms. In addition, the change in government seems to have improved the business climate even if Merkel has so far done hardly anything in terms of serious economic reforms.
Having been the sick man of Europe for much of the last decade, Germany is, for once, resuming its traditional role of a motor of economic development in the heart of Europe.
Six quarters of mostly below-trend growth are taking their toll. The trend in rising unemployment and muted wage pressures suggests underlying inflation in the UK could ease further, keeping the door open for a possible rate cut later this year.
There could have been a heated discussion, with the doves preventing the acceleration in the pace of rate hikes the hawks may have wanted.