Europe: Weekend News Summary

January 12th, 2014
in econ_news, syndication

Econintersect:  Recent news from from Europe has been collected for a quick review.  Links and summaries follow after the Read more >> jump.

Follow up:

The German defense industry is increasingly looking to Asia as a growing market for its products. Conflicts in the Far East have led to a demand for the kind of giant -- and expensive -- submarines that come from shipyards in northern Germany.

NEOPOST, a French firm that specialises in mail-handling services, is nothing if not ecumenical when it comes to raising money. In January 2012 two-thirds of its debt consisted of conventional bank credit; by January 2013 less than one-tenth did. In the meantime the company raised $175m through a private placement of notes in America, €150m ($204m) through a bond placement and €150m in non-bank loans in France...

If further proof was needed that the euro crisis has ended as far as bond markets are concerned, it was provided by Ireland’s successful bond auction on January 7th. Less than a month since exiting its bail-out the Irish government raised €3.75 billion ($5.1 billion) in an issue of ten-year bonds that was nearly four times oversubscribed...

The Bank of England’s Monetary Policy Committee voted to leave interest rates unchanged at the all-time low of 0.5% in December, and left asset purchases unchanged at £375bn.

German Finance Minister Wolfgang Schäuble has negotiated a European banking union suited perfectly to his country's tastes. It looks like a victory, but it could prove to be very expensive if Europe or Germany face another financial crisis.

CNN's Jim Boulden visits the country to explore its post-austerity construction boom.

European Central Bank chief Mario Draghi pledged "decisive action" if needed to safeguard the euro-zone recovery, as it kept its key lending rate at a record low 0.25%.


The European Central Bank sent the euro tumbling on world markets after it warned that the 18-member currency zone may need further support to prevent a Japanese-style period of stagnation.

The ECB president, Mario Draghi, said persistently high unemployment, falling inflation and difficult lending conditions were harming the recovery, and the ECB stood ready to use all the tools available to maintain confidence and growth.


Lithuania must demonstrate its public finances are sustainable in the medium term to win approval to adopt the euro in 2015, Olli Rehn, the European commissioner in charge of economic and monetary affairs, said on Saturday. While Lithuania was making a good progress in meeting euro adoption criteria, its was "particularly important" for Lithuania to ensure its public finances are sustainable over a medium term, the European Commissioner said...

by James Narron and David Skeie - Liberty Street Economics, Federal Reserve Bank of New York

Convicted murderer and millionaire gambler John Law spotted an opportunity to leverage paper money and credit to finance trade. He first proposed the concept in Scotland in 1705, where it was rejected. But by 1716, Law had found a new audience for his ideas in France, where he proposed to the Duke of Orleans his plan to establish a state bank, at his own expense, that would issue paper money redeemable at face value in gold and silver...

Heathrow today slammed “draconian” price cuts ordered by the airport regulator that will see passengers pay lower fares and threatened to cut investment at the UK’s biggest airport as a result.

German Finance Minister Wolfgang Schäuble met with his EU colleagues until midnight on Tuesday to discuss Europe's planned banking union. Berlin is playing it safe in the talks, but its hesitancy threatens to derail the project's core ambitions.

WASHINGTON -- President Obama will nominate Stanley Fischer, the former head of the Bank of Israel, to be vice chair of the Federal Reserve, and also tapped two other people for seats on the central bank's Board of Governors, the White House said Friday.

BERLIN/FRANKFURT (Reuters): Europe's largest automaker Volkswagen is bracing for challenging markets as it posted record 2013 sales with demand from China and North America more than offsetting declining deliveries in core European markets. "Even though the situation in Europe would appear to be stabilizing, economic uncertainty will continue and the challenges we will be facing on markets will remain virtually unchanged," VW sales chief Christian Klingler said in a statement on Saturday...

Job creation continued to surge in December, according to recruitment agencies. Alongside deteriorating staff availability, rising demand for workers pushed up pay rates at the fastest pace for six years. The data therefore suggest that unemployment should continue to fall sharply, possibly breaching the Bank of England’s policy threshold of 7% in early 2014, and that a return to real wages growth is in sight for 2014.

France's Total is set to become the first major oil company to invest in Britain's nascent shale gas industry, sources said, boosting hopes for a pick-up in exploration to help assess the commerciality of the resource. Total will on Monday announce a deal to commit 30 million pounds to drilling for shale gas in Lincolnshire in central England, two sources familiar with the matter told Reuters, confirming details published in the Telegraph newspaper...

By Inmaculada Sanz and Tracy Rucinski MADRID (Reuters)

Spain's Princess Cristina, daughter of King Juan Carlos, will appear before a Palma de Mallorca court to testify over tax fraud and money-laundering charges she denies but has decided not to appeal, her lawyers said on Saturday. It is the first time a member of Spain's royal family will testify as the subject of criminal proceedings since Juan Carlos came out of exile to reclaim the throne after the end of the Francisco Franco dictatorship in 1975...

British advertising ended the year much stronger than expected thanks to the economic recovery, prompting analysts today to upgrade their forecasts to record levels for both 2013 and 2014.

When Mediobanca said in June that it planned to put most of its stakes in other companies up for sale and become a “normal” bank, critics of crony capitalism cheered. For decades the Italian investment bank has sat at the centre of a web of cross-shareholdings, shareholder pacts and nested stakes that has allowed a small group of banks, big companies and rich families to control the destinies of many of Italy’s most important firms...

Weaker than expected output of the industrial sector and a surprise drop in construction industry output in November suggest fourth quarter economic growth could come in lower than the surveys are indicating. Nevertheless, the economy remains firmly in recovery mode, and a rebound from this current bout of weakness looks likely in coming months.

Official data indicated that UK goods exports rebounded in November, but the recent trend remains far weaker than indicated by business surveys. The weakness is also at odds with the general upward trend in global economic growth. The divergence is a puzzle, and suggests that the official data may have been understating trade growth in recent months.

A life on the ocean wave

For the cruise business, January and February, the “wave season”, are the busiest months for passengers booking their trips. So it was especially unfortunate when, on January 13th two years ago, the Costa Concordia, owned by a subsidiary of Carnival, the world’s biggest cruise line, sank off the coast of Italy, with the loss of 32 lives...

The week sees further clues to US growth in the fourth quarter, as well as UK retail sales and inflation in December. Euro area industrial production and Japanese trade data are also notable highlights.

A regional airport that opened six months ago in the German city of Kassel has close to 140 employees, but no scheduled flights this winter. Everyday operations are legally required, even as the facility hemorrhages money.

Steven Hansen
John Lounsbury

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