May 24, 2017

Greek Unions Call Strike to Protest Cuts

ATHENS — Greek unions stepped up their opposition Wednesday to a new round of austerity measures promised to the country’s foreign creditors, calling a 24-hour general strike for Tuesday while local government employees occupied city buildings to protest plans for wage cuts and layoffs.

The country’s two largest unions, which represent some 2.5 million workers, called the fourth general strike of the year to protest a new raft of economic changes, including a contentious streamlining of the country’s civil service. The government submitted the changes to Parliament for debate late on Tuesday, and a vote was expected by July 19.

‘’Let the government and the troika finally understand that we are people and we won’t become numbers,’’ the G.S.E.E. private sector union said in a statement, referring to Greece’s three international creditors: the European Commission, the European Central Bank and the International Monetary Fund.

Despite strong union opposition, the government must push the changes into law if it is to clinch the first installment of a 6.8 billion euro, or $8.7 billion, aid payment approved by the 17 finance ministers of the euro zone countries on Monday.

Greece’s foreign lenders are meting out the aid in doses to keep the pressure on Athens to deliver on pledges. The first installment would be 2.5 billion euros.

The changes that have fueled the most vehement protests are plans for layoffs in the civil service by the end of next year and a so-called mobility plan that would give reduced pay to 12,500 public sector workers for eight months before transferring them to other positions or laying them off.

Municipal police officers, school janitors and teachers would be among the first to be affected by the program. Municipal police officers occupied offices in Athens on Tuesday, while other local authority employees, including street cleaners, met to plan protests.

Last month, a decision by Prime Minister Antonis Samaras to close the state broadcaster, ERT, putting some 2,700 people out of work, led the junior partner in the coalition to quit, shaking the stability of the fragile government. The upheaval illustrates just how difficult it will be for the authorities to slash the civil service payroll.

Dismissed ERT workers have continued to occupy the broadcaster’s headquarters, running a pirate broadcast via satellite. Negotiations have stalled between the former employees and a new minister installed in a cabinet shake-up last month to oversee the creation of a new state broadcaster. The minister, Pantelis Kapsis, blamed the breakdown on “10 ERT unionists.”

Also on Wednesday, an interim channel called Greek Public Television, or EDT, began transmitting its logo on ERT’s old frequency. Mr. Kapsis said the channel would start airing films and documentaries “in the next few hours” and that an unspecified number of people would be hired for a temporary news program until the debut of the new broadcaster, to be known as Nerit, in the coming months.

The former ERT employees were defiant, dismissing the interim broadcaster as “an illegal creation.”

Article source: http://www.nytimes.com/2013/07/11/business/global/greek-unions-call-strike-to-protest-cuts.html?partner=rss&emc=rss

As Lenders Return to Greece, Athens Seeks Relief

ATHENS — The international lenders overseeing Greece’s bailout were back in Athens on Monday for their latest audit, as Greek officials hope dissent in the lending group might allow them new negotiating room.

It was the first time high-ranking representatives of the troika — the International Monetary Fund, the European Commission and the European Central Bank — have assembled here since an I.M.F. report last week conceded that it had made mistakes in Greece’s first foreign bailout. The report prompted angry reactions from the European Commission, not to mention Greek citizens weary of years of recession and austerity measures imposed by the lenders.

Finance Minister Yannis Stournaras met with the foreign envoys Monday for the first in a series of talks expected to focus on Greek pledges for layoffs in the civil service, an overhaul of the dysfunctional tax collection system and the status of a slow-moving effort to raise money by selling off state assets. Athens is obliged to show progress on those and other commitments to secure a tranche of 3.3 billion euros, or $4.4 billion, in rescue loans that are scheduled to be dispensed this month.

A ministry official described the first meeting as “a discussion and an exchange of views about where we are and how we see things.”

“We didn’t decide on anything,’’ he said. “All issues remain open.”

Having arranged two bailouts for Greece worth a combined 240 billion euros over the last three years, the troika has been handing out the aid in installments in exchange for the country’s adopting economic changes and hitting austerity targets. Many Greeks have protested those measures, which have helped slash living standards as the country enters its sixth year of recession and have played a part in an unemployment rate that has reached 27 percent.

Greek government officials hope that the string of errors highlighted in the I.M.F.’s internal report might prompt the troika to ease demands for more painful reforms. The report concluded that the fund made serious miscalculations and failed to anticipate the severity of Greece’s economic downturn. The I.M.F.’s admission has given Greece some “negotiating power,” Mr. Stournaras said in an interview with the center-left To Vima newspaper on Sunday.

Among the concessions he is expected to seek is the lowering of the value-added tax on restaurants and taverns – to 13 percent, from 23 percent — as a way to lighten the burden on small businesses and help the crucial tourism sector, which is forecasting a record year of 17 million foreign visitors.

Government officials are also expected to ask for a reprieve in the approximately 2,000 layoffs in the civil service that the troika wants to see over the summer; Athens fears that possible labor protests and transport strikes would hamper tourism. Greece had committed to dismissing 4,000 public sector workers this year and an additional 11,000 in 2014. Even after those cuts, the number of Greek civil servants would be above 600,000, compared with around three million working in the private sector.

Other issues likely to be discussed are an expected funding gap of 4.6 billion euros for financing the bailout program in 2014 and measures that will be taken to cover the shortfall. Also on the table might be discussion of how likely it is that Greece’s international creditors might be forced to take some losses on their holdings of Greek debt next year to ease the country’s financial burden.

Another big topic on the agenda is Greece’s huge untapped potential for privatizing government-owned assets. But Athens received an unpleasant surprise when the Russian energy giant Gazprom failed to submit an offer for the Greece’s public gas corporation, Depa, by Monday’s deadline. Athens had hoped to close a deal with Gazprom after meetings in recent months between the Russian company’s chief executive, Alexey Miller, and the Greek prime minister, Antonis Samaras. Gazprom made a preliminary bid last year of 900 million euros, and a final bid of around 800 million euros had been expected.

Some Greek media reports Monday said the deal went sour following a dispute over the price at which Gazprom would supply gas to Greek households. Others reported that objections by the European Union’s competition authorities, which have been investigating Gazprom since last fall, led the Russians to withdraw their interest. Greece’s privatization agency, Taiped, was expected to issue a statement later in the day.

Addressing supporters of his conservative New Democracy Party, which leads Greece’s ruling coalition, in the northern port of Thessaloniki on Sunday, Mr. Samaras said the government was “doing everything in our power to attract investments.” He accused the main leftist opposition party, Syriza, which opposes the terms of Greece’s foreign bailouts and has pledged to reverse all privatizations if it comes to power, of “doing all it can to chase investments away.”

Article source: http://www.nytimes.com/2013/06/11/business/global/as-lenders-return-to-greece-athens-seeks-relief.html?partner=rss&emc=rss

After Citizen Protests, Israel Approves Austerity Budget

Even before the new government’s first budget was approved, 12,000 Israelis took to the streets Saturday night in a show of anger reminiscent of the vast social protests that rocked the nation in the summer of 2011. At that time, record crowds complained of the high cost of living — and eventually many voted their cause and expected the new leadership to respond.

Instead, the government announced that a large deficit required higher taxes and less spending.

The austerity measures are intended to help close a 2012 deficit of about $10.5 billion, which was 4.2 percent of the gross domestic product and double the amount that had been projected.

“Today, given the State of Israel’s national needs and the global economic crisis, it is important for the State of Israel to show that it is passing a budget,” Prime Minister Benjamin Netanyahu said on Monday at the start of the cabinet meeting. He announced that a compromise had been reached on the fiercely contested military budget, cutting it by $840 million.

But because voters had demanded a different budget blueprint, anger was focused less on Mr. Netanyahu, whose previous government created the deficit, than on Yair Lapid, the political rookie and former television host, who was recently elected and is now finance minister.

Mr. Lapid’s centrist Yesh Atid Party stunned the political establishment by placing second in the January election. Its success was widely attributed to the way that Mr. Lapid rode the wave of the social protest movement, campaigning on a slogan of “Where’s the money?” and championing the cause of Israel’s struggling middle classes.

But this budget includes, among other things, an increase of 1.5 percentage points in the personal income tax and of one point in the corporate tax. The value-added tax is set to rise to 18 percent from 17 percent, child allowances are to be sharply reduced, and subsidies for after-school programs for children under the age of 9 will be canceled. Mr. Lapid has noted that with the ultra-Orthodox political parties sitting in the opposition after being part of most government coalitions for the last three decades, financing for yeshivas has also been reduced.

The cuts hitting the public in the pocket appear to contradict the goals of the social protest movement, which began with a tent encampment in Tel Aviv to protest housing prices and peaked one night in September 2011 when half a million Israelis demonstrated against the high cost of living.

Mr. Lapid’s critics have argued that he has fallen into the groove of old politics, shying away from more sweeping structural changes.

Shelly Yacimovich, the leader of the Labor Party and head of the opposition, sent a letter to government ministers urging them to oppose the new budget. The economic program, she wrote, according to a copy posted on her party Web site, “was written by the previous government. Its clauses are very well known to many of us, for they were written in the near and distant past by the same Finance Ministry officials.”

Prof. Avia Spivak of the department of economics at Ben-Gurion University of the Negev, an early supporter of the social protest movement, said he agreed with those who said Mr. Lapid’s budget was “more of the same.”

The tax increases could have been done more progressively, Professor Spivak said in a telephone interview, for example, by increasing corporate taxes or by considering reintroducing an estate tax that was canceled in 1981 during a period of high inflation. The government could have raised the corporate tax by three percentage points, he said, “without seeing an exodus of companies abroad.”

Professor Spivak was a co-chairman of an academic committee that advised the grass-roots leaders of the social justice movement of 2011. He said he had no doubt that Mr. Lapid was voted in on the heels of the protest and that he was not fulfilling the protesters’ expectations.

“If he had had more time, he could have been more creative,” Professor Spivak said, adding that Mr. Lapid’s lack of experience made him reliant on Finance Ministry staff and outside experts who mostly presented him with familiar ideas.

Now that it has been approved by the government, the budget must be presented to Parliament in June and passed by July, and it is expected to be adopted, albeit with possible amendments, because the parties in the governing coalition hold a majority of seats. While overall spending would increase year to year, the deficit ceiling would be reduced to 3 percent of gross domestic product from 4.65 percent.

Although Israel’s economy is regarded as relatively strong and stable, having weathered the global economic downturn, the growth of recent years has directly benefited a small percentage of the population, living costs are high — perhaps because of a lack of competition, experts say — and the gap between the rich and the poor has been increasing.

Until a few days ago, Mr. Lapid had communicated with the public solely through Facebook since taking office. But feeling the popular heat, he broke his silence last week with a news conference and a television interview.

Mr. Lapid argued that for once, it was not only the middle class that was bearing the brunt, but also wealthier Israelis who would lose child allowances altogether and pay increased taxes on luxury goods.

In the interview that ran on Friday on Channel 2, Mr. Lapid said of those rallying against him: “Who are you demonstrating against? Are you demonstrating so that you can lose your jobs, so that the economy will collapse? You are demonstrating against yourselves.”

Yesh Atid won 19 seats in the 120-seat Parliament, positioning Mr. Lapid as a power broker. By taking on the Finance Ministry with no political experience or economic expertise, many analysts here said, he risked his popularity and exposed himself to criticism. Others said that the job could prove a valuable test of leadership, but that it was too early to tell how his political fortunes would fare.

Mr. Lapid said the pain would be short-lived. In a Facebook post on Sunday, he wrote that he was going through “stormy days,” but that the budget cuts were a necessary first step. He continued, “After that, the reforms will begin — all those things that will be done to bring down the cost of living and to improve the life of the working person.”

Article source: http://www.nytimes.com/2013/05/15/world/middleeast/after-citizen-protests-israel-approves-austerity-budget.html?partner=rss&emc=rss

Portuguese Debt Crisis Brings New Trouble for Euro

In an address to his beleaguered nation on Sunday, Prime Minister Pedro Passos Coelho warned that his government would be forced to cut spending more and that lives “will become more difficult” after a court on Friday struck down some of the austerity measures put in place after a bailout package two years ago.

The renewed tension in Portugal raised the threat of further trouble elsewhere in the euro zone, where ailing members have struggled to rebuild economic growth after enduring wrenching spending cuts.

“The risks in the euro zone have increased markedly over the past six weeks or so,” wrote Nicholas Spiro, managing director of Spiro Sovereign Strategy, a London-based consultancy that assesses risk on sovereign debt.

A critical moment for the latest trouble took place on Friday, when Portugal’s Constitutional Court struck down four of nine contested austerity measures that the government introduced as part of a 2013 budget that included about 5 billion euros, or $6.5 billion, of tax increases and spending cuts. The ruling left the government short about 1.4 billion euros of expected revenue, or more than one-fifth of the 2013 austerity package.

Specifically, the court, which began reviewing the legality of the government’s austerity measures in January, ruled as unconstitutional and discriminatory the government’s plans to cut holiday bonuses for civil servants and pensioners, as well as to reduce sick leave and unemployment benefits.

Since Greece’s bailout in 2010, spikes in the borrowing costs of troubled euro countries have spread from one country to another as investors have tried to anticipate possible problems elsewhere in the currency union.

With that contagion risk in mind, politicians in Spain wasted no time over the weekend trying to distance their country from the latest turmoil in Lisbon.

Esteban González Pons, a senior official of the governing Popular Party, told a gathering of the party on Sunday that “Spain is not in the situation of Portugal.” He added, “If Portugal is in worse shape than Spain, it is because they have not taken the necessary measures that we have taken in our country.”

In May 2011, Portugal became the third euro zone country, after Greece and Ireland, to negotiate an international bailout. Lisbon received 78 billion euros from the International Monetary Fund and European creditors in return for introducing spending cuts and tax increases. Since then, however, Portugal has failed to meet its promised budgetary goals. Its economy has instead continued to sink into one of Europe’s most severe and prolonged recessions, spurring labor strikes and huge street demonstrations.

But Mr. Passos Coelho, in his first public address since the court ruling on Friday, defended the record of his nearly two-year-old government and pledged to do “everything to avoid a second bailout.” He ruled out, however, introducing tax increases.

The prime minister addressed the nation on Sunday after an emergency meeting of his cabinet on Saturday, as well as talks with the Portuguese president, Anibal Cavaco Silva.

Cyprus received a bailout of 10 billion euros from international creditors last month. It may need even more to save its banks, a top German policy maker said on Sunday.

“The situation in Cyprus has stabilized in the last few days,” Jens Weidmann, president of the Bundesbank, the German central bank, told Deutschlandfunk radio. “However, I wouldn’t rule out that the need for liquidity in Cyprus could increase.”

The crisis in Cyprus reflects how urgent it is for the euro zone to establish a means to shut down failed banks without burdening taxpayers or endangering the financial system, Mr. Weidmann said.

“There continues to be a problem with banks that may be too connected and too big to wind down without creating a danger for the financial system,” he said.

Jack Ewing contributed reporting.

Article source: http://www.nytimes.com/2013/04/08/business/in-portugal-more-cuts-on-way-to-ease-debt-crisis.html?partner=rss&emc=rss

In Portugal, More Cuts on Way to Ease Debt Crisis

Just weeks after European leaders tamped down a banking crisis in Cyprus, troubles in the euro zone have again reared their ugly head, this time in Portugal.

In an address to his beleaguered nation on Sunday, Prime Minister Pedro Passos Coelho warned that his government would be forced to cut spending more and that lives “will become more difficult” after a court on Friday struck down some of the austerity measures agreed to in exchange for a bailout package two years ago.

The renewed tension in Portugal raised the specter of further trouble elsewhere in the euro zone, where ailing members have struggled to rebuild economic growth after enduring wrenching spending cuts.

“The risks in the euro zone have increased markedly over the past six weeks or so,” wrote Nicholas Spiro, managing director of Spiro Sovereign Strategy, a London-based consultancy that assesses risk on sovereign debt.

The flash point for the latest trouble took place on Friday, when Portugal’s Constitutional Court struck down four of nine contested austerity measures that the government introduced last year as part of a 2013 budget that included about 5 billion euros, or $6.5 billion, of tax increases and spending cuts. The ruling left the government short about 1.4 billion euros of expected revenue, or more than one-fifth of the 2013 austerity package.

Specifically, the court, which began reviewing the legality of the government’s austerity measures in January, ruled as unconstitutional and discriminatory the government’s plans to cut holiday bonuses for civil servants and pensions, as well as to reduce sick leave and unemployment benefits.

Since Greece’s bailout in 2010, spikes in the borrowing costs of troubled euro countries have spread from one country to another as investors have tried to anticipate possible problems elsewhere in the currency union.

With that contagion risk in mind, politicians in Spain wasted no time over the weekend trying to distance their country from the latest turmoil in Lisbon.

Esteban González Pons, a senior official of the governing Popular Party, told a gathering of the party on Sunday that “Spain is not in the situation of Portugal.” He added: “If Portugal is in worse shape than Spain, it is because they have not taken the necessary measures that we have taken in our country.”

In May 2011, Portugal became the third euro zone country, after Greece and Ireland, to negotiate an international bailout. Lisbon received 78 billion euros from the International Monetary Fund and European creditors in return for introducing spending cuts and tax increases. Since then, however, Portugal has failed to meet its promised budgetary goals. Its economy has instead continued to sink into one of Europe’s most severe and prolonged recessions, spurring labor strikes and huge street demonstrations.

But Mr. Passos Coelho, in his first public address since the court ruling on Friday, defended the track record of his nearly two-year-old government and pledged to do “everything to avoid a second bailout.” He ruled out, however, introducing tax increases.

The prime minister addressed the nation on Sunday after an emergency meeting of his cabinet on Saturday, as well as talks with the Portuguese president, Anibal Cavaco Silva.

Cyprus received a bailout of 10 billion euros from international creditors last month. It may need even more to save its banks, a top German policy maker said on Sunday.

“The situation in Cyprus has stabilized in the last few days,” Jens Weidmann, president of the Bundesbank, the German central bank, told Deutschlandfunk radio. “However, I wouldn’t rule out that the need for liquidity in Cyprus could increase.”

The crisis in Cyprus reflects how urgent it is for the euro zone to establish a means to shut down failed banks without burdening taxpayers or endangering the financial system, Mr. Weidmann said.

“There continues to be a problem with banks that may be too connected and too big to wind down without creating a danger for the financial system,” he said.

Jack Ewing contributed reporting from Frankfurt.

Article source: http://www.nytimes.com/2013/04/08/business/in-portugal-more-cuts-on-way-to-ease-debt-crisis.html?partner=rss&emc=rss

Ahead of Cyprus Election, Gloom and Voter Apathy

Both candidates have promised to abide by a deal with international lenders that promises to help the country service its debts but that will bring harsh austerity and recession with it.

Mr. Georgiou, 28, studied business management in Britain and returned almost a year ago to look for work. He has yet to find a job and says he believes that a deal with the European Commission, the European Central Bank and the International Monetary Fund — known collectively as the troika — will only make matters worse.

“They both have the same policies but find a way to make the public believe they disagree,” Mr. Georgiou said of the two candidates. “We see that any country with a troika agreement is ridden with debt and has high unemployment of youth.”

What many Cypriots find most frustrating is that their crisis, like those in Ireland and Iceland before them, was concentrated in the banks. There is no sovereign debt crisis and, before the banking collapse, their economy was relatively healthy. Why, they wonder, should they suffer for the misdeeds of a few bankers? Why cover losses that should be borne, at least in part, by private investors?

This small Mediterranean nation goes to the polls at a moment of rising uncertainty and apprehension. Nicos Anastasiades, the leader of the conservative party Democratic Rally, is expected to best Stavros Malas, who is backed by AKEL, the Communist party.

Mr. Anastasiades comes from the same conservative bloc in Europe, the European People’s Party, as Chancellor Angela Merkel of Germany. Ms. Merkel came here for a party conference in January and met with Mr. Anastasiades at that time.

But on the subject that preoccupies many Cypriots, the anticipated bailout, the difference between the two candidates may be slim. Mr. Malas has called for a softening of the harshest austerity measures but otherwise has promised to stay the course with the sort of budget-slashing measures advocated by Germany that have led to deep recessions in other European countries.

“Fundamentally, the average Cypriot and even the average politician realizes this model being imposed by Germany all over Europe is flawed,” said Bambos Papageorgiou, who is a member of the Cypriot Parliament’s finance committee from AKEL and who used to work in the London derivatives market. “But our situation is such that we can’t avoid negotiating.”

Cyprus has known its share of adversity. The island has been divided since the Turkish Army invaded the northern part of the island in 1974. United Nations peacekeepers still patrol the buffer zone, which runs through the center of the capital, Nicosia.

Graffiti written in black spray paint near one of the blue and white guard posts at the edge of the zone on the Greek side reads “Troika Go Home.”

Cyprus has been unable to raise money in international bond markets for a year and has been kept afloat only by a loan of $3.5 billion from the Russian government. That allowed it to put off the final reckoning, which is now coming due.

In absolute terms, the bailout of Cyprus under discussion is quite small compared with the cost of keeping Greece afloat, around $22 billion compared with roughly $327 billion. But German politicians have balked at what they see as a bailout for Russian oligarchs and money launderers, who they say keep their money in Cypriot banks.

Cyprus signed a memorandum of understanding with the troika in November, cutting salaries for government workers by up to 15 percent. Additionally, public pension payments were pared back by as much as 10 percent, and the value-added tax will rise. Both sides decided to wait until a new government was in place to complete the bailout.

In the meantime, Cyprus’s economy shrank by roughly 2.3 percent last year, according to preliminary estimates by the government statistics office, driving the unemployment rate up to 14.7 percent by the end of the year.

Though frustrated, European voters have tended to hold their noses and vote for pro-bailout candidates, as they did in Greece last year when Antonis Samaras eked out a victory over Alexis Tsipras’s radical-left Syriza. But political analysts wonder how long their patience will hold as austerity measures punish the most indebted countries and their pared-back spending pulls down even the Continent’s healthier economies.

And there is little hope for a rapid recovery. The European Commission said Friday that the economy of the euro zone would shrink 0.3 percent in 2013. The commission also forecast that Cyprus’s economy would shrink 3.5 percent this year and 1.3 percent in 2014.

Marios Mavrides, a member of Parliament with Democratic Rally and a professor of economics at the European University Cyprus, predicted that as the deep budget cuts mandated by the troika began to bite, recession would last all the way into 2015.

“We need to go through a deep recession. There’s no other way,” Mr. Mavrides said. “The banking system is virtually hanging from a single thread.”

The mood is especially pessimistic among young Cypriots. “I don’t see any future for the young generation,” said Marios Georgiou, 30, a sales representative in Nicosia, who said he was saving money to emigrate, possibly to Australia or Canada.

In the meantime, property developers have started placing their hopes on Asian investors. The highway between Limassol and the resort town of Paphos is lined with billboards advertising property in Chinese characters. Christos Charalambous said that his employer, Kleanthis Savva Developers, had several dozen clients from China.

“We hope that this year things will turn around. Last year was the worst that I can remember in the real estate business,” said Mr. Charalambous, who has worked in the industry for a decade. “If 2013 is worse than 2012, many businesses will default.”

There is hope on the horizon, in the form of substantial natural gas reserves discovered in the waters between Cyprus and Israel. Recalling the difficult period four decades ago after Turkey invaded, Andreas Christou, Limassol’s mayor, said he remained optimistic. “We shall find a way to survive,” he said.

Andreas Riris contributed reporting.

Article source: http://www.nytimes.com/2013/02/24/world/europe/ahead-of-cyprus-election-gloom-and-voter-apathy.html?partner=rss&emc=rss

Bureaucracy’s Salaries Defended in Europe

BRUSSELS — Days ahead of a summit meeting where leaders of the European Union’s 27 member states are to wrestle again with a proposed seven-year budget, a spokesman for the bloc’s executive body was forced to defend the salaries of some officials.

At a time when many European governments have been compelled to impose stringent budget cuts, the issue of salaries and perquisites for European Union officials has resonated. In November, Prime Minister David Cameron of Britain called on officials in Brussels to share the pain that austerity measures have brought to millions of Europeans.

On Sunday, the German newspaper Die Welt am Sonntag stoked the controversy by comparing the salaries of some European officials to the compensation paid to Chancellor Angela Merkel.

Anthony Gravili, a spokesman for the European Commission, told a news conference on Monday that such figures were flawed.

“It’s a totally unfair comparison,” said Mr. Gravili, who offered a long rebuttal of the article without mentioning the newspaper by name. “No official earns more than Chancellor Merkel.”

Mr. Gravili criticized comparisons of Ms. Merkel’s monthly salary that exclude her pay as a member of the German Parliament and other allowances, with European Union salaries that include allowances and benefits. European Commission data show that the monthly base salary of the most senior bloc officials is 18,370 euros, or $24,830.

Ms. Merkel’s monthly base salary is 21,000 euros, Mr. Gravili said. Of that, 17,000 euros is her pay as chancellor, while 4,000 euros is her reduced salary as a member of the German Parliament, he added.

Once Ms. Merkel’s basic allowances as both chancellor and Parliament member are included, Mr. Gravili said, her monthly pay was about 25,000 euros.

European Union officials generally pay low taxes, but Mr. Gravili said he did not have the figures available to say whether this would raise the officials’ after-tax income above Ms. Merkel’s. Inge Grässle, a German member of the European Parliament and a member of the body’s budgetary control committee, said that the highest-paid European Union officials paid taxes equivalent to about 25 percent of their gross salary.

Germany contributes the most to the bloc’s budget, one that last year reached about 135 billion euros.

European Union officials receive steady criticism about waste and bloat, but only about 6 percent of all spending goes to the bloc’s administration, which employs 55,000 people, including 6,000 translators, most of them in Brussels.

European political leaders will gather in Brussels on Thursday to consider a budget proposal of roughly 1 trillion euros for 2014-2020. One proposal would trim 1 percent from the European Commission’s requested spending for administrative costs. Britain has argued for deeper cuts, saying that those costs, while small in comparison to the overall budget, are symbolically important.

Unlike European Union officials, the 27 members of the European Commission are political appointees. Their salaries are much closer to those of national leaders like Ms. Merkel, and in some cases may exceed them.

José Manuel Barroso, president of the commission, is paid a monthly salary of 25,351 euros, a residence allowance equal to 15 percent of that salary, and allowances for expenses like running a household and schooling for children. The seven vice presidents of the commission earn basic monthly salaries of 22,963 euros.

Article source: http://www.nytimes.com/2013/02/05/business/global/eu-officials-salaries-draw-fire.html?partner=rss&emc=rss

A Measure of Business Spending Rises 4.6%

The Commerce Department said on Monday that new orders for capital goods increased 4.6 percent last month. The category of nondefense capital goods orders excluding aircraft, a closely watched proxy for investment plans, edged up 0.2 percent in December.

In a further sign of business confidence, the November reading on capital spending plans was revised higher to show a 3 percent gain, up from the 2.6 percent rise reported a month ago.

Many economists had expected businesses to invest more timidly late last year because of uncertainty over government spending cuts and tax increases that had been scheduled to begin this month. But Congress struck a deal to avoid or postpone most of the austerity measures.

Despite the uncertainty, the new data pointed to growing economic momentum as companies sensed improved consumer demand.

“It certainly seems to us that companies are slowly but surely expanding,” said Tim Ghriskey, chief investment officer at the Solaris Group in Bedford Hills, N.Y.

A second report showed that a measure of pending home sales slipped 4.3 percent in December. Still, the housing sector posted a rebound last year and economists expect it will add to growth again in 2013.

New orders for overall durable goods — long-lasting factory goods as diverse as toasters and automobiles — jumped 4.6 percent in December, beating economists’ expectations for a 1.8 percent gain. The gains were broad-based, with orders for machinery, cars and primary metals all increasing.

Orders for civilian aircraft surged 10.1 percent.

Article source: http://www.nytimes.com/2013/01/29/business/economy/durable-goods-orders-exceed-estimates.html?partner=rss&emc=rss

Economix Blog: Business Optimism Plunges

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

The Small Business Optimism Index is starting to look misnamed.

The index, reported monthly by the National Federation of Independent Business, had one of the steepest declines in its history in November, and is now at one of its lowest readings ever. The industry group has reported a lower index value only seven times since it began conducting monthly surveys in 1986. Businesses, it seems, are about as optimistic today as they are during the typical recession.

Hurricane Sandy did not seem to have driven the decline in optimism, either, given that the survey did not show much difference between sentiment at businesses in states hit by Sandy and those in states it spared.

The big drag on overall optimism came from small businesses’ view of the future.

In October, businesses were slightly more likely to say that they expected business conditions to improve in the next six months than they were to say that conditions would worsen. But by November, the outlook darkened substantially. The net percentage of business owners saying they expected better conditions — that is, the share saying they expect improvement minus the share saying they expect deterioration — was negative 35 percent.

Source: National Federation of Independent Business, via Haver Analytics. Source: National Federation of Independent Business, via Haver Analytics.

That is the worst outlook since the federation began collecting this data on a monthly basis. Bill Dunkelberg, the chief economist at the National Federation of Independent Business, attributed the pessimism about the future to looming fiscal austerity measures scheduled for 2013, higher health care costs and “the endless onslaught of new regulations.”

While businesses have been gloomy for a while, consumers had been resisting warnings about the impending so-called fiscal cliff of rising taxes and spending cuts. Until recently, that is.

The latest consumer sentiment survey from the University of Michigan showed consumer sentiment nose-diving. Gallup’s Economic Confidence Index likewise slid recently, mostly because of declining expectations about the future, although the overall index was still higher than it was for most of this year.

The Conference Board’s Consumer Confidence Index reported a small increase in November, at least.

Article source: http://economix.blogs.nytimes.com/2012/12/11/small-business-optimism-plunges/?partner=rss&emc=rss

Euro Watch: Italian Political Turmoil Weighs on Markets

Former Prime Minister Silvio Berlusconi said he would again seek Italy’s highest office, leading Mario Monti, the unelected official who currently holds the office, to say he would step down.

Mr. Monti has restored Italy’s credibility with investors, giving the country a break on its borrowing costs. But those gains have come at the cost of painful austerity measures that have worsened the country’s economic situation, and given Mr. Berlusconi an opening to attack.

Mr. Monti will leave after Parliament passes a budget this month and may contest national elections against Mr. Berlusconi, with the vote — previously scheduled for April — now possible as early as February or March.

Mr. Berlusconi, a four time prime minister, left office a year ago as markets pushed Italy to the brink of financial collapse.

The Milan benchmark MIB index was down 3.6 percent in the early European afternoon, with trading halted in the shares of two banks, Monte Paschi and Banca Popolare di Milano, after they fell by their maximum daily limit.

The yield gap, or spread, between Italian 10-year sovereign bonds and equivalent German securities, the European benchmark for safety, grew to 3.61 percentage points Monday from 3.25 points late Friday, suggesting that investors were growing more wary of holding Italian debt. Italian 10-year bonds were trading to yield xxx by midday Monday.

A barometer of euro zone blue-chip stocks, the Euro Stoxx 50 index, fell 1.1 percent. The euro was little changed from its levels in New York Friday, at $1.2907.

“It’s as if a tank moved through” the market, said Mario Sechi, editor in chief of the Rome daily Il Tempo, speaking on Radio 24 on Monday morning. Like many Italian commentators, Mr. Sechi expressed reservations about Mr. Berlusconi’s decision to return to politics.

A dismal economic report Monday served as a reminder that despite Mr. Monti’s success with investors, the real economy continues to suffer. Italian industrial production fell a seasonally adjusted 1.1 percent in October from September, and by 6.2 percent from a year earlier, the national Istat statistics agency reported from Rome.

The coming Italian election “remains high on our list of tail risks for 2013,” Holger Schmieding, an economist in London with Berenberg Bank, wrote in a research note. “A Berlusconi campaign against ‘German austerity’ could potentially unsettle markets,” he noted, and possibly push Spain or Italy into a bailout and additional bond purchases by the European Central Bank to hold down borrowing costs.

Spanish bonds also came under renewed pressure following Mr. Monti’s announcement, with the risk premium demanded by investors for holding Spanish 10-year bonds rather than equivalent German bonds rising to 4.38 percentage points on Monday morning, from 4.16 points on Friday.

Luís de Guindos, the economy minister, warned that Italy’s political turmoil would have an impact on Spain. “When doubts emerge over the stability of a neighboring country like Italy, which is also seen as vulnerable, there’s an immediate contagion for us,” he said Monday morning on Spanish national radio.

Asked whether Spain would itself seek further European rescue funding, the minister instead said that “the help that Spain needs is that the doubts over the future of the euro be removed.”

Speaking ahead of the Nobel prize awards on Monday, the European Commission president, José Manuel Barroso, said that Italy had to “continue on the road of structural reforms.” The elections, Mr. Barroso said on Sky News, “must not be used to postpone reforms.”

David Jolly reported from Paris. Raphael Minder contributed reporting from Madrid.

Article source: http://www.nytimes.com/2012/12/11/business/global/11iht-eurozone11.html?partner=rss&emc=rss