Cover of MoneyWeek magazine issue no 482

The best bets in Europe

16 April 2010 / Issue 482

Where to put your money in Europe's no-go zone...

PLUS:

  • A cheap stock with a 7% yield
  • Is Britain set for an onshore oil boom?
  • The ex-hacker running rings round the Pentagon

Excerpt

The lessons we can learn from Canada

Nearly two weeks in, and still we’re none the wiser about exactly how our new government plans to bring down the budget deficit (the rate at which our national debt is rising).

But over at the Treasury they are apparently looking at the radical measures used by the Canadians in the mid-1990s. At the time, Canada was running a deficit of more than 5% (it peaked at 9.2%), due in part to attempts to spend away stagflation. Stimulus packages were tried over and over but, as Mirabaud Securities points out, they repeatedly failed, and merely increased “the stock of debt”.

Beginning to sound familiar? In Canada the situation was made worse by the fact that high interest rates caused the cost of financing the deficit to “balloon”. At their peak, interest swallowed up over 35% of Cana-dian government revenues. Nasty. Canada’s first attempt to sort this was much the same one now being sug-gested by politicians in the UK: smallish across-the-board cuts. It didn’t work. Instead it became clear that, as Mirabaud’s Steve Clayton puts it, “big monsters can not be slain with pin pricks”.

• Read the full editor’s letter here:
The lessons we can learn from Canada

Also in this week’s magazine

• Editor’s letter: The lessons we can learn from Canada
• News: Election plays out on a peak between dips
• News: FSA clampdown turns to the Rock
• News: Can the Russian bounceback last?
• Markets: Oil price on the rise again
• Markets: The EU’s short-term fix for Greece
• Markets: The trade war heading for China
• Sector: Snap up cheap non-life insurers
• Share tip of the week: Well-placed defensive stock
• Turkey of the week: Pharma giant on a patent deadline
• Gamble of the week: Niche pharma service provider
• Strategy: Investment trusts: how to exploit the discount
• Personal view: Three plays on climate change
• Briefing: Britain’s oil rush
• City view: Greenspan has fallen from grace – why hasn’t King?
• Cover story: Where to place your bets in Europe’s no-go zone
• Cover story: How to play Europe with minimal risk
• Cover story: Four of Europe’s most solid stocks
• Funds: How to get the best price with ETFs
• Funds: Fund of the week: Focus on themes, not stocks
• Opinion: Should Britain set up a ‘bad bank’?
• Personal finance: Pensions shrink again
• Personal finance: An Isa offer to snap up now