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				June 14th 2001
				From The Economist print edition  
				
				
				Contractions
				
				
				
				
				
				
				
				
				
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				Yet another recession seems to be hitting Japan. GDP contracted by 0.8% in 
the first quarter compared with the previous quarter at an annual rate. The 
current-account surplus shrank in April by 24% compared with a year earlier, 
as the slowdown of the world economy affected Japan,s exports. The yen slid 
more against both the dollar and euro.
				
				Britain's European partners imposed on it a European directive on workers' 
rights that requires companies to consult staff about job cuts and other 
restructuring. Employers moaned. The pound fell against the euro as entry to 
the single currency looked increasingly likely, but not at the pound's 
current high rate.
				
				See article: EU workers' rights 
				
				Inflation in Europe gave cause for concern. British and French inflation, 
both at 1.8% in April, increased to 2.1% and 2.3% respectively in May. Spain,
s inflation hit 4.2% from 4.0%. Luxembourg, Greece and Norway all recorded 
faster price rises as well.
				
				Zimbabwe,s government raised the price of fuel by nearly 70%, deepening an 
economic crisis. The country,s main trade union said that over three-quarters 
of Zimbabweans already live below the poverty line. 
				
				After President Thabo Mbeki intervened, South Africa,s government struck a 
deal with the mining industry over new legislation designed to increase 
involvement by black entrepreneurs.
				
				Calling charges
				
				
				
				
				
				
				
				
				
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				Nokia, the world,s biggest maker of mobile phones, saw its share price plunge 
after revealing that sales growth would be lower than forecast and that 
second-quarter profits would suffer. Nokia insists, however, that sales will 
improve as new technology is introduced. 
				
				See article: The mobile-phone industry at a turning point 
				
				Standard & Poor,s downgraded the debt of Lucent Technologies, a struggling 
telecoms-equipment maker, to junk status. Higher borrowing costs will not 
help the firm. Nor will contracting demand for telecoms equipment.
				
				The board of Eircom, Ireland,s former monopoly telecoms operator, is to 
recommend a euro2.9 billion ($2.5 billion) bid from Valentia, a consortium 
headed by Tony O,Reilly, an Irish media tycoon. 
				
				The chief executive of Sonera, a partly privatised Finnish telecoms operator, 
resigned, hinting that government interference was to blame. The firm, 
heavily indebted after investing in third-generation mobile licences, is now 
leaderless while rumours abound of a takeover by Sweden,s Telia.
				
				British Telecom and Deutsche Telekom agreed to share the building of 
third-generation mobile networks in Britain and Germany. The companies could 
save up to euro4 billion ($3.4 billion) between them. BT raised o2.3 billion 
($3.2 billion) from the sale of property in Britain.
				
				Axa questions
				
				Claude B,b,ar, chairman of the supervisory board of Axa, a huge French 
insurance company, and Henri de Castries, its chief executive, were 
questioned by police investigating money-laundering at PanEuroLife, a 
Luxembourg company owned by Axa in 1996-98. PanEuroLife is suspected of 
complicity in helping French citizens to evade taxes.
				
				See article: French investigations into money-laundering 
				
				Accenture, formerly Andersen Consulting, a management consultancy, announced 
details of an initial public offering that would value the firm at up to $15 
billion. Accenture,s 2,500 partners will be offered 80% of the shares. Less 
lucky: 600 staff whom Accenture intend to lay off and 800 more facing up to a 
year off on 20% pay.
				
				Philip Morris sold 16% of Kraft, an American food giant, in an initial public 
offering valuing the company at $53.8 billion. America,s second-largest IPO 
will raise around $8.7 billion, which Philip Morris will use to pay off debt.
				
				The European Commission began investigating whether Electricit, de France, an 
acquisitive French power company, had received any illegal state aid. Italy 
and Spain responded to EDF,s predatory moves on domestic power companies with 
emergency laws meant to fend off the French firm. 
				
				A link-up scheme between state-owned Caisse des D,p"ts et Consignations and 
the mutually owned Caisse d,Epargne will create France,s third-biggest 
banking group by assets.
				
				Strike aircraft
				
				
				
				
				
				
				
				
				
				EPA
				
				
				
				
				
				
				
				Lufthansa, Germany,s flag-carrying airline, cut its forecast for operating 
profit in 2001 by about a third to as little as euro700m ($596m), blaming a 
euro125m pay deal with pilots and the cost of several strikes on top of a 
faltering world economy. Pilots at other airlines have observed the wage rise 
with interest.
				
				General Electric offered the European Commission more concessions to secure 
approval of its planned $40 billion merger with Honeywell. GE said it would 
sell bits of Honeywell,s aerospace business as well as its regional 
jet-engine and marine-engine divisions. Negotiations with the commission 
continued in a fraught atmosphere as the deadline loomed.
				
				Months after abandoning a merger because of regulatory difficulties, British 
Airways and KLM Royal Dutch started talks aimed at &alternative forms of 
co-operation8. BA and its partner, American Airlines, also met America,s 
transport secretary to ask for antitrust immunity to allow a deepening of 
their alliance.
				
				
				
				
				
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