EUROPE European economic growth over 2006 should come in at 2.8% according to the European Commission, although growth in the eurozone was more sluggish, at 2.6%. In 2007, growth overall is expected to slow with GDP rising just 2.1%, in part reflecting higher interest rates and declining confidence. Italy – burdened with high budget and trade deficits – will continue to be the eurozone's slowest-growing large economy. THE UK On 20 November, Nasdaq made a hostile £2.7bn (€4bn) takeover bid for the London Stock Exchange (LSE) after spending £88m buying seven million LSE shares: this increased its holding to 28.75% and made it by far the largest shareholder. Although the bid was promptly rejected by the LSE as undervaluing its business and strong strategic position, observers say Nasdaq's bid – which might just be an opener, particularly if other bidders step into the ring – could succeed, not least because there are few grounds on which the UK authorities could block it, other than purely nationalistic ones.  GERMANY After recent results showed a 34% drop in Q3 profits – against the same period in 2005 – Deutsche Telekom elevated Rene Obermann, head of T-Mobile, DT's mobile phone arm, to CEO, replacing Kai-Uwe Ricke. Obermann's priorities will be bolstering DT's performance in the fixed-line sector, concluding his predecessor's ongoing restructuring programme and fighting a legal challenge bought in the US by French firm Vivendi, which says DT acted improperly in buying Polish telecoms company PTC from another Polish company, Elektrim, in late October. Vivendi, which has invested substantial sums in PTC, says it co-owned the company with Elektrim through a third company and that Elektrim and DT therefore had no right to conclude the transaction.  FRANCE The controversial merger of Gaz de France and Franco-Belgian utility Suez – which many believe is being orchestrated to prevent Italy's Enel taking over Suez – was delayed following union opposition; Suez shareholders have also been complaining about the French government's plans to retain a one-third stake in the merged company and about the size of the expected dividend. The new entity, to be called Gaz de France-Suez, will be France's fourth-largest company with a market cap of €80bn and annual sales of around €60bn. THE NETHERLANDS Following similar votes in Germany, Italy, the Czech Republic and Austria, the Dutch election yielded no clear winner. All centrist parties lost votes, including the Christian Democrats and the Liberals, which together had pushed through a number of business-friendly, free market measures. The Socialist Party, led by a former communist, made the largest gains, nearly tripling its vote on the promise to shield the Dutch from the excesses of economic liberalism.  SPAIN A booming construction sector continues to power Spain's economy according to the latest growth figures, which showed GDP grew by 3.8% in the third quarter. A coastal housing boom and the continuing growth of out-of-town commercial sites – including shopping malls – has been behind much of the growth, with costs kept down by the high use of immigrant labour. Spain has been one of the eurozone's fastest-growing economies and well ahead of the two largest, Germany and France.  SCANDINAVIA The Nordic region is far and away the least corrupt in the world, according to the latest annual Corruption Perception Index, published by Transparency International. Out of 163 countries, the five Scandinavian countries were all in the top 10 least corrupt, with Finland in first position, Iceland second, Denmark fourth, Sweden sixth and Norway eighth. The EU's most corrupt country was found to be Poland – position 61 – although it will lose this dishonour to Romania – position 84 – when that country joins in January. CENTRAL & EASTERN EUROPE The European Bank for Reconstruction and Development says post-communist countries are growing faster than in 2005 and at a much faster rate than the eurozone, thanks largely to strong domestic consumption, while foreign investment has been strong but with investors increasingly selective about where they go. Over 2006, central and eastern Europe and the Baltics should grow by around 5.3% and south-eastern Europe (the Balkans) by 5.9%. The CIS will see the highest growth, around 7%, led by the energy-producing countries. RUSSIA With electricity liberalisation moving forward, UES is to make as many as 20 IPOs, raising around €9bn on the London and Moscow stock exchange, as the power monopoly breaks itself into six separate generating companies and 14 regional distribution companies. CEO Anatoly Chubais says the first IPO will probably be in April 2007. UES needs to raise around €70bn to increase production capacity to meet Russia's growing electricity demands. GREECE European Insurance Holdings (EIH), one of the country's fastest-growing insurance companies, announced it is to issue a €50m convertible corporate bond and list on London's AIM. EIH – which currently comprises two legally separate companies, Egnatia and Le Monde – plans to use the money from the IPO to restructure and move into the life insurance market. It has ambitious plans to build general and life insurance business in Cyprus and in central and eastern Europe. TURKEY The prospects of a Turkish disaster with the EU intensified after Brussels released a highly critical progress report, suggesting Ankara's reforms were moving far too slowly. Turkey was also given one month to open its ports and airports to traffic from the Republic of Cyprus, a state it doesn't recognise, despite the EU failing to honour its own promises to lift the isolation of northern Cyprus and allow it direct trade with the EU; despite EU protests, Turkey insists the issues are connected. Opinion polls within Turkey show support for EU accession is falling with one suggesting just 25% want to join (against the 70% typical a few years ago).  AZERBAIJAN Buoyant oil prices and high levels of investment in the energy sector – including the Baku-Tblisi-Ceyhan oil pipeline and the South Caucasus gas pipeline – have made this Caucasian country of 8.4 million the fastest-growing economy in the world, according to the European Bank for Reconstruction and Development. GDP growth in 2005 was 26.4% while in the first half of 2006 year-on-year GDP growth increased by 36.3%. Every silver lining has a cloud however; Azerbaijan has been ranked a low 130 out of 163 in Transparency International's list of least corrupt countries. |