Euro Zone Booming !

[pricemazda]

He may want to do that, but he simply won't be able to. There are simply too many states which oppose protectionism.

Sarkozy is a smart politicians and would know that probably half EU states would oppose that kind of protectionism. It is entirely for a domestic French audience.

He can say, by liberalising at home and boosting the French labour market, French workers will then be protected at European level.

It is simply smart politics and nothing more.

[Qaabus]

Some people here seem to forget that Sarkozy is the French president. He has no power whatsoever over the 450 million or so other EU citizens.

[Tickle]

It’s a bit early to be handing over the moral leadership of the EU to Sarkozy. The fact remains that he is leader of an economically moribund country. As far as I can see it is Sweden, Denmark, Finland, the UK and Ireland which are leading Europe by example….embracing globalisation and growing. These are the countries which the new EU entrants are looking to. Even Germany has taken its first tentative steps to liberalising its economy….France is in the business of catching up, not setting the agenda for Europe.

[flash110]

Originally Posted by Nexus6

It rather looks like he will make sure that France continues to trail and not lead:

http://washingtontimes.com/op-ed/200...3346-1205r.htm

"The first of them is a commitment to economical and political protectionism, using the European Union as a shield against globalization. "France is back in Europe" stated Mr. Sarkozy, encouraging the other EU states "to hear the voices of the people who want to be protected." Mr. Sarkozy intends to take the European leadership and to fuel the engine with protectionism since Europe must not be the "Trojan horse of globalization" -- i.e. must not yield to a capitalist system embedded in the United States. "

http://www.bbj.hu/main/news_26874_sa...ade+talks.html

"Sarkozy, on his first presidential visit to Brussels, called on Europe to “protect” its citizens, buying them time to adapt to the pressures of globalization. His comments suggest he will pursue an assertive French agenda in Europe that could put him in conflict with free traders including Angela Merkel, German chancellor, and Gordon Brown, incoming UK prime minister. Sarkozy’s passionate defense of French farmers will concern Europe’s trade partners who hoped he might be more flexible in his approach to cutting EU farm tariffs than Jacques Chirac, his predecessor."

you are only citing trade and farm issues, farm subsidies e.g., are greatly more important for France than for Germany and the UK, France won´t favor Germany and the UK even if this could bring benefits for France in the long term, you can´t expect this from a french. On the other hand, local and international capitals will have little interests about EU subsidies, it´s known that one of the main obstacles for investments and growth in continental europe is the rigid labor market, I expect Sarcozy to do something in this matter

[flash110]

Originally Posted by Qaabus

Some people here seem to forget that Sarkozy is the French president. He has no power whatsoever over the 450 million or so other EU citizens.

France is one of the biggest EU economy, what does france not only matters to the french people but also to the rest of the EU and their goberments because of competitive reasons. For instance, if France liberalizes its labor market and is successful, other countries such as Germany and Italy will have to follow suit if they don´t want to see their investments fall and flee to France

[Nexus6]

Originally Posted by flash110

if France liberalizes its labor market and is successful, other countries such as Germany and Italy will have to follow suit if they don´t want to see their investments fall and flee to France

The flaw in your logic is that you assume Germany to be as protectionist as France. Everything that I have heard from Sarkozy in terms of planned liberalization is already reality in Germany.

[Nexus6]

Originally Posted by Tickle

As far as I can see it is Sweden, Denmark, Finland, the UK and Ireland which are leading Europe by example

Pretty diverse list with quite differing economic policies. Personally I think Denmark's approach is most attractive.

[flash110]

Originally Posted by Nexus6

The flaw in your logic is that you assume Germany to be as protectionist as France. Everything that I have heard from Sarkozy in terms of planned liberalization is already reality in Germany.

[img][/img]

In a way Germany is even more protectionist than France, one of the reason why France is regarded as more protectionist is that its statequote over the economy is bigger than in Germany and the EU average, regarding the labor market Germany is pretty different than the rest of industrialized nations including france, trade unions and worker´s representatives are given there more power and influence over private companies than in any other west european country and as it´s also the case in France there are tough laws for dismissal protection, the german chancellor Angela Merkel and its party wanted to reform this and give companies greater freedom but unfortunately the voters didn´t give her the necesary majority in the parliament to implement her intentions, btw that economic freedom ranking is based manily on private property protection and other factors but not business opportunities, not for nothing is Germany one of the poorest european countries in terms of foring direct investments while the UK and France are leading, see table below the page: http://www.unctad.org/Templates/webf...ID=1634&lang=1

[Nexus6]

Originally Posted by flash110

regarding the labor market Germany is pretty different than the rest of industrialized nations including france, trade unions and worker´s representatives are given there more power and influence over private companies than in any other west european country

You seem to be talking about the fact that in Germany labour representatives have the right to receive half of the seats on the supervisory board of publically listed companies with more than 2000 employees.

Please note that the supervisory board has no executive power, it is a controlling and advising instance. Strategic decisions are made in the annual plenary meeting of the stock holders, labour representatives have no voice there. And executive decisions are made by the executive board where again labour representatives have no voice.

The supervisory board therefore doesn't give labour representatives "more power and influence over private companies" like you claimed - Instead it gives German workers more information and insight into the company, as the supervisory board has access to all books and figures and the executive officers have to give regular reports. It is mostly an instrument of transparency and not so much an instrument of power like you assumed.

Just have a look at a publically listed company like Deutsche Telekom which furthermore was once state owned and therefore should have a maximum of labour influence. What can we read in the news? We read that the executive board decided to move 50,000 people into a new subsidary for lower wages and longer working hours - if they don't comply the units will be sold. Can the supervisory board where labour representatives are sitting stop that decision? No, it can't. All they can do is to go on strike, which is what they did - so far without success. That is how big the "power and influence" of labour representatives in the supervisory board is:

http://www.iht.com/articles/2007/05/...ss/telekom.php

http://www.americasnetwork.com/ameri....jsp?id=427291

[flash110]

Originally Posted by Nexus6

You seem to be talking about the fact that in Germany labour representatives have the right to receive half of the seats in the supervisory board of publically listed companies with more than 2000 employees.

http://www.iht.com/articles/2007/05/...ss/telekom.php

http://www.americasnetwork.com/ameri....jsp?id=427291

Indeed, the unique german codetermination although one of the facts that gives trade unions more influence, not the most important, (it wasn´t even in Merkel´s agenda and in tie situations the president of the supervisory board, which is a shareholder representative, should have the final decision) specially i´m talking bout the way companies in germany determine wages and working hours for each industry sector by agreements between trade unions and employers representing each part for that sector, this procedure is also unique in Germany. On the other hand you´ll find that even considering recent progresses, the average profit margins in german listed companies still are among the lowest in europe and on average about half of the margins exhibited in the rest of the west european countries. The banking sector is also overregulated

[Nexus6]

Originally Posted by flash110

Ii´m talking bout the way companies in germany determine wages and working hours for each industry sector by agreements between trade unions and employers representing each part for that sector, this procedure is also unique in Germany.

That again is a misunderstanding on your part. Wages in Germany are not set for whole sectors. There is no law which would grant anybody that power.

However, industry associations (which are usually organized by sector) often offer the service to their member companies to centrally negotiate wages with the unions. Many companies opt for that model as they don't want to deal with the unions themselves. But again, it is completely optional for companies to join such centrally organized wage negotiations. Most companies (about 60%) negotiate wages individually.

Germany is in fact quite unique as it is one of the few countries that is so liberal to grant complete freedom to employers and labour unions to negotiate wages and doesn't interfere by setting i.e. binding minimum wages by law as many countries do.

[flash110]

Originally Posted by Nexus6

Many companies opt for that model as they don't want to deal with the unions themselves.

As far as I know, the german companie´s constitution law doesn´t allow each company to set internal elections among workers (whether organized in unions or not) fore these decisions, a practice in other countries, and each decision must be approved by the unions, which often are foreign to the companie´s needs

[Nexus6]

Originally Posted by flash110

As far as I know, the german companie´s constitution law doesn´t allow each company to set internal elections among workers (whether organized in unions or not) fore these decisions, a practice in other countries, and each decision must be approved by the unions, which often are foreign to the companie´s needs

There is no such law which would forbid companies to hold internal elections in order to decide whatever they want to. A famous example is the now bancrupt Photo Porst company which was organized like a socialist collective, every employee voted which managers were to employ and how much they would be payed.

In general, law gives labour the right to two types of "participation" in the affairs of a company (which however doesn't forbid other kinds of participation schemes):

- Supervisory board seats in case of large publically traded companies.

- Worker's councils

In case of supervisory boards there are between 6-10 seats reserved for employee representatives. 2-3 seats are reserved for representatives of the labour unions which have a members among the employees. These 2-3 labour union representatives are not employees of the company but come from the outside (union). This is probably what you had in mind? The other 4-7 seats are occupied by employees of the company that are selected in elections by the staff. The fact that the unions have 2-3 seats more or less for granted (it is very rare that not at least 1 employee is union member) can lead to an overrepresentation of the union organized staff compared to the non-union organized staff and is often criticized.

In case of worker's councils (companies can btw have both supervisory board and worker's councils) it can only consist of company employees that are elected by the staff, no union representatives from the outside are allowed.

[Fabb]

By Fergal O'Brien

June 1 (Bloomberg) -- Europe's economy grew at three times the pace of the U.S. in the first quarter as investment by companies surged the most in a decade, countering a drop in consumer spending.

The economy of the 13 nations that share the euro expanded 0.6 percent from the fourth quarter, when it grew 0.9 percent, according to Eurostat, the European Union's Luxembourg-based statistics office. Unemployment fell to a record low of 7.1 percent in April, according to a separate report today.

Corporate investment helped the euro-area economy overcome the impact on household spending of an increase in Germany's value-added tax. With unemployment falling and business and household confidence at a six-year high, the expansion is being sustained in the current quarter, keeping Europe's economy on course to outperform the U.S. for the first time since 2001.

Europe ``came through the headwinds such as the VAT increase and some slowdown abroad at the start of the year,'' said Silvia Pepino, an economist at JPMorgan Chase & Co. in London. ``By continuing to spend, companies were looking through temporary factors. The impression is that growth remains robust.''

Growth in business investment spending accelerated to 2.5 percent in the first quarter, the fastest since the second quarter of 1997, from 1.5 percent in the fourth quarter, today's report showed. Consumer spending slipped 0.1 percent, its first decline since the last three months of 2001.

U.S. Expansion

Europe's growth compares with U.S. expansion of 0.2 percent in the first quarter from the prior quarter, according to Eurostat. From a year earlier, the euro-area economy expanded 3 percent in the first three months of 2007, revised from an earlier estimate of 3.1 percent.

Reports this week indicate the euro area is maintaining its growth momentum. Business and consumer confidence unexpectedly rose last month to the highest since 2001, and unemployment in Germany, the region's biggest economy, held at a six-year low in April.

The euro-area economy grew 2.7 percent last year, the most since 2000, and the European Commission last month raised its 2007 forecast to 2.6 percent, saying it expects Europe to outpace the U.S. for the first time since 2001.

A slowdown in the pace of U.S. economic expansion may damp demand for European goods this year, curbing export growth. The world's largest economy grew at a 0.6 percent annual rate, the weakest in more than four years and less than the 1.3 percent pace initially estimated last month, the Commerce Department said yesterday.

Euro-Area Exports

Euro-area exports rose 0.3 percent in the first quarter, according to today's report, after growing 3.5 percent in the previous three months. The euro, whose rise makes European goods less competitive, was at $1.3443 today. While the currency is up 4.1 percent since mid-January, it has fallen 1.5 percent since reaching a record $1.3681 on April 27.

The 7.1 percent unemployment rate for April compares with 7.2 percent in March and is the lowest since the data series began in 1993. EU Monetary Affairs Commissioner Joaquin Almunia said yesterday the jobless rate could move below 7 percent by next year, further bolstering consumer spending.

D+S Europe AG, a German maker of software for call centers, said on May 15 it will add 600 new jobs this year. DAF Trucks NV, the Dutch division of U.S. truckmaker Paccar Inc., this week said it plans to increase daily production at its main plant by about 5 percent.

Interest Rates

With growth showing little signs of slowing, the European Central Bank is concerned that companies will raise prices and wages as the economy of the 13 euro nations expands at close to the fastest pace in six years.

ECB council members Klaus Liebscher and Nicholas Garganas said this week that the central bank should keep its options open even after the interest-rate increase that policy makers have signaled for next week.

``I belong to those that say that you shouldn't exclude anything in the future,'' Liebscher said. ``Strong vigilance is needed to ensure that risks to price stability do not'' materialize over the medium-term.

The central bank has increased its key lending rate seven times to 3.75 percent since late 2005 to slow inflation. Currently, the bank forecasts consumer-price growth to average about 1.8 percent this year, holding below its 2 percent limit for the first time since 1999, before accelerating to around 2 percent in 2008. It will publish revised growth and inflation projections at its next monetary policy meeting on June 7.

[Nexus6]

http://www.iht.com/articles/ap/2007/...ny-Economy.php

German think tank IfW raises 2007 GDP growth forecast to 3.2 percent

FRANKFURT, Germany: One of Germany's main economic think tanks raised its expectations for GDP growth in Europe's biggest economy to more than 3 percent Thursday on strong domestic demand.

"Nearly all indicators paint a very positive picture of the current economic situation," the Kiel-based Institute for the World Economy, or IfW, said in its report.

It said in addition to domestic demand, moderate wage growth was also a driving factor in its decision to lift its forecast of gross domestic product growth to 3.2 percent through 2007 and 2.7 percent in 2008. The think tank also predicted that Germany's grand coalition would be able to balance its budget this year and post a slight surplus next year...

[The Dear Leader]

Our economy might be overheating!

[Fabb]

AFX News Limited
French May unemployment 8.1 pct vs 8.2 in April; jobless down 24,100
06.28.07, 2:23 PM ET

PARIS (Thomson Financial) - France's seasonally-adjusted unemployment rate fell to 8.1 pct in May from 8.2 pct in April, the Labour Ministry said.

The number of registered unemployed who are 'immediately available' for work fell 24,100 to reach 1.987 mln on a seasonally-adjusted basis, dropping below the 2 mln mark.

This category excludes those on the unemployment register who undertake part-time or temporary work for more than 78 hours per month. Including such registrants, the number of jobless fell 1.1 pct to pct to 2.443 mln in May.

The ministry also issued figures for the number of unemployed based on International Labour Organisation definitions. These gave a seasonally-adjusted total of 2.240 mln in May, down 21,000 from 2.261 mln. The unemployment rate series is calculated using these figures.

Economists had been expecting a headline rate of 8.1 pct and a 15,000 fall in the number of unemployed, according to ILO definitions.

tfn.paris@thomson.com

COPYRIGHT

Copyright AFX

[Fabb]

German Unemployment Falls to 12-Year Low on Growth (Update4)

By Claudia Rach

June 28 (Bloomberg) -- Germany's unemployment rate fell to the lowest level in 12 years in June as growth in Europe's largest economy encouraged companies to invest and hire.

The jobless rate, adjusted for seasonal swings, declined to 9.1 percent from 9.2 percent last month, the lowest since March 1995, the Nuremberg-based Labor Agency said today. The adjusted number of people out of work fell 37,000 to 3.82 million. Economists expected a drop of 20,000, according to the median of 39 forecasts in a Bloomberg News survey.

``The economy is doing really well,'' said Holger Schmieding, head of European economics at Bank of America Corp. in London. ``Germany's unemployment rate could drop to 7.3 percent by the end of next year if the economic upswing continues.''

Rising employment and a ``massive change'' in Germans' willingness to spend lifted consumer sentiment to a six-month high, GfK AG, a market-research company, said June 25. The economy is showing few signs of cooling from the fastest expansion since 2000 last year, as global demand for German exports sparks investment and consumption at home.

Workers Wanted

``Prospects continue to be good,'' Frank-Juergen Weise, head of the Federal Labor Agency said today in an interview. ``This means unemployment can fall further in average terms, but not by the same amount as seen so far.''

Ikea, the world's largest furniture retailer, aims to hire 800 to 1,000 workers this year for its new German stores, spokeswoman Sabine Nold said in an interview June 26.

``It's a totally new experience for Germany,'' said Stefan Muetze, an economist at Helaba Invest GmbH in Frankfurt. ``In some industries, the labor market has already been cleaned out.''

The IfW Kiel institute, one of five that advise the government, said this month it expects the economy to expand this year at 3.2 percent, faster than last year's 2.8 percent. The Ifo institute in Munich raised its forecast this week to 2.6 percent.

``The outlook for economic growth is clearly favorable'' in the euro area, Miguel Angel Fernandez Ordonez, a member of the European Central Bank's council, said June 26 during testimony to the Spanish parliament. ``This strength in activity is being led by the elevated dynamism of investment.''

`Enormous Change'

The Labor Agency said in May that it has 642,563 vacancies, including jobs for 12,660 engineers, 22,740 metal workers and 24,610 electricians. An ``enormous change'' in the labor market will cut unemployment to 3.8 million this year, Ifo head Hans- Werner Sinn said on June 25.

Changes by former Chancellor Gerhard Schroeder's government cut benefits to people unemployed for over a year and joblessness began declining from a post-World War II record of 5 million in unadjusted terms before Chancellor Angela Merkel took office.

``It's the booming world economy that is responsible,'' said Thorsten Polleit, an economist at Barclays Capital in Frankfurt. ``We are fooling ourselves if we believe that structural reforms are responsible for the improvement in the German labor market.''

Finance Minister Peer Steinbrueck told reporters in Berlin today that unemployment is declining thanks to ``companies that have clearly improved their competitiveness'' and ``labor unions and workers which have gone through very meager times in the past years, but have helped to lower unit labor costs.''

Comparable Figures

According to the latest comparable figures from the Paris- based Organization for Economic Cooperation and Development, Germany's jobless rate was 6.7 percent in April. That compared with 8.6 percent in France, 3.8 percent in Japan and 4.5 percent in the U.S.

German construction companies will boost hiring in 2007 as the industry rebounds from 11 years of zero growth through 2005 in which half a million jobs were shed. The sector's workforce will average 725,000 this year, about 2 percent, or 14,500, more than in 2006, the HDB construction association said June 20.

Waning investor and executive optimism meanwhile suggest that growth may have peaked. Business confidence as measured by the Ifo index fell more than economists had expected, a report on June 22 showed. Industrial output and manufacturing orders have fallen and growth in exports disappointed economists' expectations in April.

The decline in unemployment ``is a great development, but the economy won't be able to solve all unemployment problems'' as there is also a high plateau of structural unemployment, said Eckart Tuchtfeld, an economist at Commerzbank AG in Frankfurt.

Slower Growth?

Germany's HDE retailers association today said it expects real sales to decline this year. European retail sales fell for a second month in June, a sign growth may slow, the Bloomberg purchasing managers index showed today.

Still, consumers are gaining confidence as the labor market improves and unions win wage increases, Helaba's Muetze said. IG Metall, Germany's largest union, won a 4.1 percent pay rise for 800,000 workers last month in a deal that may serve as a benchmark for as many as 3.4 million workers.

Higher wages may give the ECB reason to raise interest rates further to keep inflation in check. The central bank raised its key refinancing rate to a six-year high of 4 percent this month and left the door open for more increases.

``It's important that wage agreements maintain the current moderation and reflect a sufficient degree of differentiation relative to the specific conditions in each sector and the productivity of each company,'' Ordonez said.

In western Germany, the number of people out of work fell by a seasonally adjusted 26,000 in June, while the number of unemployed in eastern Germany fell by 11,000, according to the labor agency.

[lexberg]

Finnish GDP up 5,5 pct yr/yr in first quarter
Finland's gross domestic product (GDP) rose by 5.5 per cent year-on-year in the January-to-March period, Statistics Finland (SF) said in a statement Wednesday. GDP rose by 0.8 per cent from the previous quarter.

Ministry of Finance Economic Bulletin 2/2007
In Finland, the growth in total output has continued since the upturn at the beginning of 2006 at the brisk rate of 5 per cent in the early part of this year. The exceptional extent and force of the growth have led to a self-feeding cycle the like of which has been seen only a couple of times during the past 35 years. The upswing is indeed going to have an above-average duration, and the growth in the GDP will exceed 4 per cent this year, i.e. be a good one percentage point above the forecast made in March.

[Fabb]

Euro-Zone 1Q GDP Revised Up On Steady Spending

Thu, Jul 12 2007, 09:01 GMT



By Paul Hannon

Of DOW JONES NEWSWIRES


================================================================
Euro-Zone 1Q GDP - Final Report ! !
1Q 4Q ! Consensus: +0.6% QQ !
on qtr +0.7%r +0.9% ! +3.0% YY !
on yr +3.1%r +3.3% ! Actual: +0.7% QQ !
r=revised ! +3.1% YY !
================================================================



LONDON (Dow Jones)--The euro-zone economy grew more rapidly that previously estimated in the first three months of the year as consumer spending steadied.

According to figures released by the European Union's statistics agency Eurostat Thursday, the combined gross domestic product of the 13 countries that share the euro rose 0.7% from the fourth quarter of 2006, and 3.1% from the first quarter of 2006.

That was a stronger outcome than economists had forecast. They had expected the latest Eurostat estimate of first-quarter GDP to be unchanged from its most recent calculation, which was published in June and showed the economy grew by 0.6% on the quarter and 3.0% on the year.

The upward revision was largely due to a slightly stronger estimate of consumer spending in the quarter. Having previously calculated that household expenditure fell 0.1% from the final three months of last year, Eurostat now estimates that it was unchanged.

Stronger growth in the first quarter increases the likelihood that the European Central Bank will raise its key interest rate again this year, since it means spare capacity is likely to be smaller than previously thought.

The euro zone's growth performance was stronger than in the U.S., where GDP rose 0.2%, but slightly weaker than in Japan, where GDP rose 0.8%.

-By Paul Hannon, Dow Jones Newswires, +44 20 7842 9491, paul.hannon@dowjones.com

(END) Dow Jones Newswires

July 12, 2007 05:01 ET (09:01 GMT)


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