NEWS,04.04.2013

EU-IMF experts resume Greek audit

Greece's finance minister met on Thursday with EU-IMF auditors who have resumed an audit in Athens that was interrupted last month, and said details would be available once a comprehensive agreement had been reached.
"Nothing will be sealed until everything is sealed," Finance Minister Yannis Stournaras said after speaking with representatives from the European Union, International Monetary Fund and European Central Bank, a group of creditors known as the troika.
Stournaras told journalists that the atmosphere in the meeting, which lasted more than three hours, was "good" and that further meetings were scheduled on a daily basis.
"There is still work to be done," Stournaras was reported by the Athens News Agency to have added.
The inspection of Greek reforms was initially suspended to give the Greek government time to work on outstanding matters, and attention then turned to the banking crisis in Cyprus.
Pending issues reportedly include the thorny issues of civil service job cuts and a revised property tax.
The auditors' report is required to release a €2.8bn ($3.6bn) rescue loan that has been delayed since March.
Another loan payment of €6.0bn, originally scheduled for the first quarter of 2013, will have to be postponed until at least mid-April.
According to the terms of its bailout deal, Greece has to cut the number of public sector workers by 25 000 this year and by 150 000 by the end of 2015.
The heavily-indebted country, which has been relying on international aid to avoid bankruptcy and is in its sixth year of recession, must also recapitalise its banks and speed up privatisation plans.
"Our goal is for 2013 to be the final year of recession," conservative Prime Minister Antonis Samaras said on Thursday.
Samaras is under pressure from his two coalition government partners, the socialists and moderate leftists, to ease the tax burden as the country suffers through a fourth year of austerity.

We can't replace government action - ECB

The European Central Bank cannot step into the breach left by a lack of action by eurozone governments to solve the region's debt crisis, but is ready to do whatever it can to play its part, ECB chief Mario Draghi said on Thursday.
"We cannot replace lack of capital in the banking system or the lack of actions by governments," Draghi told a news conference after the ECB left its interest rates unchanged for the ninth month in a row.
"The most stimulative measure is to pay the arrears. The ECB cannot replace governments on that front, or on structural reforms," he said.
Nevertheless, the ECB was willing and ready to act and looking at all policy options, both standard and non-standard, to help resolve the crisis, Draghi insisted.
"We are ready to act within our mandate," he said.
With regard to non-standard or anti-crisis measures, "we discussed a variety of measures. We have to be aware of what we can do and what we cannot do," Draghi said.
The ECB was also open to taking on board the experiences of other countries in trying to solve the eurozone's problems, he said.
"We will certainly look at other countries' experiences, what is feasible, institutionally acceptable and effective," he said. "We are thinking 360 degrees on non-standard measures," Draghi said.
Throughout the seemingly never-ending crisis - which appeared to have abated recently until political gridlock in Italy and the crisis in Cyprus sent shockwaves through financial markets once again - the ECB has never hesitated to act as firefighter.
It has slashed its key interest rates, pumped more than €1.0 trillion ($1.3 trillion) into the banking system to avert a credit crunch and sought to tame borrowing costs in worst-hit countries by buying up their sovereign bonds.
The multi-faceted approach appeared to pay off, allowing the markets to enjoy an extended period of calm.
But calls have arisen for the ECB to come to the rescue once again as tensions re-emerged after elections in Italy ended in a political stalemate and Cyprus's parliament rejected the terms of a tough bailout deal with its international creditors.
Finding a solution was not easy, and would require the participation of all actors, Draghi insisted.

Bank of England keeps rates at record low

The Bank of England on Thursday voted to leave its main lending rate at a record-low level of 0.50% and refrained from pumping out more new cash to help stimulate Britain's recession-threatened economy.
"The Bank of England's Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%," the BoE said in a brief statement at the conclusion of a regular monthly meeting, whose minutes will be published on April 17.
Thursday's outcome had been widely predicted by markets, which expected the BoE to wait for official data later this month to see whether Britain's economy has re-entered a period of recession.
With Britain struggling to sustain economic recovery following the 2008 global financial crisis, the BoE's main lending rate has stood at 0.50% for more than four years.
The central bank has meanwhile pumped out £375bn of new money under its quantitative easing (QE) stimulus programme since March 2009.
"Although the Monetary Policy Committee (MPC) left policy on hold again today, we suspect that the decision was still a close one," said Samuel Tombs at the Capital Economics research group.
BoE governor Mervyn King, who shortly steps down to be replaced by Canadian central bank chief Mark Carney in July, has in recent months unsuccessfully called for an additional £25bn of stimulus along with two other of the MPC's nine members.
"It is likely that BoE governor King, along with Paul Fisher and David Miles voted to expand QE by a further £25bn" at Thursday's meeting, said ING Bank analyst James Knightley.
Recent official data revealed that British gross domestic product (GDP) shrank 0.3% in the fourth quarter of 2012 compared with the previous three months.
Another contraction in the first quarter of 2013 would place Britain in its third recession in under four years.

Cypriot bank staff boycotts bailout

Hundreds of Cypriot bank workers marched peacefully toward parliament on Thursday over fears that their jobs and pensions are at risk under an international bailout deal.

Bank employees earlier staged a two-hour walk-out, with unions saying that pension deposits at the now defunct Laiki bank totaling €27m ($34.7m) will be wiped out, while another €15m at the Bank of Cyprus will face losses of up to 60%.
Two of the country's banks are to be restructured in exchange for a €10bn ($12.8bn) bailout from the European Commission, European Central Bank and International Monetary Fund.
With one of the banks being wound down, retrenchments are expected, while the pension fund for more than 11 000 banking sector workers is also seen to be at risk.
Banks have been operating under strict capital controls since they reopened a week ago.
European Central Bank chief Mario Draghi conceded on Thursday that a failed attempt last month to tax small depositors in Cyprus as part of a bailout was "not smart".
Asked if it had been a mistake for the ECB to agree to the levy after Nicosia proposed it in negotiations, Draghi told reporters: "It was not a smart move and it was corrected the day after."
He insisted that the proposed levy on deposits under €100 000, which caused outrage in Cyprus and spooked financial markets, had never been part of the original ECB bailout proposals.

Pension fears grips Cyprus bank staff

Bank workers were to hold a work stoppage on Thursday over fears that pensions may be at risk under Cyprus's bailout, as the island looked set to top the agenda at a European Central Bank policy meeting.
Bank employees' union ETYK called the two-hour stoppage over concerns that pension funds at Laiki and Bank of Cyprus are not being protected under the island's €10bn ($12.8bn) bailout deal with the International Monetary Fund, European Commission and ECB.
The strike comes despite reassurances last week from President Nicos Anastasiades that every effort would be made to preserve pension funds at the two banks.
There has been no labour unrest in Cyprus so far, but the terms of the bailout will force the island to make painful reforms, raising taxes, downsizing the public-sector workforce, privatising some state-owned firms and drastically reducing the size of its bloated banking sector.
The country's new Finance Minister Haris Georgiades vowed on Wednesday to implement the bailout terms in full.
"We... shall do whatever it takes to fix our public finances and put our economy back on track for growth," he said after swearing in to his new post.
Georgiades, a British-educated economist who had been serving as labour minister, took over from Michalis Sarris, who announced on Tuesday he was resigning to cooperate with a judicial probe into the causes of the crisis.
Sarris had been chairperson last year of failed bank Laiki, the collapse of which was a major contributor to the crisis.
Cyprus is already in recession, with unemployment at around 15% and expected to grow sharply this year and next. Forecasts before the deal was agreed saw GDP contracting by 3.5% this year.
Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits.
The central bank has been progressively easing these restrictions, and has now raised the limit on business transactions from €5 000 to €25 000 and allowed people to write cheques of up to €9 000.
But under the terms of the deal, those with savings larger than €100 000 in Bank of Cyprus, the country's largest, face losing up to 60% of their deposits over that amount.
Those in second lender Laiki will have to wait years to see any of their money over €100 000 as the bank is shuttered.
Cyprus was expected to top the agenda at the European Central Bank's policy meeting in Frankfurt on Thursday.
Markets panicked when Eurogroup chief Jeroen Dijsselbloem appeared to suggest that the Cyprus deal which rattled world markets might be used as a template for future eurozone bailouts.
The consequences of the Cyprus bailout for the eurozone were expected to be the main focus of ECB chief Mario Draghi's's monthly post-meeting news conference.
On the political front, Turkish President Abdullah Gul said on Wednesday the crisis was a chance to work towards a peace deal on the island, divided since Turkish troops invaded its northern third in 1974 after a Greek Cypriot coup.
"The economic crisis should also be an important lesson to all of us because at the end of the day if the island were united then there would be a greater economic potential," he said.

Clinton to pen her views on the US

Hillary Clinton, whose every move is being scrutinised for signs that she might make a 2016 presidential run, announced on Thursday she's penning a book outlining her views on the United States' role in the world.

The ex-secretary of state's first book since leaving office will be published by Simon & Schuster in the summer of 2014, midway through President Barack Obama's final term, the publisher said.
"This will be the ultimate book for people who are interested in world affairs and America's place in the world today," said Jonathan Karp, publisher of Simon & Schuster Publishing Group, and who is set to edit the work himself.
No title was announced, nor details of how much former president Bill Clinton's wife would be paid.
The publisher's CEO Carolyn Reidy said Hillary Clinton would "bring readers worldwide her unique insights into the most dramatic events and critically important issues of our time."
Topics covered will include the killing of Osama bin Laden, the US pullouts from Iraq and Afghanistan, the Arab Spring revolts, and the rise of China.
Broad issues including the role of women and girls, climate change, and human rights will also be addressed, the publisher said in a statement.
"And she will share her views as to what it takes for the United States to secure and sustain prosperity and global leadership. Throughout, Secretary Clinton will offer vivid personal anecdotes and memories of her collaboration with President Obama and his National Security team, as well as her engagement with leaders around the world," the statement said.
Clinton has stayed coy about her plans in 2016, but she is seen as a clear frontrunner this time, having lost the Democratic nomination in 2008 to Obama, who went on to become America's first black president.
Polls show that Clinton, who would be 69 in 2016, has strong support among Democrats should she bid to become the first woman elected to the White House.

Kerry returning to Middle East

US Secretary of State John Kerry is headed back to the Middle East for his third trip in a month, foraging for signs that Israel and the Palestinians are ready to make tough sacrifices for peace.

In a surprise move, the State Department announced on Wednesday that Kerry will return to Jerusalem and the Palestinian territories early next week to build on a series of talks last month between American and regional leaders.

Expectations are growing that the US administration is ready to resume some kind of shuttle diplomacy to rekindle the moribund peace process, which has stalled since late 2010 amid bitter recriminations on both sides.

But State Department spokesperson Victoria Nuland cautioned: "I would not expect the secretary to be putting down a plan."

President Barack Obama visited Israel and the West Bank in mid March, with Kerry then staying behind in the region to meet separately with both Israeli Prime Minister Benjamin Netanyahu and Palestinian president Mahmoud Abbas.

"They've had some time to reflect on the visit," Nuland said. "So this a chance for the secretary to go back and to listen again and to hear what they think is possible."

Apology to Turkey

"But he'll also be making clear that the parties themselves have to want to get back to the table, that this is a choice that they have to make, and that they've also got to recognise, both parties, that compromise and sacrifices are going to have to be made if we're going to be able to help."

Kerry will start his trip with a visit to Istanbul this weekend, with the 2-year-old conflict in Syria that has cost more than 70 000 lives set to top the agenda of talks with senior Turkish officials.

Nuland would not go into details about the talks on Sunday, but many of the top Syrian opposition leaders are based in Istanbul and he may seek to carve out some time to meet them.

Kerry's latest trip to Turkey also comes after Israel apologised to Ankara in late March for the deaths of nine Turkish activists in a botched raid by Israeli commandos on a Gaza-bound aid ship.

The breakthrough brokered by Obama ended a nearly three-year rift between Israel and Ankara - both key regional US allies.

Kerry will head to Israel and the Palestinian territories on Monday and Tuesday for separate talks with Netanyahu and Abbas, Nuland said.

Stage set

The stops have been added to a previously announced trip during which Kerry will also travel to London for a meeting of G8 foreign ministers before heading to Asia for the first time as America's new top diplomat.

On his first overseas trip since taking up the post on 1 February, Kerry visited Egypt in early March for talks with President Mohammed Morsi.

Kerry has stressed he would like to find a path forward in the peace process which has bogged down for decades.

"I think the stage has been set for the possibilities that the parties can hopefully find a way to negotiations," Kerry said in Baghdad after meeting Netanyahu and Abbas.

Direct peace talks broke down just weeks after Obama made a failed bid to bring the sides together in September 2010 in a bitter row over Israel's settlement building.

Since then, the Palestinians have refused to return to the table without a settlement freeze while Israel has agreed to resume talks only if there are no preconditions.

Freeing of prisoners

Nuland refused to speculate on Wednesday on whether Kerry would try to lay out any confidence-building measures to kickstart the talks in his next round of talks.

But Abbas said on Wednesday that the freeing of prisoners held by Israel was a "priority" for the leadership in the West Bank.

"We cannot be silent about their staying behind bars... [we] have demanded the freeing of all prisoners, especially those arrested before the Oslo accords, and sick, child and women prisoners," he told his Fatah party.

Clashes broke out in the West Bank earlier in the day between Israeli soldiers and Palestinians protesting the death of a Palestinian prisoner serving a life sentence in an Israeli jail.

A 16-year-old Palestinian was killed by Israeli soldiers and two others were wounded in the unrest.

Isolated South Koreans tough it out

Fear and anxiety are spreading among hundreds of South Korean workers sitting 10km inside North Korea and trying to ride out a growing military crisis that is edging ever closer.

The Kaesong joint industrial area, the last remaining symbol of inter-Korean co-operation, has become a pawn in an increasingly dangerous, high-stakes game of brinkmanship between Pyongyang, Seoul and Washington.

A day after it blocked South Koreans from accessing the complex, Pyongyang on Thursday threatened to pull out the 53 000 North Korean workers who keep the South Korean factories in Kaesong running, and to shut it down entirely.

Although allowed to leave Kaesong, about 800 South Korean managers and staff have opted to stick it out for now, as dire threats of nuclear war and retaliation fly back and forth over their heads.

"The anxiety is really ramping up," said Kwon Sook-Mi, who decided to leave the mobile phone plant in Kaesong where she works and cross back into South Korea on Thursday morning.

"There's a lot of uncertainty and some people are finding it mentally very tough," Kwon, aged 37, said.

Supplies running low

By contrast, Kwon said she had seen "no particular change" in the attitude of the North Korean workers at her plant since the crisis began.

Kim Won-Soo, the manager of a footwear plant, said his company was running out of supplies, both for the assembly lines and employees.

"We'll have to stop operating soon as we're almost out of raw materials," said Kim, who crossed back to the South with another group in the afternoon.

"Food supplies are also low, and stocks in the local supermarkets are way down. It's going to be noodles from tomorrow," he added.

On the South Korean side of the border crossing near Paju city, around 100 people and 40 trucks turned up early in the hope of the access ban being lifted on Thursday.

Drivers, managers and workers huddled in small groups, discussing the situation, with much of the talk focused on how long the 123 South Korean companies in Kaesong can keep going.

Political games

"Time is going to run out very fast," said Ryu Koon-Sung, who works for a female underwear company, Young Inner Foam, in Kaesong.

"If I can't get the material packed in this truck over, then we're going to have to stop production in a few days," Ryu said.

At 08:30, the expected announcement was broadcast over loudspeakers: "Entry into Kaesong is impossible today". The trucks began turning away, although some drove straight to an adjacent car park to try again on Friday.

"Kaesong should not become a scapegoat for political games," Ryu said, shaking his head.

South Koreans in general have grown accustomed to the North's threats and provocations over the years.

Even now, there is some anxiety but little panic - in contrast to 1994, when a North Korean negotiator threatened to turn Seoul into "a sea of fire" and people stripped store shelves and bunkered down.

These days Seoulites, especially the young, largely shrug off such threats and the bars and clubs of the upscale Gangnam district remain as popular as ever.

Haven of co-operation in danger

The stock market is also remarkably resilient, down barely 1% since the war rhetoric intensified two weeks ago.

In the Customs, Immigration and Quarantine hall of the Paju border crossing, a slightly desperate Han Jae-Kwon, head of the association that represents the companies in Kaesong, urged an end to the impasse.

"Operations in the complex are in serious trouble because of North Korea's ban... and there is fear and apprehension that the complex could be shut down permanently," Han said.

Han spoke in front of a banner reading: "We appeal for normalisation of passage to Kaesong" - a simple, plaintive message compared to the bellicose rhetoric emanating from Pyongyang.

Han said production had already ceased at a few smaller plants and others would run out of food within a week, as well as gas for heating and cooking.

Kim Deok-Chul, who was trying to cross into Kaesong to reach his textile company, said the complex risked losing its special status as a haven of co-operation that has always weathered political storms.

"Kaesong is a place where people from both side communicate," Kim said. "Both sides should make concessions and keep this area as it is."

NEWS,03.04.2013

Economist warns of radical climate change

The author of an influential 2006 study on climate change warned on Tuesday that the world could be headed toward warming even more catastrophic than expected but he voiced hope for political action. Nicholas Stern, the British former chief economist for the World Bank, said that both emissions of greenhouse gas and the effects of climate change were taking place faster than he forecast seven years ago.Without changes to emission trends, the planet has roughly a 50% chance that temperatures will soar to five degrees Celsius (nine degrees Fahrenheit) above pre-industrial averages in a century, he said."We haven't been above five degrees Centigrade on this planet for about 30 million years. So you can see that this is radical change way outside human experience," Stern said in an address at the International Monetary Fund."When we were at three degrees Centigrade three million years ago, the sea levels were about 20 some meters above now. On sea level rise of just two meters, probably a couple of hundred million people would have to move," he said.Stern said that other effects would come more quickly including the expansion of deserts and the melting of Himalayan snows that supply rivers on which up to two billion people depend.Even if nations fulfill pledges made in 2010 at a UN-led conference in Cancun, Mexico, the world would be on track to warming of four degrees (7.2 Fahrenheit), he said.Stern's 2006 study, considered a landmark in raising public attention on climate change, predicted that warming would shave at least five percent of gross domestic product per year.Despite the slow progress in international negotiations, Stern saw signs for hope as a number of countries move to put a price on greenhouse gases."My own view is that 2013 is the best possible year to try to work and redouble our efforts to create the political will that hitherto has been much too weak," Stern said.Stern said that French President Francois Hollande was keen for nations to meet their goal of sealing an accord in 2015 in Paris.Stern also voiced hope that German Chancellor Angela Merkel, long a prominent voice on climate change, would become more active after this year's elections.US President Barack Obama has vowed action on climate change after an earlier bid was thwarted by lawmakers of the rival Republican Party, many of whom reject the science behind climate change.Emissions have risen sharply in recent years from emerging economies, particularly China.

Minister vows to revive Cypriot economy

The new finance minister of cash-strapped Cyprus vowed on Wednesday to do "whatever it takes" to sort out the EU country's teetering finances and put the economy back on track for growth. Haris Georgiades was speaking hours after President Nicos Anastasiades swore him in, warning of "difficult days ahead" for an island struggling to recover from a near financial meltdown and the need for a crippling eurozone bailout.Anastasiades said this would entail "firstly, collectivity and, secondly, consistency and fiscal discipline and all those measures that will contribute to kick-starting the economy as soon as possible."The new minister, a 40-year-old British-educated economist, vowed to implement the terms of the bailout "fully... we shall meet all time frames and meet all targets"."We... shall do whatever it takes to fix our public finances and put our economy back on track for growth.""Even though today's circumstances might be bleak, the medium- and long-term prospects remain excellent. We have received a blow but I'm absolutely confident we shall overcome," said Georgiades.Under the terms of the bailout, Cyprus will drastically reduce the size of its bloated banking sector, raise taxes, downsize the public sector workforce and privatise some state-owned firms.Cyprus is already in recession, with unemployment at around 15% and expected to grow sharply this year and next.Forecasts before the deal was agreed saw GDP contracting by 3.5% this year.On Tuesday, outgoing finance minister Michalis Sarris said "2013 will be a very difficult year, and the beginning of 2014 will also be difficult. Beyond this I believe the prospects are positive".Georgiades, who became labour minister when Anastasiades was elected in February, was appointed after Sarris stepped down on Tuesday.Sarris had been chairperson last year of failed Laiki Bank, whose collapse was a major contributor to the crisis. He said he was resigning to cooperate with a panel of judges appointed to investigate the causes of the crisis.His departure came as the government wrapped up talks with the IMF, European Commission and European Central Bank that will open the way for Cyprus to receive a €10bn ($12.8bn) bailout.The deal will see Cyprus receiving the loan with an interest rate of between 2.5 and 2.7%, repayable over 12 years after a grace period of 10.On Wednesday, International Monetary Fund managing director Christine Lagarde said the IMF's contribution would be approximately €1bn."This is a challenging programme that will require great efforts from the Cypriot population," Lagarde said in a statement, but it "provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery".Under the final deal, Cyprus won a two-year extension, from 2016 to 2018, to get its public finances in order.Cyprus should get the first payment from the bailout next month after the rescue accord is formally ratified, the European Commission said.Also sworn in on Wednesday was Zeta Emilianidou, who becomes the first woman in the cabinet and replaces Georgiades at the labour ministry.Anastasiades told her: "The ministry you are undertaking certainly requires great sensitivity. It is a ministry that deals with the government's social policy for vulnerable groups" and with industrial relations.Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits.The central bank has been progressively easing these restrictions, and has now raised the limit on business transactions from €5 000 to €25 000 and allowing people to write cheques of up to €9 000.Thus far, there has been no labour unrest in Cyprus, but bank workers union ETYK called a two-hour stoppage for Thursday over fears that pension funds at Laiki and Bank of Cyprus are not being protected under the bailout.Last week, Anastasiades said every effort would be made to preserve provident (pension) funds at Laiki and Bank of Cyprus.

March US job gains worse-than-expected

The US private sector added 158

• jobs in March, sharply below February's growth as the jobs market slowly recovers, payrolls firm ADP said on Wednesday.The worse-than-expected March reading followed February's upwardly revised figure of 237

• new jobs, from an initial estimate of 198

• Analysts on average had forecast 197

• new jobs were added last month. The March number was well below the first quarter's average monthly gain of 191

• jobs and marked the smallest increase since October.The massive US services sector continued to generate the greatest job growth, adding 151

• posts in March from February.Goods-producing employment rose by 7

• jobs, the slowest growth in six months.Manufacturing gained 6

• jobs.Construction added no jobs, after three months of average gains of 29

• "Construction employment gains paused as the rebuilding surge in the wake of Superstorm Sandy ended," said Mark Zandi, chief economist of Moody's Analytics, referring to the devastating storm that battered the Northeast at the end of October."The job market continues to improve, but in fits and starts," he said.The ADP report came ahead of the government's closely watched jobs and unemployment data Friday.The labour department was expected to report that the United States gained 192

• jobs in March, slowing significantly from growth of 236

• in February, and the jobless rate was unchanged at 7.7%.

IMF set to provide €1bn to Cyprus

The International Monetary Fund has agreed to provide approximately €1bn to the €10bn rescue plan for cash-strapped Cyprus, managing director Christine Lagarde said on Wednesday.This would be through a three-year 891 million Special Drawing Rights (about €1bn) loan, Lagarde said in a statement, adding that she expects the deal to go to the IMF executive board for approval in early May.The IMF, European Commission and European Central Bank agreed with Cyprus on Tuesday the terms of a programme that will see the country drastically downsize its bloated banking sector and put state finances in order."The Cypriot authorities have put forward an ambitious, multi-year reform programme to address the economic challenges they face," Lagarde said, describing it as "resolute.""The overarching goals are to stabilise the financial system, achieve fiscal sustainability and support the recovery of economic activity to preserve the welfare of the population."As part of the deal, Cyprus agreed last week to shut down bankrupt Laiki (Popular) Bank, transferring its deposits under €100 000 to the country's largest lender, Bank of Cyprus, which will be recapitalised.Deposits over €100 000 at Bank of Cyprus will be subject to a still-undetermined haircut which could reach 60% of their value. At the same time, the government imposed capital controls to prevent a run on banks.Lagarde said efforts will now "focus on completing the financial sector recapitalisation process, gradually restoring normal financial flows and facilitating the restructuring of banks' impaired loans".Cyprus has also committed itself to raise taxes, rein in spending and carry out structural reforms in the public sector to put its public finances in order.Lagarde said "this is a challenging programme that will require great efforts from the Cypriot population," but that it "provides a durable and fully financed solution to the underlying problems facing Cyprus and provides a sustainable path toward a recovery."She added that the measures adopted "seek to distribute the burden of the adjustment fairly among the various segments of the population and to protect the most vulnerable groups. The IMF, together with its European partners, will continue to support the efforts of the Cypriot people".

Dodging taxes 'second nature' in India

In a country long defined by its poverty, it's easy now to find India's rich.They're at New Delhi's Emporio mall, where herds of chauffeur-driven Jaguars and Audis disgorge shoppers heading to the Louis Vuitton and Christian Louboutin stores. They're shopping for Lamborghinis in Mumbai. They're putting elevators in their homes and showing off collections of jewel-encrusted watches in Indian luxury magazines. They're buying real estate in comfortable but unpretentious neighborhoods neighborhoods thought of as simply upper-middle-class just a couple years ago where apartments now regularly sell for millions of dollars.They're just about everywhere. Unless it's income tax time. Then, suddenly, they barely exist.The reality is simple: "There are very few people who are paying taxes," said Sonu Iyer, a tax expert at Ernst & Young in New Delhi. And tax dodging is everywhere. "It's rampant - rampant."If the generalities of that have long been known here, Finance Minister Palaniappan Chidambaram stunned the country in late February when he proposed a new tax on India's top earners. The surprise wasn't the temporary 10% surcharge on those earning more than 10,000,000 rupees, or about $185 000, per year, but the number of Indians who fall into that category.That number? Just 42 800 people."Let me repeat," Chidambaram told Parliament in his budget speech, making sure no one thought he had misspoken, "only 42 800" people say they earn that much.In a country of 1.2 billion people, a country where years of staggering economic growth annually create tens of thousands of new millionaires and a recent slowdown has done little damage to a thriving luxury goods market, far less than one ten-thousandth of the population admits they are in the top tax bracket.With so few Indians willing to come clean, the perennially cash-starved government has to scrabble every year for revenue.Among the rich, dodging taxes has become second nature, said Jamal Mecklai, CEO of Mecklai Financial, a Mumbai-based financial consulting firm. About 158,000 Indians are thought to be dollar millionaires, according to a 2012 Credit Suisse estimate, though some analysts believe the number is far higher."It's just taken as the reality" that most wealthy Indians are cheating, he said, adding that he pays everything he owes. India's top tax rate is currently 30%.It's not just the rich evading their taxes. Less than 3% of Indians file income tax returns at all, and officials say only about 1.5 million taxpayers say they earn more than 1,000,000 rupees per year about $18 000.Most of those not paying have legitimate reasons. Well over half the population earns so little they don't have to pay income taxes. Despite its ever-growing population of nouveau riche, more than 400 million Indians still live below the poverty line.Millions more people are exempt because regulations exclude agricultural income from taxes, no matter how much is earned. Since India has hundreds of millions of small farmers, and a powerful bloc of wealthy farmers, that's a tax break few politicians dare challenge. Various other tax breaks legally keep many more people off the tax rolls.The bulk of those paying income taxes, experts say, are salaried employees whose companies are responsible for making their tax payments. While those taxpayers can fudge their numbers to an extent, using inflated receipts to magnify tax breaks on expenses like housing, it's extremely difficult for them to completely escape tax authorities.But most everyone else from the barons of family-owned businesses to doctors, lawyers and small traders operate in largely cash economies that enable them, if they want, to hide most of their income.The size of India's underground economy and the amount of lost taxes is widely debated, but even the lowball figures are immense in a country with a nearly $2 trillion GDP. In recent studies, experts estimated that anywhere from 17% to 42% of the economy operates beneath the official radar.Billions of dollars are widely thought to be hidden in Switzerland, Singapore and other tax havens.Then there is the strange case of Mauritius. More than 40% of foreign direct investment in India comes through this tiny island in the Indian Ocean. In part, that statistic reflects an India-Mauritius tax treaty that legally eases the flow of investment funds into India. But, experts say, it also allows Indians to launder vast amounts of untaxed wealth by sending their illegal cash to Mauritius, then "round-tripping" it back to India in the form of legal investments.If it would take concerted effort to shut down complex, international money-laundering operations, catching at least some of India's high-end tax dodgers should be ridiculously simple. This is, after all, a country where flaunted wealth often seems as common as traffic jams.How about targeting the buyers of the 25 000 luxury cars sold last year in India? Or the buyers and sellers of big-budget apartments? What about the people racking up thousands of dollars a month in credit card bills? Maybe tax investigators could go to those high-end malls, looking to see who is buying all the expensive shoes.While the government says it recently has begun targeting some big spenders, mailing notices to tens of thousands of people they say may have underpaid their taxes, few believe officials have truly become aggressive."It's not really that difficult to chase down the tax dodgers," said Mecklai, the consulting firm CEO. "It's just a matter of putting the machinery in place."So why isn't the government doing that?The answers range from sheer incompetence to corrupt tax bureaucrats to a political class accustomed to making vast wealth on the side, and unlikely to do anything that might jeopardize its ill-gotten gains.Certainly the Indian public sees official corruption as a major part of the equation."Of course I don't pay all my taxes," said a New Delhi businessman who spoke on condition he not be named because he was admitting to breaking the law. "Why should I pay my taxes while the politicians are getting richer and richer every day?"Such talk is, experts say, the most commonly heard rationale for tax evasion, one entrenched by decades of political corruption and waves of official scandals.But it doesn't explain everything. Iyer, the Ernst & Young tax expert, notes that the culture of tax-avoidance runs deep in India. She points particularly to the way buyers and sellers of real estate openly discuss how much of the price will be paid in "white" declared money, and how much will be paid under the table in "black.""No one thinks of it as something to be ashamed about," she said. "In a country of holier-than-thou's, no one thinks that it's a blatant lie" to cheat on your taxes.Embarrassment, she said, may be what India needs most of all."The moment this society establishes a stigma to it, I think you'd see a change."

Cyprus to swear in new FM

Cyprus's new finance minister was due to be sworn in Wednesday following his predecessor's resignation hours after a probe was launched into how the island was pushed to the verge of bankruptcy. Haris Georgiades, a 40-year-old economist who had been serving as labour minister, will formally take up his new post a day after Michalis Sarris said he was stepping down to cooperate with judges investigating the failure of Laiki Bank, where he was chairman for much of last year.The bank's collapse was a major contributor to the island's near financial meltdown and need for a crippling eurozone bailout.President Nicos Anastasiades said on Tuesday he had accepted Sarris's resignation with "sadness" and lauded his "high political ethos" for stepping down.Sarris said he believed stepping down was "the right thing" to do to facilitate the investigators' work.His departure came as the government wrapped up talks with international lenders that will open the way for Cyprus to receive a €10bn bailout, said government spokesperson Christos Stylianides."Today we have completed the forming of the memorandum, which is a precondition for the loan agreement," with the period to implement the deal extended by two years to 2018 to "ease pressure on the economy", he said.It "should have taken place a lot sooner, under more favourable political and financial circumstances," he said, but added: "Even with this delay, the situation is now normalising, stabilising and the conditions to restart the economy are created."Cyprus is already in recession, and as he resigned Sarris said that "2013 will be a very difficult year, and the beginning of 2014 will also be difficult. Beyond this I believe the prospects are positive."

Ex-Goldman trader guilty in $118m scandal

A former trader with US banking giant Goldman Sachs has pleaded guilty to wire fraud.Matthew Marshall Taylor entered the plea Wednesday in federal court in Manhattan.Taylor admitted he took a trading position 10 times larger than he would have been allowed. He wanted to score profits that would enhance his reputation and boost his bonuses.The judge who accepted the plea said he was miffed that the government is holding Taylor responsible for only up to $2.5m in losses.Taylor was arrested on Wednesday on criminal charges of fraud linked to a scheme to hide an $8bn futures bet, officials said. Matthew Marshall Taylor "was in FBI custody as of early this morning," a source familiar with the government's case told AFP on condition of anonymity.The federal prosecutor's office in Manhattan said Taylor was due to appear before a judge on the charges "in connection with a scheme to accumulate and conceal an unauthorized $8bn position in a trading account that he managed at Goldman Sachs".In November, the Commodities Futures Trading Commission filed a civil suit accusing Taylor of defrauding his employer "by intentionally concealing... the true huge size, as well as the risk and potential profits or losses associated"."On or about December 13 2007, Taylor's scheme culminated in his concealment of an approximately $8.3bn long (S&P 500) e-mini futures position," the watchdog said, alleging that Taylor ended up defrauding Goldman Sachs of $118.4m.In December last year, the CFTC ordered Goldman Sachs to pay $1.5m in a fine for the actions of its trader, saying "it failed to diligently supervise its employees for several months in late 2007".The central bank eased restrictions imposed last week to prevent a bank run, raising the limit on business transactions from €5 000 to €25 000 and allowing people to write cheques of up to €9 000.With public anger mounting, Anastasiades said no one would be immune from the new judicial inquiry into the banking collapse, and called on the commission headed by former Supreme Court judge George Pikkis to investigate him and his relatives with "extra vigour".This is seen as a move to counter so far unsubstantiated allegations that family members used privileged information to get money out of the country before deposits were locked down.Other leading politicians and business figures have also been accused of taking advantage of their positions to protect their assets from a hit on bank deposits imposed by EU-led creditors last week.Under the bailout deal with the European Union, European Central Bank and International Monetary Fund, those with savings larger than €100 000 in the Bank of Cyprus face losing up to 60% of their deposits over that amount.Those in second lender Laiki will have to wait years to see any of their money over €100 000 as the bank is shuttered.Central bank official Yiangos Demetriou told state radio on Tuesday that Bank of Cyprus savers would now be able to access 10% of their deposits over €100 000.But he added the "troika" of bailout creditors had asked for more information before agreeing to release the full 40% of deposits over that threshold that savers can be sure of retaining.Banks have been operating under stringent capital controls since they reopened on Thursday, after a near two-week lockdown prompted by fears of a run on deposits.Central Bank of Cyprus governor Panicos Demetriades said the remaining controls would be eased in stages."I can't really tell you if it will be seven or 14 days before capital controls end," he told the Financial Times. "We have to lift them gradually."

Strike halts train, sea travel in Greece

Tens of thousands of travellers were stranded across Greece on Wednesday as seamen and train conductors called a 24-hour strike to protest austerity measures.Ferries were moored at ports across the country, and train services were disrupted as employees protested cutbacks, including the abolition of collective labour contracts that safeguard wage levels and other benefits.Dock workers were demanding back pay from ship owners and an end to undocumented and uninsured employees. The workers also want the government to cancel a plan to regulate the minimum number of dock workers required in each crew, saying it would lead to layoffs.Air traffic was also expected to be disrupted on Thursday as air-traffic controllers were to hold a 24-hour walkout.Greek unions have held dozens of strikes over the past three years to protest public sector pay cuts and tax hikes. The heavily indebted government passed the measures to secure bailout loans.

Italy seizes €1bn in Mafia-linked assets

Italian police on Wednesday said they had seized assets worth €1.3bn from a Sicilian renewable energy developer in the biggest ever seizure of Mafia-linked assets.The assets, including 43 wind and solar energy companies, 98 properties and 66 bank accounts, belonged to Vito Nicastri, a 57-year-old businessman dubbed the "Lord of the Wind" for his prominent role in the business."This is a sector in which money can easily be laundered," Arturo de Felice, head of Italy's anti-Mafia agency, told news channel SkyTG24."Operating in a grey area helped him build up his business over the years," De Felice said.The anti-Mafia agency said in a statement that it was the biggest seizure of mafia-linked assets.The assets had been frozen in 2010 and Nicastri is on probation under orders not to leave his town of Alcamo in western Sicily during the investigation.Nicastri had "numerous and high-level contacts with mafia figures," the anti-mafia agency said, adding that this had been confirmed by messages found during the arrest of two local Mafia bosses.The businessman was also linked to Matteo Messina Denaro, a fugitive who is considered the godfather of the Sicilian mafia, the statement said.The seizure "impacts in a significant way on the economic power of Matteo Messina Denaro, who is considered the lord of that land," it added.Italy's renewable energy sector has been heavily infiltrated by the mafia because of once-generous state subsidies and lax controls, as well as the availability of land in areas of southern Italy with a strong Mafia presence.

NEWS,01 AND 02.04.2013

World Bank urges end to extreme poverty

World Bank chief Jim Yong Kim on Tuesday called for a global drive to wipe out extreme poverty by 2030, acknowledging that reaching the goal will require extraordinary efforts."A world free of poverty is within our grasp. It is time to help everyone across the globe secure a one-way ticket out of poverty and stay on the path toward prosperity," Kim said in a speech in Washington, according to the prepared text.The World Bank president said that in practical terms, the goal would be to lower the number of people living on less than $1.25 a day from 21% of the world's population in 2010 to just 3% by 2030."Below 3%, the nature of the poverty challenge will change fundamentally in most parts of the world. The focus will shift from broad structural measures to tackling sporadic poverty among specific vulnerable groups," Kim said in a speech at Georgetown University."Though we will continue to reach out to those who suffer from sporadic and occasional poverty, the fight against mass poverty that countries have waged for centuries will be won."In 2000, the international community set eight UN Millennium Development Goals to be reached by 2015. One of them, to halve extreme poverty, was accomplished in 2010, five years ahead of time, Kim noted, after developing countries invested in social safety nets and created buffers to protect against crises."To reach the 2030 goal, we must halve global poverty once, then halve it again, and then nearly halve it a third time all in less than one generation," he said.To do that will require three main factors, he said.Higher economic growth rates will be needed, in particular sustained high growth in South Asia and Sub-Saharan Africa. Efforts must be made to curb inequality and ensure that growth reduces poverty, especially through job creation.And potential shocks, such as new food, fuel, or financial crises and climatic disasters, must be averted or cushioned.The World Bank president also set another poverty-reduction target that is less measurable: to increase the incomes of the poorest 40% of the population in each country.Kim, speaking ahead of the World Bank and International Monetary Fund meetings in Washington later in the month, said the goals of ending poverty and boosting shared prosperity require coordinated efforts."They are goals which we hope our partners our 188 member countries will achieve, with the support of the World Bank Group and the global development community," he said.

Cyprus finance minister quits

Cypriot Finance Minister Michael Sarris quit on Tuesday after concluding talks with foreign lenders on a bailout that forced the island to slap unprecedented losses on bank depositors in return for aid.The news came after Cyprus announced a partial relaxation of currency controls, raising the ceiling for financial transactions that do not require central bank approval, but keeping most other restrictions in place.Sarris, who was dispatched to Moscow last month but returned empty-handed as Cyprus sought Russian aid after rejecting a European bank levy proposal, said his main goal of agreeing a deal with lenders had been accomplished.He said it was also appropriate to resign since he was among several people under scrutiny by a team of investigators looking into the collapse of the country's banking system. His resignation was accepted by the government."I believe that in order to facilitate the work of (investigators) the right thing would be to place my resignation at the disposal of the president of the republic, which I did," Sarris said.Before quitting, he said it was not clear when the remaining capital controls would be lifted.The island introduced curbs on money movements when banks reopened on March 28 after a two-week shutdown while the government negotiated a €10bn bailout from the International Monetary Fund and the European Union.Cyprus's status as a financial hub has crumbled in the space of a fortnight after authorities were forced to wind down one bank and slap heavy losses on wealthier depositors in a second in return for the financial aid.Its capital controls are a first for the eurozone, introduced by Cyprus as it strives to prevent a cash drain.Bailout terms disclosed A finance ministry decree on Tuesday, the third since controls were first introduced, raised the ceiling on transactions which do not require central bank approval to €25 000 from €5 000. It also permits the use of cheques worth up to €9 000 per month.Other restrictions introduced last week, including a €300 per day cash withdrawal limit and a €1 000 limit on the amount travellers can take overseas, remain in place.The decree signed by Sarris and dated April 2 is valid for two days. Cypriot officials have said it could take up to a month for restrictions to be fully removed.Cypriot President Nicos Anastasiades, who has been in power for just over a month, says he was forced to accept onerous terms imposed by lenders to avert a default and an exit by the island from the eurozone.Under the terms of the deal, Cyprus will have until 2018 to carry out measures to shore up its finances and begin to receive aid starting in May.The island will pay an interest rate of 2.5% on its rescue loans, with repayment starting in 10 years. The loans will repaid over 12 years.On Tuesday, Anastasiades appointed three retired Supreme Court judges to investigate political, civil and criminal responsibilities over the demise of the economy, one of the bloc's smallest.Cyprus last week agreed to break up its No. 2 lender Popular Bank, kept on an ECB liquidity lifeline for months, into a "good" and a "bad" bank. The bank's "good" assets will be transferred to Bank of Cyprus, where depositors have been forced into accepting massive losses on uninsured deposits of more than €100 000.The process, known as a "bail-in" sees 37.5% of deposits exceeding €100 000 converted into equity in the bank, and an additional 22.5% used as a buffer which could also be converted into equity if circumstances warrant it.In a deal brokered early on Tuesday morning, it was also agreed that a small portion of the remaining 40% in uninsured deposits effectively frozen under the arrangement, 10%, be unblocked.The Cypriot government had unsuccessfully argued that the entire 40% be unblocked, a source familiar with the consultations said.

Casinos to kickstart Cypriot economy

Cyprus plans to lift a ban on casinos and offer firms tax exemptions on profits reinvested on the island under a package of reforms to kickstart its ailing economy, its president said on Monday.The country's eurozone partners agreed on a €10bn rescue package last Monday after weeks of tense negotiations that showed the debt crisis racking the 1-nation currency union is far from over.The tough terms of the deal look set to deepen the island's recession, shrink its banking sector and lead to thousands of job losses, while the capital controls imposed to prevent a run on Cypriot banks may test the ties that bind the single-currency bloc as a whole.President Nicos Anastasiades, who briefed ministers on the economy at an informal meeting on Monday, said the 12-point growth plan would be put to the cabinet for approval within the next 15 days.The programme includes measures to attract foreign investment to the island a hub for offshore finance as well as tax exemptions on business profits reinvested there, and the easing of payment terms and interest rates on loans.With about €68bn in its banks, Cyprus has a vastly outsized financial system that attracted deposits from abroad, especially Russia.In a bid to attract more tourists to the south of the island, it also hopes to lift a ban on casinos, which so far only operate legally in Turkish-controlled northern Cyprus.Speaking to reporters after a memorial service to commemorate the 1955 armed campaign against British rule, Anastasiades said the government would focus on "growth and incentives for growth".Cyprus's bailout is the first to impose steep losses on depositors with more than €100 000 in their accounts, and is expected to hit business activity especially hard.Asked to make a forecast on the likely depth of recession Cyprus faces, government spokesperson Christos Stylianides said: "It's not possible at this time to put numbers on the recession.""The government, having inherited an atomic bomb, tried to deactivate it and in doing so spared this country from total bankruptcy. It is now dealing with a post-earthquake period with the aim to kickstart the economy," he said.Stylianides said the cabinet discussed pending issues in the country's negotiations with its international lenders relating to the financial sector, fiscal adjustment measures, structural measures in the public sector and energy issues. He said Anastasiades would also chair a meeting of party leaders at 18:00 GMT on Monday to brief them on the matter.Under the bailout deal, major depositors in Cyprus's biggest lender, Bank of Cyprus, will lose around 60% of savings above €100 000.The country's banks reopened on Thursday after a nearly two-week hiatus aimed at averting a bank run, but the ripple effect of their closure is likely to strangle business on the island for a long time to come.There are also concerns that depositors in other struggling eurozone nations could take fright at the conditions imposed on Cyprus, although there have been no signs of bank runs.The capital controls imposed on the country raise questions about the long-term viability of the euro. There is also the risk that euros on the island may be valued differently to those in the rest of the bloc due to them being less liquid as a result of the controls. Anastasiades has defended the rescue deal as painful but essential, saying that without it, Cyprus had faced certain banking collapse and risked becoming the first country to be pushed out of the European single currency.

Cyprus probes causes of bankruptcy

Cyprus authorities on Tuesday launched a judicial probe into how the island was pushed to the verge of bankruptcy before having to agree a crippling eurozone bailout.Cypriot President Nicos Anastasiades called on the three-judge commission George Pikkis, Panayiotis Kallis and Yiannakis Constantinides to investigate himself and his family members as a "matter of priority" and with "extra vigour".This is seen as a move to counter unsubstantiated allegations that his family members used privileged information to get money out of the country before deposits were locked down.Accusations have also been made against other leading politicians and business figures that they took advantage of their position to protect their assets from a hit on bank deposits imposed by European Union-led creditors last month.Anastasiades said nobody was immune from the inquiry not even his extended family or the law firm in which he was a partner until recently."The current plight of the economy and our people is without a doubt the result of a synergy of factors both external and internal," Anastasiades said at the swearing-in ceremony."A series of acts or omissions from those authorised to manage the economy or the banking system led the country to the brink of bankruptcy, the dissolution of one its largest banks and the loss of billions from an impairment of deposits," he added.The massive losses suffered by savers in the island's two largest banks in the first eurozone rescue package to punish larger depositors has sparked huge resentment against anybody seen as having taken unfair advantage to shirk their share of the burden.Big depositors in largest lender Bank of Cyprus face losses of up to 60%, while those in second lender Laiki will have to wait years to see any of their money as the bank is wound up with the loss of thousands of jobs.The government is looking to free up the remaining 40% of BoC deposits of more than €100 000 that are not frozen as part of the bailout agreed with the "troika" of the EU, European Central Bank and International Monetary Fund.Allegations have swirled of big movements of cash out of both banks in the run-up to the bailout agreement as those in the know scrambled to protect their money.The panel, which has three months to report its findings, will also probe a list published by Greek media of Cypriot politicians who allegedly had loans forgiven during the meltdown.Cypriot banks have been operating under stringent capital controls since they reopened on Thursday, after a near two-week lockdown prompted by fears of a run on deposits.Central Bank of Cyprus governor Panicos Demetriades said in an interview with the Financial Times published on Tuesday that the controls would be eased in stages."I can't really tell you if it will be seven or 14 days before capital controls end," Demetriades said. "We have to lift them gradually."He played down fears there would be a run on accounts once the controls were eventually relaxed."Once people realise how well capitalised the banks are there is little reason why there will be deposit flight," he said.The draconian controls limit daily withdrawals to €300 and ban the taking of more than €1 000 in cash out of the country.At the island's main international airport in Larnaca, signs in Greek, English and Russia warn departing travellers of the restrictions.

Eurozone manufacturing slump deepens

The downturn in the 17-nation eurozone's manufacturing sector deepened sharply in March, with even powerhouse economy Germany dragged down, a key survey showed Tuesday.The Markit Eurozone Manufacturing Purchasing Managers Index fell to 46.8 points in March, up from an initial estimate of 46.6 but well short of the already weak 47.9 posted in February.The outcome left the closely followed indicator at a three-month low and below the 50-points boom-bust line since August 2011.The average PMI for the three months to March was 47.5 points, which Markit said was the best performance since the first quarter of 2012, but the latest figures showed a clear deterioration across the eurozone.Germany at 49 points slipped to a two-month low while "rates of decline gathered pace in all the other nations ... with the exception of France," Markit said in a statement.France stood at 44 points, a three-month high, while Italy was on 44.5, its lowest for seven months and Spain on 44.2, a five-month low.Markit warned that the data suggested worse could be to come, after recent figures had allowed analysts to hope that the economy might have finally touched bottom.Manufacturing "looks likely to have acted as a drag on the economy in the first quarter, with an acceleration in the rate of decline in March raising the risk that the downturn may also intensify in the second quarter," Markit chief economist Chris Williamson said in a statement."The surveys paint a very disappointing picture across the region, with all countries either seeing sharper rates of decline or in the cases of Germany and Ireland sliding back into contraction," Williamson said.He said the Cyprus bailout appeared not to have had any impact so far but "the concern is that the latest chapter in the (eurozone debt) crisis will have hit demand further in April."

Eurozone unemployment hits record high

Eurozone unemployment ran at a record 12% in February, with more than 19 million people on the dole as the debt crisis continued to sap the economy, official data showed Tuesday.The Eurostat data agency said unemployment in the 17-nation eurozone at 12% was unchanged from January when the figure was initially given as 11.9%.In the full 27-member EU, unemployment in February rose to 10.9% from 10.8%, with 26.34 million out of work, it said.Some 33 000 joined the jobless queues in the eurozone and 76 000 in the EU over the month of February, Eurostat said.Compared with a year earlier, the increase in registered unemployment was 1.78 million in the eurozone and 1.81 million in the EU.The highest unemployment rates in February were found in Spain with 26.3% and neighbour Portugal, on 17.5%. Greece was put at it 26.4% but this figure is for December, the latest available.The lowest rates were 4.8% in Austria and 5.4% in Germany, Europe's biggest economy.With youth unemployment a huge cause of concern, Eurostat said that the jobless rate for under-25s ran at 23.9% in the eurozone and 23.5% in the EU.Among the countries with the highest youth jobless levels, Spain was on 55.7%, followed by Portugal on 38.2% and Italy with 37.8%.Greece was the highest with 58.4% but this figure was for December, the last available.

UK manufacturing contracts in March

Britain's manufacturing sector shrank for a second consecutive month in March, a survey showed on Tuesday, leaving the country's more resilient services sector as the best hope of avoiding a new recession.The Markit/CIPS manufacturing purchasing managers' index came in at 48.3, only slightly above February's shock reading of 47.9, and a touch weaker than the consensus forecast.The output component of the survey fell in March at its fastest pace since October.The survey suggests manufacturing exerted an even bigger drag on growth between January and March than it did in the fourth quarter of 2012, when it accounted for a third of the economy's 0.3% contraction."The onus is now on the far larger service sector to prevent the UK from slipping into a triple-dip recession," said Rob Dobson, senior economist at Markit.Official GDP data for the first quarter won't be released until April 25 but the evidence so far suggests a strong risk that Britain will record a second consecutive quarter of contraction the technical definition of recession.A third recession in less than five years would be an embarrassment for the government which is sticking to tough austerity measures despite faltering growth at home and abroad.Despite the weakness in the economy, the Bank of England is not expected to take new stimulus measures when it meets on Wednesday and Thursday, although more action is widely expected before the end of the year.The Markit report blamed the poor performance of manufacturing in March on tough market conditions, subdued client confidence and ongoing bad weather.New orders from abroad contracted for the 15th month running in March. The survey blamed the fall on weak demand from Europe and strong competition in US and South Asian markets.In further bad news for UK policymakers, there were also signs that inflation pressures were picking up. Output prices rose at the fastest pace in three months while input prices picked up sharply, driven by the weakness of sterling and higher energy and food costs.Manufacturing accounts for around a fifth of British economic output. Surveys of the construction and service sectors for March are due to be released on Wednesday and Thursday respectively. There have been signs that the services sector is faring better than manufacturing. It grew at its fastest pace in five months in February, according to Markit and official data showed it notched up its best performance in January for five months.