Business in Brief

Budget approval

The biggest EU economies, Germany, the UK, Italy and France, are all on track to keep their budget deficits below 3% of gross domestic product (GDP) next year, according to EU finance ministers who met on Tuesday (10 October). Hungary, currently set to run a 10% deficit this year, was given until 2009 to come down to 3.2%.

Slow growth rate

EU growth rates will slow down for the second half of 2006, according to European Commission estimates released on Wednesday (11 October). The Commission’s economic and financial affairs department projects GDP growth of 0.4-0.8% for the third quarter of this year, and 0.2-0.7% for the fourth quarter. Figures from the EU’s statistics office Eurostat on the same day showed growth of 0.8% and 0.9% in the first and second quarter of the year, respectively.

Borrowing rates up

The European Central Bank on Thursday (5 October) raised the rate of borrowing by 25 points to 3.25%. It was the fifth rate rise since December. The bank warned that it will remain "strongly vigilant" on inflationary pressures.

Ailing Alitalia

The Commission said that loss-making Italian airline Alitalia should be restructured rather than receiving new injections of state aid. A spokesman for EU Transport Commissioner Jacques Barrot said on Wednesday: "The fact that there are again problems at Alitalia shows that the way to solve the problems here is not necessarily through state aid. The real issue is to look at the economic and industrial side of the question to see how Alitalia could be restructured." Italian Prime Minister Romano Prodi has called the airline’s condition "out of control" and pledged a new strategy by January to save the carrier from bankruptcy.

Truck truce

German truckmaker MAN said it would drop a bid for Swedish counterpart Scania on Wednesday if Scania and Volkswagen agree not to launch a counter bid or to break up MAN. The announcement follows pressure from Volkswagen, majority shareholder in both companies, to switch to friendly negotiations.

Gazprom snub

Gazprom announced on Monday (9 October) that it would go it alone on development of new gas field Shtokman, rejecting potential foreign investors, including Europeans Statoil, Total and Hydro. Chief Executive Alexei Miller said investors had not been able to offer enough assets in exchange for a share in the company. The Russian company also announced it plans to ship most gas from Shtokman, in the Barents Sea, to Western Europe.

German Socialist MEP Evelyne Gebhardt remains determined to push through supposedly consumer-friendly amendments to the services directive, despite calls from centre-right MEPs and industry to preserve the compromise reached by member states in July.