Britain’s historic difficulties with France took a turn for the worse on Friday after an unsavory war of words broke out over the eurozone.
In a spectacular moment of machismo, France’s finance minister, François Baroin said being French is better than being a Brit.
"It's true that the economic situation in Great Britain is very worrying and that we prefer being French rather than British on the economic front at the moment.
His comments are likely to upset “bulldog” Prime Minister David Cameron who set himself on a crash course with European neighbours after using Britain’s veto at last week’s eurozone summit.
Meanwhile, the head of the Bank of France - Christian Noyer - also stuck the boot into the British economy.
But late on Friday afternoon, the French Prime Minister Francois Fillon telephoned Nick Clegg out of the blue to "clarify" his earlier comments on the UK economy, where he had suggested that the UK should lose its AAA credit rating before France did.
Clegg told Fillon that "recent remarks from members of the French government about the UK economy were simply unacceptable” and that steps should be taken “to calm the rhetoric".
Speaking to Huffpost UK a spokesman for Nick Clegg said: "The deputy prime minister and PM Fillon have quite an extensive working relationship and have had several long meetings this year. They conduct their business in French. On this particular occasion since the remarks that have been made, PM Fillon wanted to get in touch.
"The message came through that he wanted to speak to the Deputy Prime Minister so we set up the call this afternoon.
"In many ways PM Fillon is the Deputy Prime Minister's opposite number so it's natural for them to speak to each other, as well as their ongoing relationship."
Despite the row and Cameron’s dramatic “no” to treaty change in the eurozone meeting, the UK is to return to the table for technical discussions surrounding the fiscal integration deal.
The move - agreed on Thursday night in a telephone call between Cameron and the President of the European Council, Herman von Rompuy - is likely to be seen as an olive branch both to the other EU countries and his Liberal Democrat coalition partners.
"The prime minister reiterated that he wants the new fiscal agreement to succeed, and to find the right way forward that ensures the EU institutions fulfil their role as guardian of the EU treaty on issues such as the single market," a No 10 spokesman said.
After the crisis deal was agreed last week, there was immediate criticism of Cameron's stance, which many said would not protect the City of London from regulation from Brussels.
Earlier, Italian Prime Minister Mario Monti said in a speech that the EU must look for more sustainable, long term solutions to its sovereign debt crisis, and politicians must overlook the short term needs for "rigour" in order to achieve the goal of stability, Reuters reported.
"To help European construction evolve in a way that unites, not divides, we cannot afford that the crisis in the euro zone brings us ... the risk of conflicts between the virtuous North and an allegedly vicious South," he told a conference in Rome.
12/30/2011 5:29 PM EST
Global Stock Markets Lost 12 Percent Of Value, Or $6.3 Trillion, In 2011
Investors in global stock markets lost $6.3 trillion in wealth in 2011 largely because of fears of a eurozone breakup, according to The Financial Times. The value of global stock markets fell 12 percent to $45.7 trillion.
From the FT:
The S&P 500 is flat this year while the FTSE 100 has only dropped 5.5 per cent. But the Eurofirst 300 gauge of blue-chip European companies has lost 11 per cent, led by the French and Italian exchanges. The MSCI Emerging Markets index has shed a fifth of its value despite strong growth in China and other emerging markets.
Asian equity markets were hit particularly hard with Japan’s Nikkei index losing 17.3 per cent this year, Hong Kong’s Hang Seng index 20 per cent and the Shanghai Composite 22 per cent.
12/30/2011 2:08 PM EST
Subsidy Cut Threatens Italy's Newspapers
Up to 100 Italian newspapers will be forced to close after the Italian government slashes subsidies to newspapers in the name of shoring up its finances, according to The Financial Times.
The subsidy cut amounts to a 69 percent cut in funding for newspapers, according to the FT. It was ordered by the government of the previous prime minister, media magnate Silvio Berlusconi, and approved by the new government of Mario Monti. Though the newspaper industry is in decline, some say that these local and sometimes partisan newspapers give voice to stories that the mainstream media ignores, according to the FT.
Staffers at the communist daily Liberazione, which has 5,000 readers, are staging an occupation of the newsroom this weekend to prevent the owners from shutting down the paper after its possible last issue is released on Saturday, the FT reports.
12/28/2011 10:28 AM EST
Investors Unmoved By Lower Borrowing Costs For Italy
Investors were unmoved by the steep fall in Italy's short-term borrowing costs on Wednesday, as Italy's long-term borrowing costs stayed elevated and European stocks fell.
The interest rate on Italy's six-month government bonds fell by half to 3.25 percent at an auction on Wednesday: a vote of confidence in Italy's ability to pay off its debts for half a year.
But investors remained skeptical about Europe's long-term economic prospects. The DAX in Germany plunged 1.04 percent on Wednesday, the CAC in France fell 0.38 percent, and Italy's FTSE Italia All-Share neither gained nor lost ground. The interest rate on Italy's ten-year government bonds remained unsustainable at 6.80 percent.
12/28/2011 10:08 AM EST
EU Admits That Austerity Will Lead To Higher Youth Unemployment
The European Commission admitted in a report in mid-December that its medicine for the sovereign debt crisis may be poison for Europe's long-term economic outlook.
The report said, according to The Wall Street Journal, that the imminent economic slowdown in Europe, caused in part by a contraction in government spending, will worsen job prospects for young people, and "young people remain the hardest hit by the crisis and its aftermath." The report added that "income shocks may prove permanent."
The youth unemployment rate in the European Union is disastrously high at 20 percent, with a high of 48 percent in Spain, according to the WSJ.
12/28/2011 10:05 AM EST
European Safe Haven Deposits Reach All-Time High, Again
The European sovereign debt crisis is turning into a banking crisis.
After breaking a record just a day earlier, the amount of overnight deposits parked at the European Central Bank's overnight deposit facility reached another record high on Tuesday: $591 billion, a 10 percent increase from $538 billion the day before, according to The Wall Street Journal.
The deposits attract an interest rate of just 0.25 percent and could translate into a loss for banks, highlighting the rising level of banks' distrust in any risky lending as banks seek to shore up capital to meet new regulatory requirements.
12/27/2011 3:27 PM EST
Italy Suffers From Worst Christmas Shopping In Ten Years
Italy suffered from the worst Christmas shopping season in ten years, according to the Italian consumer group Codacons, Bloomberg News reported.
Italians spent $62.75, or 48 euros, less per person during the holidays this year than the average of the past five years, according to Codacons.
Shoe and clothing stores suffered the most, with sales in that sector plunging 30 percent compared to previous years, according to Codacons.
As the Italian government seeks to rein in its debt by slashing spending and collecting more in taxes, Italians are cutting back in their spending, which will continue to hurt the economy. Italy's latest austerity plan will cost every Italian family about $1,476, or 1,129 euros, according to the Italian consumer group Federconsumatori, Bloomberg News reported.
The FTSE Italia All-Share, Italy's main stock index, fell 0.85 percent on Tuesday.
12/27/2011 10:18 AM EST
European Safe Haven Deposits Reach All-Time High
Banks parked a record high number of deposits in the European Central Bank's overnight deposit facility, which is considered to be a safe haven, according to The Wall Street Journal.
Banks deposited $538 billion, or 412 billion euros, overnight at the ECB on Monday, up 19 percent from $453 billion, or 347 billion euros, on the Thursday before Christmas, according to ECB data cited by the WSJ.
The high level of overnight deposits reflects the rising level of distrust in inter-bank lending, in conjunction with continued liquidity in the eurozone markets as the ECB lends more to banks, the WSJ noted.
12/27/2011 9:55 AM EST
French Unemployment At 12-Year High
The number of people without jobs in France reached a 12-year high in November, placing pressure on French President Nicolas Sarkozy's reelection campaign, according to Reuters.
France's labor ministry reported that the number of registered jobseekers in France rose to 2.85 million, 1.1 percent more than in October and 5.2 percent more than during the same period last year, according to Reuters.
The unemployment rate in France rose in the third quarter to 9.3 percent from 9.1 percent in the second quarter, according to France's national statistics office, Reuters reported.
12/27/2011 9:39 AM EST
Post-Christmas Shopping Boosts European Stocks
The stock prices of European retailers rose after reports of shoppers flooding stores both in Europe and the United States on Monday, the day after Christmas, according to The Financial Times.
The stock price of German retailer Metro rose 1 percent on Tuesday, France's Carrefour rose 0.6 percent, and Swiss watchmakers Swatch and Richemont rose 0.7 percent, according to the FT.
The DAX stock index in Germany rose 0.23 percent, while the CAC 40 in France fell just 0.03 percent.
12/20/2011 2:11 PM EST
EU Rolls Out Plan To Combat Youth Unemployment
In the face of growing youth unemployment across Europe, the European Commission has launched what it calls the Youth Opportunities Initiative, a program aimed at getting more of the continent's young people into the workforce.
Per a press release from the European Commission, the program will allocate 4 million euro toward getting young people into employment, education or training within four months of leaving school.
At the moment, the EU has a youth unemployment rate of about 21 percent, meaning that 5 million young people are out of work. According to the European Commission, a total of 7.5 million people age 15 to 24 are not employed, attending school or involved in work training.
The lack of opportunities for Europe's young people has inspired protests and riots in some countries and mass migrations in others. The problem is expected to grow worse if Europe tips into a recession, or if the EU's many heavily indebted countries impose austerity measures to rein in deficits.
-- Alexander Eichler
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