France's US-owned couture house Christian Lacroix SNC has declared insolvency after falling foul of the global crisis, the company said Thursday. Arguably one of the most exuberant couturiers in Paris, Christian Lacroix SNC said in a statement that the company owned by Falic had declared insolvency before a Paris court due to "the sharp downturn of the luxury market," Agence France-Presse reported.

Britain yesterday became the first big economy to be warned in the financial crisis that it might lose its top-notch credit rating, in a move that raised fears of possible downgrades for other large industrialised nations, the Financial Times reported. S&P based its warning on a forecast that net government debt risked approaching 100 per cent of national income and staying at that level. "A government debt burden of that level, if sustained, would in Standard & Poor's view be incompatible with a AAA rating," the agency said.

The European Commission proposed a draft law on Wednesday that would make it mandatory for hedge funds to register and disclose information on leverage to supervisors if they want to operate in the EU, a Commission official said. The draft law has been subject to intense horse-trading ahead of its publication as Britain, the European Union's hedge fund centre, fears overly draconian rules, while France is a keen backer of tighter regulation. The global hedge fund sector has assets totalling $1.4 trillion, relatively small compared to the wider financial market.

In Spain, when the previous finance minister said there was no room for tax cuts or spending to buoy the economy, he was sacked by the prime minister. "There is room--there can't not be," new finance minister Elena Salgado said last week, in the face of a Europe-high 17% unemployment rate. But in the U.K., France and Italy, gaping budget deficits have largely ended the chance of major new tax cuts or spending . Germany says that despite expecting a 6% dive in its economy this year, it is more worried about stoking inflation in 2010.

Group of 20 leaders need to give regulators oversight of unregulated markets and products, such as credit-default swaps and collateralized debt obligations, to prevent future systemic crises, according to Jean-Pierre Jouyet, head of the French market watchdog AMF and head of an international task force on unregulated markets. "The crisis doesn't arise from the markets but from the lack of organization of some of them," Mr. Jouyet said in an interview Tuesday. "We need to redraw the perimeter of regulation." Financial regulators are looking to the G-20 for guidelines to act, with U.S.

French President Nicolas Sarkozy yesterday threatened to wreck the London summit if France’s demands for tougher financial regulation are not met, the Times Online reported. France will not accept a G20 that produces a “false success with language that sounds good but contains no commitments”, his advisers said.

Responding to a popular outcry, the French government issued a decree Monday banning stock options and limiting bonuses for bankers or auto executives who lay off workers after accepting government aid to weather the economic crisis, The Washington Post reported. Prime Minister François Fillon, announcing the measures, said France was the first European country to lay down such legal restrictions on executive pay. Although not retroactive, they will run through 2010, he said in a statement, and they could be extended.

AIG executives in Europe are adamant they should not have to return their controversial bonuses and some feel that pressure on them to do so may amount to blackmail, according to a company employee and internal emails. AIG Financial Products unit head Gerald Pasciucco told a staff meeting for UK and Paris employees on Monday that he thought a demand for repayments was to a certain extent "blackmail," said a London-based recipient of one of the retention bonuses from the bailed-out insurer.

A wave of indignation swept over France when it became known Tuesday that the head of a large auto parts company who was edged out because of poor results walked away with a severance package worth more than $4 million, The Washington Post reported.

Carmaker Renault on Friday announced a production boost at one of its French plants but distanced itself from a minister's comments that the move amounted to transfer of foreign auto jobs back to home soil, Reuters reported. As the world's leading carmakers battle to survive the worst sales crisis for decades in an industry now flirting with protectionism, French Industry Minister Luc Chatel characterised the temporary output increase as a first sign that aid measures for the country's auto sector were working.