Category Archives: European Finances

Romanian informal economy reached 28% of GDP

Romania informal economyThe informal economy of Romania represented 28.4% of GDP in 2013, taking into account a slight decrease compared to 2011, when calculating the 30% of the GDP shows an assessment of the European Commission said in a report of the Committee of experts Council of Europe to assess measures to combat money laundering and financing of terrorism (MONEYVAL). Thus, the level of the shadow economy in 2011 was in line with losses for the country in the amount of 40 billion EUR, this amount has remained constant during 2013, whereas GDP growth.
According to estimates by the European Commission in Romania the ratio of the shadow economy in 2011 was 30% of GDP (in 2013 this proportion dropped to 28.4%), which is consistent with the loss of 40 billion EUR caused by economic abuse and tax evasion.
According to the report in 2012, the number of economic abuse was 41,820 compared to 39,124 in 2011 and 34,730 in 2008, the same time the number of fraud doubled in 2012 compared to 2008 – from 12 579 to 25 586 cases. The damage caused annually to Romania only cigarette smuggling is estimated at about 400 million EUR. The number of people smuggling charges in 2012 increased by 184% compared to 2007, reaching 879 people.

UBS reported 15% profit growth in Q2 2014

UBSUBS reported 15% profit growth in Q2 2014 amid lower costs. The net profit the lender rose to 792 million Swiss CHF (876 million USD) compared to 690 million CHF an year earlier, said the Zurich-based institution. For comparison the analysts predicted a slight increase to 719.3 million CHF.
The CEO of UBS Sergio Ermotti made ​​a big cost reductions in the amount of 2.1 billion CHF after the bank was facing increased pressure due to the decline in revenues and higher costs of litigation. The Bank aims to promote the return on equity to more than 15 percent by 2016 from 7.6% in the first half of this year. The cost of UBS fell by 6.9% to 5.9 billion CHF during the quarter, which helped their level reaches 82.8% of revenue compared to 86.2% an year earlier.
Earlier this year, the bank paid 300 million EUR (403 million USD) to the authorities in the German city of Bochum to settle the dispute whether help their clients to evade taxes. The lender set aside 120 million CHF for settling disputes during the quarter, bringing the total cost of legal provisions for the period amounted to 254 million CHF.

Profit of Deutsche Bank dropped in Q2 2014

Deutsche BankDeutsche Bank AG announced profit decrease by 29% yoy in Q2 2014, caused by lower non-interest profits and higher taxation. The net profit of the lender in the three months to the end of June fell to 237 million EUR compared to 334 million EUR for the same period last year. Remained below the level expected by experts polled by Bloomberg for a profit of 470 million EUR. The global investment banks try to cut costs in order to push up profits amid tighter regulations and record-low interest rates of central banks tightened in recent years, proceeds from loans and trading bonds.
“Nobody expects a good performance against the very difficult revenue environment”, said before a statement Stephan Bongard, an analyst at Independent Research GmbH. “The company needs to show investors that the trend in trade debt will change in the coming quarters. Their patience is not infinite”, he added.

Germany presses EC for green energy discounts

Green Energy discounts EUBrussels has been under pressure from Germany to loosen restrictions on subsidizing clean energy to clear the way to the German Government the adoption of the crucial law on renewable energy sources. The European Commission (EC) will probably change the rules on State aid, which would allow one party to the rapid removal of subsidies for renewable energy, but at the same time continuing the rebates for green energy on a large scale indicates publication.
Amendments to the rules will allow the German government to adopt new law on renewable energy without impacting the requirements of the European Union (EU). The reform of the German Energy became necessary after the previous government of Angela Merkel has decided to abandon nuclear energy after the Fukushima accident. The biggest challenge for the Chancellor, however, to shift towards renewable sources, and who will pay for the turn in energy policy. The proposals to change the state aid rules that allow the phase out of subsidies for green energy, have brought criticism from environmental groups. According to them, these rules will greatly hinder competition with big energy companies who still cling to fossil fuels and nuclear energy. The EU Competition Commissioner Joaquin Almunia insists, however, a more market-oriented system to support renewable energy sources to prevent waste of taxpayers’ money.

Bank of France raised its forecast for GDP for Q4 2014

Bank of FranceThe Bank of France revises earlier today its forecast for the gross domestic product (GDP) for the fourth quarter and trust among business has seen an unexpected increase in November. According to the monthly business survey published by the Bank of France, the economy will expand by 0.5% in the last three months of this year, compared to 0.4% in the previous forecast. The indicator of the business confidence in the manufacturing sector rose to 101 points in November from 100 in October.
The analysts had expected the index to fall to 98 points. The confidence in the service sector, however, has fallen to 92 from 93 points in October.

Sentix announced an unexpected of the investor confidence in Eurozone

European investorsThe investor confidence in the Eurozone fell more than expected in December, its highest level in two and a half years. It showed today monthly survey of the research group Sentix. The index of investor confidence dropped to 8 points in December compared to 9.3 points in November and did not meet growth forecasts to 10.3 points. Assessment of current conditions fell sharply to -6.3 points from -3.3 points in November. Meanwhile, the investor expectations have improved for the second consecutive month to 23.3 points in December (from 22.8 in the previous month), which is its highest rise since April 2006.
In Germany, investor confidence has risen by almost 2 points to 32.1, reaching its highest level since December 2010, while economic expectations rose to a historical high.

Concerns about the luxury goods markets dragged the European stocks

Hugo BossThe concerns about the shrinking market for luxury goods dragged major indices of European markets down. Among the major losers are the manufacturer of cognac Remy Martin – Remy Cointreau. The company recorded a decline in its share price by 8.31% to a level of 66 EUR after voicing fears of declining sales in China. For the first six months of the fiscal year Remy Cointreau has a profit decrease of 20%. These data led to a decrease of Stoxx Europe 600 by 0.6% to 322.24 points, and so the index stopped its upward movement. Yesterday he registered a growth of 0.4%. Since the beginning of the year Stoxx Europe 600 increased by 15%. Among the biggest losers is another luxury brand – Hugo Boss. The company said it will not meet the targets set for 2015. This led to a reduction in the price of securities of the company by 2.1% to 97 USD per share.
Against this background, Repsol shares rose 4.3% to 19.24 EUR per share. The company was assured that he would be compensated for its share in YPF, taken from the Government of Argentina in April 2012. The Spanish company assess its share of 3.5 billion USD plus 1.5 billion USD for lost benefits of development projects in the company.

Paris and Brussels made ​​the first steps in coordinating the French budget

hollande francoisFrance tried to find a common language with the European Commission (EC) on budgetary matters that took place earlier this week, a meeting between the French authorities and representatives of several member states of the European Union (EU) concerning the state budget for the new financial year. On Monday, several lawmakers, members of the committees of the French National Assembly, convened a meeting to exchange ideas about the new budget of the country, reports Euractiv. It was attended by Minister for European Affairs Thierry Repentin, Commissioner Michel Barnier and some French MPs, MEPs. The aim was to reconcile national and European budgetary policy, which is generally a difficult task. Barnier expressed his disappointment that the French finance minister Bernard Kaznyov not attend the meeting. Even if only three members of the center-right party oppositional attended. Some of them had good reason to be there – the draft budget for 2014 had to be accepted until 15th October, and the committee members are working on proposals for amendments. Socialist government sees the Finance Bill 2014 as a budget with austerity while EC defines it as not so difficult to implement.

Ireland got more measures for expenses decrease in budget 2014

IrelandDublin budgeted for next year’s tax increase and reduce public expenditure to total 2.5 billion EUR against the preparation of the country out of the bailout program. Among the most controversial measures to reduce unemployment benefits for young people up to 25 years, reducing allowances and health benefits for retirees, and increase the excise tax on alcohol and cigarettes. It is also envisaged tax deposit rates be increased to 41% from 33 %, while the fee for prescriptions to be 2.5 EUR from 1.5 EUR. Will be eliminated and one-off payment of 850 EUR to cover funeral expenses for deceased relatives financially troubled families. Businesses will be affected by the new tax on banks and reduce the state subsidy for paid sick leave to employees, but provides for the abolition of tax on airlines and the adoption of a package of incentives for the construction sector. If the draft is adopted in its current form, it would mean that since 2008 the country has implemented austerity measures worth 31 billion EUR. The amount is equivalent to almost a fifth of Ireland’s economy.
“The purpose of this budget is to continue the progress we have made to strengthen policies for economic growth”, said Finance Minister Michael Nuun. “I know there are some opinions that consolidation should continue, but those people have already made enough sacrifices”, he added.

Germany is responsible for the delay in Eurozone banking reform

Angela MerkelThe two-week political deadlock in Washington may occupy the headlines, but the other side of Atlantic Ministers of Member States of the euro area strove for months on an essential element of the financial framework – the creation of a banking union. At today’s meeting of the council of finance ministers (the so-called Eurogroup) in Luxembourg issue will be high on the agenda. The economists, however, are not convinced that it will be significant progress in solving the problem, given the lack of government in Germany. Chris Sikluna, head of economic research at Daiwa Capital Markets, said the political problems in Europe, luckily are much more routine than those in the US, where the business of government is partially blocked due to failure of the negotiations for reconciliation budget for the new financial year beginning on October 1, and therefore unlikely to get much attention this week. While the banking union will be discussed, do not expect a final agreement at today’s meeting. “One of the reasons for the current political momentum in the euro area, of course, is the political vacuum in Germany”, wrote Sikluna in his note. To take away the burden of rescuing failing banks from the shoulders of the debt-ridden country, which was one of the main reasons for the financial crisis in the Eurozone, the leaders of the parties agreed to establish a system which will exercise greater oversight of the financial sector European level.