EURO-ZONE - Fears that the eurozone crisis is escalating and further evidence of the weakness in the US economy drove stock markets lower on Wednesday as policy makers failed to restore confidence in global markets. The FTSE 100 index closed at its lowest level since November, after its biggest one day fall for nine months of 133 points. After a nerve-racking day Wall Street narrowly avoided its ninth consecutive day of falls – a losing streak unseen since 1978. A much anticipated speech by Italy's prime minister, Silvio Berlusconi, was delayed until European markets closed but failed to calm the storm on international financial markets that threatens to engulf his country and imperil the entire eurozone. Italy and Spain – whose prime minister, José Luis Rodríguez Zapatero has cut short his summer holiday – are now at the centre of the eurozone debt crisis that began with Greece more than a year ago and has enveloped Ireland and Portugal. European commission president José Manuel Barroso tried to inject calm into the markets by insisting that record high yields – interest rates – on Spanish and Italian government bonds were "unwarranted". "Developments in the sovereign bond markets of Italy and Spain are a cause of deep concern," Barroso said.

European politicians had hoped their deal on 21 July to bailout Greece for a second time and impose losses on bond holders would restore confidence in the eurozone. Their efforts have failed, particularly as US debt crisis compounded the febrile atmosphere in the markets. In France, shares in the second largest bank Société Générale were temporarily suspended – they eventually closed 9% lower in heavy turnover – after it took a €395m (£345m) hit on its exposure to Greece because of its contribution to the bailout plan. Concerns were also mounting that banks across the eurozone were finding difficulties in funding themselves on the markets. Huw van Steenis, banks analyst at Morgan Stanley, said: "Investors, we and some banks are increasingly concerned that funding markets won't reopen with sufficient depth or at good enough terms for Italian and Spanish issuers, requiring banks to take offsetting measures". Berlusconi's statement to the lower house of parliament faced immediate criticism for failing to tackle the problems facing the Italian economy even though he promised to work with unions and employers on a reform of Italy's notoriously rigid employment laws. He drew attention to the fact that his government had earlier given the green light to €9bn of infrastructure projects which he said would promote growth, especially in the poorer south.

European debt crisis --Barclays Capital caught the mood best – the result was "more than expected but not enough to make us sleep soundly". First, the definite good news. The yield on Greek two-year debt has plunged from 40% to 28%. Clearly, even the lower rate shows Greece is miles away from being able to fund itself in the market. But the danger of an imminent chaotic default has been removed by the eurozone's softer stance on lending. The country will get €109bn (£96bn) of loans at 3.5%, ranging from 15 years to 30 years in length. The banks will volunteer (ie have their arms twisted) to join the relief effort, but not by so much as to trigger worries about holes being ripped in their balance sheets. The precise sums are hard to determine given the complexity of the volunteering menu but the hit to the private sector could be €50bn for 2011-14, calculate analysts; banks will count that as a good result for themselves. But will the assistance be enough to shift Greece back on the road to financial solvency? And is the eurozone now equipped to cope with an outbreak of worry about Spanish and Italian debt? It is hard to answer "yes" to either question. The debt-relief programme simply doesn't look big enough to be a permanent solution. The country's debt-to-GDP ratio, previously set to hit 160%, could still emerge as high as 130% and its economy still looks too uncompetitive and too weak to allow higher tax rates to take a meaningful bite out of the debt pile Well, four years after the beginning of the 2007-8 financial collapse, this time it is different. After a recession, one normally expects a recovery in the major industrial economies. This time, recovery has had to be postponed – except, for a time, in Germany. Which is a disappointment, evidently, to our chancellor, George Osborne, who last week conducted a dramatic U-turn with regard to his party's view of the eurozone. Our very Conservative chancellor is now in favour of greater European integration, and has declared that "the remorseless logic" of monetary union is greater fiscal union. The "remorseless logic" is hardly news to those of us who, while being pro-European, were always concerned about the deficiencies of a monetary union without a full fiscal counterpart. But what is new is the chancellor's enthusiasm for it. The motive for this change in Treasury – as opposed to Foreign Office – policy towards the eurozone is not at all hard to find. Osborne was quite candid: if the eurozone crisis spirals out of control – 40% of our exports go to the eurozone – it will exacerbate what Osborne acknowledges is Britain's "tough" economic situation.

The US faces the prospect of a "catastrophe" as President Barack Obama stands firm against Republican demands for deep spending cuts without any tax increases as the condition for raising the country's borrowing limit and avoiding a debt default. With Washington gripped by a growing sense that it may be too late to avert a crisis, the president has said he will give the increasingly rancorous negotiations until the end of next week to reach agreement on the terms for raising the US's $14.3 trillion (£8.9tn) debt ceiling. The White House has said that if there is no agreement by 22 July, then discussion about budget cuts and taxes should be abandoned in favour of legislation dealing solely with raising the debt ceiling before the borrowing limit is reached on 2 August. But the Republicans have rejected legislation without agreement on budget cuts. With European leaders also facing a potentially ruinous debt crisis, a leading Wall Street figure described the prospect of a US default as catastrophic. Jamie Dimon, chief executive of JP Morgan, one of Wall Street's biggest banks, said: "No one can tell me with certainty that a US default wouldn't cause catastrophe and wouldn't severely damage the US or global economy. And it would be irresponsible to take that chance." On Wednesday, Ben Bernanke, the chairman of the Federal Reserve, warned of a "huge financial calamity" if a political agreement is not reached. He told Congress a default would "send shockwaves through the entire financial system". Hours later, the credit ratings agency Moody's warned that it may downgrade the US's AAA credit rating, saying there is a "rising possibility" that no deal will be reached by next month's deadline. (source the guardian.uk)

Jean-Claude Trichet, president of the European Central Bank, tightened the screws on Greece, Portugal and Ireland on Thursday by pressing ahead with an increase in interest rates, and insisting the single currency's weakest members must avoid a default at all costs. Trichet also attempted to keep Portugal away from the abyss by pledging to keep accepting its bonds, despite some rating agencies regarding such securities as no better than junk. This stance pushed shares higher across Europe and helped the euro to strengthen, as fears abated that Portuguese banks would soon struggle to finance themselves. Speaking after the ECB's governing council met in Frankfurt, Trichet warned eurozone governments against pursuing any plan that the credit ratings agencies would deem a default. "Our message is no credit event, no selective default, no default. As simple as that." The ECB is nervous that a default would trigger billions of pounds-worth of complex financial instruments such as credit default swaps, and destabilise the European banking sector. Trichet's staunch defence of the ECB's stance came as he announced a quarter-point increase in interest rates, to 1.5%, to clamp down on inflation, despite some of the single currency's members – including Greece – remaining deep in recession. Trichet said he would "monitor very closely" price developments – usually regarded as code for another rate rise in the pipeline, though not at the next meeting. The ECB is tightening policy in response to above-target inflation, driven by the strong recovery in the eurozone's largest member, Germany, as well as other northern economies including France. Inflation across the eurozone hit 2.7% in June. Analysts said higher borrowing costs would make life even harder for the struggling "peripheral" economies of Greece, Portugal, Ireland, Italy and Spain, which are all imposing tough austerity measures to deal with budget deficits, at the same time as coping with sickly economic growth, or outright recession.

Eurozone finance ministers are sharply divided over how to handle the spiralling Greek debt crisis, Dutch finance minister Jan Kees de Jager revealed as he attacked France's plans for a new rescue package. Speaking in London after a meeting with the chancellor, George Osborne, de Jager said it was "illusory" to hope that Europe's banks would voluntarily bear their fair share of the costs of a new bailout for Athens, and that President Sarkozy's current proposals let Greece's private sector creditors off too lightly. Any evidence of a fresh split among European policymakers will increase anxiety in the financial markets, which were rattled on Wednesday by news that ratings agency Moody's had downgraded Portugal's debt to junk status. "We do have concerns about the French scheme," de Jager said. "I think it's illusory to think of such a scheme as voluntary, so we have to work on solutions so that banks reach a level playing field." As a non-eurozone member, Britain is on the sidelines of talks about a new bailout for Greece, but de Jager said Osborne was "very close to our position". The cost of insuring Portuguese government debt through credit default swaps hit a record high after the downgrade, while the yield on Portuguese 10-year bonds jumped by more than a percentage point to 12.07%, ratcheting up the pressure on Lisbon. European commission president José Manuel Barroso criticised Moody's announcement, saying: "In this context, and the absence of new facts on the Portuguese economy that could justify a new assessment, yesterday's decisions by one rating agency do not provide for more clarity. They rather add another speculative element to the situation."

Germany's constitutional court has begun hearing a case that will decide whether Angela Merkel's government was right to agree to last year's multimillion-euro bailout of Greece and the accompanying rescue package for other faltering EU countries. In the unlikely event that the complainants win, the payments will be blocked, an outcome experts say would shake the foundations of the European Union. "If the court were to restrict the government's leeway to act, the consequences for the EU and the financial markets could be extremely serious," said Commerzbank analyst Eckart Tuchtfeld. Plaintiffs include MP Peter Gauweiler, a renegade member of Chancellor Merkel's conservative bloc. He has a history of challenging European Union initiatives and in 2009 he brought a complaint against the integration measures dictated by the Treaty of Lisbon, with limited success. Gauweiler, along with a group of professors, argues the measures violate EU no-bailout provisions and German constitutional clauses protecting property and democracy. They have the support of the majority of ordinary Germans, who were fiercely opposed to "their money" being used to bail out less prudent countries. The case is so crucial that Merkel dispatched her finance minister, Wolfgang Schäuble, to give evidence at Tuesday's hearing in Karlsruhe. Inside the court, he defended the rescue packages for Greece and other eurozone countries, arguing that "the stability of the euro is of paramount significance". He pointed to the risk of financial instability across Europe and beyond at the time when the government signed on to the initial Greek rescue of May 2010 and also the wider eurozone fund created shortly afterward. Those plans foresee Germany, Europe's biggest economy, guaranteeing loans up to €22.4bn for Greece and €147.6bn (£20.1bn) for other countries. The constitutional court's president Andreas Vosskuhle said the court did not want to hear a debate on the measures' economic merits, and that the right economic strategy was a matter for politicians and not judges. But, he said, his court "has to consider the limits that the constitution sets for politicians." Eurosceptic law professor Karl Albrecht Schachtschneider insisted that "what is economically wrong can't be legally right". He argued that the rescue measures violated a no-bailout provision in the European Union's Lisbon treaty without sufficient justification. He also contended that they violated German constitutional clauses protecting property and democracy, the latter by restricting the German parliament's control over its own budget. "A union of liability and debt favouring other states has been created," he said. Gauweiler's representative, Prof Dietrich Murswiek, pointed to current efforts to set up a second Greek rescue package, arguing that loans would sink into a "bottomless pit". "It's like trying to repair water damage by blowing up the house," he said. Murswiek contended: "The rescue fund serves in reality to take risks away from certain big banks," which would be unconstitutional. Schäuble said the government was on solid legal ground, and argued that "we Germans benefit even more than other Europeans from the currency union".

German and French proposals to restructure up to €30bn (£28bn) of Greek government debts were thrown into disarray after ratings agency Standard & Poor's said they amounted to a "selective default". The decision placed Germany and France on a potentially disastrous collision course with the European Central Bank (ECB). The proposals would have seen investors inject billions of euros into Greece by rolling over maturing Greek debt into new 30-year bonds. They are part of a broader €110bn rescue package, the details of which have yet to be finalised. The debt-swap proposals were designed to meet Berlin's demand that investors bear some of the costs of the bailout, since the terms of the agreement meant bondholders would end up out of pocket. However, because the proposals left bondholders nursing losses, S&P yesterday ruled that they would amount to a default on the debt. This sets up Germany and France for a clash with the ECB. The proposals are contingent on Greece not defaulting on its debt, because the central bank has said it will not accept defaulted bonds as collateral for loans. But any deal that satisfies German demands that bondholders take a share of the losses is doomed to failure since, based on the S&P ruling, it would trigger a default.

Juncker said Greece needed to adopt a process similar to the Treuhand agency, used by Germany to sell off 14,000 former East German firms between 1990 and 1994 – even though Treuhand failed to deliver any profit, oversaw huge job losses and eventually closed its books with a deficit. But he did appear to acknowledge that the Greeks were hostile to foreign officials appearing to take charge: "One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the eurozone." Athens, together with European leaders and the IMF, must now start work on a second €110bn bailout for Greece, which must be finalised by September and is likely to include private-sector involvement. The European commission conceded on Saturday, after the two-hour Eurogroup teleconference agreed the fifth tranche payout, that any plan to cut Greece's debt of 160% of economic output would be at risk of being derailed by internal unrest or external economic conditions. Growth just one percentage point below expectations, it said, would push Greece's debt to 170% of GDP, and rising, past 2020. For the first time, the commission's report also discusses debt restructuring, including a possible 40% "haircut" – a forced reduction in the value of Greek bonds – which would devastate Greek banks and, the report warns, could reverberate on Ireland, Portugal and Spain.

Analysts are increasingly questioning the French and German governments' plan for holders of Greek bonds to swap them for new loans as part of a fresh aid package. The Greek prime minister, George Papandreou, met his side of the rescue bargain last week by winning MPs' approval for radical new austerity measures, including €50bn of privatisations, public sector wage cuts and widespread civil service job losses. But eurozone ministers have so far failed to agree details of a new rescue, expected to be up to €110bn. The debt-swap proposal, which French and German banks have agreed to, involves offering new 30-year loans in exchange for expiring bonds, to meet Germany's demand that investors bear some of the costs of a new Greek bailout. But analysts say it is likely that ratings agencies could still brand the plan a default. That would trigger chaos in world markets, as investors were forced to slash the value of their Greek debts - and could also lead to Portugal and Ireland, the other bailed-out eurozone states, having their debts downgraded. Simon Derrick, chief currency strategist at BNY Mellon, said: "When you compare the French plan to what the ratings agencies have said, it looks as though they would make it a default." Standard & Poor's said no final decision would be made on the scheme until the full details were published but pointed out a recent statement setting out the reasons a debt-swap might still constitute a default. "While an exchange offer for longer-dated bonds may appear to be 'voluntary', we may conclude that investors have been pressured into accepting because they fear more adverse consequences were they to decline the exchange offer," S&P said.

Global economic recovery slips into lower gear as industrial activity dips - A sharp bounce in stock markets following agreement in the Greek parliament to pursue EU-sponsored austerity measures became more muted after it became clear a global slowdown in manufacturing was firmly under way. "Over the past two months, [euro-zone manufacturing] output growth has weakened to the greatest extent since late-2008," said Chris Williamson, chief economist at Markit, which compiled the surveys. The US was the only bright spot, adding to expectations the economy may be recovering from a recent slowdown. The US Institute for Supply Management said its index of national factory activity rose to 55.3 from 53.5 the month before. The reading beat expectations for a decline to 51.8, according to a Reuters poll of economists. The UK's Markit/CIPS purchasing managers' index showed a bigger than expected drop to 51.3 from 52 in May, revised from 52.1. David Noble, chief executive at the Chartered Institute of Purchasing & Supply, said: "The UK's manufacturing sector is slipping into 'growth-lite' mode, a far cry from the strong expansion seen earlier in the year." For the second quarter as a whole, the average PMI reading of 52.6 is the lowest since the recovery began in the autumn of 2009. Export orders and employment slowed to the weakest growth rate since last September. Rob Dobson, senior economist at Markit, said: "It is worrying to see that slowdown is not just being driven by the demise of domestic market strength, with growth in new exports having also slowed since the start of the year as the global economic recovery drifts into a softer patch." Input price inflation slowed sharply to the slowest rate in one-and-a-half years, reflecting recent falls in the cost of oil and other commodities. Output price inflation – measuring the prices charged by manufacturing – was the weakest since last December.

Total Lloyds job cuts now almost 45,000 - Lloyds Banking Group boss announces 15,000 job cuts - António Horta-Osório stamped his mark on Lloyds Banking Group on Thursday, cutting 15,000 jobs and pledging to revitalise the Halifax brand in an effort to help taxpayers make a profit on their £20bn investment in the bailed-out bank. On a bleak day for employment in the banking industry, HSBC also cut 700 jobs at its UK arm to save £9m – a sum officials at Unite noted was the same as the bonus of chief executive Stuart Gulliver. While unions were furious about the scale of the job losses at Lloyds – which are now on track to touch 45,000 as a result of the rescue of HBOS during the 2008 crisis – the City applauded the actions of Horta-Osório, who was presenting the outcome of a strategic review he conducted after taking the helm of Lloyds on 1 March. The Portuguese-born banker, who was lured from Spanish bank Santander, was at first unrepentant about the scale of the job cuts although later admitted: "I do regret that we have to do this. I would prefer to put this bank back on its feet without reducing staff." But, he insisted the cuts were essential. "We have to do this. This bank has lost money, it's losing money this year on an after-tax basis. "We have to get this bank back on to its feet to support the UK economy and we have to pay taxpayers' money back," he said.

Research published today by Ricoh Europe reveals that European businesses could be missing out on potential profit increases of €46 billion, due to the existing, inefficient methods used to process information. TheRicoh Process Efficiency Index shows that employees across Europe responsible for managing business critical document processes spend approximately 362 million hoursof their time per year on the function, which amounts to an overall business cost of €147 billion. The Index examines how European organisations are managing their business critical document processes; those that occur regularly and repeatedly and have a direct impact upon businesses interactions with clients and employees. For example, purchase orders, patient records or invoices. The study also identifies the areas for improvement and the economic return that those improvements could deliver. Carsten Bruhn, Executive Vice President, Ricoh Europe said: "This report is essential reading for every European CIO. It highlights that if European businesses are to meet the challenge of competing with emerging markets, it is essential that they look at the efficiency of their business critical document processes." "The Index clearly illustrates how outdated, manual processes have multiple impacts on the business. For example, if critical information is processed using traditional hard-copy methods, business risk is enhanced as they are less likely to be backed-up. They are also easier to lose, making them more prone to security breaches. It is also inevitable that employees are spending unnecessary time processing business documents, instead of focusing on the core business transactions and customer service."

GREECE - The votes are just in, and the €28bn (£25bn) austerity bill has been passed, but Greece's troubles are still a long way from being resolved. What has the Greek parliament just voted through? The programme covered €28bn of spending cuts and tax rises, and permission for €50bn of asset sales. Measures include cuts to public sector pay, a new solidarity levy on income, and cutbacks in government spending. Here's a full rundown of the key measures. Does this mean victory for prime minister George Papandreou? Not yet. The Greek parliament will reconvene on Thursday to vote on an enabling law that will allow the government to speed up the pace of reform. This will also include a specific breakdown of some of the fiscal measures, including the tax changes and a €50bn privatisation programme. Analysts believe this could be even tighter than Wednesday's vote, given Papandreou's narrow majority. Why did MPs agree to these measures? Greece has been struggling to meet the conditions of the original €110bn rescue loan agreed with the EU and the International Monetary Fund last year. Eurozone finance ministers had insisted on tougher austerity measures in return for the next slice of the package, worth €12bn. What would happen if Greece did not receive the €12bn? More than €6bn of Greek government bonds mature in July, meaning they must be repaid then. Another €6.6bn matures in August. Greece cannot roll the debt over by issuing new bonds, as the financial markets are now demanding ludicrously high interest rates on Greek government borrowing. The €12bn tranche of aid is already earmarked to cover these payments – without it, an immediate disorderly default looked inevitable.

French finance minister Christine Lagarde has become the new head of the IMF after the fund's board confirmed her appointment following a meeting in Washington. Lagarde, who takes over from Dominique Strauss-Kahn, is the first woman to hold the post. She will begin her five-year term on 5 July. After the board's announcement, Lagarde tweeted: "The results are in: I am honored & delighted that the Board has entrusted me with the position of MD of the IMF!" Official confirmation came after the US hadformally endorsed Lagarde's candidacy. Treasury secretary Tim Geithner said: "Minister Lagarde's exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy. We are encouraged by the broad support she has secured among the fund's membership, including from the emerging economies." French president Nicolas Sarkozy was quick to show his support for his compatriot. He said in a statement: "The French presidency rejoices that a woman is taking on this important international role." Chancellor George Osborne hailed Lagarde's appointment as "good news for the global economy and for Britain." He said: "She is the best person for the job, which is why Britain was one of the first countries to propose her. She has been a strong advocate for countries tackling high budget deficits and living within their means." Lagarde has the support of most European countries, and is seen as an ideal candidate to handle the IMF's ongoing bailout of weak eurozone countries. Many observers felt the time had come for a non-European to take the post, but despite initial coolness towards her candidacy China and Russia backed Lagarde's appointment. Along with the US, she has the explicit support of nations including Indonesia and Egypt, representing more than half the IMF's 24 voting board members. The executive board represents the 187 members of the IMF.

EUOBSERVER / BRUSSELS - European lenders are considering the 'first draft' of a plan put forward by French banks for a rollover of some 70 percent of the banks' holdings of Greek debt. Unveiled by French President Nicholas Sarkozy on Monday (27 June), the plan would involve private bondholders agreeing to re-invest back in Greece half the amount of their holdings as they matured, swapping the debts for new longer-dated bonds. The maturity on the new bonds remains up for discussion, with some German sources saying the suggested extension to 30 years is too long, but the aim is to partially free the country from having to repay its debts in the near term, relieving some pressure from the insolvent nation. A further 20 percent of debts coming due would be invested in triple-A bonds via a special purpose vehicle. EU nations are hoping to convince private creditors to engage in such voluntary rollovers amounting to around €30 billion, representing just under a third of the amount of a potential second bail-out of the country. The French scheme was considered alongside other options at a meeting in Rome on Monday night of some of the most powerful figures in international banking, with executives flying in to talks with eurozone and European Central Bank representatives regarding the voluntary rollover.

CITIZEN ADVICE - The economic downturn is pushing consumers into the hands of con merchants and rogue traders who have "never had it so good", Citizens Advice warned this week. The national charity says the current economic conditions have led to an unprecedented boom in that exploit people's need to save money on bills, increase their income, and find work and affordable housing. It says there is a growing problem with unscrupulous employers advertising fake "jobs" that require fees to be paid in advance. Increasingly, it adds, "phantom flats" are offered to would-be tenants, who are then asked to prove they can pay the rent by transferring money to the landlord: money they never see again. It also warns that some money transfer services and classified ad websites can sometimes be channels for fraud. The warning chimes with Guardian Money's postbag, which is increasingly seeing complaints about bogus websites offering desirable products such as cameras at low prices. Fraudsters set up the sites, trade for a short time and then disappear with the cash. If a camera or pair of designer jeans looks too cheap, there is usually a reason why, say police. Meanwhile, as the summer music festival season gets underway, fans are being urged to be on their guard against sophisticated online rip-offs run by organised gangs of "cyber criminals", in which they are duped into buying fake or non-existent tickets. Experts at Get Safe Online, a government-backed initiative, are warning that the problem will get worse as the wave of events provides rich pickings for the fraudsters. More than one in 10 people (or their friends and family) say they have already been a victim of an online ticketing scam. According to Get Safe Online, criminals are increasing efforts to dupe consumers into visiting fake ticket websites. They are passing off their operations as supposedly genuine businesses, and are often willing to make significant investments for high returns. For example, they will often pay for search advertising (such as Google AdWords) so their fake sites appear at the top of event search results. And they even enlist professional web designers so that their sites appear genuine. One method used by scammers is targeting band websites, forums and social networking sites. Posts will be displayed from "fans" claiming they have bought tickets from a certain site and encouraging those not yet successful in getting theirs to visit it. More consumers are then driven to the fake site.

Global stock markets bounced back on Friday after European Union leaders reached agreement on a €120bn (£105bn) bailout for Greece. Most Asian markets were up, with the Nikkei in Tokyo gaining 0.85% to 9678.71 and Hong Kong's Hang Seng rising 1.6% to 22,115.24. The FTSE 100 index in London opened 75 points higher. On Thursday, it closed down 98.61 points at 5674.38 after downbeat comments on the state of the economy from the US Federal Reserve chairman, Ben Bernanke. European leaders agreed on Thursday night to launch a fresh bailout of Greece, assuming the country passes an austerity package next week. Britain is to be spared from taking part in the rescue after leaders accepted David Cameron's argument that the bailout should be borne by the eurozone. The rescue will be provided by Greece's "euro partners and the International Monetary Fund", meaning that Britain is exempt from the European part of the package. Germany had been insisting that the bailout should be partly funded by all 27 EU members, but backed off. Without the final tranche of last year's €110bn bailout – €12bn from the eurozone and the IMF – Greece would be broke by mid-July. Brent crude oil rebounded by more than a dollar to $108.70 a barrel on Friday morning, after tumbling 6% on Thursday when the International Energy Agency announced the release of 60m barrels of emergency oil supplies on the market in an attempt to stem soaring petrol and other energy prices. US crude climbed to $92.34 a barrel. It is only the third time in the 37-year history of the IEA that oil has been released in this way and follows repeated calls on Opec to turn on the taps and bring down the price of oil.

Much of Europe is now engaged in achieving quick reduction of public deficits through drastic reduction of public expenditure and it is crucial to scrutinise realistically what the likely impact of the chosen policies may be, both on people and the generating of public revenue through economic growth. The high morals of "sacrifice" do, of course, have an intoxicating effect. This is the philosophy of the "right" corset: "If madam is at all comfortable in it, then madam certainly needs a smaller size." However, if the demands of financial appropriateness are linked too mechanically to immediate cuts, the result could be the killing of the goose that lays the golden egg of economic growth. This concern applies to a number of countries, from Britain to Greece. The commonality of the "blood, sweat and tears" strategy of deficit reduction gives some apparent plausibility to what is being imposed on more precarious countries like Greece or Portugal. It also makes it harder to have a united political voice in Europe that can stand up to the panic generated in the financial markets. In addition to a bigger political vision, there is a need for clearer economic thinking. The tendency to ignore the importance of economic growth in generating public revenue should be a major item for scrutiny. The strong connection between growth and public revenue has been observed in many countries, from China and India to the US and Brazil. There are lessons from history here, too. The big public debts of many countries when the second world war ended caused huge anxieties, but the burden diminished rapidly thanks to fast economic growth. Similarly, the huge deficits that President Clinton faced when he came to office in 1992 melted away during his presidency, greatly aided by speedy economic growth. The fear of a threat to democracy does not, of course, apply to Britain, since these policies have been chosen by a government empowered by democratic elections. Even though the unfolding of a strategy that was not revealed at the time of election can be a reason for some pause, this is the kind of freedom that a democratic system does allow the electorally victorious. But that does not eliminate the need for more public discussion, even in Britain.

The International Finance Corporation (IFC), member of the World Bank Group, and the European Bank for Reconstruction and Development (EBRD) granted a 114.8 million euros loan to Cernavoda Power company to co-finance the construction and exploitation of the 138 MW wind farms Cernavoda I and II, reads a release issued by the two banking institutions. EBRD and IFC each grant a 57.4 million euros loan for Cernavoda Power, whose majority shareholder is EDP Renovaveis, to finance the construction and exploitation of the wind farms.
This is the first "project finance"-type of investment of EBRD and IFC in the renewable energy sector in Romania.
"Supporting the projects devoted to renewable energy is one of the key priorities of EBRD. The Cernavoda-based wind farm will make a major contribution to expanding the capacity to generate wind energy in Romania and to reaching the EU renewable energy standard figures," said Nandita Parshad, EBRD head of power and energy utilities.
The Cernavoda-based wind farm located in the south-eastern region of Dobrogea will become one of the largest wind parks in Romania. Cernavoda I is operational now generating already 69 MW while Cernavoda II will be put into operation soon only to generate another 69 MW. Its total capacity will represent the fourth part of the total capacity of generating wind energy in Romania. AGERPRES

Greece's embattled prime minister has survived the first of a trio of tests that could sink the Greek economy and lay waste to Europe's single currency by winning a parliamentary vote of confidence in his reshuffled government. George Papandreou must now try to drive through a package of savage spending cuts and national assets sales in order to secure a new EU bailout. With the complex effort to stave off a Greek sovereign default moving towards a climax and anti-government and anti-EU protesters laying siege to central Athens, Papandreou won the vote by 155-143 in the 300-seat chamber. Brussels and other EU capitals anxiously watched the drama in Athens prior to a crucial summit of EU leaders. "Good news for Greece and for the EU as a whole," said Jose Manuel Barroso, the president of the European commission. Papandreou's victory removed "an element of uncertainty from an already very difficult situation. His government can now focus all efforts on building support in parliament for the ambitious series of fiscal measures and privatisations." The vote kicked off a crucial three weeks that could make or break the euro. Leaders in Brussels spoke of the worst crisis in Europe since the second world war, the International Monetary Fund (IMF) set ultimatums before the 17 countries of the single currency, and international ratings agencies classified the bailout terms for Greece as a likely default. In order to secure an immediate €12bn lifeline and then EU agreement on a second bailout running to more than €100bn over three years, Papandreou now has to persuade parliament to back a radical programme of spending cuts, tax increases, and a mass assets sell-off by the end of next week