Euro Watch

Disagreements between governments and private contractors has stopped plans by Europe to put into place a satellite navigation system meant to rival the US global positioning system now in place. European Union transport commissioner Jacques Barrot has said that he will contact the companies participating in the project, asking them to explain why no progress has been made in more than a year. The urgency in locating and correcting the cause for the delays is due to EU fears that China could launch a competing system before the European Galileo system is up and running.

The original plan was to have 30 satellites in place and active by 2010, but a spokesman for Mr. Barrot said that at this point the system could not be operational until 2011 and that the timetable would likely slip further. Meanwhile China has said that its Beidou system will be operational for it and its neighbors by 2008, with worldwide coverage to come later on.

A consortium of European companies is involved in the project, but there are reports that they are reluctant to share development costs that have doubled from €1 billion to €2 billion since the project began. Among the companies which are signed up to participate in Galileo are EADS (Euronext: EAD; FWB: EAD), Thales (Euronext: HO), Alcatel-Lucent (Euronext: ALU; NYSE: ALU; TYO: 6687), Inmarsat, Finmeccanica (ISE: FNC), AENA, Hispasat, and a group led by Deutsche Telekom (NYSE: DT; LSE: DEU; TYO: 9496). These groups have not even set up a joint office or appointed a chief executive as yet, and there was no comment from any spokesman for the consortium on the latest developments.

Some have alleged that Spain is behind the hold-up in progress as it tries to get more jobs for its participants, but it said that it was only trying to make sure that that the consortium sticks to a 2005 agreement on the division of work among the companies involved.

Tags: European Economy News, European Union News by Brian Turner
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According to European Central Bank president Jean-Claude Trichet, recent upheaval in global markets will have little lasting impact on economic growth. He called what went on in the markets a “correction” and said that it would not lead to a correction in “the real economy”. Mr. Trichet also said that the recent events served a useful purpose in reminding all involved that there are inherent risks in all markets. He implied that perhaps that reminder was needed in an environment where the willingness to take risks has been at a high level recently.

The financial community could give Mr. Trichet’s remarks considerable credibility on the grounds that remarks he made at the Davos summit in January could be seen as predicting the recent declines in the markets. He said then that he saw global financial conditions as “unstable” and that a correction could be coming up.

Mr. Trichet’s remarks show that he remains optimistic about the global economy, including the US economy. He has endorsed current Federal Reserve chairman Ben Bernanke’s upbeat take on the economy in the US rather than former chairman Alan Greenspan’s recent remarks indicating that he sees a possible US recession coming up.

Tags: ECB: European Central Bank News, European Economy News by Brian Turner
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The European Central Bank lived up to expectations on Thursday when it lifted Eurozone interest rates by 25 basis points to 3.75 percent. Most analysts were sure that the rate would go up after the ECB’s president, Jean-Claude Trichet, said after last month’s meeting that the Bank would exercise “strong vigilance” in fighting inflation. Those words have come to be seen as Mr. Trichet’s code for “expect a rate hike next month” among analysts.

More rate increases are expected in the future as core inflation is likely to rise and wages go up. One German union is currently demanding wage hikes of 6.5 percent at the least. In addition, the money supply has continued to rise in the Eurozone. It was up by 9.8 percent in January over the same period last year and its growth increased faster in December and January than it has since early in 1990.

Probably playing into the decision from the ECB to raise rates was new data showing that the Eurozone economy grew by 0.9 percent in the last quarter of 2006 for full-year gross domestic product growth of 2.7 percent.

Tags: ECB: European Central Bank News, Interest Rates News by Brian Turner
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The European Union is reportedly getting ready to introduce US-style class actions into their legal system in order to strengthen protections to consumers by allowing what is being called “collective redress” claims against firms that provide faulty or substandard goods and services. Currently, some EU nations have class action provisions in place, but there is no option for such actions on a EU-wide basis.

EU consumer affairs commissioner Meglena Kuneva defends the upcoming proposal as a way to keep businesses an incentive to keep the quality of the goods and services they offer high and to give consumers more confidence in cross-border transactions. She claims that this is especially necessary as e-commerce grows. Ms. Kuneva says that while the new proposal will take its inspiration from the US system, it will not reproduce it exactly.

The US class action system allows individuals to put separate claims against one company into one collective lawsuit, which encourages them to pursue compensation on claims that would be too expensive and time-intensive to be pursued individually. Such suits have been criticized, however, as benefiting the law firms that bring the suits more than that they benefit the wronged consumers. Ms. Kuneva has reportedly looked at possibly having collective claims in the EU handled by national consumers’ bodies, although some officials think that lawyers or other groups might also become involved.

Tags: European Union News by Brian Turner
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If you find yourself having to move home suddenly and need to sell your house quickly, an interesting new set of options have become available for property seller.

A new breed of property cash buyers has entered the UK property market, helping those who need to sell house quick and avoid the potential delays of a traditional public property sale.

A main reason for being able to acclerate the property buying process is that these property cash buyers, usually private or public propertry investment companies, are able to offer cash for houses. The result is usually a quicker, cleaner sale, that allows the house seller to move more quickly to liquidate their home equity for whatever required reasons.

Tags: European Stocks & Shares News by Brian Turner
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New data shows that inflation grew by 1.8 percent in February over the same period last year. The growth was slightly less than the 1.9 percent that had been expected and remained below the 2 percent inflation ceiling set by the European Central Bank. Even though the inflation rate remains below where the ECB wants it to be, most analysts remain convinced that the Bank will issue another interest rate hike when it meets in March. A few analysts, on the other hand, believe that the Bank will wait until summer to raise rates again.

In a separate report, the purchasing managers’ index supported the inflation report, by showing that the Eurozone manufacturing sector is still growing. The index rose to 55.6 in February, up slightly from its January level of 55.5, but a bit lower than the 55.8 reading that had been expected. Any reading above 50 shows expansion in the sector. Growth in the index was helped by gains in France and Italy that more than compensated for a decline in Germany that was likely due to a hike in the value added tax there from January 1.

Tags: ECB: European Central Bank News, European Economy News, Interest Rates News by Brian Turner
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New data from Spain shows that its economy continues to be among the most prosperous in Europe. It ran a public sector surplus amounting to 1.8 percent of the gross domestic product last year, the best it has managed in 30 years. Two-thirds of the surplus came from social security funds that were sent higher by contributions from immigrants and those new to the job market. Spain created half of the new jobs last year in the European Union, at nearly 700,000 new positions, and unemployment in the country is at an all-time low of 8 percent.

The surplus amounted to nearly €18 billion, and was used to pay off public debt and to build a reserve fund to pay pensions in the future, according to finance minister Pedro Solbes. Mr. Solbes said his goal is to bring public debt to below 30 percent of the GDP this year. It was at 39.8 percent of the GDP in 2006.

Only four Eurozone countries had a public sector surplus in 2006. In addition to Spain these were Finland, with the largest surplus and the only one higher than that of Spain, Ireland, and the Netherlands.

Economic growth in Spain last year exceeded the Eurozone average of 2.7 percent by rising to a six-year high of 3.9 percent. Inflation was at an annualized rate of 2.5 percent in February, with the expectation that it will rise to around 3 percent by the end of the year.

Tags: European Economy News by Brian Turner
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