News

News from the EU - January 2010

Note:
The euro area consists of Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

The EU27 includes Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom.
-----------------------------------------------------------------------------------------------------------------------------------------Rural development: €5 billion in total injected into rural development programmes following last vote on Health Check and Recovery package changes
On 29 January 2010, Europa announced that the Rural Development Committee had voted on the last proposals from Member States/regions for using EU Recovery Plan and CAP Health Check funding and other transfers within the CAP to address issues including the economic and dairy crisis, and climate change:

In the period October 2009 - January 2010, all rural development programmes were modified and the additional funding of about€5billion is now ready to be invested in agriculture, the environment and broadband in rural areas.
The January 2010 RDC voted on the last 7 of these modifications for October, November and December approvals).
The majority of the funds will be concentrated in the areas of bio-diversity (31.2% of all funds, or€1.5 billion) and water management (26.9% or€1.3 billion).
Dairy restructuring received 14.5% of the total budget (0.7 billion), climate change measures account for 14.2% or€0.7 billion, with renewable energy re-enforcement being 5.6% of the total additional budget (€0.3 billion).
The development of broadband infrastructure remains an important policy issue for rural areas. Member States have thus decided to invest 35% of the EU Recovery funds for broadband, which equals€360.4 million out of the available€1 billion.

Information on the Rural Development Programmes from the Member States is available at:
http://ec.europa.eu/agriculture/rurdev/countries/index_en.htm
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/102&format=HTML&aged=0&language=EN&guiLanguage=en
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EU moves to ease small business accounting burden
On 29 January 2010, Keith Nuthall wrote in Accountancy Age about a push to remove red-tape for business turning over less than €1m:

An opt-out allowing European Union (EU) small businesses turning over less than €1m (£865,000) per year to stop filing annual accounts has been proposed by the European Parliament's legal affairs committee.
It has passed amendments to a proposed reshaped 'directive on the annual accounts of certain types of companies as regards micro-entities' which would allow member states to abandon these filing duties.
The opt-out would apply to companies with a balance sheet under €500,000 and/or an average of 10 employees during a particularfinancial year, which the committee thinks makes up 5.4 million of the EU's 7.2 million companies.
They would still have to keep records of their transactions however, and national EU governments could still ignore the opt-out and order them to file.

Read the full article at:
www.financialdirector.co.uk/accountancyage/news/2257006/eu-moves-ease-small-business
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Success in the fight against counterfeiting: results of ASEM joint customs operation
On 29 January 2010, Europa announced that a joint customs operation, codenamed Diabolo II, conducted in the framework of ASEM (Asia-Europe meeting) has led to the seizure of more than 65 million counterfeit cigarettes and 369,000 other counterfeit items (shoes, toys, cameras, headphones, hats, caps, gloves, handbags, etc.) representing over 20 different trademarks. The operation also resulted in further international investigations into criminal activities. Final results of this operation were released at a debriefing meeting held in Tokyo. This joint customs operation, coordinated by the European Commission/the European Anti-Fraud Office (OLAF), was codenamed "Diabolo II" following the successful 2007 joint customs operation "Diabolo I".
Source and further information:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/99&format=HTML&aged=0&language=EN&guiLanguage=en
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Flash estimate - January 2010: Euro area inflation estimated at 1.0%
On 29 January 2010, Europa announced that in the Euro area annual inflation is expected to be 1.0% in January 2010 according to a flash estimate issued by Eurostat, the statistical office of the European Union. It was 0.9% in December 2009.

Computation of flash estimates
Euro area inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available 4 as well as early information about energy prices.

The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the euro area. No detailed breakdown is available. Experience has shown the procedure to be reliable (18 times exactly anticipating the inflation rate and 6 times differing by 0.1 over the last two years).
Source and further information: http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/10/17&format=HTML&aged=0&language=EN&guiLanguage=en
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December 2009: Euro area unemployment rate up to 10.0% and EU27 up to 9.6%
On 29 January 2010, Europa announced that the euro area (EA16) seasonally-adjusted unemployment rate was 10.0% in December 2009, compared with 9.9% in November. It was 8.2% in December 2008. The EU27 unemployment rate was 9.6% in December 2009, compared with 9.5% in November. It was 7.6% in December 2008. For the euro area this is the highest rate since August 1998 and for the EU27 since the start of the series in January 2000.

Eurostat estimates that 23.012 million men and women in the EU27, of whom 15.763 million were in the euro area, were unemployed in December 2009. Compared with November, the number of persons unemployed increased by 163 000 in the EU27 and by 87 000 in the euro area. Compared with December 2008, unemployment went up by 4.628 million in the EU27 and by 2.787 million in the euro area.

The above figures are published by Eurostat, the statistical office of the European Union.

Among the Member States, the lowest unemployment rates were recorded in the Netherlands (4.0%) and Austria (5.4%), and the highest rates in Latvia (22.8%) and Spain (19.5%).

Compared with a year ago, all Member States recorded an increase in their unemployment rate. The smallest increases were observed in Germany (7.1% to 7.5%), Luxembourg (5.3% to 6.2%) and Belgium (7.1% to 8.2%). The highest increases were registered in Latvia (11.3% to 22.8%), Estonia (6.5% to 15.2% between the third quarters of 2008 and 2009) and Lithuania (6.5% to 14.6% between the third quarters of 2008 and 2009).

Between December 2008 and December 2009, the unemployment rate for males rose from 7.8% to 10.0% in the euro area and from 7.5% to 9.8% in the EU27. The female unemployment rate increased from 8.7% to 10.1% in the euro area and from 7.9% to 9.3% in the EU27.

In December 2009, the youth unemployment rate (under-25s) was 21.0% in the euro area and 21.4% in the EU27. In December 2008 it was 17.0% and 16.9% respectively. The lowest rate was observed in the Netherlands (7.6%), and the highest rates in Spain (44.5%) and Latvia (43.8% in the fourth quarter of 2009).

In the USA, the unemployment rate was 10.0% in December 2009. In Japan it was 5.2% in November 2009.
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/10/16&format=HTML&aged=0&language=EN&guiLanguage=en
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Antitrust: European Competition Network publishes first edition of newsletter on competition authorities' activities
On 28 January 2010, the European Competition Network (ECN), composed of the competition authorities of the EU Member States and the European Commission, published the first issue of the ECN Brief.

The ECN Brief will inform readers about the activities of the ECN and its members with a view to ensuring wider communication on antitrust enforcement and advocacy action by all authorities in the ECN. The Brief, which is intended to be published five times a year, complements the extensive communications policies of the individual ECN members.

The first issue of the ECN Brief covers news from September 2009 to mid-January 2010. It features information in the areas of enforcement and cases, legislation and policy as well as events and other issues. The ECN Brief is designed to reflect news of the network as well as enforcement actions based on the EU antitrust rules by all ECN authorities. The Brief provides overview information as well as targeted links to further reading. The ECN Brief is addressed to members of the legal and business community, the judiciary, consumer associations and academics as well as any individuals interested in EU antitrust law developments.
The ECN Brief is available in electronic format at: http://ec.europa.eu/competition/ecn/brief/index.html
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/73&format=HTML&aged=0&language=EN&guiLanguage=en
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Europeans' Privacy will be big challenge in next decade, says EU Commissioner
Europeans' Privacy will be big challenge in next decade, says EU Commissioner (on 28 January 2010). Personal privacy faces new challenges:

behavioural advertising can use personal internet history to better market products;
social networking sites used by 41.7 million Europeans allow personal information like photos to be seen by others; and
the 6 billion smart chips used today can trace your movements.

With the Lisbon Treaty and the Charter of Fundamental Rights now in force, the Commission says it wants to create a clear, modern set of rules for the whole EU guaranteeing a high level of personal data protection and privacy, starting with a reform of the 1995 EU Data Protection Directive.

The improved rules would be vigorously applied across all policy areas and international agreements, be it new technologies, consumer rights or public security.
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/63&format=HTML&aged=0&language=EN&guiLanguage=en
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January 2010: Economic Sentiment Indicator approaching its long-term average
On 28 January 2010, the Europa website disclosed that, in January 2010, the Economic Sentiment Indicator (ESI) rose for the tenth successive month and stood at 97.1 (+2.1 points) in the EU and 95.7 (+1.6) in the euro area. Thus, although the rebound appears to be slowing, the indicator has now returned to a level approaching its long-term average in both areas.

The majority of Member States reported a general improvement in sentiment. Among the largest Member States, Italy (+4.2 points) reported the most significant increase, followed by the UK (+3.2) and the Netherlands (+2.7). The improvements were less marked in Poland (+0.9), Germany (+0.6), France (+0.6) and Spain (+0.3).

Sentiment in industry, which increased by 3 points in the EU and by 2 points in the euro area, remained the main contributor to the overall improvement. Most respondents in this sector reported strong improvement in both their order books and their production expectations. The declining level of stocks, across all the main industrial sectors, confirmed further destocking. The results of the quarterly manufacturing survey confirmed these positive developments. The survey participants were optimistic about past and future orders. Firms also reported an increase in their capacity utilisation rates which now stands at 73.1% in the EU and 72.4% in the euro area, although these are still far below their respective averages.

Confidence in financial services - which is not included in the ESI - is now stabilising at around the pre-crisis level. It remained broadly unchanged in the EU and improved by 6 points in the euro area.
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/75&format=HTML&aged=0&language=EN&guiLanguage=en
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Sector Accounts: third quarter of 2009 Household saving rate down to 15.8% in the euro area and 13.7% in the EU27 Business investment rate up to 21.3% and 21.1% respectively
On 28 January 2010, the Europa website disclosed that in the third quarter of 2009, in both the euro area (EA16) and the EU27, the seasonally adjusted household saving rate decreased and the household investment rate was almost unchanged. In both zones, the business investment rate and the profit share grew.

These figures come from a detailed set of quarterly European sector accounts released by Eurostat, the statistical office of the European Union, and the European Central Bank (ECB).

Household saving rate down for the first time since first quarter 2008

In the third quarter of 2009, the seasonally adjustedgross saving rateof households was 13.7% in theEU27compared with 14.2% in the second quarter of 2009.
In theeuro area, the household saving rate was 15.8% in the third quarter of 2009, compared with 16.2% in the previous quarter.
In theeuro area, the decrease in the household saving rate was caused by real disposable income6falling (-0.1%), while real final consumption expenditure grew (0.5%).

Household investment rate stabilises in both zones

In theEU27, the gross investment rate of householdswas 8.3% in the third quarter of 2009, compared with 8.2% in the second quarter of 2009.
In theeuro area, the household investment rate was 9.1% in the third quarter of 2009, compared with 9.0% in the previous quarter.
In theeuro area, the slight increase in the household investment rate was due to gross fixed capital formation (investment, mostly in dwellings)growing faster in nominal terms (1.7%) than nominal disposable income (0.2%).

Business investment rate up for the first time since third quarter 2008

In theEU27,the gross investment rate of non-financial corporations was 21.1% in the third quarter of 2009, compared with 20.7% in the second quarter of 2009.
In theeuro area, the investment rate was 21.3% in the third quarter of 2009, compared with 20.7% in the previous quarter.
In theeuro area, the increase in the gross investment rate of non-financial corporations was due to gross fixed capital formation (investment)growing faster (5.1%) than value added (2.4%). As for stocks, total inventories of materials, supplies and finished goods decreased for the third quarter in a row.

Business profit share up in both zones

In theEU27, the gross profit shareof non-financial corporations was 37.2% in the third quarter of 2009, compared with 35.8% in the second quarter of 2009.
In theeuro area, the profit share was 37.7% in the third quarter of 2009, compared with 36.4% in the previous quarter.
In theeuro area, the gross profit share of non-financial corporations increased due to value added growing faster (2.4%) than compensation of employees (wage costs) plus taxes less subsidies on production (0.4%).

Source: http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/10/15&format=HTML&aged=0&language=EN&guiLanguage=en
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January 2010: EU Business Climate Indicator
On 28 January 2010, the Europa website showed that the Business Climate Indicator (BCI) for the euro area rose for the tenth successive month, but it remains at a low level, suggesting that year-on-year growth in industrial production was still negative in December 2009. The significant increase in the BCI reflects managers' optimism about order books and production expectations. At the same time their assessment of production trend observed in recent months was more subdued. The declining level of stocks confirmed further destocking.

The BCI is based on a factor analysis of the euro area aggregate balances (seasonally adjusted) of five of the monthly questions in the industry survey (only employment and selling-price expectations are excluded).
Full details of the Business Climate Indicator are available on the Europa website at:
http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/77&format=HTML&aged=0&language=EN&guiLanguage=en
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Sharp fall in Eurozone retail sales in January
The Eurozone Retail PMI figures were published on 28 January 2010 showing that the exceptional winter weather in January 2010 caused severe disruption to the Eurozone retail sector, with sales falling at the sharpest rate since March 2009, compared to December 2009. The Eurozone Retail PMIslumped to 46.5 after seasonal adjustment, having risen above the 50.0 no-change mark in December (50.3) for the first time since May 2008. A figure of 50.0 or more represents monthly growth of sales.

The survey covers retailers in the three largest Eurozone economies. In January, Germany and France recorded a substantial drop in sales partly due to the adverse weather and in France also partly due to the end of car scrappage incentives in December 2009.

The weather was not a factor in Italy and consequently it recorded a rise in sales for the third consecutive month.

Sales against targets were affected across the board in January as the harsh weather took hold. Overall, Eurozone retailers hold a broadly neutral view regarding the one-month outlook for sales versus targets.

The drop in sales impacted on profit margins for retailers, with the rate of decline the sharpest in five particularly in Italy. Average purchasing costs recorded the fastest rise in ten months, with the fastest rates in pharmaceuticals and autos & fuel.

Retailers continued their cutbacks on stock purchases in January, which led to a further overall decline in inventories. January saw another month of job reductions by Eurozone retailers, now stretching to twenty-two months of continuous decline.
Source: Markit Eurozone Retail PMI
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EDPS statement and activities on the occasion of European Data Protection Day
On 28 January 2010, the European Data Protection Day will be celebrated for the fourth time by the Member States of the Council of Europe and the European institutions. Convention 108 was the first legally binding international instrument in the field of data protection and was adopted by the Council of Europe on this day four years ago.

This year will again see the European Data Protection Supervisor (EDPS) reconfirming the need for privacy and data protection, which is seen as a fundamental human right in the EU charter and became binding with the entry into force of the Lisbon Treaty.

The EDPSA saw this as a monumental step in which a legal development of the last decades in Europe was confirmed. However, the challenge remains to ensure effective practical application of the law.
Source: Europa
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State aid: Commission authorises €576 million Spanish film support scheme
The European Commission has approved under EU state aid rules a €576 million Spanish film support scheme until 31 December 2015.

The scheme covers Spain's national film support measures including film production and distribution. The Commission found that the scheme is compatible with Article 107(3)(d) of the Treaty on the Functioning of the European Union (TFEU), which allows aid to further cultural objectives under certain conditions. In particular, the scheme is in line with the rules of the Commission's Cinema Communication.
Details and Source: Spanish film support scheme
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Vocational training actions for women co-financed by the European Social Fund
On 26 January 2010, the European Court of Auditors released an analysis of whether vocational training actions for women co-financed by the European Social Fund during 2000-2006 were appropriately selected and adequately monitored.

The funding was intended to help promote equal opportunities between men & women by making vocational training available at a cost of €3 billion and is in isolation to any programmes being implemented independently by the Member States.

Conclusions reached by the Court found that:

Programmes were not in response to an analysis of labour market requirements and the measures failed to focus sufficiently on specific target groups;
Traditional female roles were still being focussed on rather than roles that were under-represented by women;
The information gathered from the audited programmes was insufficient to evaluate whether the vocational training actions for women achieved their stated objectives;
There is still a need for further monitoring for reliable data to be collected so that conclusions to be drawn as to the effectiveness and efficiency of the co-financed actions.

Source: Europa
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EU27 current account indicator deficit falls
Figures issued on 22 January 2010 by Eurostat, the statistical office of the European Union, showed that the EU27 recorded a deficit of €27.7 billion in the third quarter of 2009. This represented a decrease on the figures recorded in the third quarter of 2008 and the second quarter of 2009 (€73.5 billion and €49.0 billion respectively).

Both the deficit of goods account and the income account decreased in the third quarter of 2009, compared with the third quarter of 2008, along with the surplus of the services account. Only the level of the deficit of the current transfers account increased.

The services account surplus was mainly due to surpluses in "other business services", which includes miscellaneous business, professional and technical services, financial services, transportation and computer and information services. The only deficits shown in this sector were in travel and royalties and licence fees.

In the third quarter of 2009, the EU27 external current account recorded the following data:
Surplus with:

the USA (+€12.5 billion);
Switzerland (+€6.0 billion);
Canada (+€42.4 billion);
Hong Kong (+€2.1 billion);
Brazil (+€1.6 billion);
India (+€1.1 billion).

Deficit with:

China (€-29.3 billion);
Russia (€-8.4 billion);
Japan (€-8.0 billion).

Financial Account
In the third quarter of 2009, direct investments abroad made by the EU27 fell to €56.2 billion compared with €75.7 billion for the same period in 2008. Foreign direct investors making investments in the EU27 also fell to €6.9 billion, compared with investments of €64.5 billion in the same quarter of 2008. Likewise portfolio investments recorded a reduction in net inflow of €100.8 billion, compared with €153.2 billion in the third quarter of 2008.
Source and access to full tables: Europa press release
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Industrial new orders show increase in euro area
On 22 January 2010 Eurostat, the statistical office of the European Union, released statistics for November 2009 which showed that, compared with the previous month, the euro area EA16 industrial new orders index rose by 1.6 percent. In October 2009 the index fell by 1.9 percent.

The EU27 area also saw increases in new orders, with levels recorded at 1.8 percent in November 2009, after a decrease of 1.4 percent in October. This trend was mirrored for new industrial orders with an increase of 2.0 percent and 1.5 percent in the euro area (excluding the more unstable factors of ships, railway and aerospace equipment).

However, comparing the figures with the same period for 2008, there was a drop recorded across the board.
Source and access to full tables: Europa press release
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EU Consumer Confidence Indicator: January 2010
In January 2010, the DG ECFIN flash estimate of the consumer confidence indicator signals an improvement for the EU aggregate (up to -13.3 from -14.3 in December 2009) and a broadly unchanged level for the euro-area aggregate (-15.8 compared with -16.1 in December).

Computation of Flash CCI
To compute the flash consumer confidence indicator for the EU and euro area, DG ECFIN uses the data available on the cut-off date. The estimation procedure combines historical data with information from those Member States for which data are available in the reference month. Experience has shown this procedure to be statistically reliable.
Full tables are available on: http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm
Source: Europa press release
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E-commerce in Europe
In January 2009, 93% of enterprises of ten or more persons employed had access to the internet in the EU27 and 82% of enterprises had a broadband internet connection. Among other uses, internet access enables enterprises to buy and sell products electronically: in the EU27 in 2008, 12% of enterprises' turnover was generated from e‑commerce. This data issued on 19 January 2010, comes from Eurostat and form part of the results of a survey conducted at the beginning of 2009 on Information and Communication Technologies (ICT) in enterprises in the EU27 Member States, Croatia and Norway.

Almost all enterprises in Finland, Denmark, Austria and Slovakia have internet access. In January 2009, the highest proportions of enterprises with internet access in theEU27 were recorded in Finland (100%), Denmark, Austria and Slovakia (all 98%) and Germany (97%). The percentage was less than 90% in only six Member States: Romania (72%), Bulgaria (83%), Latvia and Hungary (both 87%), Cyprus (88%) and Greece (89%).

The proportion of enterprises with a broadband connection in January 2009 was above 90% in Finland (94%), Spain and Malta (both 93%) and France (92%). Only in Romania (40%), Lithuania (57%) and Poland (58%) did less than 60% of enterprises have a broadband connection.
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/10/12&format=HTML&aged=0&language=EN&guiLanguage=en
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Construction activity in the EC
On 19 January 2010, Eurostat (the statistical office of the European Union) published details of construction activity in the EC.

Taking November 2009 compared with October 2009, construction output was down by 1.1% in the euro area and down by 0.6% in the EU27

In the construction sector, seasonally adjusted production decreased by 1.1% in the euro area (EA16) and by 0.6% in the EU27 in November 2009, compared with the previous month. In October2009, production fell by 0.4% and 0.3% respectively. Compared with November 2008, output in November 2009 dropped by 8.0% in the euro area and by 6.7% in the EU27.

Monthly comparison
Among the Member States for which data is available for November 2009, construction output rose in six and fell in six. The highest increases were recorded in Slovakia (+13.7%), Portugal (+4.1%) and Romania (+2.9%), and the largest decreases in Slovenia (-4.5%), Spain (-3.5%) and Bulgaria (-1.9%).

Building construction fell by 1.5% in the euro area and by 0.7% in the EU27, after -0.6% and -0.4% respectively in October. Civil engineering increased by 0.9% in the euro area and by 0.6% in the EU27, after +0.2% and +0.6% respectively in the previous month.

Annual comparison
Among the Member States for which data is available for November 2009, construction output fell in nine and rose in Poland (+8.8%), the Czech Republic (+6.4%) and Germany (+3.8%). The largest decreases were registered in Romania (-24.4%), Bulgaria (-22.5%), Slovenia (-18.1%) and Spain (-16.5%).

Building construction fell by 10.5% in the euro area and by 9.4% in the EU27, after -8.9% and -9.2% respectively in October. Civil engineering increased by 1.2% in the euro area and by 4.4% in the EU27, after +1.0% and +5.1% respectively in the previous month.
Source: Eurostat statistics: construction activity in the EC
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EC study on Monitoring and Enforcement practices of Corporate Governance Codes in Member States
On 14 January 2010, the EC published a Study on monitoring and enforcement practices in corporate governance in the member states. It considers the distribution of corporate governance related principles between national legislation and non-legislative "comply or explain" codes in each of the member states.

This Study provides an overview of the various monitoring and enforcement mechanisms in the Member States of the European Union concerning corporate governance rules that are laid down in codes of corporate governance. It assesses the level of compliance of companies with the provisions of corporate governance codes and examines the availability and quality of explanations for deviations from these codes for a sample of 270 listed companies from 18 Member States. Two surveys were conducted in the framework of this Study. They aimed at evaluating the perception of corporate governance codes by director institutes and business associations on the one hand, and EU shareholders on the other hand. On this basis, the Study evaluates the effectiveness of the different monitoring and enforcement systems and presents suggestions to improve their effectiveness.

The comply-or-explain approach formally adopted by the European Commission in 2006 enjoys wide acceptance by the corporate as well the institutional investor community. However, its practical implementation suffers some deficiencies, mainly in the form of an unsatisfactory level and quality of information on deviations by companies and a low level of shareholder monitoring. These issues could be remedied by strengthening the role of market-wide monitors and statutory auditors, by creating a reporting framework to ensure comprehensive and qualitative disclosure by companies, and by developing a comply-or-explain regime for institutional investors. The comply-or-explain regime should not be abandoned but rather should be strengthened.
Source: Study on Monitoring and Enforcement practices in Corporate Governance in the Member States
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Committee of European Securities Regulators: FAQs on Prospectuses
The Prospectus Directive 2003/71/EC and the EC's Regulation on Prospectuses (EC 809/2004) became effective on 1 July 2005. The Prospectus Directive and accompanying Regulation establishes a harmonised format for Prospectus in Europe and allows companies to use their Prospectus to list on all European markets without having to re-apply for approval from the local regulator and by doing so, it is intended to help companies avoid the inherent delays and cost that this may involve. As a result of this new legislation, consumers can also be assured of more consistent and standardised information which will enable them to compare more effectively the various securities offers available from a wider number of European companies.

On 15 January 2010, the Committee of European Securities Regulators (CESR) published its updated Frequently Asked Questions (FAQs) regarding prospectuses: common positions agreed by CESR members. The FAQs, originally published in July 2006 and regularly updated since, are intended to provide market participants with responses in a quick and efficient manner, to "everyday‟ questions which are commonly posed to the CESR secretariat or CESR Members.
Source: www.cesr.eu/data/document/09_1148.pdf
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Industrial production up by 1.0% in euro area and up by 0.9% in EU27
Estimates released by Eurostat, the statistical office of the European Union on 14 January 2010 show that:

InNovember 2009 compared with October 2009, seasonally adjusted industrial production grew by 1.0% in theeuro area(EA16) and by 0.9% in theEU27;
In October 2009, production fell by 0.3% and 0.7% respectively;
InNovember 2009 compared with November 2008, industrial production declined by 7.1% in theeuro areaand by 6.4% in theEU27.

Monthly comparison
In November 2009 compared with October 2009, production of intermediate goods increased by 1.8% in the euro area and by 1.7% in the EU27. Durable consumer goods grew by 1.8% in the euro area, but fell by 0.5% in the EU27. Capital goods rose by 1.1% and 0.7% respectively. Non-durable consumer goods gained 0.6% in the euro area and 0.5% in the EU27. Production of energy declined by 2.2% and 1.7% respectively.

Among the Member States for which data is available, industrial production rose in sixteen and fell in four. The highest increases were registered in Latvia (+8.7%), Slovenia (+3.0%) and Estonia (+2.9%), and the largest falls in Ireland (-8.0%) and Portugal (-3.7%).

Annual comparison
In November 2009 compared with November 2008, production of non-durable consumer goods fell by 1.1% and production of intermediate goods by 5.9% in both the euro area and the EU27. Production of energy declined by 6.2% in the euro area and by 6.8% in the EU27. Durable consumer goods decreased by 8.7% and 6.2% respectively. Capital goods dropped by 13.0% in the euro area and by 11.1% in the EU27.

Industrial production fell in all Member States for which data is available, except Poland (+7.3%), Romania (+4.4%) and Luxembourg (+0.7%). The largest decreases were registered in Denmark and Finland (both -14.4%), Estonia (-13.7%) and Bulgaria (-12.1%).
Source: Eurostat News release
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Eurozone interest rates unchanged
The European Central Bank (ECB) has kept eurozone benchmark interest rates on hold at a record historic low of 1% for the eighth month in a row. The decision was widely expected by economists, with Europe still recovering from recession. But it follows positive data on the eurozone, with industrial production found to be growing twice as quickly as expected.

Interest rates have been at 1% since May 2009.

Economists argue that rates are unlikely to increase while eurozone inflation remains well below the ECB's target of 2%. While the eurozone's two largest economies Germany and France appear to be well on the road to recovery, there are also questions over the state of Europe's economic recovery, with the state of Greece's public finances a particular concern. Last year, Greece admitted that its budget deficit was expected to reach 12.5% of GDP, attracting the condemnation of the European Union. The eurozone prohibits budget deficits of more than 3% of GDP - other countries have broken the limit in the past, but Greece's troubles are so serious they have led to speculation the country may even default on its debt.

The European Central Bank, which sets interest rates and monetary policy for the 16 countries that use the euro, is tasked with keeping inflation at close to, but below, 2 percent. In the year to December 2009, official figures showed that inflation remained subdued at an annual rate of 0.9 percent.
Source: www.ecb.int/press/pr/date/2010/html/pr100114.en.html and www.ecb.int/press/pressconf/2010/html/is100114.en.html
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EU assistance implemented through United Nations organisations: decision-making and monitoring
On 13 January 2010, it was reported that aid implemented by the European Commission through United Nations (UN) organisations amounted to over 1 billion euro in 2008.

The European Court of Auditors investigated whether aid channelled through the UN has been the result of a clear and objective selection process and whether the achievement of objectives can be monitored effectively:

The European Parliament has questioned why the Commission channels funds through the UN rather than through direct management. They are seeking assurance on the adequacy of the management of these funds;
The Court concludes that the selection process has insufficient practical criteria to support decision-making. It suggests that the Commission does not adequately demonstrate a robust assessment before deciding to work with a UN organisation and is looking to see this improved for greater effectiveness;
Although formal appraisals are not carried out by the Commission, they have expressed satisfaction with its choices to work through UN organisations and have said that sometimes there is no alternative, particularly in crisis situations;
In respect of monitoring systems, the Commission carries out a prior assessment of the financial control systems of its UN partners and seeks assurance as to the operation of these systems.

On the basis of its observations, the Court has made recommendations to improve selection procedures and to focus on the achievement of results that will assist the Commission in providing more efficient and effective aid.
Source: European Court of Auditors Press Release
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Public consultation on Commission's late payment problems
On 12 January 2010, the European Ombudsman invited individuals, companies, NGOs, associations and other interested persons to participate in a public consultation about the European Commission's late payment problems. Since 1995, the Ombudsman has conducted 63 investigations concerning late payments by the Commission. In addition, the Ombudsman has opened three investigations on his own initiative into measures taken by the Commission to improve the situation. The current, ongoing investigation started in February 2009.

In the Ombudsman's view, although the Commission has, during the past few years, made progress in this front, further improvements could be envisaged. Before he takes any further steps in this case, therefore, he is keen to receive feedback from concerned parties about what the Commission can and should, in their view, do further to reduce late payments.

Since the Office was set up in 1995, the Ombudsman has conducted 63 investigations concerning late payments by the Commission. Most of these complaints were lodged by NGOs, companies, research centres, universities and other associations involved in EU-funded projects and contracts.

In 2007, the Ombudsman found that one in five, that is, 20%, of all the Commission's payments was late. At the same time, the Ombudsman commended the Commission for the measures already taken to reduce payment delays, namely, simplifying procedures and ensuring better internal monitoring. He also applauded the decision to pay interest automatically in certain cases when payment has been delayed.

During his current investigation into the Commission's late payment problems, the Commission, in its opinion on the matter, provided data which show that in 2008 delays still occurred in more than 22% of all cases. It also announced new measures to improve the situation, such as stricter time limits and an increased use of lump sum payments.

The Ombudsman welcomes these additional measures. With an eye, however, to ascertaining whether the efforts undertaken by the Commission are sufficient and, if not, to determining what further steps could be taken to reduce payment delays, he invites interested parties in civil society to express their views on this important issue. To be sure, the aim of the public consultation is not to solve individual late payment cases. Such cases can, as always, be submitted to the Ombudsman as individual complaints, using the on-line form available on the Ombudsman's website.

Contributions to this public consultation may be submitted by 31 March 2010 in any of the 23 official languages.
Source: Europa press release 12/1/2010
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Short-changed, Euro style
Europa announced on 11 January 2010 that, in 2009, the number of counterfeit euro coins removed from circulation was 172,100. This was down from 195,900 the year before. This second consecutive decrease confirms the action to render euro coins safer for users. Although encouraging, there is no room for complacency and efforts to remove counterfeits from circulation should be maintained and intensified. A Commission proposal, presented in 2009 and currently being discussed in Parliament and Council, aims to further improve the fight against euro coin counterfeiting.

The number of counterfeit euro coins removed from circulation in 2009 decreased by 12% compared with the year before. The evolution per denomination, however, is contrasted. Where the number of 2-euro counterfeits decreased by almost 18%, the numbers for 50-cent and 1-euro continued to increase, by 9% and 8%, respectively. The 2-euro denomination remains by far the most counterfeited euro coin, representing almost 3 out of every 4 counterfeit euro coins.

The Commission considers that counterfeit euro coins are not, however, a significant cause of concern for the public. Indeed, the overall number is very small by comparison with the total number of around 15 billion genuine euro coins put into circulation of the three highest denominations, with a resulting ratio of 1 counterfeit for every 89 000 genuine coins. The number of detected counterfeits is also lower than the sum of counterfeit coins in the euro area countries before the introduction of the euro. These counterfeit coins, while increasingly sophisticated, should generally be rejected by properly adjusted vending and other coin-operated machines.
Source: Euro coin counterfeiting in 2009
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Euro area GDP levels up for third quarter of 2009
A report from Eurostat on 8 January 2010 showed that GDP levels rose in the Euro area (EA16) 0.4 percent and EU27 by 0.3 percent during the third quarter of 2009, compared with the previous quarter.

Compared with the same time last year, GDP declined by 4.0 percent in the Euro area and by 4.3 percent in the EU27.

In the third quarter of 2009, among Member States for which seasonally adjusted GDP data are available, Lithuania (6.1%) recorded the highest growth rate compared with the previous quarter, followed by Luxembourg (4.2%) and Slovakia (1.6%). In contrast, US GDP was up by 0.6 percent and Japanese GDP up by 0.3 percent.
Source and access to full report available at: Europa
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Industrial producer prices up by 0.1% in euro area/up by 0.2% in EU27
Figures released on 6 January 2910 by Eurostat, the statistical office of the European Union, show that in November 2009 compared with October 2009, the industrial producer price index rose by 0.1% in the euro area (EA16) and by 0.2% in the EU27. In October 2009, prices increased by 0.3% and 0.6% respectively. In November 2009, compared with November 2008, industrial producer prices dropped by 4.4% in the euro area and by 3.2% in the EU27.

Monthly changes
In November 2009, compared with the previous month, prices in total industry excluding the energy sector fell by 0.1% in the euro area and remained stable in the EU27. Prices in the energy sector rose by 0.8% and 1.1% respectively. In both zones, capital goods and durable consumer goods remained stable. Non-durable consumer goods declined by 0.1% in the euro area and remained stable in the EU27. Intermediate goods decreased by 0.2% in the euro area and remained stable in the EU27.

Among Member States for which data are available, the highest increases in the total index were recorded n Denmark (+1.4%), Lithuania, Portugal, Finland and the United Kingdom (all +0.6%), and the largest decreases in Latvia (-1.6%), Cyprus (-1.1%) and the Netherlands (-0.4%).

Annual changes
In November 2009, compared with November 2008, prices in total industry excluding the energy sector decreased by 3.1% in the euro area and by 2.4% in the EU27. Prices in the energy sector fell by 8.7% and 5.7% respectively. Intermediate goods declined by 5.0% in the euro area and by 4.3% in the EU27. Non-durable consumer goods dropped by 2.9% and 1.8% respectively. Capital goods fell by 0.7% in the euro area and by 0.4% in the EU27. Durable consumer goods rose by 0.5% and 1.0% respectively.

Among Member States for which data are available, the largest decreases in the total index were observed in Latvia (-11.0%), Lithuania (-9.7%) and Malta (-8.1%). The only increases were observed in Romania (+1.9%), Poland (+1.8%), Greece and the United Kingdom (both +0.8%).

Source: http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/10/3&format=HTML&aged=0&language=EN&guiLanguage=en
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Industrial new orders down by 2.2% in euro area/down by 1.6% in EU27
Figures released on 6 January 2910 by Eurostat, the statistical office of the European Union, show that in October 2009, compared with September 2009, the euro area (EA16) industrial new orders index fell by 2.2%. In September 2009, the index rose by 1.7%. In the EU27, new orders declined by 1.6% in October 2009, after an increase of 1.4% in September 2009. Excluding ships, railway & aerospace equipment, for which changes tend to be more volatile, industrial new orders fell by 0.4% in the euro area and by 0.8% in the EU27.

Monthly changes
In October 2009, compared with October 2008, industrial new orders decreased by 14.5% in the euro area and by 14.1% in the EU27. Total industry excluding ships, railway & aerospace equipment dropped by 14.4% and 14.1% respectively.

In October 2009, compared with September 2009, new orders for intermediate goods increased by 1.5% in the euro area and by 1.0% in the EU27. Durable consumer goods rose by 0.6% in the euro area , but fell by 1.7% in the EU27. Non-durable consumer goods remained stable in the euro area, but declined by 1.4% in the EU27. Capital goods dropped by 4.6% and 1.8% respectively.

Among the Member States for which data are available, total manufacturing working on orders rose in ten and fell in thirteen. The highest increases were registered in Hungary (+7.4%), Slovenia (+5.1%) and Latvia (+4.4%), and the largest decreases in Denmark (-14.8%), Ireland (-14.2%) and France (-9.2%).

Annual changes
In October 2009 compared with October 2008, new orders for non-durable consumer goods fell by 6.4% in the euro area and by 5.9% in the EU27. Durable consumer goods declined by 14.2% and 9.5% respectively. Capital goods dropped by 15.0% in the euro area and by 15.4% in the EU27. Intermediate goods decreased by 16.4% and 15.4% respectively.

Total manufacturing working on orders fell in all Member States for which data are available. The largest falls were registered in Lithuania (-35.2%), Estonia (-33.6%) and Greece (-27.4%), and the lowest in Slovenia (-3.0%), Slovakia (-8.7%) and the United Kingdom (-8.8%).
Source: http://europa.eu/rapid/pressReleasesAction.do?reference=STAT/10/2&format=HTML&aged=0&language=EN&guiLanguage=en
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December 2009: Economic Sentiment Indicator continues to improve
The Economic Sentiment Indicator (ESI) rose once again in December to 92.0 (+4.1 points) in the EU and to 91.3 (+2.5) in the euro area. It has improved in both areas for nine consecutive months since its trough in March 2009, though it still remains below its long-term average.

The majority of Member States reported a general improvement in sentiment. Among the largest Member States, the UK reported a sharp increase (+8.2 points), followed by France (+4.1), while the improvements were less marked in Italy (+2.9), Germany (+1.7) and Spain (+1.2). Sentiment in the Netherlands remained unchanged and decreased slightly in Poland (-0.6).

Sentiment in industry, which increased by 3 points in both the EU and the euro area, remained the main contributor to the overall improvement. While most respondents in this sector reported strong improvements in their order books, they appear to have scaled back their production expectations. The declining level of stocks, especially in the automotive sector, confirmed further destocking.

Services increased by 1 point in the euro area and by 6 points in the EU, the latter owing to a strong increase in UK services sentiment. Confidence among consumers improved by 1 point in both areas, as unemployment fears faded. Mirroring this outlook, employment expectations picked up in industry and services. No major development was noted in retail, which remained unchanged in the EU and increased by 1 point in the euro area. Construction declined by 1 point in the EU and by 2 points in the euro area.

Confidence in financial services - which is not included in the ESI - remained broadly unchanged in the EU and declined by 2 points in the euro area, where managers' assessment of the business situation over the past three months was significantly more negative than in last month's survey.
Full tables are available at: http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm
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Volume of retail trade down by 1.2% in euro area
A report from Europa on 7 January 2010 shows that, compared with October 2009, the volume of retail trade fell by 1.2% in the euro area (EA16) and by 0.8% in the EU27 in November 2009. In October 2009, retail trade rose by 0.2% and 0.5% respectively.

In November 2009, compared with November 2008, the retail sales index decreased by 4.0% in the euro area and by 2.1% in the EU27.

Monthly changes
In November 2009, compared with October 2009, "Food, drinks and tobacco" declined by 0.4% in both zones. The non food sector fell by 1.6% in the euro area and by 1.0% in the EU27.

Among the Member States for which data are available, total retail trade fell in fifteen and rose only in Poland (+1.0%) and the United Kingdom (+0.2%). The largest decreases were observed in Lithuania (-4.8%), Estonia (‑3.1%) and Latvia (-2.3%).

Annual changes
In November 2009, compared with November 2008, "Food, drinks and tobacco" fell by 2.9% in the euro area and by 1.6% in the EU27. The non food sector dropped by 4.2% and by 1.7% respectively.

Among the Member States for which data are available, total retail trade fell in twelve, rose in four and remained stable in Finland. The largest decreases were observed in Latvia (-30.2%), Lithuania (-27.8%) and Estonia (‑21.2%), and the highest increases in Poland (+4.6%) and Belgium (+3.7%).

These first estimates come from Eurostat, the statistical office of the European Union.
Source and access to full report available at: Europa
Selected Principal European Economic Indicators: http://ec.europa.eu/eurostat/euroindicators
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Euro area inflation estimated at 0.9%
Euro area annual inflation is expected to be 0.9% in December 2009 according to a flash estimate issued by Eurostat, the statistical office of the European Union published on 5 January 2010. It was 0.5% in November 2009.

Euro area inflation is measured by the Monetary Union Index of Consumer Prices (MUICP). To compute the MUICP flash estimates, Eurostat uses early price information relating to the reference month from Member States for which data are available as well as early information about energy prices. The flash estimation procedure for the MUICP combines historical information with partial information on price developments in the most recent months to give a total index for the euro area. No detailed breakdown is available. Experience has shown the procedure to be reliable (18 times exactly anticipating the inflation rate and 6 times differing by only 0.1 over the last two years).
Source: EuroIndicators
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News from the EU - January 2010