Bershidsky's View From Europe: Brits Make Out

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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Here's today's look at some of the top stories on markets and politics in Europe:

The Netherlands to missEU budget deficit target in 2014 .

The Netherlands' official economic forecaster, the Bureau for Economic Policy Analysis, predicted that the Dutch economy will emerge from recession in 2014, growing 0.5 percent, but that the budget deficit will overshoot the EU limit of 3 percent of GDP by 0.3 percentage points. In the Netherlands, one of the staunchest proponents of the rule, this is an important political issue. The centrist coalition government of Mark Rutte faces tough criticism from both ends of the political spectrum: the Socialists and the far-right Freedom Party oppose the $8 billion austerity measures he's proposed. The official forecast appears to support their misgivings, predicting a growth in unemployment and a drop in purchasing power if the cuts go ahead. If Rutte pushes ahead, the extreme left and extreme right may well become the country's most popular parties next year. The anti-EU, anti-immigrant Freedom Party is already polling 22 percent. One has to wonder whether the austerity measures are worth the political risk.

Catalonia warned: secessionwill place it outside the EU .

European Commission Vice President Joaquin Almunia warned Catalan secessionists that "if one part of a territory of a member state decides to separate, the separated part isn't a member of the European Union." Catalan separatists, who last week formed a 250-mile human chain to demonstrate support for independence in the region, are pro-Europe. In fact, economically, the industrial region may have a stronger claim to EU membership than the rest of Spain. Almunia's unequivocal statement is a cold shower to the separatists hoping for a victory in a secession referendum planned for 2014. The EU isn't likely to change its mind, though: The last thing it needs now that Europe is finally reviving is more economic and political disruption.

UK government starts selling off Lloyds Bank .

Four years after bailing out the U.K.'s biggest retail bank, Lloyd's, the government is ready to start selling it off. UK Financial Investments Ltd., the formal owner of the nationalized 39 percent stake in Lloyds and 81 percent of the Royal Bank of Scotland, is unloading 6 percent of Lloyds. The stake will go to institutional investors for about $5.1 billion, which means U.K. taxpayers will make a profit on their investment in the troubled bank. The government bought it for about $1 a share and the current selling price is about $1.20. Instead of spending billions of dollars on recapitalizing the nationalized banks, U.K. authorities forced them to trim their assets and become less risky. The strategy has paid off for Lloyds, now a profitable institution with a buoyant share price. RBS has proved much more difficult to turn around. A recent management change may help it follow in Lloyd's footsteps sooner or later. So far, however, the taxpayers would take a heavy loss if the government tried to sell it.

Karstadt owner sells off choice partsof troubled chain.

Billionaire Nicolas Berggruen, who pulled Germany's Karstadt retail chain out of bankruptcy in 2010, has given up the company's crown jewels, the luxury department stores KaDeWe in Berlin, Alster in Hamburg and Oberpollinger in Munich. Berggruen sold the three famous landmarks and 28 Karstadt Sport stores to Austrial investor Rene Benko, who owns much of the real estate used by Karstadt, for $400 million. Berggruen has vowed not to take any of the money for himself: It will be used to modernize the remaining 83 stores in line with a plan devised by former Woolworth manager Andrew Jennings, whom Bergrguen brought over to run the chain in 2011. Jennings has had to make unpopular decisions, including large staff cuts, and he promises that his strategy will finally start bearing results this fall. If he is right, this will be one of the greatest turnarounds in global retail history, well worth the loss of the iconic KaDeWe store for Berggruen.

Danske Bank chief oustedin wake of publicity disasters.

Denmark's leading bank, Danske, has been profitable and its share price has grown steadily in recent months, but the bank's board fired its chief executive Eivind Kolding, saying it needed somebody "with stronger qualifications within banking". Kolding, a fomer shipping executive who spent 12 years on Danske's board representing its major shareholder, the container shipping giant Maersk Line, was blamed for a series of recent publicity disasters. They included a public argument with the Danish banking regulator about risk level accounting; an ad campaign that was criticized as hypocriticalbecause it included images of Occupy Wall Street protests; and an abrupt decision to start charging clients a service fee for current accounts, which led to 40,000 depositors leaving the bank. In the north of Europe, excluding Iceland, banking is still a relatively conservative business that avoids controversy and frowns on any kind of public scandal. It is these qualifications that Kolding apparently lacked.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net