On setting the date
If the election could be held tomorrow, the better for the economy and most of society.
Electioneering practically has not stopped from soon after the last general election. It has now come to the stage where the electoral campaign for the next general election has opened. It has done so without anybody knowing the date when the election will be held. Except, that is, for the prime minister. The election is his to call and he has probably made up his mind. Heavy odds are that he will not call this year, but will do so in the middle of the first quarter of 2008.
That will give time to the euro to get into circulation, amid the partying that is already being prepared.
There would not, however, be enough time for any upward pressure on prices to start being felt. The government and the euro changeover committee are doing their utmost to ensure that prices do not go up because of the transition to the euro. They are trying to enter into stability pacts with importers, distributors and the retailers. Propagating the one big supplier they have landed in the pact scheme has already brought the authorities in conflict with the GRTU, which feels that they are publicising that big supplier at the expense of the small retailing fry.
There will be various such happenings in the weeks ahead, not just as the countdown of the remaining 95 days continues with much flourish, but beyond as well. Various hands are helping in the preparations for that beyond. The banks are planning to take a leading role. They intend to distribute calculators to help familiarise consumers with conversions of Malta liri into euro. Actually, that seems to be like taking hold of the wrong end of the stick. During the early period of euro-ing, consumers will need to convert euros into Malta Lira, to try to understand whether prices are moving and if so, to what extent.
It will serve little purpose, from January 1 on, to convert Malta Lira units into euros. The timing of the adoption of the euro is set to coincide with a segmental surge in prices, under the impact of galloping international cereal prices and the speeding cost of fossil fuel. Much as the government pushes for stability pacts, it will be a very brave supplier who promises to maintain prices at the pre-adoption level. What suppliers can promise is that they will not seek to benefit from the conversion, that they will not raise or round up euro prices, other things remaining equal.
If they buy at higher prices, it is highly improbable that suppliers will accept to absorb them by squeezing their margins or, in some cases, wiping them out completely. The prime minister knows all that as well as the next small, middle or big-scale supplier. He can anticipate that, after any euphoria over the changeover to the euro, there is like to be a growing perception that the money in one's pocket is not stretching as much as it used to do.
Come February to March and the grumbling will rumble and euphoria will stumble. The prime minister will probably want to get the election out of the way before negative perception, assuming it does enter into play, starts to snowball. That is why the Independence celebrations brought along the heavy suggestion by him that elections are round the corner. From an economic point of view, the sooner the date is set, the better. For in the meanwhile, uncertainty will grow. The rating agencies are saying that they do not expect a high negative reaction should Labour win the day.
At this stage that is not the point. The point is that between now and election day it will become more difficult to take investment decisions, both at the household and at the commercial level. One example is already doing the rounds. The MLP put forward a packet of proposals it would implement, if elected, to help the housing sector. Reaction to the proposals has been muted. From the Nationalist side there was an effort to shoot them down or at least deflate them by saying that most of what Labour is proposing is already in force.
Maybe, and maybe not. Either way Labour speakers upped their thrust. Some even came across as suggesting that those who intend to purchase a residence for around Lm50,000 would be foolish to do so now, rather than waiting for the subsidies which the MLP is promising.
Estate agents who were suggesting that the property market had all but slumped, and that the remaining action was in the sector of modest first-time buyers will now tell you that even that sector had stalled. The savvy thing is to wait for the election and see who wins.
On the broader table there are no ideological differences between the contenders in the fight to form the next government. Nevertheless, until the way ahead is clear, uncertainty will grow, leading to hesitation about decisions and implementation starting dates. It seems odd that the economy and society should be placed in this situation when the election need not be held before the coming summer. But endless electioneering and loaded talk suggest otherwise, without indicating anything different. That is how uncertainty starts.
If the election could be held tomorrow, the better for the economy and most of society. But, tell that to the political class...
That will give time to the euro to get into circulation, amid the partying that is already being prepared.
There would not, however, be enough time for any upward pressure on prices to start being felt. The government and the euro changeover committee are doing their utmost to ensure that prices do not go up because of the transition to the euro. They are trying to enter into stability pacts with importers, distributors and the retailers. Propagating the one big supplier they have landed in the pact scheme has already brought the authorities in conflict with the GRTU, which feels that they are publicising that big supplier at the expense of the small retailing fry.
There will be various such happenings in the weeks ahead, not just as the countdown of the remaining 95 days continues with much flourish, but beyond as well. Various hands are helping in the preparations for that beyond. The banks are planning to take a leading role. They intend to distribute calculators to help familiarise consumers with conversions of Malta liri into euro. Actually, that seems to be like taking hold of the wrong end of the stick. During the early period of euro-ing, consumers will need to convert euros into Malta Lira, to try to understand whether prices are moving and if so, to what extent.
It will serve little purpose, from January 1 on, to convert Malta Lira units into euros. The timing of the adoption of the euro is set to coincide with a segmental surge in prices, under the impact of galloping international cereal prices and the speeding cost of fossil fuel. Much as the government pushes for stability pacts, it will be a very brave supplier who promises to maintain prices at the pre-adoption level. What suppliers can promise is that they will not seek to benefit from the conversion, that they will not raise or round up euro prices, other things remaining equal.
If they buy at higher prices, it is highly improbable that suppliers will accept to absorb them by squeezing their margins or, in some cases, wiping them out completely. The prime minister knows all that as well as the next small, middle or big-scale supplier. He can anticipate that, after any euphoria over the changeover to the euro, there is like to be a growing perception that the money in one's pocket is not stretching as much as it used to do.
Come February to March and the grumbling will rumble and euphoria will stumble. The prime minister will probably want to get the election out of the way before negative perception, assuming it does enter into play, starts to snowball. That is why the Independence celebrations brought along the heavy suggestion by him that elections are round the corner. From an economic point of view, the sooner the date is set, the better. For in the meanwhile, uncertainty will grow. The rating agencies are saying that they do not expect a high negative reaction should Labour win the day.
At this stage that is not the point. The point is that between now and election day it will become more difficult to take investment decisions, both at the household and at the commercial level. One example is already doing the rounds. The MLP put forward a packet of proposals it would implement, if elected, to help the housing sector. Reaction to the proposals has been muted. From the Nationalist side there was an effort to shoot them down or at least deflate them by saying that most of what Labour is proposing is already in force.
Maybe, and maybe not. Either way Labour speakers upped their thrust. Some even came across as suggesting that those who intend to purchase a residence for around Lm50,000 would be foolish to do so now, rather than waiting for the subsidies which the MLP is promising.
Estate agents who were suggesting that the property market had all but slumped, and that the remaining action was in the sector of modest first-time buyers will now tell you that even that sector had stalled. The savvy thing is to wait for the election and see who wins.
On the broader table there are no ideological differences between the contenders in the fight to form the next government. Nevertheless, until the way ahead is clear, uncertainty will grow, leading to hesitation about decisions and implementation starting dates. It seems odd that the economy and society should be placed in this situation when the election need not be held before the coming summer. But endless electioneering and loaded talk suggest otherwise, without indicating anything different. That is how uncertainty starts.
If the election could be held tomorrow, the better for the economy and most of society. But, tell that to the political class...