Headlines

Europe will have to “work very hard” to maintain the most generous welfare system in the world and remain globally competitive, said Angela Merkel, the German chancellor, in an interview with the Financial Times. The key to Europe’s ability to survive the challenge of globalisation is to spend more on research and education and overhaul its tax and labour markets to restore competitiveness, she said.

The Portuguese government is seeking to cut its corporate tax rate for new businesses to one of the lowest in Europe as part of a plan to attract investment and revitalize ailing industries, the minister of economy said, The Wall Street Journal reported. The government is in talks with the European Commission's competition agency in Brussels to get approval to cut the tax on corporate income for new investors to 10% from the current 25%, the minister, Alvaro Santos Pereira, said in an interview.

Spanish house prices plummeted in the third quarter, a sign that the five-year-long property bust at the core of the country's economic crisis will continue to pose problems for the government, banks and households, The Wall Street Journal reported. In an indication that the market isn't yet bottoming out, Spanish housing prices are now falling at the fastest pace on record, after double-digit falls over the past year.

China's new leaders sent their strongest signal yet that their top economic priority is to remake the economy so it relies more on domestic demand and less on exports and investment in capital-intensive state-owned companies, even if that reduces short-term growth, The Wall Street Journal reported.

Economic growth is slowing to a worrying degree across the euro zone and not only in the periphery, European Central Bank Governing Council member Erkki Liikanen said in an interview published on Sunday in Germany's Welt am Sonntag newspaper. "There are a number of indications that the economy is getting weaker and not only in the indebted southern European countries, but across the euro zone," Liikanen was quoted as saying in an excerpt released on Saturday. "Economic developments are causing us concern," he said, adding that no-one is immune to the effects of the debt crisis.

Property developer Paddy McKillen, who is engaged in a high-profile battle for control of three luxury London hotels, has cut €90 million off his debt held with the Irish Bank Resolution Corporation in recent months and is poised to reduce it by another €200 million, the Irish Times reported. Last night, Mr McKillen’s spokeswoman said the debt owed by companies controlled by him now stands at €550 million, some €50 million below where it stood during his High Court battle with the billionaire Barclay brothers in the middle of the year.

With the pressure off after finance ministers clinched a significant agreement on a single banking supervisor, European Union leaders differed widely at a summit on Thursday over the next steps for their troubled currency union. The 27 leaders argued along well-worn lines over banking resolution, deficit reduction and a common euro zone budget, making little headway.

As Prime Minister Mario Monti prepares to exit the stage, he has burnished Italy’s image — and his own — abroad, but he is less beloved at home, the International Herald Tribune reported. Italians are irate about higher taxes, while critics say that Mr. Monti failed to carry out the basic structural changes he said were needed, leaving a legacy more of austerity than growth. While Mr.

Bank lending to Britain's property market is at its tightest since the collapse of U.S. investment bank Lehman Brothers, a report showed on Friday, Reuters reported. Though lending has picked up since Lehman collapsed in 2008, the protracted euro zone debt crisis and shaky domestic economic data has hit confidence among banks, making them more wary of offering new loans to property companies.

Euro-zone finance ministers on Thursday backed the release of long-delayed aid payments to Greece, saying the first batch of money will be sent to Athens in the coming days, The Wall Street Journal reported. Euro-zone leaders and the International Monetary Fund agreed last month to provide the next installment of about €34 billion ($44.5 billion) in loans if Greece met certain economic conditions and retired a sizable portion of its private-sector debt by buying back its bonds at deep discounts to face value.