Global economic update

The ECB’s earlier pledge to save the region from economic ruin by buying government bonds is compatible with EU law, announced ECJ advocate-general Cruz Villalon today. The opinion issued comes in response to a lawsuit brought by German opponents who claimed that the ECB’s Outright Monetary Transactions program, announced in August 2012, violates the EU treaty. While the opinion isn’t binding on the court, the judges usually follow the advocate general’s reasoning.

World shares are in the red today, as commodity prices dropped and falling oil prices continued to weigh on global equity markets. The World Bank yesterday cut its forecast for global growth this year amid worsening prospects in Europe and China. Oil is now down for a fourth day, with WTI 0.3% lower at $45.75/bbl.

Speaking at an annual economic conference this morning, Russia’s finance minister Anton Siluanov said that his ministry plans to cut budget costs by 10% across all sectors except for military spending. The World Bank expects Russia’s economy to contract by 2.9% in 2015 due to poor economic prospects in the euro zone and lower oil prices.

Seeking to support growth, Japanese Prime Minister Shinzo Abe’s cabinet approved a record ¥96.3T ($814B) budget while cutting new borrowing for a third year in a row. Rising revenues following the sales tax increase last April enabled Abe to raise spending without increasing the proportion financed by new government bonds, though the total national debt is still well over twice the country’s GDP.

President Obama will push the Federal Communications Commissiontoday to overturn state laws that prevent cities from building their own broadband networks, building on his previous call for the agency to regulate broadband service as a utility. The centerpiece of the initiative is a call for the FCC to pre-empt laws in 19 states that can prevent cities and localities from building their own high-speed broadband networks. FCC Chairman Tom Wheeler has already indicated that he is strongly considering the move.

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