Business Brief

Internal market rap

The European Commission released its six-monthly internal market scoreboard on Tuesday (18 July). Charlie McCreevy, commissioner for the internal market, criticised the relaxed approach of some member states failing to transpose EU rules into national law. National leaders had failed to deliver on their pledge not to fall below the interim target deficit of 1.5% of total internal market directives. None of the old member states was able to reduce infringement proceedings by 50% in 2003-06, as promised.

VAT refusal

The Commission yesterday (19 July) refused Germany and Austria permission to apply the reverse charge mechanism to the application of VAT. The mechanism would have ensured VAT is only charged once at the point of consumption, thus reducing the flow of money currently exploited by fraudsters. The Commission said that changes to VAT rules must reduce possibilities for fraud, while creating no "disproportionate administrative burden" for companies. It was thought that reverse charging would impose unnecessary burdens on honest businesses.

Payment card findings

The Commission presented at a public hearing on Monday (17 July) the preliminary findings of its sector inquiry into competition in the retail banking sector, which looked at the markets for payment cards and core retail banking services. Significant competition abuses and obstacles to market entry had been found in the payment cards market. Mastercard criticised the report after the hearing, accusing the Commission of misunderstanding the sector.

Electricity prices rise

Industrial electricity prices went up by more than a quarter between January 2005 and January 2006 in Cyprus (+38.4%), the United Kingdom (+36.2%), Sweden (+30.5%) and Belgium(+25.0%), according to a Eurostat report released on Friday (14 July). The report said household electricity prices rose by 5% over the same period, with the largest increases to be found in Cyprus (+31.4%).

Germans shift deficit

Germany will no longer face budget deficit action, the Commission said. The country is now on track to cut its budget deficit to below 3% by 2007, as set out by the Stability and Growth Pact. Raising VAT from 16% to 19% will help Germany to meet its goal.

Investment up

Foreign direct investment (FDI) flowing out of the EU went up by 19% last year to 153 billion euro, EU statistics agency Eurostat said. FDI into EU25 countries went up by 23% to 70bn euro that same year. Increases were attributed to trade flows between the EU25 and North America.

Independent music companies will this week call for the music giant Sony BMG to be split back into two separate businesses after the European Court of First Instance overturned the European Commission's decision to approve the merger last week.

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