The letter also sparked an immediate response from
Poland, where Foreign Minister Wlodzimierz Cimoszewicz said the expanding
bloc "cannot function on the principle of carrots and sticks".
In a reference to Germany's economic downturn, the letter says EU citizens
would not understand if the EU budget were exempted from the painful
consolidation efforts carried out at home. The letter's proposal would
slice 25 billion euros ($31bn) from the budget which the European
Commission is expected to propose. In a swift reply, European Commission
President Romano Prodi said that with less money it would simply not be
possible to do what EU governments and the rest of the world expected in
terms of foreign aid and improved border and immigration controls.
"Miracles... are not my speciality," Mr Prodi said in a
statement, adding that they did not seem to come easily to EU member
states either. The letter from the six countries that hold the EU
purse-strings will inevitably be seen by Spain and Poland as a threat.
WIND ENERGY PLANS
Plans to develop some of the world's biggest offshore
wind farms in the UK have been outlined by the government. They will be
located at 15 sites in three areas — the Thames Estuary, Greater Wash,
and the North West. They are expected to produce seven per cent of the
UK's energy needs by the end of the decade. The announcement comes just
weeks after the Government announced measures to boost financial support
for renewable energy. Energy Minister Stephen Timms said the proposals
proved the government was committed to a greener future.
He said: "This is the biggest expansion of
renewable energy anywhere in the world, and demonstrates that we are
serious about moving towards a cleaner, greener future. "The Energy
White Paper committed us to providing 10% of our total energy needs from
renewable sources. "These new wind farms will not only put us firmly
on the path to meeting this challenging target, but will help us to meet
our aspiration of generating 20% of our energy from renewables by
Mr Timms said the response from developers wishing to
build the farms, which should provide electricity for four million homes,
had been "overwhelming". Details of the sites, together with the
developers chosen to build them, can be seen on the website of the Crown
Estate, which leases the seabed around the UK. The British Wind Energy
Association, which represents almost 300 companies, welcomed the
announcement. Its chief executive, Marcus Rand, said: "We have the
best wind resource in Europe and this announcement puts the UK in the fast
lane to becoming a world leader in developing it offshore.
FRANCE DUMPS MOTORWAY SELL-OFF
The French Government has rejected a controversial plan
to privatise three large motorway operators. The state had been expected
to sell part or all of Autoroutes du Sud, Sanef and SAPRR, which together
run 6,700km of France's motorway network. The finance ministry wanted the
sales — which could have raised 10bn euros (£7bn; $12.4bn) — to help
ease France's budget deficit. But privatisation was opposed by the
transport ministry and by unions. Transport Minister Gilles de Robien
insisted that the state needed the revenue stream provided by the firms'
toll-booths; while labour activists were worried about job losses.
IMF GIVES BROWN BORROWING WARNING
Chancellor Gordon Brown has been warned by the
International Monetary Fund (IMF) that he risks breaking his own rules on
government borrowing. In its annual assessment of the British economy, the
IMF said the government needed to cut its spending deficit. It recommended
that either taxes should be raised or spending reduced to improve the
public finances. But the IMF also praised the UK's economy for performing
"enviably" while other major economies have struggled. In the
recent pre-Budget report, Mr Brown raised his borrowing estimate for
2003/04 from £27bn to £37bn.
DOLLAR HITS NEW LOW AGAINST EURO
The dollar has slid to a new low against the euro,
after reports the European Central Bank (ECB) had no plans to intervene in
the market. The report, citing unnamed ECB sources, said there would be no
intervention by the ECB until the euro hits $1.35. The euro traded as high
as $1.2418, topping its previous $1.2383 record. The euro has risen by
nearly 19% against the dollar this year and hit record highs in 12 of the
past 14 trading sessions.
"Things were relatively quiet this morning until
this story came out suggesting from ECB sources that they did not see the
need for any intervention," said Robert Sinche, global head of
currency strategy at Citibank in New York. "Whenever you put a number
out there, the markets get very excited," he added.
FISHERMEN PEER INTO ANNUAL ABYSS
The annual round of European Union talks to agree
permitted fish catches is starting in Brussels.
The commission, the EU's executive arm, is proposing to
maintain the deep cuts in cod quotas imposed last year. Scientists say cod
catches should be banned completely in the North Sea, the Irish Sea and
off western Scotland, to give the stocks a chance to recover. But many
trawlermen say the fish are plentiful and think the scientists are missing
clear evidence of abundance.
CREDIT LYONNAIS FACES HUGE FINE
French bank Credit Lyonnais has agreed to pay $100m to
settle charges that it illegally bought a US insurance firm twelve years
ago. The payment forms part of a $770m settlement deal between the US
authorities, the French government, and a handful of French firms. US
mutual fund hit by record fine Alliance Capital is to pay $250m to settle
charges of irregular trading practices, the biggest penalty ever paid by a
mutual fund. Alliance had been accused of allowing big investors to
execute rapid-fire trades in its shares, a practice that erodes returns
for ordinary savers.
RAMPANT EURO RISE SPARKS DEBATE
The euro has hit yet another all-time record against
the dollar, sparking debate on whether the trend is good for Europe's
sluggish economy. The single currency hit $1.2423, the latest in a series
of highs. European Central Bank (ECB) chief Jean-Claude Trichet said that
Europe and the US were both pursuing "strong and stable"
currencies. But European Commission President Romano Prodi warned a strong
euro could derail the eurozone's slow recovery.
HIGHER FARES THREAT AT STANSTED
The British Airports Authority (BAA) has told the BBC
that landing charges could rise by up to £10 to pay for the planned
expansion of Stansted airport. BAA expects to raise £2bn from higher
charges, roughly half the cost of the new runway due to be ready in 2011.
Low-cost airlines Easyjet and Ryanair, the airport's biggest operators,
are opposed to any increase in duty.
INFOSYS MAKES FIRST OVERSEAS BUY
India's leading software firm, Infosys, has snapped up
Australian software firm Expert Information Services (EIS) — its first
overseas acquisition. The all-cash deal is valued at $22.9m (£13.5m), and
is expected to be completed by the first week of January.
HOUSE PRICES 'WILL REMAIN STRONG'
The UK's biggest building society has said house prices
look set to increase by 9% next year. Nationwide said it expected most of
the growth to come in the first half of 2004, before rising interest rates
and weaker income growth dampen confidence. Its figure is more than the 8%
the Halifax predicted earlier this week, but lower than the 15% prices are
expected to have risen by in 2003.
GERMAN BUSINESS CONFIDENCE SURGES
German business confidence hit a three year high in
December, the latest sign that Europe's biggest economy is recovering. The
influential Ifo index rose to 96.8, its eighth straight monthly advance
and the highest level since January 2001. A pick up in the US and
increasing demand in Asia are having a positive impact, economists said.
US WATCHDOG BACKS NYSE OVERHAUL
Financial regulators have backed reforms aimed at
improving the way the New York Stock Exchange (NYSE) is run. Members of
the Securities and Exchange Commission (SEC) voted unanimously in favour
of the overhaul, which would make NYSE directors more independent.
CHINA LIFE SURGES ON MARKET DEBUT
Shares in China's biggest life insurance company have
jumped by nearly 27% on their trading debut in New York. China Life is
selling US-traded shares, known as American Depositary Shares, as part of
its $3bn (£1.76bn) flotation — the biggest in the world this year.
Demand for the shares has been high, with investors keen to invest in
China's economy which is growing at about 8% a year. China Life has about
45% of the mainland Chinese life insurance market.
US IN CENTRAL AMERICAN TRADE DEAL
The United States has agreed a free-trade agreement
with four Central American countries.The Central American Free Trade
Agreement, or CAFTA, was struck between the US and Guatemala, El Salvador,
Nicaragua and Honduras. A fifth nation, Costa Rica, pulled out of the
talks saying it needed more time to consider demands being made by the US.
KENYA HUNTS FOR MISSING BILLIONS
The authorities in Kenya are seeking to retrieve at
least $1bn (£570m) siphoned out of the country by former officials. A
six-month inquiry by investigative group Kroll has tracked the stolen
money to accounts in big-name banks, and shares in London hotels.
BOEING MOVES AHEAD WITH NEW JET
US plane maker Boeing has said it is to start taking
orders for its new 7E7 Dreamliner passenger jet. The 200-300 seat aircraft
is Boeing's first new commercial airliner for more than a decade. The new
model, which is not expected to enter service until 2008, is seen as vital
for Boeing's future. The US firm is facing fierce competition from
Europe's Airbus, which is expected to overtake Boeing this year in terms
of sales. Boeing said its board had unanimously decided to start offering
the 7E7 model for sale.
YUKOS AND SIBNEFT TO END MERGER
The $11bn merger between Russian oil firms Sibneft and
Yukos has all but ended after the two companies agreed to reverse the
BANK VOTED 8-1 TO HOLD UK RATES
Bank of England deputy governor Sir Andrew Large was
alone in his call for a rise in interest rates earlier this month. Minutes
from the Bank's rate setting Monetary Policy Committee (MPC) show that Mr
Large was concerned by the rise in consumer debt levels. But the remaining
eight members of the committee voted to keep the cost of borrowing on hold
at 3.75%. Governor Mervyn King decided to adopt a wait-and-see policy
after November's quarter-point rise in UK rates.
UK INFLATION IN SURPRISE SLOWDOWN
Inflation unexpectedly slowed last month to its weakest
rate since July, official figures show. The Office for National Statistics
(ONS) said the new Consumer Price Index (CPI) measure fell 0.1% to
1.3%.Analysts had predicted a rise to 1.5%. The Chancellor had set a
target of 2% for the new measure, which excludes housing and council tax
costs. But the old Retail Price Index "headline" rate, which
includes mortgage interest payments, fell by 0.1% to 2.5%.
IMF APPROVES NEW BRAZIL LOAN DEAL
The International Monetary Fund has approved a new deal
to extend its current loan to Brazil. The extension will give Brazil
access to a standby loan worth more than $14bn next year. The Brazilian
Government says it will not draw on the money it sees as a precaution
against economic turbulence. IMF sources said the deal was approved
unanimously, with board members praising Brazil's performance as
UK JOBLESS TOTAL SHOWS FALL AGAIN
The number of UK workers out of a job has fallen during
the three months to October, as the number of people in work reached a new
high. The so-called ILO survey, the government's preferred method of
gauging unemployment, fell by 33,000 people to 1.47 million. This equates
to a jobless rate of 5.0% of the workforce.