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Flat summer sales at Thomas Cook

2011-10-27T10:25:00.000-07:00

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29 September 2011 Last updated at 07:34 GMT Thomas Cook has issued three profit warnings over the past year in the face of tough trading conditions Thomas Cook has said bookings by its UK customers were "flat" during the summer holiday season, but that its full-year profits should be "broadly in line with market expectations".

In a trading statement, the travel company also said it was continuing to be affected by the political turmoil in the Middle East and North Africa.

It said this had particularly affected its French business.

However, its sales in northern Europe, including Germany, were up strongly.

Its summer bookings for this region - which also includes the Scandinavian countries - were 13% higher than a year earlier.

Bookings in France, Belgium, the Netherlands and Eastern Europe were down 1% from a year ago; and there was no change in the UK.

Boss departure

Thomas Cook's forward bookings for the 2011-12 winter season are currently mixed when compared with the same time last year.

They are down 7% in the UK, and 16% lower in France, Belgium, the Netherlands and Eastern Europe, but up 6% in Germany and Scandinavia.

Thomas Cook said it was continuing efforts to boost its profitability.

The company also said it would not be making any dividend payments. It is instead focusing on paying down its debts of around ￡900m.

Former chief executive Manny Fontenla-Novoa left in August, followed just over a week later by the head of its UK retail division, Ian Derbyshire.

They departed the company after it had issued its third profit warning in a year.

Thomas Cook is now continuing with a strategic review of the business.

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Trend in EU economic bucking of Estonia

2011-10-27T06:43:00.000-07:00

October 6, 2011, last updated: 57 GMT by Charlotte Ashton, World Tallin Tallinn, Estonia-Skype, as well as other companies in emerging technologies now has the fastest economic growth in the European Union, so what does Estonia just when other countries are so many economic problems?

Ave Maria Ounapuu enjoys boom of Estonia.

Organic cosmetics company established JOIK four years ago to take its business to making candles.

She has received grants from the European Union for machinery and marketing help, but says the business agenda of the Government of Estonia helped too: "it was pretty easy.

"There was no problem with the regulations, even finding products to sell went smoothly enough.

"You can report your taxes online so you don't need to spend valuable time to forms and things. We don't have our growth to the Government, but they will not put any obstacles in our way. "

Currently, JOIK employs four people, was moved to a larger space. It has an annual turnover of 250,000 euros, on export to countries bordering the Baltic.

Ave Maria Ounapuu says the Government of Estonia has set up an independent business with ease

This is a similar story of Estonia as a whole, as the country has a long way since she joined the EU in 2004.

The initial flow of credit to the construction boom that led to high House, but the bubble burst in 2008, when the country found itself the economic doldrums, it had to smarten up their act.

Labour laws were liberalised, increased retirement age and public spending cut. But the tax remained low to encourage business; Entrepreneurs were fashionable.

Estonia GDP grew at 8.5% in the first quarter of this year, the fastest growth of all the EU economy. One of the biggest growth areas in it technology.

Estonia exports mainly to the EU, but exports of its main markets, Finland, Sweden are distorted

Skype Online software used by people 200 m each month to make free or cheap video phone calls over the Internet, has its development, on the outskirts of Tallinn.

The software was invented in Tallinn of Dane, Swede and Estonians.

Stan Tankivi, head of Skype Estonia, says: "you can show the country of Estonia itself as a witness. It regained independence 20 years ago, the company generally or culture here has very little hierarchy.

"It is very small and nimble, that sort of environment is very positive for entrepreneurship".

In January, Estonia joined the euro. Stability of the currency result, along with those low corporate taxes (zero profits reinvested), this tiny nation of 1.3 m investment very attractive. Exports are soaring, up 53% last year. This summer came the euro 1bn for the first time.

But 70 percent of exports go to EU countries, growth is deteriorating steadily and its two main export markets, Finland and Sweden.

How is the economy of Estonia so fragile?

It is still a net recipient of EU money but its contribution to financial stability facility means that European companies is decreasingly profitable. Contribution of Euro 2bn represents one third of the annual budget.

"We were invited to a wedding but turned out to be a funeral," says Anders Arrak, Estonian who has entrepreneurial University apply.

Read on the Central story

of course we understand what the meaning of the credit crisis, but in Estonia is not a hot topic for us "

end quote Andrus Ansip Estonian Prime ??????"??? us a lot of money from the EU.

"We have already renovated churches and roads. But now we are being asked to pay money to improve the errors made in the past, Greece and the countries of the eurozone.

"It makes sense. We have to invest in the future of Estonia. "

But the Prime Minister of Estonia Andrus Ansip stay safer will continue its growth: "of course we all need to be concerned but our banking sector is doing well, our commercial banks are well capitalised and correspond to the reserves.

"The State the money are the best of all the European Union because we have still 12% GDP reserves.

"Yes, of course, we understand what the meaning of the credit crisis, but in Estonia is not a hot topic for us."

Mr Ansip thank him an erection activities explaining why Estonia, a poor cousin Mizrahi, fresh out of troubled times himself, bail out its richer southern cousins.

Drinkers in the lounge of their obligation to contribute to the Museum say bailouts EU

But support for the European Union young Estonians soothes the unwavering with a glass of wine in one of the new trendy bars, lounge Tallinn Museum.

Memories of Soviet occupation, which ended just 20 years ago, are still fresh among the younger generation.

Ali is a teacher at the school who says it fully supports Estonia's contribution to the bailout.

"I don't even understand what the discussion. We already received money from the EU now is a good thing because ultimately we are in a position to help someone else. I think it's only fair. "

The Museum lounge Manager, ARGO, agrees. "An overview of Estonia in the West now, only the West," he says.

And Estonia are ready to pay the price.

The world tonight is broadcast weekdays on BBC Radio 4: 00 p.m. BST.

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IBM now second biggest tech firm

2011-10-27T03:35:00.000-07:00

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30 September 2011 Last updated at 09:23 GMT Continue reading the main story For the first time since 1996 IBM's market value has exceeded Microsoft's.

IBM's closing price on 29 September was $214bn (￡137.4bn) while Microsoft's was a shade behind at $213.2bn (￡136.8bn).

The values cap a sustained period in which IBM's share price has moved steadily upward as Microsoft's has generally been in decline.

The growth means IBM is now the second largest technology company by market value. Apple still holds the top slot with a value of $362bn (￡232bn).

Since the beginning of 2011, IBM's share price has made steady gains and is now 22% higher than at the start of the year, according to Bloomberg figures. By contrast, Microsoft's value has dropped 8.8% over the same time period.

Analysts put the switch in the number two slot down to a decision IBM made in 2005 to sell off its PC business to Chinese manufacturer Lenovo to concentrate on software and services.

"IBM went beyond technology," Ted Schadler, a Forrester Research analyst told Bloomberg. "They were early to recognise that computing was moving way beyond these boxes on our desks."

By contrast much of Microsoft's revenue comes from sales of Windows and Office software used on PCs. Also, Microsoft is between releases of Windows which can mean a fallow period for its revenues.

Windows 7 was released in 2009 and Windows 8 is not expected to be released until late 2012 at the earliest.

Many have also claimed that the rise of the web, mobile computing and tablets spells the end of the PC era. In early August, Dr Mark Dean, one of the designers of the original IBM PC, declared that the centre of the computing world had shifted away from the humble desktop.

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New Ryanair card facing criticism

2011-10-26T23:05:00.000-07:00

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4 October 2011 Last updated at 10:37 GMT James Daley from Which?: "The card only benefits passengers who fly solely with Ryanair"

A branded pre-paid card for Ryanair passengers launched on Tuesday has been criticised by consumer group Which?

The airline's passengers must sign up for the Ryanair Cash Passport to avoid an administration fee of ￡6 per person per journey.

However, as with many pre-paid cards, charges are levied for withdrawing cash or not using the card for six months.

Which? described the card as an "insult" to customers, but Ryanair said the card would be more accessible.

The specific type of card that avoided the Ryanair administration fee had previously been changed from the Electron card to Mastercard pre-paid cards. Anyone using the Mastercard pre-paid card will be charged from November.

When the new card was announced, a Ryanair spokesman said that 25% of all UK bookings were made using a Mastercard pre-paid card.

He said that the airline hoped to increase this proportion by changing to the new Cash Passport card that, unlike the current cards, would be available on its website.

But Which? said that switching to the new card complicated the process further and added "insult to UK consumers who have little opportunity to avoid such fees".

Fees

The card will need to be pre-loaded with cash before any booking is made. There will also potentially be additional costs to anyone who signs up for the new card.

It will initially cost ￡6 to buy, although each customer will be given a ￡6 Ryanair travel voucher. Charges include a fee for withdrawing cash from the card over the counter at a bank or from an ATM.

There is also a 50p charge for all transactions, other than Ryanair bookings, from April 2012 and a rolling fee of ￡2.50 if a card is not used for six months.

The OFT recently held an inquiry into card surcharges for passengers booking travel online. Ryanair said that its charge was for administration purposes, such as the cost of running a website, rather than a surcharge for using a credit or debit card.

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UK banks hit by Moody's downgrade

2011-10-26T19:16:00.000-07:00

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7 October 2011 Last updated at 07:19 GMT Shares in Royal Bank of Scotland have opened sharply down following the downgrade Moody's has downgraded the credit rating of 12 UK financial firms including Lloyds, RBS, Nationwide, and Santander.

Moody's said it now believed the UK government was less likely to support some firms if they got into trouble.

However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".

The news sent bank shares lower, with RBS 3.8% off and Lloyds 3.36% down.

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Credit agencies 'have failures'

2011-10-26T15:48:00.000-07:00

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30 September 2011 Last updated at 17:10 GMT The report details a number of failures at the credit rating agencies The Securities and Exchange Commission (SEC) has discovered "apparent failures" at 10 credit rating agencies.

It said it was concerned that the agencies - including Standard & Poor's (S&P) and Moody's - were not making timely and accurate disclosures or managing conflicts of interest.

The SEC said it expected the agencies to "address the concerns".

Credit rating agencies have been criticised for their role in the financial crisis that started in 2007.

This is because a root cause of the crisis was the bad US mortgage debt that was resold around the world, debt that was given top credit ratings by the agencies.

The agencies were accused of having conflicts of interest, because they were paid by the banks that sold the debt.

'Monitoring progress'

The three largest credit rating agencies are S&P, Moody's and Fitch.

Continue reading the main story Use the dropdown for easy-to-understand explanations of key financial terms:AAA-rating GO The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule.The SEC did not directly link specific failings to specific agencies, but it said that two of the big three did not have specific policies in place to manage conflicts of interest where they rated financial products issued by banks in which the agencies were large shareholders.

The SEC said that one of the three largest agencies was not correctly following rating methodologies.

It said the agency in question was slow to discover, disclose and fix the methodology errors, and may have let business interests influence its mistakes.

It added that its findings did not constitute a "material regulatory deficiency" at the SEC.

"We expect the credit rating agencies to address the concerns we have raised in a timely and effective way, and we will be monitoring their progress as part of our ongoing annual examinations," said Norm Champ, deputy director at the SEC's Office of Compliance, Inspections and Examinations.

US downgrade

The SEC was given more powers to regulate credit rating agencies in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed in July of last year.

The other credit rating agencies covered in the SEC's annual report are AM Best, DBRS, Egan-Jones, Japan Credit, Kroll Bond, Morningstar, and Rating and Investment Information.

S&P downgraded the US's credit rating in August by one notch from AAA to AA+.

Explaining the move, it said the government was not doing enough to reduce the country's budget deficit.

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Samsung forecast beats estimates

2011-10-26T10:57:00.000-07:00

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7 October 2011 Last updated at 06:35 GMT Falling demand and prices of flat-screen TVs have hurt profits at various electronics makers Samsung Electronics has issued a better-than-expected profit forecast for the third quarter as its handset business helped to offset falling demand for TVs and computer chips.

Samsung said it expected an operating profit of 4.2tn won ($3.5bn; ￡2.3bn) a 14% dip from a year earlier, but better than market projections of 3.5tn won.

Compared with the previous quarter, the projected profit is up 12%.

Samsung is the world's second-largest maker of mobile phones.

"Its telecommunications business is seen very positive as shipments of smartphones and other high-end handsets expanded," said Park Jong-Min of ING Investment Management.

Advantage Samsung? Analysts said they expected Samsung's handset business to keep growing robustly, not least due to the Apple's decision to upgrade its existing model of iPhone4 with new features and technology, rather than launch a new version.

Apple had been expected to launch an iPhone5 at a media event held earlier this week.

"Given Apple's relatively unchanged new iPhone, Samsung will have the opportunity to eat into Apple's market share with its hardware build-up and growing software power until next year," said Jang In-Beom of Bookook Securities.

Samsung has also been growing its presence in the tablet PC market.

Last month the Korean electronics manufacturer announced that sales of the Samsung GALAXY S II had crossed the 10 million mark, doubling from five million in just eight weeks.

'Major risk'

Despite the optimism about the growth potential of its handset business, analysts said that external factors remain a big threat to the company in the short to medium-term.

There have been concerns that a slowdown in the US coupled with the ongoing debt crisis in Europe may hurt global growth and dent consumer demand.

"The macroeconomic situation will remain a major risk for Samsung in the fourth quarter," said Ahn Seong-Ho of Hanwha Securities.

At the same time, there are fears that volatility in the currency markets may also have a bearing on its earnings.

The Korean won has fallen as much as 10% against the US dollar since the start of July.

A weaker won makes Korean goods cheaper for foreign buyers.

"The weakening won may have inflated third-quarter profits," said Kim Young-Chan of Shinhan Investment Corp.

However, Mr Kim added the exchange rate remained a threat to Samsung as any recovery in the won would have a counter effect.

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US Senate postpones currency vote

2011-10-26T06:33:00.000-07:00

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7 October 2011 Last updated at 04:02 GMT President Obama has said that any action by the US has to be consistent with international treaties The US senate has postponed its vote on the much-debated currency bill until next week amid differences between the Republicans and Democrats.

The bill would make it easier to impose penalties on goods from countries seen as keeping their currencies artificially low.

Politicians and some business groups have accused China of using its policy of limiting the yuan's value to boost exports.

Leaders differed on certain amendments.

"I think China needs to carefully think about and process the substance of what people are saying here on the floor of the United States Senate." said John Kerry, chairman of the Democratic Senate Foreign Relations Committee.

'Very aggressive'

The debate on China's currency policy has become the centre of attention amid a slowdown in the US economy.

Continue reading the main story

Whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations”

End Quote Barack Obama US President President Barack Obama said "China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States."

"It is indisputable that they [China] intervene heavily in the currency markets and that the RMB [yuan], their currency, is lower than it probably would be if they weren't making all those purchases in the currency markets."

Politicians and policy makers have said that undervalued yuan has not only given an unfair advantage to Chinese exporters, it has also contributed to the unemployment situation in the US.

"We cannot continue to let China flaunt the rules," said Democratic Senator Chuck Schumer.

Mr Schumer added that if no action was taken against China's policies the US "may never recover as a country. This is serious stuff".

Cautious approach

However, President Obama warned that the US needed to take a cautious approach while handling the matter.

"My main concern and I've expressed this to Senator Schumer, is whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations." he said.

President Obama's comments come as China has accused the US of using the currency dispute to take protectionist measures.

At the same time, some politicians and trade groups have said that such a bill may do more harm than good to the US economy.

They have warned that any such action by the US may start a trade war with China.

"Unilateral action by the United States will only serve to increase trade tensions and negatively impact the US economic recovery during this fragile period in the global economy," Bruce Josten of the US Chamber of Commerce wrote to the Senators earlier this week.

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Qatar gears up for 2022 World Cup

2011-10-26T01:54:00.000-07:00

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6 October 2011 Last updated at 23:01 GMT By Bill Wilson Business reporter, BBC News Qatar now has 11 years to prepare for the 2022 World Cup To say the football world was shocked when Qatar was given the right to host the 2022 football World Cup would be an understatement.

Critics, and many still remain, wondered how such a massive event could be held in a country with a total population less than Greater Manchester's, and where the summer temperature can reach 50C.

However, the man at the helm of organising the tournament insists criticism is misplaced and that the Middle Eastern Emirate will be able to stage a memorable tournament 11 years from now.

Hassan al-Thawadi, the secretary-general of the Qatar 2022 Supreme Committee, is looking to provide a World Cup memorable for all the right reasons.

Mr al-Thawadi said that two billion people were within a four-hour flight of Qatar, and that the World Cup would "build bridges of understanding between the Middle East and rest of the world".

And some bridges need to be built.

He said that since Fifa had awarded it the tournament, the emirate had faced an "avalanche of accusations and allegations" relating to claims it had bribed its way to securing the World Cup.

Mr al-Thawadi said Qatar had in fact conducted its bid campaign "to the highest ethical and moral standards".

'Promises'

Now he wants to focus on leaving a "bold legacy" from hosting a World Cup which some analysts estimate could cost as much as ￡138bn to bring about.

Qatar hopes to leave a legacy in the areas of football development, air-cooling technology, building modular stadiums (which can be downsized after the event), and fan experience.

New stadiums will be built and existing ones will have their capacity extended

"We can deliver... and fulfil the promises we made to the world," Mr al-Thawadi told delegates at the Leaders in Football conference in London.

He said Qatar has been drawing inspiration about how to host a successful event from a number of sources, including London 2012.

The small nation, population 1.7 million, is now looking to appoint a project management company by the end of the year - "a crucial appointment which we must get right".

It is also looking to draw up a "master schedule" for stadiums and infrastructure, in order to resolve any potential pitfalls on the road to 2022 as soon as possible.

There will be 12 stadiums in use at the World Cup, and it is hoped the first new one with air-cooling technology with will be in place by 2015.

Cooling

In addition, Mr al-Thawadi said the 2022 World Cup would benefit from a "state-of-the-art transport infrastructure" which needed to be largely constructed from scratch.

The official said that the small size of the emirate meant fans would be able to stay in the same hotel for the duration of the tournament, and also to travel easily and take in two games in one day at different venues.

One on the thorny question of temperature, the country says it is also developing air-cooling techniques.

"Technology is already being trialled in open spaces in Qatar," says Mr Al al-Thawadi.

There has been talk of moving the World Cup to the winter, but this notion has been scotched my many, including the German football federation.

"We submitted a bid that looks towards hosting a summer World Cup - we are moving towards that," says the 2022 supremo.

He said it was up to the global football community to come to any unanimous decision if that situation was ever to be changed.

Meanwhile, nine of the stadiums being used will be modular, and Qatar will donate 170,000 seats to developing countries after the World Cup, when stadiums are slimmed down.

That he said, meant the country would not be lumbered with any large "white elephant" rarely full stadiums after 2022.

Alcohol

For potential visiting fans, Mr al-Thawadi wanted to quell fears that there would be nothing for them to do after matches.

Continue reading the main story

We are confident and excited that this will leave a legacy of understanding, and that people can unite through a shared love of football”

End Quote Hassan al-Thawadi Qatar 2022 "There is significant investment in tourism in Qatar, museums and entertainment sites, and a service industry dedicated towards fans," he says.

"We have always said alcohol would be available. It might not be as available as it is in London, but any fan that wants to enjoy a drink can do so."

He said the Qatar public would also be prepared for the influx of fans and, for example, their different dress sense.

In addition, he said Qatar was host to many different communities, including English people, and was "used to being hospitable".

He added: "We have hosted major events over the years" - including the 2006 Asian Games.

Catalyst

The country has also applied to host the 2017 World Athletics Championship - in competition with London - and also the 2020 Olympics.

"The Olympic Games bid is not a distraction to 2022, and may be an opportunity for some synergies with the World Cup."

It is hoped the 2022 World Cup will help improve football quality in Qatar

Hosting these large sporting events could, he said, be used as "an economic tool".

"The World Cup can be a catalyst of economic change," he believes, not only for Qatar but for the whole Middle East region.

He said a number of yet-to-be-revealed initiatives were in the pipeline to involve other Middle East countries' participation in the World Cup.

Finally, on the playing field, it is hoped that 2022 will provide the same boost to football in West Asia that the 2002 World Cup in Korea and Japan did for East Asia, particularly the two host countries.

"We want people to come and explore, and learn about us," he says.

"We are confident and excited that this will leave a legacy of understanding, and that people can unite through a shared love of football."

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Greek bailout cash decision looms

2011-10-25T22:15:00.000-07:00

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28 September 2011 Last updated at 08:59 GMT Greeks continue to protest against the latest round of austerity measures European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) officials are heading for Athens to review Greece's progress in cutting its debt levels.

They hold the key to releasing further bailout money the country badly needs.

On Tuesday, Greek Prime Minister George Papandreou hailed his country's "superhuman" efforts to cut its budget.

The review comes amid reports of a split among eurozone members about further support for Greece.

Citing "senior European officials", the Financial Times said a number of the bloc's 17 members want private investors to take a bigger hit in the proposed restructuring of Greece's debts.

Eurozone members are in the process of ratifying proposals put forward in July, one of which would see private lenders writing off about 20% of their loans to Greece.

The proposals also included expanding the powers of the eurozone bailout fund.

Continue reading the main story Mark Lowen BBC News, Athens

It has become the focal point of the anti-austerity demonstrations: Syntagma Square in the heart of Athens, in front of parliament.

A few hundred protesters gathered there again as the property tax was debated inside. They chanted "resist", calling politicians "thieves".

As news filtered out that the vote was passed, the mood turned. Protesters scuffled with riot police, who used tear gas and pepper spray to disperse them.

For an hour the trouble continued, police charging the crowds across the square and into the narrow streets beyond. Some projectiles were thrown, battered away by the police. As the night wore on, calm returned.

Anger is growing here at the austerity drive, with the property tax one of the most unpopular measures to date. And while the government has a tough time convincing its international creditors to stick with it, facing down an increasing wave of protests will be an immense challenge too.

Germany will vote on the plan on Thursday.

Meanwhile, the head of the European Commission has stressed that Greece will not leave the eurozone. There has been growing speculation that the country will be forced to default on its debts, with some observers suggesting this would inevitably lead to it exiting the bloc.

However, in his annual State of the Union address in Strasbourg, Jose Manuel Barroso said: "Greece is, and Greece will remain, a member of the euro area."

He did, however, warn that the EU was facing its "greatest challenge".

There has been widespread criticism that leaders are acting too slowly in pushing through measures to address the wider debt crisis.

Jean-Claude Trichet, the head of the ECB, has called on governments to speed up their policy response.

He told the Italian newspaper Corriere della Serra that leaders needed "to demonstrate their sense of direction", and do so quickly.

Deficit cut

Commission, ECB and IMF officials will decide whether to release about 8bn euros ($11bn; ￡7bn) from a 110bn bailout package agreed last summer.

Discussions with Greek officials are expected to begin on Thursday.

A key obstacle to the payment was removed on Tuesday when the Greek parliament passed a controversial new property tax bill, first announced earlier this month, that aims to boost revenues.

Greece's new property tax has proved particularly unpopular

Anyone who does not pay the new tax risks having their power cut off.

The tax is one of a number of austerity measures Athens is introducing, measures that saw Greece's budget deficit fall by more than 5 percentage points in 2010, Mr Papandreou said in a speech to German business leaders on Tuesday.

Speaking in Berlin, he said Greece would fulfil its obligations and hoped to be without a primary deficit from 2012.

He added that it was very important his country gets indications of support from "our European partners".

Renewed hope

There has been renewed optimism this week that eurozone leaders may finally be ready to take decisive action to tackle the debt crisis.

G20 leaders met over the weekend to discuss the best way forward, but EU officials stressed that no grand plan of action had been agreed.

A number of ideas were reportedly discussed, including a 50% write-down of Greece's government debts.

Other proposals included strengthening big European banks that could be hit by any defaults by highly indebted governments, and boosting the size of the eurozone bailout fund.

These helped to boost investor sentiment, with stock markets rising sharply on Tuesday.

The Dow Jones in New York closed up 1.3%, while France's Cac index ended up 5.7%, Germany's Dax 5.3% and the UK's FTSE 4%.

Asian and European markets were largely flat on Wednesday.

However, markets remain highly volatile, with investors remaining sceptical of policymakers' ability to solve the crisis quickly.

"Every time the market gets its hopes up that a solution to the eurozone crisis is near, the rug gets pulled from under it," said Ben Potter at IG Markets.

"Only when we see firm action being taken, rather than hollow promises, will confidence and sentiment begin to improve."

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Greeks worry about ambitious privatisation plans

2011-10-25T17:34:00.000-07:00

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4 October 2011 Last updated at 23:30 GMT By Nigel Cassidy Business correspondent, BBC News, Athens The Greek lottery OPAP will be sold as part of an ambitious privatisation programme Go into any of Greece's 5,000 OPAP lottery shops and there is one thing you definitely cannot bet on.

It is that the array of Greek state assets lined up for sale will fail to raise an agreed 50bn euros by 2015 to lighten the country's crushing international debts.

OPAP is on a long list of nearly 20 entities earmarked for full or partial sale, by order of the European Union (EU) and the International Monetary Fund (IMF).

They are the sell-offs Greece's European partners are now demanding should be stepped up, not least because efforts to raise revenue through tax receipts are still defeating the country.

But in spite of Greece's lofty plans, the BBC has found that only one solitary stake has actually been sold in recent months: a 10% stake in the mobile phone group OTE has been bought by Deutsche Telecom for 400m euros.

Consequently, the chances of Greece reaching its target of raising 5bn euros by the end of the year from asset sales look slim.

Fear and frustration

It is easy to see why the programme is being opposed every step of the way by most of the state's employees.

As protesters unfurl their banners in Syntagma Square, it is clear that they bracket all the mooted sell-offs with other unpalatable measures, such as austerity tax rises and job cuts.

Greek utility workers are wary about plans to sell off the companies they work for

Staff fear that as public services - from power and water supply to transport and defence industries - are sold, it is inevitable that their pay and pensions will be drastically cut.

For their part, Greece's European partners are infuriated at the painfully slow progress in freeing up all these utilities.

Critics frequently suggest Greek privatisation is mired because the Pasok party in power has traditionally protected state workers, and is not pushing the measures through with enough vigour or conviction.

Much resistance

Whether or not this is true, there are several other reasons for the delays.

Some of these are apparent if you take a ride to the Athens suburb of Zografou.

(Bids for 49% of the railway OSE are welcome, by the way, but offers may not be forthcoming until losses of a billion euros a year have been stemmed.)

Greece remains "the last Soviet bastion in Europe", says Eydap's chief executive Nikolaos Bardis

This is where you find the headquarters of Eydap, the well-respected water and sewage utility serving Athens, which employs 2,800 workers and has a good reputation for maintaining supplies of high-quality drinking water.

Eydap is supposed to be privatised next year, but the company says little has happened since it was put on the list.

Few workers are expected to lose their jobs after any sell-off, but bosses admit that pay, conditions and pensions may not be maintained at current levels.

Yet a huge union poster outside the front door shows a wad of euro notes, with a running tap emerging from them.

The message: Do not try to profit from our essential services.

'Soviet bastion'

There are two reasons why the sell-off process has been slow, according to Eydap's chief executive Nikolaos Bardis.

Bureaucratic delays have contributed, as have investors' concerns that the potential value of the company might fall, given the current financial climate.

"We can say that Greece remains the last Soviet bastion in Europe," Mr Bardis says.

"There is a lot of opposition to the process. Socially this is a completely new idea. People here are just not used to private investors controlling state-owned companies.

"It is also true that the (Eydap) capitalisation is low because the market is extremely distressed and [the sell-off] didn't happen much earlier when the capitalisation was larger."

Investors' concerns

Mr Bardis has recently returned from a visit to the City of London to drum up investor interest in his company.

MP Elena Panaritis says privatisation is slow because democracy in Greece is weak

One concern expressed there was that the Greek government was retaining the right to set water charges, a job that might be expected to fall to an independent regulator.

Potential buyers do not like the idea of political interference in consumer charges, which could easily have the effect of wiping out profits or investment spending plans, Mr Bardis observes.

"They are also concerned about the country's solvency and whether it will stay in the eurozone or be forced to re-adopt the drachma," he says.

"And they are making the assumption that the country will ask its lenders to take a 50% haircut on its loans," he adds, which means the lenders should expect only half their money to be repaid.

While investors are getting used to the idea, the same seems to be the case with the Greek people, who are gradually coming to realise that their country is broke.

"I do believe there is now a a silent majority in the society which is in favour of reform," says Nikos Koritasis, a principal at the Koultadis law firm that is deeply involved in the country's gas privatisation.

The company is working for a new Greek agency that has been set up expressly to run the sale of the country's assets, and Mr Koritasis insists people understand Greece has to try something new.

"There have been long delays, but there is now a new will to speed up the whole process," he says.

Speedy privatisation

One member of the Greek parliament who has a clearer perspective than most is Elena Panaritis.

She is a former World Bank executive, brought into the ruling Pasok party by Prime Minister George Papandreou to help oversee decisions and educate other politicians about the ways of the markets.

Following another long night of parliamentary debate, the country is making "superhuman" efforts to clear the way for the privatisations, yet it is taking time, she laments.

"We haven't been able to be as effective precisely because our bureaucracy is so bad," she reasons.

"Getting anything done is so complicated, with conflicting regulations and far too many people involved in taking decisions on each single asset.

"All this is taking longer than the 16 months we have to get it resolved. There really is the appetite to get the job done, but there are layers of steps and we get bogged down with the actual details."

It took the privatisation pioneer Britain well over a decade to free up and sell off its essential industries. Greece is expected to do much the same in a few months.

So it is no wonder that privatisation is a hard sell. It is another leap for this state-dominated island nation into what are seen as shark-infested commercial waters.

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High Street bookshops in decline

2011-10-25T13:38:00.000-07:00

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4 October 2011 Last updated at 01:42 GMT The Book Warehouse saved Notting Hill's Travel Bookshop earlier this month The number of bookshops on UK High Streets is in steady decline, according to The Booksellers Association.

Membership of the body, which represents 95% of booksellers in the UK and Ireland, has continued to fall over the last six years.

Since 2006, the total number of members, not including supermarket outlets, has fallen by 20%.

Independent bookshop membership has fallen by over a quarter during the same period.

Chief executive officer Tim Godfray has called for the government and publishers to step in to stop the decline.

"At a time when literacy is an issue and libraries are under threat from government cuts, we need to build a coalition of publishers, government and consumers to provide opportunities for the passionate and creative entrepreneurs who run bookshops on our High Streets to thrive," he said.

In 2006, there were 4495 outlets who held memberships with the Booksellers Association, including 1483 independents.

By June this year, the total number had fallen to 3683, while independents dropped to 1099.

Last year, 50 new independent bookshops opened across the UK but 72 closed, confirming an overall decline for the third year running.

One of the most high profile shops to close this year was The Harbour Bookshop in Dartmouth, founded by the son of Winnie the Pooh author AA Milne in 1951.

In a recent Booksellers Association survey, the top three issues concerning shop owners that the government could address were the cost of rates, parking and planning.

"This is not just an issue for our members; it's also about preserving the retail diversity of our town centres," said Mr Godfray.

The rise of the e-book has also been blamed, an issue which the government can do little about.

Sales of e-books increased by 318% in 2010 and many predict that at least 50% of all books sold within 10 years will be digital downloads.

Book retailers have also faced increasing competition from online retailers.

Spending on printed books fell by 4% in August this year, with sales dropping to a seven-year low for the month, according to sales analysts Neilsen BookScan.

Yet physical non-fiction book sales were up 3% on this time last year, with significant gains for some genres such as cookery and fitness.

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BBC Wales workers' one-day strike

2011-10-25T08:57:00.000-07:00

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30 September 2011 Last updated at 06:10 GMT Bectu is protesting against the loss of four BBC Wales editing jobs BBC Wales workers from the broadcasting union Bectu are staging a one-day strike on Friday.

The union is protesting against the loss of four editing jobs in the BBC's post-production news area.

"Every request made that our members be redeployed in new roles being created in the area of their expertise was refused," said a Bectu statement.

BBC Wales said it was disappointed about the strike and apologised for any disruption to services it might cause.

In a statement the broadcaster said it had a record of successfully redeploying as many staff as possible.

In July, members of the National Union of Journalists (NUJ) at BBC Wales took part in UK-wide industrial action protesting at compulsory redundancies due to cutbacks in funding.

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Oil firm resumes Libya operations

2011-10-25T04:24:00.000-07:00

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26 September 2011 Last updated at 13:50 GMT Libya's refineries were mostly closed in March, when fighting intensified Italian oil firm Eni has restarted production at an oil field in Libya, as opponents of Col Muammar Gaddafi tighten their control on the economy.

Eni, which was the biggest foreign oil producer in Libya before Col Gaddafi was overthrown, said it planned to reopen other fields in the coming days.

Other firms, including French company Total, have also restarted operations.

Meanwhile, anti-Gaddafi forces are closing in on his hometown of Sirte, one of his few remaining strongholds.

The soldiers, loyal to the National Transitional Council (NTC), launched a surprise attack on the city on the weekend.

The BBC's Alastair Leithead, near Sirte, says the troops have the city surrounded and are preparing to enter it with significant force.

Gaddafi loyalists have been fiercely protecting the city from NTC advances in recent weeks.

Eni said in a statement it has restarted production at 15 wells in the Abu Attifel oil field, about 300km (190 miles) south of Benghazi.

Slow recovery

The company said it was pumping 31,900 barrels of oil a day, compared with a rate of 70,000 barrels a day before the unrest broke out.

The wells were closed in March amid increasing violence between Gaddafi loyalists and rebels, who later formed the NTC.

France's Total announced last week that it had resumed production at its al-Jurf offshore facility, which is capable of producing 40,000 barrels a day.

And Libya's state controlled Arabian Gulf Oil (Agoco) announced earlier this month that it had started pumping 160,000 barrels of oil from fields in the east.

The country was producing 1.6 million barrels a day before the unrest began, making up the bulk of its wealth.

Experts say it is likely to take at least a year before anything close to those levels are reached again.

The NTC still has not found Col Gaddafi, who ruled the country for more than 40 years.

But several of his children and members of his inner circle have fled abroad.

His daughter Aisha fled to Algeria, and told journalists last week that her father was in good spirits and fighting alongside his supporters.

The Algerian newspaper El-Khabar reported on Monday that a group of Gaddafi supporters, possibly including Aisha, had now left the country for Egypt.

The report has not yet been confirmed.

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Eurozone rates unchanged at 1.5%

2011-10-25T00:00:00.000-07:00

October 6, 2011, last updated : 52 BST resignation of President Jean-Claude Trichet as the Bank's Central Europe European Central Bank left interest rates unchanged amid the ongoing crisis in the eurozone debt.

Benchmark rates were held at 1.5% in the third, after growing from 1.25% in July in an attempt to cool inflation.

Earlier, the Bank of England of British kept interest rates hold at 0.5%, but for quantitative re-started.

The decisions come from intensive European leaders beyond speculation does recapitalise banks.

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Pension talks yield 'no progress'

2011-10-24T19:07:00.000-07:00

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6 October 2011 Last updated at 00:19 GMT TUC secretary general Brendan Barber has said the sides are a long way apart Talks between ministers and union chief Brendan Barber over public sector pension reform have resulted in no progress, sources have told the BBC.

TUC chief Mr Barber met Cabinet Office minister Francis Maude for impromptu private talks at the Conservative conference in Manchester this week.

Unions are balloting members for strike action on 30 November over plans to increase contributions from employees.

The next round of face-to-face talks is due on 24 October in London.

A source close to Mr Barber said he used the impromptu meeting to again urge the government to "give a degree of confidence that they are serious about maintaining sustainable public service pensions in the future".

'Groundhog day'

Unions say the changes are unfair and financially unnecessary. Ministers insist that pension contributions must be increased to make schemes sustainable.

In recent weeks Mr Maude has described the talks as "like Groundhog Day", with no progress being made.

Both sides have previously insisted they are committed to resolving their differences through talks but the BBC understands the latest meeting again yielded little.

Mr Barber also met Chancellor George Osborne at a party during the conference, although it is unclear whether the issue of pensions was discussed.

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Chinese demand boosts Yum profits

2011-10-24T15:59:00.000-07:00

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5 October 2011 Last updated at 01:37 GMT Yum Brands is planning to expand its presence in China even further to cater to growing demand Fast food giant Yum Brands has reported a jump in third-quarter profit as sales at its Chinese outlets continue to grow.

Yum reported a net profit of $383m (￡248m) in the three months to 3 September, up from $357m last year.

The owner of Pizza Hut and KFC said same-store sales in China rose 19% during the period.

With close to 4,200 outlets, China accounts for more than 40% of Yum's profits.

"This tremendous sales growth, combined with our expectation to open a record 600 new restaurants this year, gives us even more confidence our China business model is as strong as ever," said David Novak, chairman and chief executive officer of Yum Brands.

Domestic trouble

While it continues to grow in China and other emerging markets, Yum Brands has been struggling in the US market.

The company said like-for-like sales at its US outlets fell as much as 3% in the third-quarter, resulting in a 16% drop in profit during the period.

"We're obviously disappointed in our US performance," Mr Novak said.

Analysts said the company was still suffering the effects of the lawsuit against Taco Bell earlier this year, over allegations that it used large amounts of additives and little actual meat in its beef products.

Though the company denied the claims and the lawsuit was dropped, it damaged Yum's brand image.

"They've got a job to do PR-wise to repair that," said Jack Russo of investment firm Edward Jones.

"It looks like it's stabilising and we'll get to the point next year where they'll be bouncing up against some easier comparisons so that will help," he added.

Yum said that it was planning to launch innovation and productivity initiatives in the US in a bid to improve sales and profits.

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Japan outlines quake-tax increase

2011-10-24T11:29:00.000-07:00

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28 September 2011 Last updated at 03:54 GMT Japan's rebuilding effort will take years to complete Japan's government and the ruling Democratic Party (DPJ) have agreed to temporarily raise taxes to pay for reconstruction after the deadly March earthquake.

The plan to raise 9.2tn yen ($120bn; ￡77bn) needs approval by the DPJ's coalition partner and the opposition party.

Officials said a further 2tn yen would be raised by selling government assets.

The earthquake and subsequent tsunami killed more than 16,000 people.

At the same time, thousands of homes and businesses were destroyed in the country's north-eastern coastal areas.

The new tax plan will increase taxes on incomes, companies, property and tobacco.

Corporate taxes will be raised starting next April and last three years, and income taxes will go up as of January 2012 for 10 years.

The tax on tobacco will be increased as of October 2012.

The Democratic Party of Japan also agreed to a third post-quake stimulus package of 12tn yen, government officials confirmed.

That plan must also now be negotiated and approved by opposition lawmakers.

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VIDEO: China currency vote: US view

2011-10-24T07:13:00.000-07:00

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3 October 2011 Last updated at 00:27 GMT Help

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Shares up on eurozone debt hopes

2011-10-24T03:13:00.000-07:00

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6 October 2011 Last updated at 09:47 GMT EC President Jose Manuel Barroso has fuelled expectations that Europe is preparing an action plan Stock markets have been boosted by expectations that European leaders are about to act to ease the debt crisis.

The main markets in London, Frankfurt and Paris were about 2% up, after Hong Kong closed 5.6% higher.

European Commission President Jose Manuel Barroso said in a television interview that there were plans for co-ordinated action to recapitalise banks.

More details of any action plan could come later at a European Central Bank press conference.

There have been a flurry of reports and comments in recent days that European authorities have negotiated plans to bolster banks and boost bailout funds.

On Thursday, Mr Barroso fuelled expectations further, telling Euronews TV that the EU executive was proposing "co-ordinated action" to the 27 European Union nations to bolster banks.

The intention was to "recapitalise banks and get rid of toxic assets they may have".

Continue reading the main story

You can see this as creeping progress towards putting adequate shock absorbers into the eurozone's financial system.”

End Quote Robert Peston Business editor, BBC News On Thursday afternoon, European Central Bank president Jean-Claude Trichet will lead a media briefing, which will come after the bank announces its decision on European interest rates.

Then German Chancellor Angela Merkel is due to hold talks in Berlin with Mr Trichet as well as the heads of the International Monetary Fund, the World Bank, the OECD and G20.

On Wednesday, Mr Merkel said she was in favour of a co-ordinated recapitalisation of European banks if that was deemed necessary.

Expectations that there will be action to bolster banks and boost European bailout funds began on Monday, when Olli Rehn, European commissioner for economic affairs, said there was "an increasingly shared view that we need a concerted, co-ordinated approach".

In an interview with the Financial Times, he said there was "a sense of urgency among ministers and we need to move on".

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New Sunderland position for Quinn

2011-10-23T23:03:00.000-07:00

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Quinn will focus on Sunderland's business interests overseas Niall Quinn is leaving his role as chairman at Sunderland to take charge of "international development".

Owner Ellis Short will take over as chairman while Quinn focuses on the club's business interests overseas.

Discussing Short, Quinn said: "He'll be a fantastic chairman and taking this role on speaks volumes about his ambition for the club."

Short said: "I can assure our fans that it's the same group of people continuing to lead the club."

Continue reading the main story

It's out of the blue. There's been a lot of restructuring behind-the-scenes at Sunderland. It's an interesting move for Quinn; he's very well respected. Maybe it's a precurser for other big changes that might be made at the club

Former Sunderland striker Marco Gabbiadini on BBC Radio Newcastle

He added: "With financial fair play rules coming into effect, it is essential for the long-term success of the club that we develop interests on a global scale and there's no one better than Niall to sell the ethos of Sunderland to an international audience.

"He has been keen to drive this change for some time and I agree that it's the way forward for us now.

"Assuming the position of chairman is a great honour and I will treat the role as guardian of this club with the utmost respect."

Quinn has been linked with the vacant chief executive role at his former club Manchester City recently.

He added to Sunderland's official website: "This is a great opportunity for us to make the club stronger and I'm delighted that Ellis has agreed to support the plan."

Continue reading the main story Becomes Sunderland chairman in July 2006Appoints Roy Keane as manager a month later, leading to the club's promotion to the Premier League that seasonReplaces Keane with Ricky Sbragia in winter 2008 then brings in current boss Steve Bruce during summer 2009 as club stays in top flight

Sunderland chief executive Margaret Byrne added: "Niall is widely known and hugely respected throughout the world of football.

"His profile, coupled with his vast knowledge of the game and the business, means he is perfectly placed to bring Sunderland to the forefront internationally.

"This new challenge begins immediately as he represents the club at the prestigious Leaders in Football conference in London this week, after which he travels to Korea with [manager] Steve Bruce and Mike Farnan, international marketing director.

"Trips to territories such as Vietnam, India, Abu Dhabi and Africa are also taking place in the coming months."

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New £50 note set for 2 November

2011-10-23T20:02:00.000-07:00

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30 September 2011 Last updated at 15:24 GMT Boulton (left) and Watt were two key figures in the Industrial Revolution The Bank of England has announced that the new-style ￡50 note will be introduced on 2 November.

The design of the new note was revealed in 2009 and features entrepreneur Matthew Boulton and engineer James Watt, who pioneered the use of steam engines in textile manufacturing.

The Bank says the note will have a range of enhanced security features.

It will be the first time that two portraits will appear together on the reverse of one its banknotes.

The Boulton and Watt note will initially be circulated in tandem with the current ￡50 note featuring Sir John Houblon, the first governor of the Bank of England.

The Houblon note will eventually be withdrawn. The Bank will announce a withdrawal date in due course.

The design has seldom changed since it was first introduced in 1725. A white ￡50 was in use for more than 200 years until 1943.

There are 210 million ￡50 notes in circulation, valued at ￡10.5bn. That is 84% higher than 7 years ago.

The ￡20 is the most common Bank of England note in circulation, with 1.55 billion notes in circulation worth ￡31bn.

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PM warns over eurozone break-up

2011-10-23T16:48:00.000-07:00

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2 October 2011 Last updated at 12:27 GMT David Cameron warns that the UK cannot shield itself from the crisis in the eurozone Prime Minister David Cameron has warned that it would be "very bad" for the UK if the eurozone was to break up.

Speaking to the BBC's Andrew Marr Show, he said the debt crisis in the eurozone was "a threat not just to itself, but also a threat to the UK economy, and a threat to the world economy".

He reiterated that eurozone leaders had to take quick and decisive action.

Mr Cameron said that, as 40% of UK exports went to the eurozone, it could not shield itself from the problem.

The prime minister said the UK government had "a very clear view" of what needed to be done, and that it was pushing this with its partners in Europe and the International Monetary Fund (IMF).

He said eurozone leaders had to strengthen the region's financial mechanisms, ensure the greater involvement of the IMF, and deal decisively with the high levels of sovereign debt.

Mr Cameron added: "Action needs to be taken in the next coming weeks to strengthen Europe's banks, to build the defences that the eurozone has, to deal with the problems of debts decisively."

He said these emergency measures were needed before any long-term plans of more economic coordination across the eurozone were introduced, such as a single tax system.

Greek fears

European stock markets again fell heavily on Friday due to concerns about the debt crisis in the eurozone.

Continue reading the main story Use the dropdown for easy-to-understand explanations of key financial terms:AAA-rating GO The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule.It meant that for the three months from July to September, the main UK share index, the FTSE 100, recorded its biggest quarterly fall since 2002.

The concerns centre on Greece, the most indebted eurozone nation.

Greece needs its next 8bn euros (￡6.9bn; $10.9bn) instalment of European Union (EU) and International Monetary Fund (IMF) bailout loans by the middle of this month to be able to continue paying its civil servants and teachers.

This tranche was delayed in September after EU, IMF and European Central Bank officials said the Greek government was not carrying out sufficient austerity measures.

The wider fear is that Greece will ultimately default on its debt payments, and of the knock-on effect this would have on banks across Europe which own Greek government bonds.

Some commentators also warn that Greece may ultimately have to leave the eurozone, plunging the region's economic and political systems into chaos.

Eurozone leaders and the IMF are now continuing to work on a solution to the debt crisis, with French President Nicolas Sarkozy and German Chancellor Angela Merkel due to speak again this week.

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Greeks on strike over austerity

2011-10-23T13:17:00.000-07:00

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5 October 2011 Last updated at 17:59 GMT A protester explains why she is against the austerity measures in Greece

Dozens of stone-throwing youths have clashed with police in Athens as public sector workers went out on strike in protest at Greece's austerity measures.

The 24-hour strike saw flights and ferry services cancelled, government offices and tourist sites closed, and hospitals working with reduced staff.

Many strikers expressed frustration and anger at the cuts.

The European Commission is discussing ways of propping up banks in Europe to protect them from the Greek crisis.

The general strike is the first since the Greek government announced an emergency property tax and the suspension of 30,000 public sector staff last month.

But despite these measures, the government has failed to cut its deficit to 7.5% of economic output (GDP) - a target it must meet if it is to receive the next instalment of bailout money from the EU.

Meanwhile, in its latest report on the European economy, the International Monetary Fund (IMF) has warned that economic growth is in danger of petering out and a global recession in the coming year cannot be ruled out.

Global financial markets have been in turmoil over fears that Greece could default on its debt, most of which is held by European banks. In other developments:

On Tuesday, Moody's ratings agency slashed Italy's credit rating from Aa2 to A2, blaming an overall loss in confidence in eurozone governments.Despite the Italian downgrade, European markets rose sharply as trading opened on Wednesday.Belgium and France are working on plans to rescue the Franco-Belgian Dexia bank, which is exposed to Greek debt.German Chancellor Angela Merkel said again that Greece must remain a member of the eurozone.'Lives ruined'

The government says the stringent austerity measures cannot be avoided if the country is to reduce its deficit of 8.5%.

Continue reading the main story Mark Lowen BBC News, Syntagma Square, Athens

It is a very noisy demonstration indeed here, certainly the biggest demonstration by Greece's public sector in several weeks. The country has ground to a halt.

All of these people are extremely angry at the austerity measures that the government is desperately trying to push through to qualify for the next instalment of its international bailout, in order to stave off bankruptcy and avoid defaulting on its debts.

The government says it is in a very difficult position, because it must pursue its austerity drive to meet its fiscal targets and reduce the budget deficit to avoid bankruptcy within the next few weeks.

But this wave of social unrest is growing by people who say the measures are deepening the recession, stagnating the economy and stunting Greece's growth.

But the measures are hugely unpopular and have led to a wave of strikes and protests.

Tens of thousands of people stayed away from work across Greece. In central Athens, at least 16,000 marched to Syntagma Square to join a demonstration outside parliament.

Although most of the protests were peaceful, police fired tear gas at small groups of demonstrators who were throwing stones.

About 10,000 people marched in the northern city of Thessaloniki.

Critics of the austerity drive say it is deepening the recession, stunting Greece's growth - the economy will shrink 5.5% this year - and stopping the country from being able to reduce its government debt itself.

Protesters also say they are unfairly bearing the burden of the country's debt.

"This is an opportunity for the Greek people, whether in the public or in the private sector, to fight this, to deny this logic that we must bow our heads all the time to save the country and show patriotism," said 37-year-old protester Dimitris Kizilis.

"We believe, as workers, that patriotism is to respond with actions."

Continue reading the main story

There are some European regulators and politicians who regard the downgrade of Italy and the woes of the Franco-Belgian bank Dexia as positive events (oh yes) ”

End Quote Robert Peston Business editor, BBC News Stathis Anestis, a spokesman for Greece's main union the GSEE, said the new measures were "just extending the unfair and barbaric policies which suck dry workers' rights and revenues, and push the economy deeper into recession and debt".

"With this strike, the government, the EU and the IMF will be forced to reconsider these disastrous policies," he told Reuters.

Greek civil servant and trade unionist Tiana Andreou told the BBC that people's lives had been ruined.

"We have decided that we're going to stop this."

Some militant civil servants are promising to sabotage the moves. On Tuesday, protesters again blocked the entrance to several government departments, including the finance and transport ministries.

The government says it has enough cash to pay pensions, salaries and bondholders until mid-November, having previously said it needed more money by mid-October to avoid a default.

Inspectors from the IMF, European Central Bank and European Commission - known collectively as the troika - have been in Greece this week to assess its financial situation.

But eurozone finance ministers have delayed a decision on handing over the money, after Greece said it would not meet this year's deficit-cutting plan.

The government admitted that the budget deficit will stand at 8.5% this year, rather than the 7.5% target.

On Wednesday, the IMF's European chief Antonio Borges said there was no rush for the second bailout, and that he was "confident negotiations will come to a positive conclusion".

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Sharp rise in eurozone inflation

2011-10-23T09:45:00.000-07:00

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30 September 2011 Last updated at 11:18 GMT Continue reading the main story Last Updated at 03:49 GMT

Market indexCurrent valueTrendVariation% variationThe eurozone inflation rate increased to 3% in September, up from 2.5% in August, according to the first estimate from the EU statistics agency.

No breakdown was given, but Eurostat said its initial forecasts were usually "reliable".

Separate figures also released by Eurostat showed the eurozone unemployment rate unchanged at 10% in August from the previous month.

The number of people unemployed fell by 38,000 compared with July.

The unemployment rate in Spain, the highest in Europe, rose slightly to 21.2%, with youth unemployment hitting 46.2%.

However, the jobless rate for those under 25 in the eurozone as a whole fell slightly, to 20.4%.

Falling shares

Analysts, who had expected a small rise in inflation, pointed to technical changes in the way price rises are calculated as a contributory factor in the sharp increase.

Continue reading the main story Andrew Walker Economics correspondent, BBC World Service

This rise in the inflation rate makes the situation even more complicated for the European Central Bank.

The ECB has been widely criticised for raising interest rates earlier this year, as several eurozone countries are struggling with government debt crises and economic growth that is either weak or completely stalled.

The ECB has an inflation target of close to but below 2%. So the increased rate of price rises will make the Bank even more cautious about making interest rate cuts.

In addition, some of the ideas being discussed for responding to the eurozone crisis involve a wider role for the European Central Bank which could be characterised as, in effect, "printing money". As this could be inflationary, the latest data on price rises underlines the potential risk of such a move.

"It's not a nice number, but I wouldn't panic that the high inflation which some have warned about for years is finally here," said Martin Van Vliet at ING.

"We will see inflation declining over the next months, staying above 2.5% but next year, with stable oil and food prices, we will fall to lower levels."

The European Central Bank target for inflation is 2%, and the bank raised interest rates in July from 1.25% to 1.5% in order to combat rising prices.

However, the continuing debt crisis makes further rate rises in the coming months unlikely, analysts say.

With confidence in the outlook for economic growth in the eurozone fragile, policymakers are unlikely to risk raising rates, they say.

Equally, however, sharply rising prices make a cut in interest rates less likely.

This put further downward pressure on markets that fell sharply in early trading.

Germany's Dax index was down 2.5%, with France's Cac 40 and the UK's FTSE 100 sliding about 1.5%.

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