The European Central Bank joined the Announcement Effect Club yesterday in its June Monthly Bulletin. In evaluating the costs and benefits of fiscal consolidation, the Bulletin said the following:

Today, the British government released its latest proposed budget, one which will dramatically slash spending and significantly raise taxes. All government departments will be forced to cut spending across-the-board, aside from the National Health Service (which is protected by law). On January 4th of next year, Britain’s Value-Added Tax (or VAT) will increase from 17.5 percent to a full 20 percent, expected to raise government revenues by 13 billion pounds annually.

Here are the highlights from this weekend’s editorials on fiscal and budget policy:

Yes, financial markets too are being affected by the World Cup. So far today, trading is quiet – even though today is one of the famous Triple Witching Days (which is not about Harry Potter but the day each quarter when contracts in three main markets must be settled and which are famous for being unpredictable). Sometimes however thin markets can be volatile.

In the aftermath of the Greek financial crisis, leaders of European nations like France and Spain are taking steps to stabilize their economies and reassure lenders that their governments are getting their fiscal houses in order. The New York Times reports that the French and Spanish government announced plans Wednesday to reduce their national fiscal deficits to more sustainable levels and to take more basic steps to improve their economic performances.

As part of a celebration of Albert Gallatin's upcoming 250th birthday the Swiss Embassy held a panel discussing the Swiss federal government's "debt brake" and what could be learned from its use.

U.S. financial markets this week have continued to be dominated by global capital seeking a safe haven in U.S. Treasury instruments, as the eurozone continues to struggle getting its fiscal problems under control. When safe haven effects kick in due to fears about problems with the U.S. recovery or elsewhere, investors turn to U.S. Treasury instruments and U.S. interest rates go down. When investors become more bullish over U.S. economic prospects (including relative to other countries), the U.S. stock markets looks better and assets are shifted from the bond markets.

Here are the highlights from this weekend’s editorials on fiscal and budget policy:

The OECD (the Organization for Economic Cooperation and Development, the Paris-based think tank for the 31 richest countries) released its twice-a-year economic outlook yesterday. It presented a bleak fiscal picture for many of the member countries (including the United States) unless governments make policy changes, but, constructively, it also presented possible ways forward for countries to get their fiscal house in order. 

Throughout the week, U.S. financial markets continued to be dominated by a global market “flight to quality” in response to perceived EU policy weakness in addressing the Greek and eurozone fiscal crisis.