Archive

Posts Tagged ‘European Union’

G20 summit: US ‘encouraged’ by eurozone plans

US President Barack Obama has said he is encouraged by European leaders’ plans to tackle the eurozone crisis, as the G20 summit in Mexico ends.

In a final communique, world leaders said they would take “all necessary measures” to protect the euro area.

Leaders said they welcomed Spain’s plans to recapitalise its banks, according to the communique.

The talks were being held as Greece seeks to form a coalition government and Spain’s borrowing costs soared.

Speaking to reporters at the end of the summit, President Obama said that European leaders recognised that “bold and decisive” action was needed to address Europe’s debt crisis.

“Euro Area members of the G20 will take all necessary measures to safeguard the integrity and stability of the area”

“What I have heard from European leaders during these discussions, they understand the stakes, they understand why it’s important for them to take bold and decisive action, and I am confident they can meet those tests,” he said.

President Obama said that while there was no “silver bullet” to solve Europe’s crisis, “each step points to the fact that Europe is moving towards further integration rather than break-up”.

“I am confident that over the next several weeks, Europe will paint a picture of where we need to go,” he added.

‘Concrete steps’

As the summit came to a close the European leaders pledged to maintain stability in the eurozone and to work with the next Greek government towards reform and sustainability.

“Euro area members of the G20 will take all necessary measures to safeguard the integrity and stability of the area, improve the functioning of financial markets and break the feedback loop between sovereigns and banks,” the joint statement said.

“We support the intention to consider concrete steps towards a more integrated financial architecture,” it continued.

“The European Union members of the G20 are determined to move forward expeditiously on measures to support growth”.

But German Chancellor Angela Merkel stressed that Greece must hold up its end of the deal.

“It’s obvious that the reforms that were agreed in the past are the right steps and that they therefore must be implemented,” Mrs Merkel told reporters.

She added that world leaders had “very balanced” talks on growth.

“We need the right mix of budget consolidation… and at the same time efforts for growth.”

In the closing discussions of the summit, leaders also agreed not to introduce new protectionist measures until 2014.

But Russian President Vladimir Putin said that the imposition of trade barriers could be a vital tool in protecting Russian jobs.

Meanwhile, the “Brics” economies (Brazil, Russia, India, China and South Africa) also pledged to increase their contributions to the International Monetary Fund (IMF) – which has been seeking to boost its finances to prevent any future financial crisis.

The five Brics nations all offered to contribute $10bn (£6.4bn) to the IMF each in exchange for voting reforms that would give them greater influence in the organisation.

China also pledged $43bn (£27bn) to the IMF’s crisis intervention fund, which has almost doubled to $456bn (£366bn).

The BBC’s diplomatic correspondent Bridget Kendall, at the Los Cabos summit, says the offer of billions of dollars from the developing economies is perhaps the most tangible result of the two-day-long talks.

The funds, which would be released by the IMF if the eurozone crisis spreads, are a sign of support but also indicate how fragile many fear the economic situation in Europe to be, our correspondent adds.

G20: How their economies are faring

Country Growth (% GDP change, 2010-11) Unemployment (% 2011) External debt (% GDP, end of 2011)
Source: Principal Global Indicators
Argentina flagArgentina 8.9 7.5 7.6
Australia flagAustralia 2.2 5.1 86.6
Brazil flagBrazil 2.7 6 17.2
Canada flagCanada 2.4 7.5 70.2
China flagChina – mainland n/a 4.1 n/a
EU flagEuropean Union* 1.5 10.1** 120.0
French flagFrance 1.7 9.3 191.2
Germany flagGermany 3 6.5 159.4
India flagIndia 6.9 n/a 17.2***
Indonesia flagIndonesia 6.5 6.6 26.5
Italy flagItaly 0.4 8.4 115.1
Japan flagJapan -0.7 4.6 52
Mexico flagMexico 3.9 5.2 26.1
Russia flagRussia 4.3 6.6 27.7
Saudi Arabia flagSaudi Arabia 6.8 n/a n/a
South Africa flagSouth Africa 3.3 24.9 29.4
South Korea flagSouth Korea 3.6 3.4 34.9
Turkey flagTurkey 8.5 9.8 42.7
UK flagUK 0.9 8.1 421.9
US flagUS 1.7
Enhanced by Zemanta
Advertisements

European Stocks Drop on Greek Impasse; Spanish Banks Fall

European stocks dropped for a second day, to the lowest level in almost four months, as investors awaited a resolution to the political impasse in Greece and as Spanish credit risk surged.

Bankia SA led a selloff in Spanish banks. Kloeckner & Co. and Mediaset SpA (MS) both plunged more than 8 percent after reporting first-quarter results. ING (INGA) Groep NV and Carlsberg A/S (CARLA) paced advancing shares.

The Stoxx Europe 600 Index (SXXP) lost 0.3 percent to 249.73 at the close of trading, the lowest since Jan. 13, as the euro weakened for an eighth day. The Stoxx 600 has tumbled 8.3 percent from this year’s high on March 16, trimming this year’s advance to 2.1 percent.

“The real concern isn’t about Greece, it’s about the euro and whether it breaks up — that is key,” Mark Tinker, a fund manager at AXA Framlington Investment Management said on Bloomberg Television in London. “We don’t make a big economic scenario after a couple of days of moves, but I think there is a lot of anxious market repositioning going on right now.”

The benchmark Stoxx 600 yesterday dropped 1.7 percent after Antonis Samaras, the leader of Greece’s biggest political party, failed to reach an agreement on a new government and the mandate passed to left-wing leader Alexis Tsipras, who opposes austerity measures required for the nation’s financial rescue.

The euro fell to 1.2948 against the dollar at 4:25 p.m., for its longest losing streak in 3 1/2 years, as Tsipras meets with leaders of New Democracy and Pasok, the two Greek parties that supported austerity.

Political Stand-off

Tsipras yesterday squared off with political leaders before talks on forming a coalition, handing them an ultimatum to renounce support for the European Union-led rescue if they wanted to enter government.

The stand-off since the inconclusive May 6 election has reignited concerns over Greece’s ability to comply with the terms of its two bailouts negotiated since May 2010. The country is again facing the risk of an exit from the euro.

National benchmark indexes fell in 14 of the 18 western- European markets. France’s CAC 40 lost 0.2 percent and the U.K.’s FTSE 100 declined 0.4 percent, while Germany’s DAX added 0.5 percent. Spain’s IBEX 35 Index sank 2.8 percent, its lowest close since October, 2003.

The cost of insuring against a Spanish default surged to a record on concern a bailout of Bankia (BKIA) won’t fend of a banking crisis triggered by bad real-estate loans. Credit-default swaps insuring Spanish government debt rose 13 basis points to 512 basis points a 10:55 a.m. in London, according to data compiled by Bloomberg.

‘Zombie Bank’

Bankia tumbled 5.8 percent to 2.13 euros, the lowest since it listed its shares in July 2011, as JPMorgan Chase & Co. downgraded the Spanish lender to underweight, the equivalent of a sell recommendation.

“While there is no danger of an imminent collapse at Bankia, there is a risk that it becomes a zombie bank, which has to rely on the European Central Bank to fund it over the long term,” said Roger Francis, an analyst at Mizuho International Plc in London.

Spanish 10-year government bonds extended a decline, pushing the yield on the securities above 6 percent for the first time since April 27. The yield climbed 20 basis points, or 0.17 percentage points, to 6.04 percent.

Banco Santander SA (SAN), Spain’s largest lender, dropped 4.5 percent to 4.64 euros and Banco Bilbao Vizcaya Argentaria SA (BBVA) retreated 4.7 percent to 5.01 euros.

Kloeckner, Mediaset

Kloeckner tumbled 8.2 percent to 8.33 euros after Europe’s largest independent steel trader reported a first-quarter loss of 10 million euros ($13 million), wider than the average analyst estimate for a 900,000 euro-loss. The company said its 2012 earnings will improve only if Europe’s economy recovers.

Mediaset lost 11 percent to 1.45 euros, the lowest since it sold shares to the public in July 1996. The broadcaster reported an 85 percent slump in first-quarter net income to 10.3 million euros after the close of trading yesterday on lower advertising sales. Analysts estimated net income of 6.5 million euros on sales of 984 million euros, according to a Bloomberg survey.

Mapfre SA (MAP) retreated 6.3 percent to 1.94 euros, the most since April 2010. The Spanish insurer reported a 13 percent drop in first-quarter net income to 271.4 million euros. That still beat the average analyst estimate of 250.3 million euros in a Bloomberg Survey.

ING, Carlsberg

ING paced advancing shares, climbing 1.7 percent to 5.08 euros. The biggest Dutch financial-services company reported earnings excluding one-time gains and losses of 705 million euros, surpassing the 632 million-euro estimate of analysts.

Net income sank 51 percent after a charge for a potential settlement of a U.S. probe offset a gain from the sale of its U.S. online bank.

Carlsberg jumped 3.8 percent to 490 kroner as the world’s fourth-biggest brewer confirmed its full-year outlook. The company reported a 43 percent drop in first-quarter operating profit, excluding some items, to 574 million kroner ($100 million) as it sold less beer in Russia. That missed the average analyst projection for 845 million kroner.

Lanxess AG (LXS) advanced 6.4 percent to 61.83 euros after the maker of synthetic rubber said growth in earnings may touch 10 percent this year, outstripping analysts’ estimates, as demand surges in emerging markets and the U.S. recovers.

For 2012, profit will probably grow 5 percent to 10 percent from last year’s 1.1 billion euros. Analysts estimated growth of about 6 percent.

ITV Plc (ITV) rose 2.2 percent to 82.50 pence. The U.K.’s biggest commercial broadcaster said it expects to outperform the TV advertising market in the first half and forecast ad revenue to increase by about 3 percent in the first half.

Enhanced by Zemanta

EU ministers close to deal on new bank rules

Denmark’s finance minister says she and her European Union counterparts are close to a deal to force banks to build up bigger capital cushions against financial shocks.

Early Thursday, after more than 15 hours of debate, Margrethe Vestager said only a few “technical issues” needed to be ironed out before the ministers’ next meeting in two weeks.

The EU is in the process of writing an international agreement on capital defenses for banks into European law that regulators hope will prevent a repeat of the 2008 financial crisis.

The so-called Basel III deal would force lenders to increase their highest-quality capital gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

BRUSSELS (AP) _ European finance ministers were divided Wednesday on how the region’s banks can protect themselves from future financial shocks.

The European Union is in the process to writing an international agreement on capital defences for banks into European law. This would determine the level of risk Europe’s banks can take and what regulators can do to ensure that financial crises like the one brought on by the collapse of U.S. investment bank Lehman Brothers in 2008 do not happen again.

The so-called Basel III deal would force banks gradually to increase their highest-quality capital _ such as equity and reserves _ from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times.

But several countries, including the U.K. and Sweden, want to require their banks to build up even higher defenses without having to go to the European Commission, the EU’s executive arm in Brussels, for approval. There was also some disagreement over what should count as capital. Some countries are warning that Europe could be seen as softening banking rules at a time when it is already under close scrutiny from international investors.

“If we duck the challenge of implementing Basel we could face very important challenges to confidence in Europe this year,” warned George Osborne, the U.K.’s Treasury chief.

Basel III was agreed by the world’s leading economies after the 2008 financial crisis demonstrated that many banks did not have enough of a capital cushion to absorb sudden losses on loans and other risky activities. Once agreed, the new rules would apply to more than 8,300 banks in Europe, forcing them to build up billions in extra capital by selling shares or assets or reining in bonuses and dividends.

The 2008 financial panic that followed Lehman’s collapse hit Europe hard. Between 2008 and 2010, governments across the 27-country-bloc spent (EURO)4.6 trillion ($6.1 trillion) propping up struggling banks.

What complicated efforts even more was that the open borders in the EU allow banks to operate freely across the bloc, but when lenders ran into trouble it was national governments _ and taxpayers _ who had to foot the bill. While the EU is now striving for a single set of banking rules, there is still no pan-European bank resolution fund that could relieve national governments.

The U.K., which had to save three major banks, has seen its debt load almost double since 2007. Meanwhile much smaller Ireland had to seek an international bailout to help stem the losses of its domestic lenders. And many economists fear that the economic recession in Spain may soon reveal massive bank losses there.

Now, the U.K. is leading a group of countries that want to be able to force their own banks to have bigger defenses than the ones prescribed by the pan-European rules without first getting approval from Brussels.

“We should make it clear that the crisis did not originate exclusively from weak fiscal policy. It originated also from insufficiently strong banks,” said Polish Finance Minister Jacek Rostowski. “So therefore a group of countries including Poland, the Czech Republic, Sweden and the United Kingdom are very determined to see that banking systems in the future should be as healthy as we expect the fiscal side, the budgetary side, to be kept.”

That demand is opposed by France and the Commission, which fear that jacking up capital requirements in one country could force banks based there to cut down lending by their foreign subsidiaries. That, they argue, could hurt small states that don’t have a big domestic banking system.

To bridge the divide between the two camps, Denmark, which currently holds the EU presidency, has proposed a compromise that would allow national regulators to require an extra capital buffer of 3 percent. Anything beyond that would have to be approved by the Commission in Brussels, which would examine not only the level of risk in the home state but also the potential impact in neighboring countries.

After several hours of public discussion, finance ministers retreated into bilateral talks. A possible compromise could include requiring not the Commission, but another European supervisor _ the European Systemic Risk Board, which is led by the European Central Bank President Mario Draghi _ to approve higher national buffers.

If they cannot find agreement Wednesday, several ministers said they hoped a deal could be struck at their next meeting in two weeks. Once finance ministers have struck a deal, they have to negotiate a final agreement with the European Parliament.

Enhanced by Zemanta

EU slams governments for not enacting growth laws

BRUSSELS  — The 27 member countries of the European Union have been slammed for not implementing laws designed to boost growth on the crisis-hit continent.

The President of the European commission Jose Manuel Barroso delivers his statement on how to combat the economic crisis, at the European Parliament Wednesday, April 18, 2012 in Strasbourg, eastern France.

The criticism, from the president of the European Union’s executive Commission, comes as the EU finds itself increasingly under pressure to do more to get its economy growing again as many of its members slash government spending, pushing some states into recession.

International bodies like the Organization for Economic Cooperation and Development have long pointed out that the EU’s internal market — which in theory should allow people and businesses to move as freely in Europe as they can in the U.S. — often falls short in practice.

“It is incomprehensible that member states are still not fully implementing growth-friendly legislation we have in place,” European Commission President Jose Manuel Barroso told the European Parliament in Strasbourg, France.

The European Commission for years has been pushing states to remove administrative barriers that prevent workers from taking jobs and companies from offering services in other EU countries.

The EU’s internal market “is probably the largest engine for growth within the European Union,” Barroso said. “It gives European business unfettered access to other companies and half a billion consumers and allows them to develop the scale to compete globally.”

Barroso spoke after the Commission approved a series of initiatives to boost jobs and growth in the crisis-hit bloc. Many of the proposals in the 27-page plan have been made before but have failed to overcome resistance by governments.

The push to free up jobs has become increasingly urgent as unemployment in Europe has jumped to more than 10 percent as the continent struggles with a series of debt crises that have caused Greece, Ireland and Portugal to seek a bailout .

Joblessness varies widely from country to country, however. In Spain and Greece, unemployment stands above 20 percent and among young people almost one out of two is looking for a job. In rich countries like Germany, Austria or the Netherlands the unemployment rate is below 6 percent.

But getting a job in Germany or Austria is difficult for a Greek or Spaniard. Not only do most jobs require workers to speak the local language, there are also practical and administrative barriers.

The Commission called Wednesday for an easier way to transfer a worker’s pensions from country to country and the way cross-border workers are taxed to be simplified. Job seekers should be able to receive their unemployment benefits for up to six months while they are looking for work in another country and non-nationals should be hired for jobs in a country’s public sector, it added.

Getting governments to implement such initiatives is not easy. Citizens are often wary of foreign workers — even in countries with relatively low unemployment — and some rich states have seen nationalistic parties rise in the polls.

The EU has also come under fire from unions for its push to make the labor market more flexible — making it, they argue, easier to fire workers. The Commission argues that knowing they can easily get rid of workers during a slump would encourage businesses to hire more in good times. However implementing the reforms in the middle of an economic crisis can create more pain in the short-run. Critics also warn that shifting taxes away from income to consumption on things like energy — as the Commission has long favored — will effectively leaves workers with less money as their bills rise.

Laszlor Andor, the EU’s commissioner for employment and an outspoken critic of the focus on austerity, said governments needed to do more to ensure people who work full-time make enough money to live.

Even when adjusted for varying price levels, minimum wages range for less than €300 a month in countries like Bulgaria to almost €1,500 in rich states like Luxembourg — leaving many workers below the poverty line. Some countries, such as Germany, don’t have a minimum wage at all.

While low wages can make country’s exports more competitive, they also hurt consumption in rich states.

In addition to strengthening its internal markets, Barroso said the EU should try to improve its trade relations with non-European countries, including the United States.

“The United States is our largest economic partner,” Barroso said, adding that trade between the EU and the U.S. was worth almost €450 billion last year and that they had invested more than €1 trillion in each others’ economies.

“Any further gains, including through reducing non-tariff barriers, would be significant for both sides,” Barroso said. “We are exploring ways in which to broaden and deepen these ties.”

Enhanced by Zemanta

Economic crisis, a failing political class and the spectre of 1930s-style extremism across Europe

History suggests that in dire economic times which offer  no hope of improvement, extreme parties of the Left and Right will spring up and  attract widespread popular support. That was what  happened in much of continental Europe in the Twenties and early Thirties, most notably in Germany.

This time, it is not in Germany that political extremism is gathering force, no doubt because that country is at least, for the moment, largely insulated from the cold economic winds blasting much of Europe. No, the first disturbing signs of parties of the  far-Right and Left entering the political mainstream are to be found in France and Greece.

To be sure, France already had an established record of extremism in the shape of the semi-fascist Front National, whose leader, Jean-Marie Le Pen, was actually runner-up (admittedly a distant one) in the 2002 presidential elections. The party’s current and only marginally more moderate leader, his daughter, Marine Le Pen, commands around 14 per cent in the opinion polls ahead of the first round of this year’s presidential election on April 22.

Phenomenal success: Jean-Luc Melenchon appeals particularly to the young, desperate and unemployed with his rousing rhetoric and extreme Left policies Phenomenal success: Jean-Luc Melenchon appeals particularly to the young, desperate and unemployed with his rousing rhetoric and extreme Left policies

More surprising, and in a way more shocking, is the phenomenal success of a far-Left candidate called Jean-Luc Melenchon, who is slightly in front of Marine Le Pen in most polls. Think of a Gallic, more intelligent Arthur Scargill and you would not be very far off beam. He advocates confiscating the incomes above a certain level of the rich, raising the minimum wage immediately by 20 per cent, and  banning profitable companies from laying off workers.

M Melenchon’s rhetoric is even more alarming than his policies. He speaks approvingly of ‘civil insurrection’ and  tells delirious crowds, largely made up  of desperate, unemployed young  people, that they ‘will have to be the crater from which the new flame of revolution erupts’.

This kind of far-Left incendiary language has not been listened to in Europe for more than 30 years. The fall of the Berlin Wall was thought to have put an end to it. The far-Left is back in France as a formidable force, and M Melenchon’s wild policies and wilder words — which only ten years ago would have seemed hopelessly anachronistic — are being taken seriously in a country where youth unemployment is at least 25 per cent.

As is invariably the case with extreme Left-wing and extreme Right-wing politicians, Jean-Luc Melenchon and Marine Le Pen have much in common, railing against globalisation  and the European Union. Mme Le Pen has her own anti-immigration rhetoric, which speaks to the fears of many French people over the ‘Islamisation’  of France.

Neither of them will win this year’s presidential election, and both will almost certainly be knocked out in the first round. The ultimate victor will either be the present incumbent, the centre-Right Nicolas Sarkozy, or the Socialist Party candidate Francois Hollande, something of a Left-wing firebrand himself, whose policies put him to the Left of the British Labour Party.

But although neither of the extremist candidates will be president, they will together probably account for around 30 per cent of the vote on April  22. Moreover, their policies will influence the eventual winner. This is particularly likely if the socialist M Hollande emerges triumphant in the second round two weeks later, and there is talk of M Melenchon securing Cabinet seats or influencing policy if that happens.

In other words, extremism is becoming part of the mainstream. Who can say what will happen if the French economy continues to deteriorate? It is still a long way from the predicament of Greece, where draconian austerity measures demanded by the German government in the name of eurozone solidarity are provoking a deeply worrying political backlash.

According to opinion polls, the two established Greek parties may win less than 50 per cent of the vote in elections early next month. A majority  of voters seems likely to back  one of the small parties  which oppose the austerity measures, in particular the Greek Communist Party or  the far-Right Chrysi Avgi  (Golden Dawn).

Jean-Marie Le Pen and his daughter Marine Le Pen: Mme Le Pen has her own anti-immigration rhetoric, which speaks to the fears of many French people over the 'Islamisation' of FranceJean-Marie Le Pen and his daughter Marine Le Pen: Mme Le Pen has her own anti-immigration rhetoric, which speaks to the fears of many French people over the ‘Islamisation’ of France

As in France, though even more strikingly, many people are rejecting the failed orthodoxies of the mainstream in favour of the superficially alluring — though almost certainly impractical — quack remedies peddled by politicians who until recently would have been almost universally regarded as being beyond  the pale.

Of course, in Europe as a whole it would be silly to exaggerate a development that is still in its infancy, and is not bound to follow the pattern  of the Twenties and Thirties.  We are obviously still very far from the financial meltdown of the Weimar Republic which led to Hitler coming to power, trading as he did on the communist threat which terrified many middle-class Germans.

But it would be equally foolish to deny that recession and unemployment on a scale unknown since the end of World War II are helping to create the  conditions in which extremist parties can flourish. Nor should we be surprised that the movement is gaining traction  in France, cradle of revolutionary fervour.

Extremism reaches Britain? It is tempting to see the recent triumph of the populist Leftist George Galloway in the Bradford West by-election as a protest vote against mainstream orthodoxyExtremism reaches Britain? It is tempting to see the recent triumph of the populist Leftist George Galloway in the Bradford West by-election as a protest vote against mainstream orthodoxy

It is also tempting to see the recent triumph of the populist Leftist demagogue George Galloway in the Bradford West by-election as a similar protest vote against mainstream orthodoxy, though we can perhaps hope that this was a one-off victory that will not be repeated elsewhere. The British are not supposed to be drawn to political extremists.

If, like me, you think that the euro is the main — though not the only — cause of Europe’s woes, then there is at least a theoretical solution. The financial difficulties of  France, Spain, Italy, Portugal,  Ireland and Greece would be greatly ameliorated if they could be freed from the  uncompetitive exchange rate which membership of the euro imposes on them.

That, though, is not going to happen any time soon. Angela Merkel, Chancellor of Germany, is wedded to the notion that the future of a federal Europe and the survival of the euro are indivisible. The fear is that she could turn out to be entirely wrong, and the medicine being forced on Europe’s weaker economies could end up destroying the patient and tearing Europe apart.

What is certain is that while many young people in some European countries have no realistic hope of having a job, and they and their parents are subjected to never-ending austerity measures imposed by Berlin, there will be more politicians such as Marine Le Pen spouting their inflammatory nonsense, and others still like Jean-Luc Melenchon proposing lunatic economic measures that would only make things far worse.

When mainstream leaders are incapable of offering solutions to apparently intractable economic problems, extremists will step in. That is what happened in Europe in the Twenties and Thirties. Looking ahead to years of sclerosis which none of our leaders shows the slightest sign of knowing how to prevent, it would be a brave man who said the same thing could not happen again.

Enhanced by Zemanta

Cameron Calls for Japan to Lift Trade Barriers for EU Companies

Prime Minister David Cameron began a four-day tour of Asia by calling on Japan to end trade restrictions on British companies to open the way for a free- trade agreement with the European Union.

Cameron will press his counterpart Yoshihiko Noda on trade before they discuss security issues in North Korea and Iran and violence in Syria today, according to his office in London. Cameron, who is leading a delegation of 35 British business leaders, also will visit Nissan Motor Co. (7201)’s Yokohama headquarters.

“Last year I pushed hard to get backing of fellow EU leaders for work to start scoping out the shape of such an EU- Japan free-trade deal,” Cameron said. “I really hope we can open formal negotiations later this year. But in order to win the argument in the EU, Japan needs to demonstrate its readiness and commitment to non-tariff barriers.”

Cameron has led similar delegations to India and China as he seeks new markets for British companies. The effort is part of a plan to make exports an engine for growth as the U.K. economy struggles to avoid a second recession in three years.

Leaders from companies such as Barclays Plc (BARC), BAE Systems Plc (BA/), Royal Dutch Shell Plc (RDSA) and Rolls-Royce Holdings Plc (RR/) will form part of the traveling group who will sign deals with Japanese companies valued at 200 million pounds ($318 million). Nissan said it will build a new hatchback car at its Sunderland, England plant, adding 225 jobs.

“We want to attract more investment like this,” Cameron said. Nissan in March said it will expand production in Sunderland and add 2,000 jobs.

Trailing in Polls

Among other deals, Mitsubishi Corp. (8058) will sign an agreement to develop a new generator for wind turbines in Edinburgh and Panasonic Corp. (6752) will develop fuel-cell research in Cardiff, Downing Street said ahead of the trip. Japanese investment in the U.K. amounts to about 26 billion pounds, or a fifth of all Japanese investment in Europe, according to Cameron’s office.

The visit may also help shift Cameron’s political fortunes after two weeks of negative headlines following Chancellor of the Exchequer George Osborne’s annual budget that have seen the Conservative Party trail the opposition in opinion polls.

A backlash following Osborne’s decision to tax pensioners more, uproar over his decision to charge sales tax on some hot take-away food and the mishandling of a threatened strike by fuel-tanker drivers opened a five percentage-point Labour lead over the Conservatives, a poll by Survation showed.

Thirty-five percent of voters said they would back Labour in a general election, with 30 percent supporting the Conservatives, according to the poll commissioned by the Mail on Sunday newspaper. Survation interviewed 1,039 people online between April 5-6.

Enhanced by Zemanta

Italy’s Monti blames Germany, France for eurozone crisis

Italy's Monti blames Germany, France for eurozone crisis

Italian Prime Minister Mario Monti heaped blame for the eurozone debt crisis on Germany and France on Wednesday, saying they had set a poor example early in the bloc’s existence by flouting fiscal rules and exceeding deficit limits.

Italian Prime Minister Mario Monti on Wednesday said the root of Europe’s debt woes lay partly in the irresponsible parenting of Germany and France during the bloc’s infancy.

Monti told reporters in Tokyo that because the eurozone’s two largest players had not abided by fiscal rules, they had set a bad example for the rest of the continent.

“The story goes back to 2003 (and) the still almost infant life of the euro,” Monti said.

“It was in fact Germany and France that were loose concerning the public deficits and debts.”

The widely-respected technocrat, who replaced billionaire media magnate Silvio Berlusconi in November as head of the eurozone’s third largest economy, said the flouting of rules allowing for an annual budget deficit of no more than three percent of GDP was the issue.

He said despite recommendations, a meeting of ministers from European Union governments had decided not to punish France and Germany for going beyond the deficit limit.

“So the two largest countries in the eurozone had the (deficit) with complicity of Italy, which was then chairing under the rotation system the council of prime ministers of European Union.

“Of course if the father and mother of the eurozone are violating the rules, you could not expect… (countries such as) Greece to be compliant.”

Monti, who was speaking during a visit to Japan, was a member of the European Commission in the early 2000s when it recommended sanctions be levied against countries that were running over-the-top deficits.

The European Council – comprising elected politicians – vetoed the move.

Monti’s visit to Japan comes as Europe continues to stagger under the weight of runaway sovereign debt, with Greece at the forefront.

The eurozone is under pressure to boost the firepower of its debt rescue fund, with the 34-nation OECD on Tuesday pressing for a safety net of at least 1.0 trillion euros ($1.33 trillion).

Eurozone finance ministers are meeting on Friday and Saturday in Copenhagen to decide whether to increase the size of their debt rescue mechanism amid resurgent concerns about the financial health of Spain.

The OECD said the refinancing needs of vulnerable eurozone nations could top 1.0 trillion euros over the coming two years, on top of cash needed to recapitalise banks.

Italy alone needs some 750 billion euros to finance its debt, while Spain requires around 370 billion euros over the next three years.

Asked about the size of the hike in the eurozone firewall, Monti declined to give a specific figure but said: “I’m confident that the compact is solidly in place, the time for a conclusive and adequate decision on the firewalls has come.”

The premier, who was due to meet his Japanese counterpart later in the day, said he believed Europe now had a handle on its debt crisis and Italy was unlikely to suffer at the hands of the markets the way that Spain had.

“I think contagion (is) certainly not from Spain. Spain is I’m sure on a steady course of budgetary consolidation.

“And contagion as a whole I hope will soon belong to the past, now that more discipline is being adhered to by most member states and now that the firewalls are in the process of being fortified,” he added.

The Copenhagen meeting will also focus on Spain’s plans to rein in its public deficit to 5.3 percent of gross domestic product.

European leaders are concerned over Spain’s deficit, fearing it may become the biggest victim of a eurozone debt crisis that has already driven Greece, Ireland and Portugal to accept international bailouts.

Enhanced by Zemanta