1 THE WORD FROM… BERLIN

The day of the locusts is over. For years, German politicians of every political persuasion and the local media branded anyone bold enough to whip out their chequebook to invest money in German assets a locust. The image, conjured up by Franz Müntefering, a leading Social Democrat, described private equity investors as voracious swarm that descended on German companies, stripped them of all their worth, and then moved on to the next field of opportunity.

Change has come in the form of a new government coalition and the realisation that in these credit-crunched times companies in Europe’s largest economy are hungry for cash and need an alternative to the banks that are now reluctant to lend. Suddenly, private equity is no longer a dreaded pest.

“What has often been labelled a locust has frequently turned out to be a savior in times of need,” says Leo Dautzenberg, a Christian Democrat MP and member of the parliamentary finance committee.

The major challenge for private equity in Germany is that there is no federal law regulating the industry. When private equity firms establish funds and then seek investor financing they need to show that they have a solid legal foundation and are subject to some kind of oversight.

In Germany, private equity has been treated like an unsavory relative, unwelcome at the family table. The industry is regulated by a complex array of directives from the Federal Ministry of Finance, which makes German private equity funds unattractive for large foreign pension funds. As a consequence, many private equity firms have established their funds outside Germany.

Angela Merkel’s re-election in September with a new centre-right coalition is changing the game. The coalition is beginning work on a private equity law that aims to put the country’s federal financial market regulator in charge of supervising the industry. The coalition is also considering tax breaks for venture capital and private equity firms “if we can justify this in light of the tense budget situation,” says one coalition official.

Dörte Höppner, managing director of the German Private Equity and Venture Capital Association, says the industry isn’t looking for handouts, but that it needs a legal basis to compete for capital with other European countries: “Germany needs capital; private equity has it. I am very hopeful that the new government will enact legislation that improves the international competitiveness of private equity in Germany.”

William Boston

2 LONDON

Despite its economic troubles, London has officially toppled New York as the world’s top financial centre, according to the Geneva-based World Economic Forum.

The WEF’s 2009 Financial Development Index ranks 55 countries on the sophistication and stability of their financial systems and markets, using more than 120 criteria, including: their institutional and business environments; the size of their equity and bond markets; their technology infrastructure and human capital; and the ease of obtaining consumer and commercial loans.

The UK’s rise from number two to the top spot, which the WEF ascribed to the relative strength of London’s financial markets, particularly in foreign exchange and derivatives, and its world-beating insurance coverage, was the biggest surprise in this year’s study. The US fell from first place in 2008 to third this year, dragged down by its weakened banking sector. Meanwhile, the second-ranked country, Australia, jumped nine rungs in the rankings, thanks to its greater financial stability, low sovereign debt, and ready access to consumer credit.

3 PARIS

France’s Constitutional Council has finally given the green light to the government’s plans to cut off internet access to repeat illegal download offenders, widely viewed by both supporters and opponents as the most draconian legislation yet devised in the battle against copyright piracy.

Judges will hand out sentences — including loss of service, fines, or even prison — while Hadopi (an acronym for the government agency created by the eponymous law) will be in charge of orchestrating the ‘three strikes’ system, in which alleged pirates will first be sent a warning email and then a letter in the post before having their internet access suspended. Even those who are not themselves engaged in such piracy can have their internet cut off if someone else in the household is doing the downloading, or they have not sufficiently secured their connection.

The first warning emails are expected to be sent “at the start of 2010”, according to the government, with the first blocks on internet access within six months. Some 50,000 connections could be cut in the first year of the regime, according to government documents. Internet-freedom advocates, however, refused to accept they had lost the battle and vowed to continue the fight by other means.

4 BRUSSELS

After eight years, two texts, and three failed referendums — not to mention the trouble it has caused in Ireland, the UK and the Czech Republic — the EU’s Lisbon Treaty will finally come into force on 1 December.

As, thanks to exemptions, EU courts will not be able to impose their interpretations of the charter in the Czech Republic, Poland and the UK, some observers are wondering what the point of it all is. Indeed, with the increase in budget deficits and public debts since the process began, even more of it seems irrelevant.

However, a big issue looms large ahead of this month’s Copenhagen summit on climate change, namely how much the EU should offer to poorer countries to help them tackle climate change? Even before US President Obama said the US has given up hope of reaching a global climate change treaty at Copenhagen and is working towards a deal late next year, African nations walked out of the latest round of UN talks in Barcelona and are threatening to do so again unless richer nations commit to cutting carbon. Meanwhile, Germany is leading a group of countries reluctant to put figures on the table until the position of the US or China is clearer. Britain, Denmark, Sweden and the European Commission say Europe needs to maintain a “moral leadership” on climate change.

5 WARSAW

Deutsche Börse is favourite to bag the state-owned Warsaw Stock Exchange, the last exchange in Central Europe up for grabs. Seen as a gateway to the Ukraine and the Balkans, Warsaw has attracted more listings this year than any other European exchange. The total market cap of companies on the WSE has more than doubled since 2004 to €165bn.

6 OSLO

Norway has raised its main interest rate by 25 basis points to 1.5%, the first country in Europe to lift rates since the height of the global financial crisis. Svein Gjedrem, Norges Bank governor, said in a statement: “The global economy is in a deep downturn but there are signs of renewed growth. Activity in the Norwegian economy has picked up more rapidly than expected.” The Norwegian government used its oil wealth to shield the country from the worst of the global downturn and is rebounding more strongly than the rest of Europe after its first recession in two decades.

7 BERN

Switzerland has announced plans to crack down on “suicide tourism”, signalling it might close the Dignitas clinic that has helped hundreds of terminally ill people to take their lives. The plans — two draft Bills that will be offered for public debate — are likely to trigger a rush of patients from across Europe, since Switzerland has become the main destination for those seeking assisted suicide.

The tightening of the rules would require patients to present two medical opinions declaring their disease incurable, that death is expected within months and that they have made their decision of sound mind and fully aware of their options. Already bristling over manoeuvres to end its banking industry’s culture of secrecy, the Swiss government is furious that its healthy image is being tarnished by suicide tourists.

Meanwhile France Telecom is to set aside up to €1bn and has suspended staff reassignments until the end of the year in a bid to help ease tension among its French workforce following the suicides of 25 of its employees since the beginning of last year. The money is to allow staff aged 57 or older, who are considered most susceptible to stress induced by reorganisation, to work part-time while maintaining their pay. The move suggests the company is finally tackling its management problems, which have triggered a political furore in France. In September, opposition socialists and far-left parties demanded that France Telecom chief executive Didier Lombard quit immediately and take “responsibility” for the management practices that unions say have pushed some vulnerable staffto the edge.