Headlines

Suggestions of a split in German policy over the way ahead in tackling the crisis in the eurozone, between the government in Berlin and the Bundesbank in Frankfurt, are exaggerated, according to officials in the German capital, the Financial Times reported. But battle lines are opening between the leading political parties in the country over the need for the largest economy in the eurozone to play a more generous role in supporting its debt-laden partners, as the main contenders seek to break a stalemate in the polls 13 months ahead of next year’s general election.

More corporate storm clouds gathered over Spain, as two major European companies on Wednesday joined those that have said they are taking steps to reduce exposure to the recession-hit country, The Wall Street Journal reported. Dutch financial services company ING Groep NV said it has taken aggressive steps to reduce its exposure to Spain, as it seeks to tackle a funding imbalance that could pose a serious threat should Spain eventually exit the euro zone.

Iceland was brought to the brink of bankruptcy when its biggest banks failed four years ago. Now, the site of the world’s most spectacular financial collapse is becoming a pioneer in banking reform, Bloomberg Businessweek reported. “We’ve been burned by this and that’s why we have to look very closely at what we need to do to prevent it happening again,” Economy MinisterSteingrimur J. Sigfusson said in an interview.

Bank of England Governor Mervyn King said the bank will "do all it can" to pull the economy out of recession, signaling further bond purchases using freshly created money, but ruling out a near-term cut in the key interest rate, The Wall Street Journal reported. Presenting the BOE's quarterly inflation report, in which the bank lowered its growth and inflation forecasts, Mr. King said the BOE will do its utmost to support the economy, and indicated that support will be channeled through a program known as quantitative easing that already totals 375 billion pounds ($585.79 billion).

The charge for bad loans at National Irish Bank will remain high for the remainder of the year before falling, the head of the Danish bank’s Republic of Ireland operations said, as the bank reported a pretax loss of €401 million for the first half of the year, the Irish Times reported. Loan impairments fell 7 per cent to €391 million for the first half, but NIB made a similar loss to the deficit posted for the first six months of 2011 as costs increased by 54 per cent to cover the closure of the bank’s 27 branches and laying off a further 100 staff.

Brazilian electricity utility Equatorial Energia's potential capital injection in debt-laden rival Celpa may come up short, a source told Reuters on Wednesday. Equatorial only has 500 million reais ($248 million) available to invest in Celpa, a power distribution company that serves the northern state of Pará, said the source, who declined to be quoted because of the sensitivity of the issue. Celpa, a unit of cash-strapped power holding company Rede Energia, filed for bankruptcy protection in February. Equatorial declined to comment.

A chill is wafting over France’s business class as Mr. Hollande, the country’s first Socialist president since François Mitterrand in the 1980s, presses a manifesto of patriotism to “pay extra tax to get the country back on its feet again.” The 75 percent tax proposal, which Parliament plans to take up in September, is ostensibly aimed at bolstering French finances as Europe’s long-running debt crisis intensifies, the International Herald Tribune reported.

Last week’s signal from Spain’s prime minister that he may be prepared to request assistance from the eurozone’s €440bn rescue fund to drive down his country’s borrowing costs has shifted the debate back to where it was more than a month ago: what strings will be attached to such aid?

Greece may have to place thousands of public workers in a special labor pool at reduced pay to help achieve as much as €4 billion ($4.95 billion) in spending cuts demanded by international creditors, a politically risky move for the fragile coalition government, The Wall Street Journal reported.

Britain's economy is stuck in its bid to beat recession, with data on Tuesday showing retail sales growth slowed in July and manufacturing tumbling in June - presaging another cut to the central bank's growth forecast, Reuters reported. Bank of England governor Mervyn King looks set to give one of his notoriously gloomy outlooks for Britain, which is in recession as the euro zone debt crisis, government spending cuts, bad weather and one-off factors are hurting the economy.