Bershidsky's View From Europe
Here's today's look at some of the top stories on markets and politics in Europe:
Europe grows 0.3 percent in Q2.
Eurostat has published the second-quarter growth rates for most of the European Union's 28 countries. Gross domestic product in both the EU and the euro area rose by 0.3 percent compared to the previous quarter, exceeding analysts' expectations by 0.1 percentage point. Of the 20 EU countries for which data are available, only Bulgaria, Italy, the Netherlands, Spain, Sweden and Cyprus showed negative growth. It was, however, Germany and France with their surprisingly high growth rates that pulled Europe out of its historically long recession. Germany's ruling parties, fighting a close federal election, have trumpeted their success in ensuring the acceleration, but analysts expect Germany to slow down in the second half of the year because of weakening export demand and low domestic investment. Other European nations will need to put in stronger performances to make sure the recession is really over.
IAG orders $5.4 billion worth of planes from Airbus.
The International Airlines Group, the parent company of British Airways and Iberia, has ordered 62 A-320 passenger jets from Airbus. The planes with a total catalog price of $5.4 billion are needed for the group's low-cost airline, Vueling, expected to give battle to Ryanair and easyJet on short-haul routes. The Barcelona-based company has an active fleet of 70 planes, compared to 194 for easyJet and 303 for Ryanair. The fact that IAG feels it needs to almost double the budget airline's fleet shows its faith in the low-cost model for European flights. Its two flag carriers are likely to concentrate on longer routes, for which BA has already ordered $21.1 billion worth of bigger planes from Airbus and Boeing.
"London whale" escapes prosecution by telling on colleagues.
Frenchman Bruno Iksil, nicknamed the "London whale," hasn't been charged by U.S. prosecutors for concealing more than $6 billion in losses at JP Morgan's London office. Instead, fraud charges were leveled against his boss, Spaniard Javier-Martin Artajo, and a lower-lever trader, Frenchman Julien Grout. The three ex-traders live in London, and Artajo and Grout are determined to fight the charges, which means the U.S. might need to initiate extradition proceedings with an uncertain outcome. After all, U.K. financial authorities are still investigating the affair and may want to prosecute themselves. Iksil, however, chose to cooperate with the American prosecution by testifying that he tried to stop his colleagues from misreporting the losses. Whether or not that is true, co-operating means that Iksil will probably escape the substantial legal penalties and penalties that Artajo and Grout may have to bear.
French companies move operations to Switzerland.
According to the Franco-Swiss Chamber of Commerce and Industry, the number of Swiss companies with at least 25 percent of French capital has increased from 750 to 850 since January, 2013. Some of the newly-established Swiss firms are well-known in France, such as the salad producer Florette and the children's clothing retailer Orchestra. These companies are not moving their headquarters to Switzerland but establishing "management centers" there, mainly to avoid oppressive French taxes on high salaries. Well-to-do people, from movie star Gerard Depardieu to company managers, are becoming a major export for Prime Minister Francois Hollande's egalitarian vision of France.
Henkel pulls toilet product from ex-Soviet markets after offending nation.
The Bref Duo Stick toilet freshener from Henkel, the leading German household chemicals producer, was a best-seller in its category in Russia and Kazakhstan. Henkel even advertised it on Russian television. The ad showed a two-tone blue and yellow sticker being placed in a toilet bowl. Blue and yellow are the colors of the Ukrainian flag, and as the ad went viral on the social networks, abuse was heaped on the German company, even though Bref wasn't sold in Ukraine. Henkel chose to do more than just pull the offending ad: It took the product off the shelves until the Duo Stick could be redesigned. Henkel gets 45 percent of its revenues from emerging markets, and the company knows from experience that it has to tread carefully where the dignity of proud new nations is concerned.
(Leonid Bershidsky, an editor and novelist, is a Bloomberg View contributor. He can be reached at firstname.lastname@example.org).