The BBC's Caroline Wyatt in Paris says France began the
argument with the EU over its budget deficit in somewhat aggressive mode,
but now seemed to be adopting a more placatory tone. Mr Lambert said
France would do its best to meet the European Commission's requirements
— as long as those measures did not plunge France into a recession. But,
he added, the government's hands were tied by its commitment to implement
the 35-hour week — which entails extra costs "If we had not been
committed to this expense, he said, we would be well under 3% of public
deficit," he said. Mr Lambert ruled out any chance of achieving this
in 2004. "The Commission cannot believe that it is possible," he
said. Promises The French economy has been growing far more slowly than
anticipated this year, at 0.5% or less, while unemployment is high and
rising, at nearly 10%.
1990S BOOM 'STUNTING WORLD GROWTH'
The world economy is still trying to shake off the
hangover of the late 1990s boom years and there is little prospect of a
sustained recovery in the near future. That is the stark message of United
Nations' annual report on trade and development. In a gloomy assessment of
the world's economic prospects, the report says there are still too many
workers chasing too few jobs — and too many goods chasing too few
buyers. And the world cannot necessarily look to the United States, the
traditional engine of growth, to haul it out of the mire. "This is an
anxious time for the global economy," the United Nations Trade and
Development (UNCTAD) report says.
"The long-anticipated rebound in the US continues
to be delayed and there are concerns that imbalances and excesses ...
could result in a long period of erratic and sluggish growth."
Despite a succession of interest rate cuts by the US Federal Reserve,
investment has still not recovered as expected and the labour market is in
"its worst shape for some time". The upturn in the US is already
beginning to look like the "double dip, jobless recovery" of the
1990s, the report says.
At the same time, neither Europe — with its weak
consumption and tight spending controls — or Japan, where the economy
continues to stagnate, were well placed to step into the breach and
provide the necessary leadership. The consequences for "even the most
resilient developing countries" are likely to be grim, the report
warns. And there is a growing consensus that the Millennium Growth Targets
— the agenda for halving extreme poverty by 2015 — are already out of
JAPAN STRIVES FOR WEAKER YEN
The Japanese currency, the yen, is falling against the
dollar in the wake of action by the authorities to arrest its recent
gains. Japan is keen to cap the yen's appreciation, which could damage
prospects for the exporters on which the country's fragile recovery
depends. Newspaper reports suggest that the Bank of Japan is preparing to
raise the legal limit on its borrowing so it can keep buying dollars. But
the yen's decline is proving hard to sustain, as investors continue to bet
on US determination to keep the dollar weak.
TRANSPORT IS KEY TO GROWTH, EU SAYS
The European Commission has thrown its weight behind a
controversial plan to boost economic growth in the European Union (EU) by
pouring money into transport. The plan is the latest in a series of
unilateral and multilateral initiatives aimed at Europe's stagnant
economy. It calls for a sustained increase in spending on transportation
Commission President Romano Prodi said that an increase
in public investment of 1% of gross domestic product could boost economic
growth by up to a percentage point per year. And spending 220bn euros
(£154bn; $256bn) to finish 29 designated projects over the next two
decades could lead to the creation of 400,000 extra jobs a year, he said.
JAPAN MERGERS ON THE RISE
The market for mergers and acquisitions in Japan grew
by almost 50% in the first nine months of 2003, a new report says. M&A
activity was up to $56bn including the massive $16.5bn taxpayer-funded
bailout of insolvent bank Resona Holdings, Thomson Financial said. But
even without that, the total amount of M&A in Japan grew, after three
straight years of decline.
The biggest driver for the renewed growth, Thomson
said, was interest from overseas, with cross-border deals rising more than
60% to $11bn. Within that figure, deals with US companies almost doubled,
with highlights including the purchase by US investment group Ripplewood
Holdings of Japan Telecom's fixed-line business from Vodafone for $2.2bn
in August. The figure for January-September already outstripped that for
the whole of 2002, Thomson said.
EURO INTEREST RATES UNMOVED
European interest rates are to stay at 2% for the
fourth successive month, and are expected to remain unchanged for the rest
of this year. October 3 rate-setting meeting was the last to be presided
over by outgoing European Central Bank (ECB) President Wim Duisenberg, who
has seen the bank through its first five years. The ECB faced its biggest
challenge to date, the launch of the euro, during Mr Duisenberg's term in
When reporters asked what it felt like to hand over
monetary leadership of the world's second largest economy, Mr Duisenberg
replied: "Relief." His successor, France's Jean-Claude Trichet,
takes office on November 1, 2003, but is not expected to back any change
in interest rates until he has settled in.
AFRICAN STATES PROMISED $1BN GRANT
Japan pledged a billion dollars in grant aid for
poverty-stricken nations in Africa last week at the start of a major
conference on development issues. Japanese Premier Junichiro Koizumi told
the conference that the money would go towards meeting basic human needs
and promote economic growth.
COETZEE WINS NOBEL LITERATURE PRIZE
South African writer John Maxwell Coetzee has been
awarded the 2003 Nobel Prize for Literature.
The Nobel Academy's head, Horace Engdahl, said Coetzee
"in innumerable guises portrays the surprise involvement of the
outsider". The 18 lifetime members of the 217-year-old Swedish
Academy made the annual selection in deep secrecy at one of their weekly
meetings. The prize includes a cheque for more than 10 million kronor
($1.3m), but it can also bestow increased sales, celebrity and admiration.
RUSSIAN OIL MEGAMERGER 'COMPLETE'
Russian oil firms Yukos and Sibneft have completed
their $45bn merger, reports say, forming what is likely to be the biggest
listed company in Russia. According to Russian news agency Interfax, Yukos
President Mikhail Khodorkovsky said on October 3 that the deal was signed
off, creating a group to rival the current world number four oil firm,
France's Total. Shares in both firms had soared on October 2 as investors
betted that the merger was ready to be completed, further extending the
Russian stock market's recent breakneck gains.
DIRTY MONEY SPOTLIGHT WIDENS
Charities and underground money networks are in the
spotlight as experts meet to talk about ways of strengthening the fight
against money laundering and terrorist finance. Also high on the agenda at
the meeting in Stockholm of the 31-nation Financial Action Task Force (FATF)
is the need for countries to be quicker about freezing funds identified as
being linked with crime or terrorism. The FATF, an international task
force set up in 1990 to tighten the rules worldwide on money laundering,
expanded its responsibilities into terror finance with a new set of
regulations issued shortly after 9/11.
NIGERIA FUEL PRICES SOAR
The price of fuel in Nigeria has gone up by 12% without
the government making any kind of intelligible public announcement to
explain just what is going on.Earlier this week, the petroleum pricing
body said that in principle they supported deregulating the price of
petroleum products, but it did not explain this would actually take effect
the following day.
RUSSIAN MARKET HITS RECORD HIGH
Russia's stock market is celebrating a record closing
high — just five years after a rouble crisis brought the country's
economy to its knees. The country's main RTS index has gained more than
1,300% in the past five years and this week topped the previous high of
571.66 points recorded in 1997. The landmark was hailed by analysts in
Moscow as a psychological break with the 'old Russia'.But some economists
also warned about an over-reliance on energy stocks and Western
ZIMBABWE LAUNCHES Z$1,000 BILL
Zimbabwe has introduced its first ever 1,000-dollar
bill worth little more than one US dollar at the official exchange rate
— to try and ease the country's chronic cash shortage.Long queues at
banks have eased slightly since the issuing last week of short-term
"bearer cheques" valued at up to Z$20,000, and of new-design
Z$500 notes on Friday. But people are still spending hours trying to
extract a few thousand dollars from their bank, in the face of
hyperinflation which currently means prices are rising at more than 400% a
year. The new note will form part of Z$2.5bn the government says it will
inject into the economy every day from now until the end of the year.
AHOLD ADMITS 1.2BN EURO LOSS
Dutch retailer Ahold has revealed losses of 1.208bn
euros for 2002, following an accounting scandal at a US subsidiary. The
results have been delayed for months as the company struggled with the
aftermath of the admission that the fiddling of figures at the US
Foodservice unit meant profits had been overstated by $880m.
SHARES REBOUND ON WALL STREET
US stocks have soared on Wall Street after figures
showed the country's manufacturing sector was not as weak as feared. The
Dow Jones closed up 194.14 points, or 2.1% at 9,469.2, wiping out Sept 30
fall which had been triggered by worse-than-expected consumer confidence
figures.But news that the US manufacturing sector had grown for the third
month in a row during September provided an excuse for investors to head
back into the market. The strong performance on Wall Street lifted share
prices in Europe, with London's FTSE 100 index closing up 1.9%, Germany's
Dax rising 2.2% and France's Cac 40 ending 1.8% higher.
EU-US IN 'OPEN SKIES' TALKS
Talks aimed at liberalising air services between the US
and Europe have got underway in Washington. The negotiations over a
so-called 'open skies' policy could lead to US and EU airlines having
unlimited access to airports on either side of the Atlantic.
BRUSSELS TO ACT OVER FRENCH AID
For the second time in as many weeks, France is in
trouble with Europe's competition authorities for giving state aid to
struggling French companies. The European Commission has said it will take
the French government to the European Court of Justice to recover a 450m
euro ($525.5m; £317m) loan granted to the troubled computer firm, Bull.
The temporary rescue package should have been repaid in June this year.
UK FACTORY COMEBACK GATHERS PACE
The UK manufacturing sector has expanded for the third
month running, reinforcing hopes that Britain's beleaguered factories are
poised for recovery. The Chartered Institute of Purchasing and Supply (CIPS)
last week said its manufacturing index — a closely-watched barometer of
activity in the sector — climbed to 52.9 in September, up from 52.2 the
previous month. A reading above 50 on the CIPS index denotes expansion,
while a score below 50 indicates contraction.