Mr Sarkozy was handed France's finance and economy
portfolio, with a brief to trim the budget without stirring up popular
opposition to reform.
Mr Sarkozy's predecessor, Francis Mer, took the blame
for a raft of unpopular cut-backs, in particular to France's expensive
welfare and pensions systems.
The key to Mr Sarkozy's approach to France's public
finances is an assumption of a recovery in economic output.
After growing by just 0.5% last year, the economy is
now predicted to accelerate to 1.7-1.8% growth in 2004, Mr Sarkozy said.
He has earmarked half the extra revenues this growth
should produce to pay off state debt, which is currently 64% of GDP.
He intends to introduce a law this year, which will
oblige governments to use any surplus tax revenues to redeem France's
Weak state finances are a disincentive to investment,
he said, and have made the French economy especially sluggish.
At the same time, he has remained cautious about
promising the sort of sweeping spending cuts some economists have called
France needs to reduce its budget deficit from the
current 4.1% of GDP to below the eurozone ceiling, or face statutory
Mr Sarkozy pledged a freeze on spending this year and
next, and in particular promised to cut state aid to companies that move
The state is to sell up to 600 tonnes of the Bank of
France's gold reserves — an amount that is worth some $7.5bn at current
BUSH ASKS FOR $25BN FOR WAR COSTS
US President George Bush has asked for an extra $25bn
for military costs in Iraq and Afghanistan, reversing a previous spending
In a statement, the White House cited "recent
developments on the ground and increased demands on our troops" as
the reasons for the request.
There have been recent upsurges of violent resistance
to the military occupations of both countries.
Earlier, the US said it had dropped plans to reduce
troop numbers in Iraq.
It had said it would cut forces to 115,000 this month,
but it now says it plans to keep 135,000 troops in Iraq until 2006.
Mr Bush had vowed not to seek more money for Iraq
before the November presidential election.
The White House is now asking for an extra $25bn from
Congress as a "contingency reserve fund" out of the proposed
budget for the fiscal year 2005, beginning on 1 October.
That will come on top of the $160bn already allocated
to Iraq and Afghanistan in President Bush's previous spending bills.
White House budget director Joshua Bolten went to
Congress to brief top Republican lawmakers on the additional request.
"This is not money for Iraq, this is money for our
troops, this is supporting our troops. Nobody is going to have any problem
with that," House Majority Leader Tom DeLay, a Texas Republican,
reportedly told journalists afterwards.
But the BBC's Pentagon correspondent Nick Childs says
that previously, amid much controversy, administration officials had said
that they would not be asking for more funds this year because it was
impossible to work out what future needs would be.
BANK UPS INTEREST RATES TO 4.25%
The Bank of England has raised UK interest rates by a
quarter percentage point to 4.25%.
The move had been widely expected by economists and
comes as the Bank tries to cool soaring property prices and consumer debt.
The increase is the third quarter-point rise the Bank
has made in the past seven months.
It will leave homeowners repaying £15 a month more on
a £100,000 mortgage with a previous interest rate of 5.75%.
Many analysts now believe the cost of borrowing could
reach 5% by the end of the year.
POOR COUNTRIES SEEK BETTER DEAL
Slow progress has been made at a meeting in Senegal's
capital, Dakar, as trade ministers from the least developed nations argue
a better deal.
The meeting, attended by World Trade Organisation (WTO)
chief, Supachai Panitchpakdi, aimed to make proposals on key issues of
agriculture and trade.
"Show realism, flexibility and a determination to
make progress", Supachai told officials.
The ministers have expressed anxiety over their
Further concern was voiced by the ministers — most of
whom are from African nations — over agricultural subsidies enjoyed by
richer trade partners.
To help speed things up a group of African states said
they will drop demands that cotton be treated separately if rich nations
guarantee the issue will not hold up further negotiations.
EURO INTEREST RATE LEFT UNCHANGED
The European Central Bank (ECB) has decided to keep
interest rates on hold at 2%, despite some calls for a cut to help boost
the slow recovery.
The move had been widely expected with the latest
economic data showing manufacturing orders and output rising at their
fastest pace since 2000.
Prospects for exporters have also improved with the
euro weakening against the dollar since February.
However, other reports say consumer confidence in the
eurozone remains low.
Eurozone interest rates have now been at 2% for 11
GREENSPAN WARNS OF DEFICIT THREAT
The soaring budget deficit could impact long term US
economic stability, warned Federal Reserve Chairman Alan Greenspan in a
He opened his Globalization and Innovation speech to a
banking conference in Chicago with warnings of fiscal challenges ahead.
The US has been pressing "historic limits in
recent years without financial disruption" he said.
"Financial disruption that almost surely would
have arisen in the past".
He pointed to limits pressed against in external and
Of main concern was the budget deficit. Mr Greenspan
noted it would soon be over $500bn.
PROFITS RISE AT JAPAN MOBILE FIRM
Japanese mobile phone network giant NTT DoCoMo has seen
its annual net profits triple to 650bn yen ($5.8bn; £3.3bn) for the year
ending March 2004.
The giant rise, boosted by an upsurge in the take-up of
next generation or 3G video phones, was further helped by its comparison
with losses last year.
DoCoMo's annual pre-tax profit rose by 5.6% to 1.1
trillion yen, on revenues of 5.05 trillion yen.
PINEWOOD SHARE SALE RAISES £46M
UK film studio Pinewood Shepperton has said it raised
£46.2m ($81.6m) from the sale of its shares, ahead of its London Stock
The studio, home to the James Bond and Harry Potter
films, said it had sold shares in the company at 180p each — valuing the
group at £82.5m.
FIRST SUPERSIZE AIRBUS ASSEMBLED
The assembly of the world's largest aircraft, the
Airbus A380, has begun at a £240m factory in Toulouse, France.
The 555-seater super airliner is expected to
revolutionise the airline industry and could lead to a doubling in Airbus'
profits, some experts say.
Fittingly for a huge plane, the factory itself is very
big: 49 metres long, 250 metres wide and 46 metres tall.
The first flight of an A380 will take place in 2005 and
by 2008 production should reach four aircraft per month.
CABLE TV BOOSTS NEWS CORP PROFITS
The TV show American Idol has helped News Corporation
boost revenues from advertising and post a 69% increase in net quarterly
The global media giant, run by Rupert Murdoch, also saw
profits boosted by sales of DVDs and films.
Net profits for its fiscal third quarter were $465m,
compared to $275m for the same period last year. Among its various units,
Cable TV income rose more than 50% and satellite television operating
income rose 25%.
MUSIC STARS GET $50M IN ROYALTIES
The world's top five music companies have agreed to pay
$50m (£28m) in unclaimed royalties to artists including David Bowie and
Thousands of musicians will receive extra royalties as
a result of a two-year investigation by New York Attorney General Eliot
Music companies including Sony, Warner and EMI failed
to maintain adequate contact with artists, Mr Spitzer said.
Liza Minnelli and Sean "P Diddy" Combs will
also receive extra payments.
SA LEAD 2010 RACE
South Africa's hopes of hosting the 2010 World Cup were
given a major boost recently after Fifa inspectors rated their facilities
as the best of five competing countries.
A 94-page technical evaluation report described South
Africa's bid as "excellent" with those of north African rivals
Egypt and Morocco termed "very good".
The report said: "Despite questions about security
in the country, the legacy compared to the investment needed will be a
great contribution to the country.
EXPERTS DIVIDED ON SASSER FUTURE
Global computer experts are divided on whether the
Sasser worm will now fade away, or become yet more of a threat.
Some believe the virus, which has wrought havoc on
computers around the world, will slow down as more and more people fit
additional security patches.
Yet others warn that Sasser could now merge with
earlier virus-like programs to wreak yet more havoc.
INTERNATIONAL POWER PROFITS RISE
International Power has reported a rise in earnings,
boosted by a stronger performance at its businesses in Europe and
The UK electricity company saw its first-quarter,
pre-tax profits rise by 12% to £84m ($150m).
RECORD HIGH FOR US SERVICES
US service sector activity rose to a record in April,
in figures released by the Institute for Supply Management.
The sector, which makes up for 85% of the US economy,
rose to 68.4 in April from 65.8 the month before in an index where higher
than 50 means expansion.
US INTEREST RATES REMAIN ON HOLD
The Federal Reserve has — as expected — decided to
keep US interest rates on hold at 1%.
But analysts now expect that the Fed will begin raising
rates in the summer, in an attempt to match the strongly accelerating
growth of the US economy.
In its accompanying statement the Fed itself hinted at
a future upward trend, saying rates could now be boosted at a
RBS GROWS IN US WITH $10.5BN BUY
The UK's Royal Bank of Scotland is expanding its push
into the US by spending $10.5bn (£5.8bn) on Cleveland-based bank Charter
The purchase is to take place through Citizens
Financial Group, RBS's main vehicle in the US.
It will give the bank access to six Mid-Western states
including the cities of Chicago, Detroit and Cleveland.
RBS has been a keen buyer of financial services firms
in the US, but Charter One is its biggest buy to date.
TROUBLED DRESDNER BACK IN PROFIT
Germany's Dresdner Bank has returned to profit —
ending 18 months of losses — according to its owners Allianz.
The news came as Allianz issued a preliminary earnings
statement showing an estimated net profit of 650m euros (£440m; $784m).
GERMAN UNEMPLOYMENT STILL RISING
Unemployment remains a serious problem in Germany and
the economy is not growing fast enough to sort it out, according to the
Federal Labour Office.
Seasonally adjusted unemployment rose to 4.367 million
in April, up by 23,000 from March.
WATER BILL RISES IN THE PIPELINE
UK water companies have called for a sharp rise in
customer bills starting in 2005.
If the proposed price rises are given the green light
by the industry regulator, average bills will rise by £14 a year from
2005 to 2010.
This will mean that the average annual bill will rise
from £240 a year in 2005 to £310 a year in 2010.
SPAIN'S TOURISM BOUNCES BACK
Spain's tourism industry has bounced back after the
Madrid bomb attacks in March which killed 191 people.
In a study released at the Global Travel and Tourism
Council Summit in Qatar, travel sector figures indicate a prompt and full
Following the 11 March disaster, Spain has compared
well with other countries that suffered similar attacks.
DEVELOPER LOSES TWIN TOWERS CASE
The destruction of the World Trade Center by two
hijacked planes on 11 September 2001 counts as a single attack, a jury has
The attacks killed more than 3,000 people, and
destroyed the Center's iconic twin towers.
Developer Larry Silverstein had argued that two events
had occurred, each attracting $3.5bn worth of insurance.
But the jury said otherwise, in a move which could
reduce the money available for rebuilding by at least $1bn.