Headlines

The euro zone's debt crisis will slam the economies of Central and Eastern Europe next year because of their close trade and financial links, said a development bank, The Wall Street Journal reported. In a report on the economic prospects for the 29 countries in which it invests, the European Bank for Reconstruction and Development also said Tuesday that growth among countries in southeastern Europe with close ties to Greece will be slower than previously expected as a result of that country's debt problems and the effect on its banks.

The shipbuilding division of troubled state conglomerate Dubai World said Tuesday it is determined to hammer out a $2.2 billion debt restructuring deal, despite a legal challenge from one of its creditors, CanadianBusiness.com reported on an Associated Press story. The unit, known as DryDocks World, gave no indication when it expected the restructuring to be completed. It has been in talks with lenders for months to retool the terms of the loans, which were excluded from its parent company's own high-profile debt talks.

Germany, Japan and China must take greater responsibility for getting the world economy out of the doldrums by boosting demand for imports to help highly indebted countries get back on track, Bank of England Governor Mervyn King said on Tuesday, Reuters reported. The lack of rebalancing between deficit and surplus nations means countries such as Britain have had to support their economies with ultra-loose monetary policy, creating a dilemma between short-term stimulus and a long-term need to cut back spending, King said.

Households are sinking under a sea of debt and threaten to take the country’s fragile economy down with them. Policymakers are rightfully alarmed, but their scrambling appears to be pushing families further into the abyss rather than keeping them afloat, The Korea Times reported in a commentary. Under enormous pressure to navigate the country out of this mess, officials at the Financial Services Commission (FSC) and Bank of Korea (BOK) are trying their hardest to put on brave faces and claim the current levels of indebtedness are broadly manageable.

European competition authorities on Monday gave temporary approval to Belgium's nationalisation of Dexia's Belgian unit under a rescue plan of the Franco-Belgian banking group, Agence France-Presse reported. The European Commission gave the Belgian government six months to provide a new restructuring plan for Dexia Bank Belgium, saying it was too soon to determine if the 4.0-billion-euro acquisition complies with EU state aid rules. "The Commission acknowledges that the measure is necessary to preserve financial stability," the European Union's executive arm said in a statement.

Germany said on Monday that a summit of EU leaders next Sunday would not produce a miracle cure for the euro zone's sovereign debt crisis, a warning that pushed down markets after a rise in the past week on expectations of a breakthrough, Reuters reported. German Finance Minister Wolfgang Schaeuble told a conference in Duesseldorf that European governments would adopt a five-point plan at the Brussels meeting to address the turmoil that has clouded the outlook for the global economy.

Portugal's government unveiled harsh new austerity measures to control its budget deficit over the next two years, as it seeks to convince European peers that it has the political will to keep the promises it made when it was bailed out and avoid Greece's fate, The Wall Street Journal reported. The new budget's tax-increase and spending-cut elements would reduce the government deficit by six percentage points of gross domestic product from what it would have been under current policies, Finance Minister Vitor Gaspar said in an interview.

Confidence among small U.K. businesses dropped sharply in the third quarter, a survey showed Monday, the latest sign of a slowdown in private-sector activity that is building pressure on the government to offer more support for companies, The Wall Street Journal reported. The Federation of Small Businesses said its quarterly confidence index fell to a reading of minus 9.3 for the period from July to September, from 0.3 in the previous three months. The index measures how small businesses see their prospects for the coming three months.

Mortgage broking group Refund Home Loans has been placed in administration, but several buyers are considering acquiring the business which has more than 350 franchisees and a substantial stake in the growing alternative home loan market, SmartCompany.com.au reported. The announcement comes just 18 months after the Australian Competition and Consumer Commission slammed the company and Ormond, after he admitted making false and misleading statements to franchisees about an agreement with the ACCC itself.

Former Anglo Irish Bank chief executive David Drumm has lost a bid to withhold $500,000 (€364,000) from his creditors in his US bankruptcy case by failing in a claim that his seaside property in Cape Cod was his main home, the Irish Times reported. A Boston court ruled yesterday that Mr Drumm was not entitled to claim a “homestead exemption” for $500,000 on his multimillion-dollar house at Stage Neck Road in Chatham, Massachusetts.