Backstop in place

Lockdowns have been lifted, bringing early signs of recovery. Retail sales have rebounded in many parts of the globe, with a jump of almost 18% in the US. While in New Zealand credit card spending almost doubled. Yet the US Federal Reserve (Fed) still strikes a cautious note, suggesting interest rates will not rise until late 2022. Hardly an expectation of strong economic growth in the meantime. But echoing a familiar phrase, the Fed promised support for ‘however long it takes’. And that’s exactly what financial markets need to hear.

Turning up the dial

Four years on from the Brexit referendum and there is a new sense of urgency to the trade talks. But the same old stumbling blocks remain. Concessions over fishing rights in UK waters and protection for what the EU calls ‘geographical indicators’, such as champagne and feta cheese. The UK might be prepared to accept sanctions if it steps over EU red lines on the environment or state subsidies. A compromise certainly, but preferable to no deal. Meanwhile, Japan has given the UK a record-breaking deadline of six weeks to agree a trade deal.

Tech tax totters

Global talks on a new digital services tax collapsed when the US stepped away. The plans are designed to catch multinational tech giants such as Amazon, Google and Facebook, by taxing their sales in the countries where they are made. The US claimed such a tax could disadvantage their national champions. The French have dubbed this decision a ‘provocation’ and there are now plans among several European countries to go it alone. But this could cause sharp retaliation, with the US claiming unfair trade practices. And could perhaps bring US taxes on European luxury goods.