Economy shrank in Q3
The Italian economy contracted in the third quarter, signaling the country may have entered its fifth recession since 2001 as the government adopts new austerity measures that will further weigh on growth. GDP dropped 0.2 percent from the second quarter, when it grew 0.3 percent, Rome-based national statistics institute Istat said in its final GDP report yesterday. It was the first contraction since the final three months of 2009 and matched the median forecast for a 0.2 percent contraction in a survey of 23 economists by Bloomberg News. The economy expanded 0.2 percent from a year earlier, Istat said. Consumer spending declined 0.2 percent from the second quarter, with investment declining 0.6 percent. Exports grew 1.6 percent in the quarter, while imports fell 1.1 percent.
Siemens to cut 1,600 jobs
Siemens AG, Europe’s largest engineering company, plans to cut as many as 1,600 jobs at its health-care division and will scale back the business after falling behind competitors including Roche Holding AG. The planned cuts amount to as much as 8 percent of workers at the diagnostics subsidiary, said Michael Sen, the chief financial officer of the health-care operations. Another 400 jobs will go as Siemens stops making linear accelerators that create radiation for cancer treatment. Order intake and sales at the health-care unit failed to grow in the most recent quarter, and profitability at the diagnostics business has slumped to less than half the rate two years earlier.
Saab declared bankrupt
Famed Swedish car maker Saab was declared bankrupt by a court on Monday, ending a nine-month survival battle by its Dutch owner. Saab, which has made cars for 64 years, has suffered cash problems since March after last year’s sales fell short of target amid the disruption of its sale by General Motors. It has not made any vehicles since April and several rescue attempts have failed. Saab owner Swedish Automobile said former owner and key licence holder General Motors had blocked a last-ditch rescue plan by Chinese investor Youngman. It also criticized the court-appointed administrator who had been overseeing its creditor protection process and who, it said, had meddled in the deals. Saab proposed a new rescue involving Zhejiang Youngman Lotus Automobile, but that was rejected by GM at the weekend. “That, basically, was the last nail in the coffin of this beautiful company,” Swedish Automobile chief executive Victor Muller told reporters hours after handing in a request to a Swedish court to have Saab made bankrupt. The court later approved the request and appointed two receivers to run the company.
Interest rate could go up
Hungary may need to raise the EU’s highest benchmark interest rate next year as talks over a bailout stalled and the government and the central bank spar over monetary-policy independence. The Magyar Nemzeti Bank increased the two-week deposit rate by a half-point for a second month to 7 percent yesterday and said it would raise borrowing costs further if country risk worsens. Policymakers also considered a quarter-point increase. The European Commission and the IMF suspended talks on a financial aid package to Hungary last week, citing objections to a draft law on the central bank that they say may undermine policy autonomy. The forint is the worst-performing currency in the world since June 30, Bloomberg data show.