European Business News (EBN), 97-01-15

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated January 15 1400 CET

CONTENTS

[01] Paris urges Daewoo to bid again

[02] German CPI slows in 1996

[03] U.K. unemployment continues fall

[04] Yeltsin accused of causing crisis

[01] Paris urges Daewoo to bid again

The envoy, Jean-Claude Paye, gave the assurance before leaving Seoul after meeting President Kim Young-sam and other government officials. Anti-French sentiment had spread since Paris dropped plans in December to sell Thomson SA to Lagardere Groupe after a state privatisation committee refused to endorse Lagardere's plan to sell Thomson's consumer electronics arm to South Korea's Daewoo Electronics.

The decision raised outcries of French racism in South Korea, leading to calls for retaliation from South Korean politicians. The government was urged to suspend investments in France. But in a face-saving turnabout, France now guarantees 'openness and non-discrimination to all bidders, including Daewoo,' when it relaunches the privatisation of Thomson, claimed Paye.

`We hope that Daewoo will compete again and will be picked as a buyer,' Paye said through a translator.

Paye called the committee's decision 'regrettable,' but added that, by law, the French government is bound to honour that decision. Paris plans to relaunch the privatisation when the European Union's antitrust body completes investigations into the case.

[02] German CPI slows in 1996

Germany's consumer price index climbed an average of 1.5% in 1996. In 1995, consumer prices in Germany were up an average of 1.8%. Preliminary CPI figures for western Germany reproduced the national figure, rising an unrevised 0.3% on the month and 1.4% on the year.

The higher rate of increase in eastern Germany, which rose an average of 2.2% over the year, was due largely to a big rise in rents in August 1995, which boosted the year-on-year increases in January-July, the statistics office said. Notable price increases in eastern Germany in December from a month earlier were a 0.5% rise in goods for education and entertainment, driven by a 4.1% rise in prices for flowers and potted plants and a 2.4% increase in child-care prices.

Western Germany's most conspicuous price increases in December were seasonal food items, up 1.9%, and fresh vegetables, up 11.0%. Energy, excluding fuel, rose 0.4% while heating oil jumped 1.7%. The statistics office noted that heating oil prices in December were up 23.7% from a year earlier.

Price declines were registered for fresh fruits, down 3.9% in eastern Germany and down 1.6% in western Germany; and for local and long-distance telephone calls, down 4.7% in eastern Germany and 4.5% in western Germany.

[03] U.K. unemployment continues fall

The government said it is hard to estimate how much of the fall last month was due to the new Jobseeker's allowance but said the quantifiable effect was no more than 12,000. It therefore stuck to its estimate of the monthly trend rate of decline of between 15,000 and 20,000.

Nevertheless, the Conservative government was anxious to highlight any good economic news in an attempt to improve its chances of winning a fifth consecutive election, due by May.

'Unemployment is falling right across the country and the smile on Britain's face can broaden,' Prime Minister John Major said. 'In the last four years, Britain has created more jobs than all the other major countries of Europe put together.

The fall, reported by the Office for National Statistics, was significantly larger than the 30,000 expected by economists, and increases the likelihood of a rise in interest rates from the current 6%. Chancellor the Exchequer Kenneth Clarke meets Eddie George, governor of the Bank of England later today to discuss monetary policy.

[04] Yeltsin accused of causing crisis

'We are seeing a systemic crisis in the state, which is manifested in a crisis of authority,' Gennady Seleznyov told the State Duma in a short address opening the new session following the New Year recess. 'It is mainly because the functioning of the institution of the presidency has got out of line,' he said, stepping up attacks on Yeltsin in the opposition- dominated parliament.

'Constitutional power has been concentrated in it and the president finds himself in a position of being unable to exercise it...We deputies cannot ignore the public's worry.'

Seleznyov, however, made no comment on a motion put forward yesterday by fellow communist Viktor Ilyukhin that the Duma should look into forcing Yeltsin to step down on health grounds.

The 65-year-old president is in hospital with pneumonia. Due to heart trouble and a coronary bypass operation, he has spent just a few days at work since being reelected on July 3. But despite his attack, Seleznyov wished Yeltsin a speedy recovery.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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