The zero interest rate policy of the European Central Bank is placing a huge burden on company pension schemes. As a result, companies are being forced to increase provisions for their direct pension obligations to their workforce. However, far from taking appropriate account of this additional expense, the state is taxing fictitious profits resulting in a tax burden of some 20 to 25 billion euros. This is depriving companies of liquidity which could otherwise be invested. A lowering of the imputed interest rate for tax purposes would counteract this effect.
The Russian war of aggression on Ukraine triggered massive price increases. But even before that, there were high inflation risks due to the Corona pandemic and creeping deglobalization. How should governments and central banks respond now?
For firms’ business and investment decisions their access to finance is a critical determinant. In times when access to finance becomes tight, corporations face either higher capital costs or they have to postpone their investment decisions when credit lines ...