France

President Nicolas Sarkozy monopolized French TV airways Sunday evening to announce measures aimed at improving the country's competitiveness, as well as his economic record, three months ahead of the spring presidential election, The Wall Street Journal reported. To help safeguard industrial jobs, Mr. Sarkozy said his government would shift part of social welfare costs from companies onto consumers by reducing payroll taxes and increasing the value-added tax—a levy similar to sales taxes in the U.S.—to 21.2% from 19.6%.

A French prosecutor has launched an investigation into the insolvency filing by the local unit of Swiss-based refiner Petroplus Holdings AG, Dow Jones reported. The prosecutor started an investigation into whether there was irregular money flow, of about EUR100 million, out of the company's bank accounts prior to the filing for insolvency, a spokeswoman said Thursday in a telephone interview. She said the French police's financial brigade is investigating and officers have already carried out searches at some Petroplus sites.

France and Spain have cleared major funding tests, steadying volatile markets and giving some much-needed cheer to the embattled eurozone, The Guardian reported. Paris and Madrid secured €13bn (£10.8bn) of funding between them in bond auctions at significantly lower interest rates than last year, despite a downgrade by the ratings agency Standard & Poor's last week that sparked fears of a run on the euro and the collapse of several banks. Stock markets rose on the news, with the FTSE 100 finishing the day up 38 points at 5741.15, while the German Dax rose 1%.

Germany and France on Monday pressed Greece and its bondholders to agree on a reduction of Athens's debt burden, warning that Greece's bailout loans from the euro zone and the International Monetary Fund are on hold until a deal is reached with private investors, The Wall Street Journal reported.

François Hollande, the Socialist opposition candidate and opinion-poll leader, said that if he is elected France's president in May, he will seek help from the only institution he feels can salvage the euro: the European Central Bank, The Wall Street Journal reported. Speaking in an interview at his campaign's headquarters in central Paris, Mr. Hollande, 57 years old, said only the ECB has enough credibility and financial firepower to restore investor confidence and unravel the debt crisis that has been roiling the euro zone for two years.

David Cameron was at the centre of a furious row with Nicolas Sarkozy on Thursday after Paris tried to isolate the prime minister at the EU summit by suggesting that Britain is seeking to exempt the City of London from all European regulations, The Guardian reported. In a move dismissed by officials in Brussels as an attempt to set Britain up as the "fall guy", senior French figures said Cameron wanted an "opt out" from EU financial services regulation.

Dexia SA, the French-Belgian lender that’s being broken up, said it won’t have to comply with capital rules set by the European Banking Authority because it’s planning to “radically shrink in size,” Bloomberg reported. The EBA, Europe’s banking regulator, said today that Dexia would need to raise 6.3 billion euros ($8.4 billion) by mid-2012 to reach a 9 percent target for core Tier 1 capital after markdowns of sovereign-debt holdings, a figure the company said shrank to 4.2 billion euros after the Belgian government’s takeover of Dexia Bank Belgium SA on Oct. 20.

A day ahead of a crucial gathering of European Union leaders in Brussels, French President Nicolas Sarkozy and German Chancellor Angela Merkel have outlined their plan for solving the euro crisis through deeper fiscal integration, The Wall Street Journal Euro Crisis blog reported. In an open letter to European Council President Herman Van Rompuy, Mr. Sarkozy and Ms. Merkel issued an ultimatum to the 27 EU governments, saying they must decide whether they will accept greater central control over their national budgets.

Seeking to restore confidence in the euro, the leaders of France and Germany jointly called on Monday for changes to the European Union treaty so that countries using the euro would face automatic penalties if budget deficits ran too high, the Los Angeles Times reported. But not everyone on Wall Street was reassured that Europe would get control of its 2-year-old debt crisis. Stock prices rose and borrowing costs for European governments dropped sharply in response to the changes proposed by French President Nikolas Sarkozy and German Chancellor Angela Merkel.

French Finance Minister François Baroin yesterday rebuffed concerns over the country's rising financing costs after Moody's Investors Service Inc. warned rising bond yields amplify France's fiscal challenges, the Wall Street Journal reported yesterday. As the second-largest economy in the euro zone, France is being pushed to get its public finances in order and avoid getting caught up in the debt crisis of the periphery.