Luxembourg’s prime minister today dismissed any possibility individual countries might abandon the euro and called on EU leaders to show the world the 25-nation bloc is still functioning despite the apparent demise of its proposed constitution.

EU finance ministers opened a two-day meeting yesterday, determined to stand by their euro at a time of political turmoil over the French and Dutch rejection of the European constitution and Britain’s decision not to put it to a vote.

Marks & Spencer should be allowed to deduct some of its foreign losses from its British tax bill, a senior EU court adviser said today in a legal opinion that could cost European governments billions of pounds.

Greece’s EU partners are giving Athens less than two years to bring its annual budget deficit under 3% of gross domestic product or face hefty fines for flouting the rules that govern the stability of the euro.

The appreciation of the euro against the dollar may have whittled the German central bank’s 2004 profit down to nothing, Handelsblatt newspaper reported.

German Finance Minister Hans Eichel may plan to equalise the corporate taxes for all types of businesses at about 30%, Welt am Sonntag said, without saying where it got the information.

An agreement that would see up to 80% percent of Iraq’s debt written off has been reached, Germany’s finance minister said today.

A LOOSENING of budget-deficit limits would fuel inflation and hamper the economy’s recovery from its weakest growth rate in ten years, Europe’s leading central bankers said yesterday.

David Clerkin

IRELAND is on course for a clash with France and Germany after Europe's two largest nations proposed harmonising tax rates across the economic bloc.

A Bundesbank spokesman has said that bank president Ernst Welteke is "no longer ruling out resignation" as the controversy over corporate hospitality he accepted gathers momentum.

European finance ministers warned Germany today that it would have trouble meeting its commitment to rein in its budget deficit next year if growth fails to meet Berlin’s optimistic projections.

Germany's black economy is generating around €1bn a day and is producing about 17% of Germany's Gross Domestic Product, according to finance minister Hans Eichel.

Chancellor Gerhard Schroeder remained defiant today after Germany and France faced down a threat of EU sanctions over their ballooning budget deficits, angering smaller member nations and sparking concern about the euro’s stability.

Pedro Solbes, EU economic and monetary affairs commissioner, has denied that the EU Stability and Growth Pact is suspended.

ENTERPRISE Minister Mary Harney and European Parliament President Pat Cox both indicated Europe should not move against France and Germany if they continue to breach the eurozone’s Growth and Stability Pact.

EU officials insisted today that giving France more time to avoid punishment for overspending did not weaken budget rules underpinning the euro, despite warnings that they were sending the wrong signal on fiscal discipline.

Germany's SPD and Green coalition have said today that the country's budget deficit for 2003 will be the highest on record at around €43.8bn.

German Finance Minister Hans Eichel has stated that the German economy is set for zero growth this year.

The German government plans to borrow an additional €4-5bn next year to help finance its tax cuts package, government sources said.

The EU’s Stability Pact is like the Ten Commandments – they all had to be adhered to, said Finance Minister Charlie McCreevy in Brussels.

The German cabinet adopted the draft budget for 2004, with a projected deficit of €23.8bn.

THE European Central Bank may reduce its benchmark interest rate for the third time in seven months this week as the economy stagnates and the euro’s advance slows inflation, economists said.

France was tonight ordered by the rest of the EU to get its economy in order - or risk the credibility of the single currency.

Pressure on Chancellor Gerhard Schroeder over his management of Germany’s misfiring economy grew today, when MPs set up a committee to investigate whether the government hid the need for tax hikes and spending cuts ahead of September’s close-fought election.

Share price were higher midday, in line with the strong late showing on Wall Street on Friday, with Munich Re supported by a broker upgrade, while Bayer was lifted by reports that GlaxoSmithKline is eyeing its pharma division, dealers said.

THE euro took a beating on all sides on Thursday from German budget woes, a Dutch government collapse and a looming referendum on European Union expansion plans.

German Finance Minister Hans Eichel said he wants to save €10bn in the 2003 budget and avoid tax hikes if possible.

THE European Investment Bank (EIB) said yesterday it would offer water-logged countries in central Europe millions in loans for repairing flood damage.

German Finance Minister Hans Eichel said it is highly desirable that the three EU members not currently part of the euro zone - the UK, Sweden and Denmark - adopt the euro after enlargement of the EU.

German Finance Minister Hans Eichel and Chancellor Gordon Brown are expected to reveal plans for a European Union financial markets watchdog this weekend.

European Union finance officials are stepping up efforts to sniff out suspicious insider trading before the attacks on the US.

The European Central Bank has surprised markets by leaving its key interest rate unchanged.