Japan's bold drive to end almost two decades of deflation and economic decline is in danger of stalling this year as the country raises consumption tax before recovery is secure, Nobel economist Joseph Stiglitz has warned.
"We are hitting a moment of fragility, there is a significant risk that growth will sputter just as it did in 1997 when they raised VAT too soon," said Prof Stiglitz, speaking at the World Economic Forum in Davos.
The economy is already losing some momentum as the initial "sugar rush" of stimulus wears off. While prices are beginning rise -- with core inflation reaching 0.8pc in November -- this has so far been caused by rising import prices due to a 25pc yen devaluation. There is little sign yet that the stimulus is filtering through to higher wages, the crucial hand-over if recovery is to become self-sustaining.
Prof Stiglitz said premier Shinzo Abe is pursuing a "risky strategy" by raising the consumption tax from 5pc to 8pc in April. The worry is a cliff-edge fall in sales this Spring. "The tax rise has been pre-announced so people have been buying goods in advance," he said.
Mr Abe is hoping that a 2.4pc cut in corporation tax will blunt the shock, relying on a trickle through to higher wages. This could go badly wrong. "If they tried this in the US it wouldn't happen. Corporations would just pay themselves bigger bonuses, and they would probably do the same in the UK," he told the Telegraph.
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Uncertainty surrounded the future of the relationship between French President François Hollande and his partner Valérie Trierweiler on Saturday.
Several French media outlets reported Saturday morning that Hollande would announce that the couple were separating later in the day. Instead, the BBC reported that it had asked the president's office at the Élysée Palace to confirm the story and been told that "false rumours" had been circulating in the French media.
Trierweiler, 48, plans to travel to India on Sunday for a charity trip. French media reported Saturday that the president wanted to settle the issue of their future before her departure.
The pair have been together since 2006. Two weeks ago, celebrity magazine Closer published a report that Hollande was having an affair with a French actress, Julie Gayet. It ran pictures of what it said was the president wearing a motorcycle helmet arriving via scooter to visit Gayet for nocturnal trysts.
German Central Bank head Jens Weidmann has developed a reputation in Europe for saying no to everything. He is skeptical of efforts to save the euro and isn't shy about saying so. But is he right?
In Jens Weidmann's world, the cup is almost always half-empty. As much as he doesn't like hearing about it, he is a man who can even find fault with a rare moment of winter sun shining through his office window in Frankfurt.
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