Emu's 3 per cent red herring

Article Abstract:

European monetary union appears threatened because of the difficulty of Germany and France in meeting budget deficit targets. Germany would prefer a strict target of 3% but would not be able to impose this if other members disagreed. Some economists argue that a budget deficit level as low as 3% is not necessary. High deficits do not necessarily mean a currency will be weak. Members could pass on the cost of their deficits through an increase in interest rates affecting all of Europe, but this should not occur if bail-outs are not permitted when one country borrows too much.

Legislative Bodies, Budget, Western Europe, Monetary unions

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Repelled by the risk but won over by the rewards

Article Abstract:

The UK government is seeking to attract private investment for infrastructure projects through its private finance initiative (PFI). The aim is to lower the amount needed from the government to fund such projects. The government has pressure to cut its borrowing needs, and the private sector should benefit from an increased number of contracts. Some projects involve risks which cannot be controlled by the private sector. This applies to prison building where the public sector controls the supply of prisoners, and so the demand for privately built prisons.

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PFI: investing today for jam tomorrow

Article Abstract:

The United Kingdom private finance initiative (PFI) was launched in 1992 with the aim of funding major projects such as hospitals and roads. The private sector has most to gain from the PFI, which provides better margins than traditional public sector contracts after projects have started to function. There are hopes of streamlining the bidding process and achieving a standard definition of the phase at which the government begins to pay. Law firms, consultants and banks have benefited since they are paid whether or not projects go ahead.

Construction, United Kingdom, Government spending policy

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