CNBC Business

Radar

A look at what’s happening across

A look at what’s happening across Europe

France

The direction of President Nicolas Sarkozy’s domestic strategy became clearer after he was presented with a radical economic reform plan prepared by a team of international economists, aimed at speeding deregulation and holding back the growth of the state. The plan, which would see most public spending frozen for five years and which was welcomed by Sarkozy, could cut unemployment by 3% to 5% and add 1% a year to GDP. Unions and other parties expressed opposition. France is expecting GDP growth of 2% this year, above the Eurozone average but below what Sarkozy promised during his election campaign last year.

Echoes of the 1995 Barings crisis, after an apparent rogue trader racked up losses in excess of €5bn on trades in equity derivatives, at France’s second largest bank Société Générale, prompting an emergency cash-call on shareholders. Like Nick Leeson, Jérôme Kerviel originated from the middle office, giving him an understanding of how to evade detection, creating a complex web of transactions that made unravelling his trades difficult. There were calls for improved regulation of banks’ internal security and fraud detection systems.

Italy

The 20-month-old centre-left governing coalition of Romano Prodi fell after it failed to secure a vote of confidence in the senate, having earlier won the support of the lower house. There are now fears Italy faces a period of instability, with left/right divisions hindering legislation. Silvio Berlusconi called for early elections, confident that he will return as prime minister.

Serbia

Hardline nationalist Tomislav Nikolic pushed ahead of his moderate rival Boris Tadic in the first round of presidential elections, which observers say are a referendum on Serbia’s relations with the West. Nikolic favours closer ties with Russia, while Tadic wants the signing of a Stabilisation and Association agreement with the EU, as a first step towards membership. The next round on 3 February will be crucial, its outcome dependent on how nationalist PM Vojislav Kostunica advises his supporters to vote. The former Serbian province of Kosovo is expected to declare its independence in February or March, with the EU divided over whether to recognise it.

Georgia

President Mikheil Saakashvili was inaugurated for a second term after elections in early January gave him a first round victory over Levan Gachechiladze. The event was marred by opposition protests that the contest was not free and fair, though Western observers have refuted this, and by Russia’s continued attempts to destabilise Georgia. Saakashvili has said his government will continue with the radical free market reforms that have boosted growth and foreign investment, although the benefits of these have yet to reach much of the population. Parliamentary elections are due later this year, which may weaken his domination of the political scene.