Headlines

As France's new president, François Hollande, tackles the many challenges posed by the deepening euro-zone crisis, from Spain's troubled banking system to Greece's potential exit from the currency union, here's the latest: Many municipalities can't fund their investment projects, The Wall Street Journal reported. This is no small matter because local governments in Europe carry out the majority of public infrastructure investments, from roads to sewage to hospitals, including more than 70% of those in France.

German chancellor Angela Merkel said Europe was ready to act to ensure stability in the euro zone as Spain's credit rating was cut by three notches today amid expectations it may soon seek EU help for banks beset by bad debts, the Irish Times reported. Spanish prime minister Mariano Rajoy said he would wait for the results of independent audits of the banking system before talking with Europe about how to recapitalise troubled lenders. An International Monetary Fund report due out next Monday is expected to show Spanish banks need at least €40 billion, financial sector sources said.

The Netherlands has recently found itself in the unusual position of being a deficit scoldee rather than deficit scolder: The government’s forecasting agency said that worse-than-expected growth boosted the deficit last year and will do so this year and next without more cuts. The ensuing austerity talks prompted the collapse of the Dutch government, but the caretaker government managed to secure a deal on a package of spending cuts and tax hikes that will bring the deficit under 3% of gross domestic product next year, as required by EU rules. So, good news, right? Actually, no.

Air Canada and Aveos have reached an agreement that will help facilitate a sale of some assets of the bankrupt aircraft maintenance firm, and the airline promised to offer some service contracts to a buyer of the Aveos assets, Reuters reported. Aveos Fleet Performance Inc, once the airline's maintenance division, halted operations in March and laid off roughly 2,600 workers, most of whom were employed at maintenance centers in Montreal, Winnipeg and Vancouver. The monitor's report said Air Canada has agreed to waive any rent on facilities leased by Aveos until Sept. 30.

Vitro SAB’s bid to enforce its Mexican bankruptcy plan in the U.S. is set to be decided by a judge next week after the glassmaker clashed with bondholders in court over the plan, Bloomberg reported. U.S. Bankruptcy Judge Harlin DeWayne Hale in Dallas said in court today that he plans to rule on Vitro’s enforcement motion next week, probably by June 13. Vitro, which has won approval for the bankruptcy plan in Mexico, is seeking an order from Hale enforcing the restructuring and stopping litigation by bondholders who have been fighting the plan in the U.S.

France, Belgium and Luxembourg, which own Dexia, the lender that is being broken up, have agreed to boost state guarantees to the ailing bank by €10bn to €55bn, it was disclosed on Wednesday, the Financial Times reported. The decision followed Monday’s meeting between Pierre Moscovici, France’s new finance minister, and his Belgian counterpart, Steven Vanackere, in Brussels. The European commission “temporarily approved” the €10bn increase in guarantees “in order to preserve financial stability”.

Lawyers who advise companies on insolvency proceedings, lenders for emergency financing for companies seeking court protection while they are restructuring and pension matters are closely watching the outcome of Supreme Court of Canada’s hearing today of an appeal in what has become known as the Indalex case, The Gazette Moves Deals And Takes blog reported.

The European Commission will propose far-reaching powers for regulators to deal with failing banks today, a step towards the banking union the European Central Bank has demanded to secure the euro's future, the Irish Times reported. The proposal will suggest closer coordination between countries and powers to force losses on the bondholders of failing banks to prevent a repeat of the chaos following the 2008 collapse of US investment bank Lehman Brothers.

As Europe careens deeper into political and economic crisis, the immediate survival of the euro turns more than ever on a single question: Will Germany act? The Wall Street Journal reported. For nearly three years, Chancellor Angela Merkel has resisted pressure from European neighbors to provide a stronger financial backstop for the euro zone. Germany, the only euro-zone nation with the economic heft to do so, has done the minimum necessary to keep vulnerable countries afloat—and demanded crushing public-spending cuts in return.

French President Francois Hollande's plan to lower the minimum retirement age to 60 from 62 is fully financed through higher payroll charges, the government said. The cost in the first full year is €1.1 billion, peaking at €3 billion in 2017, the government's spokeswoman, Najat Vallaud-Belkacem, said after the weekly Cabinet meeting, the Irish Times reported. The change, which takes effect on November 1st and involves those who started work as teenagers, will add no more than 110,000 people a year to the retirement rolls, the government said in a statement.