The pace of the crisis continues to accelerate, even as the latest More Europe plans advance. Both the World Trade Organization and the International Monetary Fund are issuing global slowdown warnings at the same time as a proposal moves forward to advance a new European industrial regime, with the “green” and biotech corporate sectors favored. And the bailout fund that’s part of the More Europe “stability” regime is now en route to quadruple, possibly with leveraging, and Finland restates its opposition.
The latest bailout rumors have a three-nation package in the works, though Spain remains singularly obstinate to bite the bailout bullet. Meanwhile, the European Commission chief is calling for a new sense of urgency, the IMF boss warns of years of misery for the PIIGS, Fiat’s boss says European car sales still haven’t hit bottom, the Catalonian independence movement may go to a referendum, Spanish corporate taxes are falling, and the country is becoming more like the U.S. Portugal killed that propose social security tax hike, The Italian prime minister says the country’s austerity-amenable, while the OECD gives the country a lecture.
German business confidence is falling, the Bundesbank predicts slower growth, the British industry lobby calls for more privatization, the French president tries to whip his reluctant junior partners into line, and more Danes are falling into poverty.
Another More Europe front opens
The More Europe agenda pushed with such vigor by German Chancellor is all about the stripping of power for European nation-states and its concentration in Brussels and that very expensive, cost-overrun-plagued new headquarters of the European Central Bank in Frankfurt.
The first step is that controversial European Stability Mechanism and fund not undergoing vetting by sundry national parliaments, to be followed by a new continental bank regulatory regime that vest final authority in the eurobank.
And the next stage? A new industrial policy that will address not only measures to restore stability but create major benefits for the “green” industrial sector, including the increasingly controversial biotech sector — areas, perhaps not coincidentally, in which Germany has a strong industrial base.
A European Commission communication to re-launch European industrial policy – to be published next month and seen by EurActiv – will face diffidence from member states left unconvinced by a string of unfulfilled initiatives and divided over what such a policy should deliver.
The Commission’s communication, called ‘Industrial Policy – a contribution to growth and economic recovery’, identifies four key pillars: investment in innovation, better market conditions, access to capital, and skills.
Unlike previous industrial policy statements – included within the Lisbon Strategy and the Europe 2020 initiative – it also earmarks six “priority action lines”, specific sectors where it proposes immediate action.
These include: clean production manufacturing technologies, sustainable construction, clean vehicles, bio-based product markets, key-enabling technologies and smart energy grids.
It will also propose measures to improve the functioning of the internal market and European performance in global markets.
And now on to some economic indicators. . .
Global trade picture dims, says the WTO
Another clear signal that the European crisis must be seen in a broader context.
What we’re witnessing is a unique historical moment, the result of the collapse of constraints on bank and finance, occurring simultaneously with global warming, global resource depletion, environmental devastation, population density, and the corporate capture of the means of production of human sustenance and the massive flooding of our environments and bodies with a flood of chemicals and the products of genetic engineering, all released with minimal understanding of their effects, singly, combinatorially, or synergistically — all fueled by the frantic, nanosecond pulse of deregulated global finance.
From Josephine Moulds of The Guardian:
The World Trade Organisation has warned the outlook for global trade is deteriorating, citing the eurozone crisis as the main drag on growth.
The WTO slashed its forecast for global trade growth this year from 3.7% to 2.5% on Friday, less than half the previous 20-year average. The WTO director general, Pascal Lamy, said there was more risk of things getting worse than better.
The news came as Brazil’s finance minister lambasted the US and Japan for their latest rounds of quantitative easing, which will devalue their currencies and, he said, trigger a global currency war.
Next year the WTO expects trade to grow by 4.5%, compared with previous forecasts of 5.6% growth. That forecast is, however, based on the assumption that current policy measures will be enough to avoid a breakup of the euro and that US politicians will reach an agreement to stabilise public finances and avoid the “fiscal cliff”.
The IMF follows in the WTO’s footsteps
Gee, ya think globalization just might produce globalized crisis?
From the BBC:
The International Monetary Fund looks likely to cut its forecast for global growth next month when it updates its projections for the world economy.
IMF head Christine Lagarde said in a speech that global growth would “likely be a bit weaker” than anticipated.
Problems in the eurozone and worries about the US economy continued to weigh on investors’ confidence, she said.
She also warned of a slowdown in some of the emerging nations that previously bolstered global economic growth.
So there’s a €2 trillion rescue fund in the works?
That’s a lot of euros, but that’s what Spiegel reported, a four-fold increase in the amount originally proposed a few months ago.
Presumably the move’s intended to add weight to the financial gyroscope of the stability mechanism.
From Deutsche Welle:
The eurozone is looking to increase its permanent rescue fund to about 2 trillion euros ($2.58 trillion), according to German media reports. European ministers want to use private capital to reach the formidable target.
The member states of the single currency are making preparations to allow the European Stability Mechanism (ESM) to leverage its capital in the same way as its European Financial Stability Facility (EFSF) predecessor, German newsmagazine “Spiegel” wrote Monday.
Spiegel said eurozone finance ministers had reiterated at their meeting in Cyprus earlier this month that the ESM should be allowed to use this method to increase the rescue fund’s planned lending power of 500 billion euros ($647 billion) to about 2 trillion euros with the help of private investors.
While German Finance Minister Wolfgang Schäuble was supporting the plan, Finland had voiced their opposition to it, Spiegel wrote. Germany’s liability under the ESM would remain capped at 190 billion euros, the news magazine added.
But wait, the German finance minister says there’s no such thing.
From Agence France-Presse:
Germany on Monday dismissed as “completely illusory” a press report suggesting that the eurozone’s bailout fund could be leveraged up by a factor of four to around two trillion euros ($2.6 trillion).
A spokesman for Finance Minister Wolfgang Schaeuble told a regular news briefing that the figure, reported by newsweekly Spiegel over the weekend, was unrealistic and “completely illusory.”
While there were discussions in Brussels over boosting the firepower of the European Stability Mechanism (ESM), due to come into force next month with a volume of 500 billion euros, it would be “abstract” to discuss figures, said the spokesman, Martin Kotthaus.
“It’s not feasible” to put a precise number on the potential final amount of the fund, he said.
However, he said that Berlin backed in principle the idea of leveraging the fund, which is reported to have run into opposition from Finland.
More from EurActiv:
A spokeswoman for the German finance ministry confirmed that following the German Constitutional Court’s ruling on the ESM, the guidelines in Europe were being reworked and that part of this would be covered by the ESM while the rest would come from private investors, which would be a kind of leverage.
This part was in the process of being approved in Brussels, she said.
The spokeswoman said that the ESM would have the same tools as the EFSF.
She also said that German liability remained capped at €190 billion and added that when work had been completed at an EU level, the result would be presented to the German Bundestag, the lower house of parliament, for approval.
The figure of €2 trillion was, however, incomprehensible, she said.
A spokesman for the European Commission declined to comment.
And Finland makes its opposition clear
Spiegel was right about Finnish opposition to the bailout machinery.
What’s also notable is the growing popularity of the True Finns, a party which opposes the bailout machinery and fuels the anti-immigrant sentiment that invariably accompanies economic crisis.
From Open Europe blog:
One of the consequences of the eurozone crisis is that media, pundits and market analysts have been forced to become experts of what previously would have been seen as the most obscure political events. Thus, the Finnish local elections now have international significance (although they are still not making any headlines) as they serve as a barometer for the extent to which “Europe” as an election issue can trickle through to the local level. The theory being that the closer the issue gets to citizens, the harder for EU leaders to sell more integration.
An opinion poll for Finnish public broadcaster Yle puts the anti-bailout (True) Finns party at 17.2% – three times higher than in local election in 2008. Compared to 2008, all parties except for the Green party and the (True) Finns party would lose voters.
With a majority of voters from all Finnish parties – apart from the small Swedish People’s Party – seemingly opposing more eurozone bailouts, expect Finland to remain assertive. Starting with the rumoured leveraging of the ESM.
The next step, a multi-nation bailout?
It’s a three-fer, according to a well-connected German news medium.
It makes a perverse sort of sense, adding the cash needed to the newest addition to the PIIGS — the one that makes them the CPIIGS — to the GS and the S.
Eurozone authorities are preparing a broad, multiple-nation bailout package including a modified program for Greece, a second bailout for Spain and a first program for Cyprus, Germany’s Financial Times Deutschland reported over the weekend, citing Eurozone sources.
Fresh support measures for the three countries could be negotiated and presented to national parliaments as a package by November at the latest, MNI reported citing the newspaper.
A joint package is aimed at breaking resistance against additional concessions to Greece – particularly among German parliamentarians – by presenting a broad solution that could represent a breakthrough in the debt crisis, the paper said.
Initially, decisions were scheduled to be taken in October. According to the report, however, Berlin is putting the brakes on closing aid-related deal at the next EU summit in mid-October.
The latest scheme: Leveraging the bailouts
There are more questions than answer the announcement, most particularly what steps are going to be taken to reduce the risks involved both to lenders and to borrowers.
Given that leverage presents as many risks as it dows opportunities, we suspect a lot of stories will follow.
German Deputy Finance Minister Steffen Kampeter said on Monday there is a discussion going on in Europe about leveraging the new permanent bailout scheme for the euro zone – and he promised that Germany’s parliament would be consulted.
“If Europe decided to leverage the ESM (European Stability Mechanism) – and this discussion is going on – we would of course involve the German Bundestag (parliament’s lower house),” Kampeter told Reuters.
Germany’s Constitutional Court made consulting the Bundestag on any changes to the ESM a condition for giving its approval to the fund’s ratification in a ruling earlier this month. Kampeter called such a step a “political and legal necessity”.
Europresident calls for urgency
He’s seeing that tunnel-ending light, too, but. . .
From Agence France-Presse:
European Union President Herman Van Rompuy called on Monday for a fresh sense of urgency in tackling the eurozone debt crisis in the run up to a “crucial” summit of national EU leaders next month.
“Europe is on the way out of the crisis,” Van Rompuy said in a video statement before attending the UN General Assembly in New York this week.
But amid stalemate over the need or otherwise for a full Spanish sovereign bailout, over whether to give Greece more time to meet budget and reform commitments and over how far and fast to push eurozone and EU banking union, Van Rompuy warned against complacency.
“As long as 25 million people … are looking for a job and as long as we have not yet fully stabilised the euro, we cannot sit back and I will make sure that we will not sit back,” he said.
And here’s Van Rompuy making his pronouncement from his own vlog:
Troikarchs busily meeting as tension spreads
It’s the big three in serial meetings: The Iron Chancellor, the eurobankster, and the IMF boss.
From Deutsche Presse-Agentur:
Christine Lagarde, head of the International Monetary Fund, is to meet Wednesday with Chancellor Angela Merkel, Berlin announced Monday, but the talks will be confidential.
On Tuesday, Merkel is to meet at her office with the European Central Bank (ECB) president, Mario Draghi. There will not be any news conference after those Tuesday afternoon talks either, the spokesman, Steffen Seibert, said.
Germany is at the centre of efforts to shore up the eurozone and the biggest net contributor to its bailouts.
Bundesbank lays into the IMF
One reason for those meetings may be a scathing verbal blast at the IMF delivered by the German Central Bank, an institution long regarded as Merkel’s staunchest ally.
From Ambrose Evans-Pritchard of the London Telegraph:
Germany’s central bank has launched a blistering attack on the International Monetary Fund, accusing officials of spraying around money like confetti and overstepping their legal mandate.
“The IMF is evolving from a liquidity mechanism into a bank. This is neither in keeping with the legal and institutional role of the IMF or with its ability to handle risks,” said the Bundesbank in its monthly report.
The bank said the Fund was right to help rescue Greece, Ireland and Portugal but said monitoring levels were slipping and there had been a “watering down” of standards. The scale of loans risks “overwhelming the IMF’s institutional structure”.
The Bundesbank’s broadside against the Fund caused consternation in Washington, where Asian and Latin American members of the Board think the IMF has been doing Germany’s work for it, shouldering too much of the risk trying to hold the eurozone together. There is irritation in IMF circles over the way the Fund has been dragged into badly-constructed rescue packages. The Fund has refused to lend any more money to Greece, saying the country cannot regain economic viability unless EU bodies take losses.
And Largarde warns PIIGS of years of austerian woes
It’s not a threat, but a promise, effectively a declaration that a two-tier Europe’s a given for some time to come.
From Philip Aldrick of the London Telegraph:
Heavily indebted countries like the UK face years more “painful” austerity to get their economies back on an even keel, International Monetary Fund managing director Christine Lagarde has warned.
Urging policymakers to deliver on their promises of co-ordinated global action to restore growth, she said: “For many economies, under present circumstances it will take years of fiscal adjustment to get back to pre-crisis levels. And again, without sufficient growth, we should not delude ourselves about how painful this is going to be.”
Speaking at the Peterson Institute for International Economics ahead of next month’s annual IMF meetings, she called on leaders to stop simply making promises and to start delivering on them.
She said: “We have seen positive market responses before [to policy announcements] that turned out to be short-lived. This time, we need a sustained rebound, not a bounce. If this time is to be different, we need certainty, not uncertainty. We need decision-makers to be real action-takers. We need delivery.”
The eurozone “remains the greatest risk to the global economy today” but action to avert huge fiscal tightening scheduled for next year in the US also “is vital for the world”. Addressing the challenges in the eurozone, she said that the focus of reforms should be on “measures rather than targets” and that austerity and growth “should not be mutually exclusive”.
Fiat boss says Europe’s car sales haven’t hit bottom
With the falloff finally hitting those previously immune German luxury car makers, it’s a reasonable buit of speculation.
Fiat, of course, is building its new factories in Brazil.
From The Economic Times:
The European car market has fallen off a precipice and does not seem to have yet reached the bottom, Fiat CEO Sergio Marchionne said on Monday.
Speaking at an industrial conference, Marchionne said the latest forecasts for car demand in Europe did not exceed 12.5 million units – which he said was the second lowest level in the past 20 years.
“The European car market is a disaster. It has plunged off a precipice that doesn’t seem to have bottomed out yet. The prospects are anything but rosy,” Marchionne said.
And on to Spain. . .
Spanish bailout delay declared risky
And that’s the pronouncement of a Spaniard in charge of Europe’s competition regime.
Lots of folks are getting miffed at Spain’s dilatory tactics, but their logical from Spain’s perspective, given that they can hope to parlay those woes into a less-harsh memorandum attached to the Spailout when it finally and invariably comes.
From The Economic Times:
Uncertainty over whether Spain intends to seek a full bailout is “highly risky”, Joaquin Almunia, the EU’s competition commissioner, warned Madrid during an interview with AFP.
Almunia, who represents Spain in the 27-member EU executive, recognised that Prime Minister Mariano Rajoy faced “a difficult decision” in having to choose whether to ask for a sovereign rescue rather than financial aid merely for its troubled banks.
“It’s not a black or white decision,” Almunia said.
“But what’s highly risky is to maintain the uncertainty, because you can come to a time when the cost of that uncertainty is bigger than any decision.”
More background on the Spanish reluctance from Jan Strupczewski and Fiona Ortiz of Reuters:
Spain once pushed hard for Ireland and Portugal to ask for bailouts from their partners in the euro because it was keen to shelter itself from an accelerating sovereign debt crisis.
Now the tables are turned and Madrid is holding back from applying for help, not least because the Spanish government knows all too well what befell its Portuguese and Irish peers once they did seek help — voters dumped them.
Facing an important regional election on October 21, Prime Minister Mariano Rajoy is in no rush to yield to nervous pleas, from France, Italy and indeed Ireland, that he request a rescue deal that might dampen investors’ concerns about their own debt.
Dublin and Lisbon fought shy of EU and IMF help for long months in 2010-11, fuelling turmoil in the bond markets, in forlorn attempts to avoid a humiliating loss of sovereignty and lenders’ demands that they draft unpopular budgets.
Catalonian independence referendum coming?
The regional independence move has got the Spanish military up in virtual arms, and it’s causing worries in Madrid.
Now the Barcelona-based regional legislature is proposing to let the people decide, another move certain to amp up an already tense situation.
From Àngels Piñol of El País:
The Catalan parliament is expected to approve a resolution this week in favor of giving citizens the right to decide on the region’s future.
The text, which is set to be presented in the regional assembly on Thursday, has yet to secure consensus backing but it appears likely that its content will seek to lend a voice to the outpouring of secessionist sentiment displayed on September 11, the national day of Catalonia, when hundreds of thousands of people marched in favor of independence from Spain.
The political groupings Convergència i Unió (CiU), Iniciativa per Catalunya (ICV-EUiA), Esquerra and Solidaritat Catalana, which together count on 86 of the regional assembly’s 135 deputies among their number, are set to endorse the referendum.
Oriol Pujol, secretary general of the governing CDU half of the CiU coalition and a declared supporter of independence, confirmed on Sunday the information published by the daily La Vanguardia. “We are working toward making a parliamentary pronouncement in the face of a popular clamor, unanimous, conclusive and historic, seen around the world.” Antoni Castellà of the pro-independence sector of CiU, said Sunday: “This is not just playing to the crowd.”
Spanish corporate tax revenues down 64 percent
That’s since the start of the crisis in a country with extremely low corporate taxes even when times were good.
From El País:
Last year businesses in Spain paid corporate tax on just 11.6 percent of their profits, according to figures from the tax authorities to which EL PAÍS has had access. Even so, the number was an improvement on 2010, when the state’s coffers received a historical low of 9.4 percent.
Although the figure represents the arrest of a decreasing trend since 2007, it is still a long way off the current rates in force in Spain of 30 percent for big companies and 25 percent for small- and medium-sized businesses.
The reason Spanish companies are able to legally pay less than in other European countries lies in a plethora of deductions, bonuses and financial adjustments applied by the tax office. Since the start of the financial crisis in 2008, corporate tax payments in Spain have fallen by a total of 64 percent.
Spain: It’s becoming like the U.S.
Yep, with proposals to gut the national healthcare system and destroy the power of organized labor, Spain is well on the road to emulating the post-Reagan United States.
The parallels are there, and provide a clear indication of the power of neoliberalism, hitched to the wagon of post-crash austerity and the machinery of disaster capitalism, are delivering the death blow to the European swelfare state — just as they have in the U.S.
From David Cronin of New Europe:
The journal Clinical Medicine has just published the results of a new study into the health effects of austerity measures in a sample of European countries. It argues that the centre-right government in Spain has “fundamentally reworked the healthcare system” within less than a year. Whereas all residents had previously been entitled to free medical attention, access to care is now being linked to employment. The upshot, then, is that Spain is becoming more like the US, where medical entitlements are also connected to holding a job. In the measured words of Martin McKee, a public health professor, and the other academics behind the study, “this creates a potentially serious situation in Spain, where over half of all youth are unemployed.”
Mariano Rajoy, the Spanish prime minister, insists that the measures being implemented reflect “common sense”. The rules of democracy have not deterred him. He has resorted to both the standard practice of reneging on election pledges and the more extraordinary step of having decisions enforced by royal decree. Why let pesky legislative procedures stand in the way of “common sense”?
Of course, the next question should be: who benefits from this “common sense”? Could it be the kind of individuals who are applauding the measures most enthusiastically?
Francisco González, chief executive of the bank BBVA, belongs in that category. In April, he travelled to Berlin, where he addressed the Spanish-German Forum. He availed of the occasion to advocate “a labour law reform that eliminates the problems of collective bargaining”.
What this really means is that he was urging the kind of war against trade unions that Ronald Reagan and Margaret Thatcher waged in the 1980s. According to his mindset, the hard-won right of workers to bargain for decent wages is a problem that must be eliminated. Like a tabloid journalist, González does not allow the truth get in the way of his story. The truth is that Spain’s economic woes were not caused by collective bargaining. They were caused by financial speculation. As part of a property bubble, more houses were built in Spain over the past decade than in Britain, France and Germany combined. Who profited from this speculation? Could it have been some of those bankers that González regaled in Berlin?
Portugal kills social security hike
One of the measures that sparked massive unrest and marches and threats of action by the military has died an unnatural deatgh, and now the government has to figure out where to get the revenues to make up for the turnabout.
From Deutsche Presse-Agentur:
The Portuguese government is planning new tax hikes to compensate for scrapping other austerity measures that sparked mass protests, Prime Minister Pedro Passos Coelho said on Monday.
Passos Coelho met with trade unionists and employers‘ representatives to discuss possible new measures to replace a plan to raise workers‘ social security contributions, which brought 15,000 demonstrators to the streets of Lisbon over the weekend.
The plan and other austerity measures had already prompted hundreds of thousands of people to rally around the country, in the biggest demonstrations since Portugal became a democracy following the left-wing Carnation Revolution in 1974.
More from euronews:
Portugal’s Prime Minister Pedro Passos Coelho has been locked in talks with business and trade union leaders.
He has taken what analysts believe is a rare step of leading a negotiating team to meet with the leaders who oppose a planned austerity drive in return for last years 78 billion euro rescue package.
One U-turn by his government is on a decision concerning two extra payments which are paid annually to Portuguese people.
“The government is now looking to prepare a proposition to pay back across all sectors a partial amount of the tax which has been taken from the summer and Christmas payments,” the PM explained and also said he will continue to negotiate with unions and business leaders over new ways to raise revenues which could include separate income tax rises or changes to property tax.
The leader of the country’s biggest union, Armenio Carlos said he wanted to show the government there are other alternatives and options.
And this from Antonio Jiménez Barca of El País:
After a meeting on Monday with labor union and business leaders Portuguese Prime Minister Pedro Passos Coelho announced the government had definitively abandoned plans to increase workers’ social security contributions, a move that sparked massive street protests.
Passos Coelho also agreed to return part of two extra monthly payments to public workers and retirees that his government had stopping paying a year ago. The Constitutional Court had declared the latter move illegal, hence the need to introduce new austerity measures to cover the two billion euros in savings that stopping the extra payments would have brought in.
The Portuguese leader said on Monday that his government would now introduce new tax increases to replace the lost revenues from the social security hike, but added that there would be no further increase in the value-added sales tax.
Passos Coelho said the social security increase, which generated the biggest street protests in Portugal since the revolution of April 1974, had “not been understood” by the people. He added that Monday’s meeting had failed to produce a consensus on how to proceed next.
And on to Italy. . .
Monti says Italians “not particularly hostile” to austerians
Tthe man the Troika installed, sans election, to run Italy after the forced ouster of Silvio “Buna Bunga” Berlusconi says his fellow Italians don’t harbor harsh feelings to the bureaucrats who are inflicting the austerian regime on them.
He also promises next year will bring the turnaround, albeit modestly.
The reaction to the economic reforms passed by Italy’s emergency technocrat government shows the country is not hostile to change, Premier Mario Monti said on Monday.
“The government has carried out structural reforms and the Italians are showing themselves not to be particularly hostile to those who have carried them out,” Monti told a OECD conference. “We’ve persuaded them that the reforms were in their interests”.
“Thanks to the government’s efforts, Italy is off the list of countries that are a source of problems for the eurozone,” said Monti. Despite forecast, 2013 will be ‘year of growth’, he added.
2013 will be a “year of growth” for Italy, which is currently mired in recession, even though government forecasts presented last week said gross domestic product will fall 0.2%.
“2013 will be a year of growth although the engine of the economy will start up slowly, as it is held back by the weight of the past,” Monti said.
“The minus 0.2% GDP forecast seems like recession, but it will be achieved with a climbing trend”.
More from Xinhua:
“Italy is no longer part of the group of countries that threaten the stability of the eurozone,” thanks to the austerity reforms carried out by his technocratic cabinet over the past 10 months, he said.
Monti said Italians’ reaction to his measures was “not hostile,” which showed that the government has “persuaded them it was in their interests.”
Yet, in order to overcome the debt crisis, it is necessary to stimulate productivity and competitiveness that have remained flat for too long in Italy, he said.
OECD brass delivers lecture to Italian pols
The message, implicitly, was this: Don’t follow the examples of Spain and Portugal and undo any of that austerian goodness.
From Deutsche Presse-Agentur:
Italian political parties scrambling to win over votes ahead of next year‘s election should think twice before committing to scrap the reforms introduced by Prime Minister Mario Monti, a top economic research body said Monday.
Last week, former prime minister Silvio Berlusconi pledged to abolish a property tax Monti introduced to solve Italy‘s budget crisis, while some members of the rival centre-left Partito Democratico (PD) want to water down pension and labour reforms.
Angel Gurria, Secretary General of the Organization for Economic Cooperation and Development (OECD), said Monti‘s work should not be undone.
“I would like to underline … the need to go all the way, to keep up the pace and to guarantee the continuity of the reforms agenda in the coming years: I say ‘no‘ to the temptation to go back, dismantling the adopted reforms,” he said.
And some news from Germany. . .
German business confidence falls again
This is getting to be a regular event.
From Ben Bryant of the London Telegraph:
German business confidence has fallen to its lowest level since February 2010, as the eurozone crisis increasingly batters its economy, new data has revealed.
Figures released today show that the Ifo economic institute’s business climate index dipped from 102.3 points in August to 101.4 points in September, falling for the fifth consecutive month.
The findings disappointed analysts who had expected an unchanged reading.
Ifo president Hans-Werner Sinn said: “The companies surveyed are again less satisfied with their current business situation. They also expressed greater pessimism about the future.”
More from Deutsche Prresse-Agentur:
The fall wrong-footed analysts at major banks, who had expected the principal indicator of sentiment in industry to rise slightly, to about 102.5, after a European Central Bank decision this month to buy up government bonds set off a rally in stock prices.
Markets had previously been cheered by upbeat purchasing manager index (PMI) data last week.
“Today‘s Ifo reading cools down bullish expectations raised by the positive reading of the PMI last week,” said the research arm of the bank Barclay‘s in a spot reaction.
“The rebound that was expected hasn‘t happened,” said Mario Gruppe, an analyst at German bank NordLB-Analyst.
Bundesbank predicts slower growth
In other words, central bankster confidence is down, too.
From Eva Kuehnen of Reuters:
Europe’s powerhouse Germany is losing momentum as its economy is feeling the pain from a slowdown in the rest of the euro zone, the Bundesbank said on Monday.
The Bundesbank said in its monthly report for September that it expects the German economy to continue on its upward trend after a solid start to the third quarter, but it added that signs of a slowdown were emerging.
“Perspectives for the further economic development are still formed by great uncertainty,” the Bundesbank said. “The domestic economic situation is so far robust, but signs of a weaker dynamics are noticeable.”
The Bundesbank pointed to Germany’s labour market, where the rise in employment was slowing down, also as companies were less willing to hire.
Germany’s foreign trade especially could be hit stronger than before by developments in the euro area, the Bundesbank added.
British business lobby calls for privatization
The Confederation of British Industry makes the usual pitch to hack away at the commons and public sector workforce for the ake of private profit.
From Philip Aldrick of the London Telegraph:
The Government could save more than £22bn a year while maintaining standards by allowing private companies to provide public services, according to research commissioned by employers body the CBI.
Opening public services provision, from school meals to bin collections, to competition from the private sector is vital if the Government is to cut spending at the same time as maintaining quality, Oxford Economics said in its study for the CBI.
“Our public services are under pressure as never before, with increasing customer demand, including from an ageing population, and an urgent need to manage costs. Carrying on regardless would be a recipe for disaster,” John Cridland, CBI director general said.
“Most public services are still largely state monopolised and it’s time to open some of them to competition. That is the way to maintain quality and achieve billions of pounds worth of savings.”
Government departments are facing 8pc cuts in real terms, after inflation, by 2015 and councils are due a 28pc reduction in their central government grant, Oxford Economics said.
Hollande demands obedience from the Greens
The French president, victim of a sudden plunge in popularity, is trying to whip his coalition junior partners into line after the Greens showed signs of reluctance to sign off on the first stage of More Europe.
From Mark John of Reuters:
President Francois Hollande’s government demanded on Monday its Green allies fall into line over European Union policy after the ecologist party said it would oppose a European Union budget discipline pact in a vote next month.
While the pact is set to pass with votes from Hollande’s Socialists and from the right, the Greens’ move is the most open defiance of Hollande’s authority yet from within his four-month coalition and comes as his popularity ratings are plummeting.
While no admirer of an EU austerity accord created during the rule of his conservative predecessor Nicolas Sarkozy, the Socialist Hollande backs the plan to return to balanced budgets as a necessary step to easing the euro sovereign debt crisis.
“I am calling on all members of the EE-LV (Europe Ecology- The Greens) to show some coherence and, frankly, solidarity,” said government spokeswoman Najat Vallaud-Belkacem.
More Danes fall into poverty
Another sign of the crisis reaching north, and the numbers from the analysis are two years old.
We’ve added currency conversions from Danish kroner to U.S. dollars in [brackets].
The number of Danes who fall below the OECD poverty line is increasing, particularly as you get closer to Copenhagen, according to conclusions in a report from the Economic Council of the Labour Movement (AE) which is due to be published today.
“Denmark is being polarised both economically and geographically. And that risks affecting social cohesion,” AE Chief Analyst Jonas Schytz Juul tells Berlingske0.
The analysis looks at poverty figures up to 2010.
According to AE almost 250,000 Danes are under the OECD’s poverty line – which in Denmark is at a monthly income of DKK8,788 [$1,520] for a single person and DKK5,047 [$874] per person for a family with four children.
The Copemhagen-based council, founded in 1936, is funded by Denmark’s labor unions.
More from Christian Wenande of The Copenhagen Post:
Overall, Copenhagen has the most cases of poverty in the nation by far. There were 41,419 in 2010, up from 25,170 in 2002. Aarhus Council has 14,166, Odense Council has 9,428 and Aalborg council has 7,696.
Morten Ejrnæs, who researches poverty at Aalborg University, said it was “worrying” that poverty has increased during the years in which employment rates in Denmark have generally been high.
“When unemployment numbers are on the rise and the welfare benefit duration is shorter, then there are more people that fall out of the system,” Ejrnæs told Berlingske. “That means that the poverty will impact on a wider margin.”