France Hikes Taxes to Reduce Deficit Paris, France French Prime Minister Francois Fillion announced tax hikes

to reduce the country's budget deficit by $.17.3 billion (EUR 12 billion) over the next two years. Along with the announcement of a package of measures to reduce the budget gap, Fillion said that the country's growth forecast for this year is reduced to 1.75 percent from 2 percent. The prime minister said that France targets to cut its budget gap to 5.7 percent of gross domestic product this year, 4.6 percent in 2012 and 3 percent in 2013, which is the limit set by the European Union. While cutting costs, the French government will increase revenue through an extra tax of 3 percent of yearly income for citizens earning more than $721,000 (EUR 500,000) a year. Besides higher income taxes, the government would collect higher taxes on alcohol, tobacco and soda, which are expected to raise $16 billion (EUR 11.1 billion). To help the government, 16 French executives offered through an open letter to give a special contribution to the country's coffers as a show of their solidarity. Among them are L'Oreal heiress Liliane Bettencourt, who is Europe's richest woman, Total Chief Executive Officer Christophe de Margerie, Societe Generale chief Frederic Oudea and Air France CEO Jean-Cyril Spinetta. France is the second largest economy in the eurozone, next to Germany. According to the International Monetary Fund analysis of the French economy, among triple A rated countries in the continent, France has the largest total outstanding debt, equivalent to 80 percent of its GDP. If the economy's growth would continue to slow down or France misses its budget targets, the outstanding debt could rise to almost 100 percent of GDP.

Shortage of teachers in EU?

According to the latest report published by the European Commission several EU countries including Germany, the UK, Italy, the Netherlands, Austria and Belgium may struggle with serious teacher shortages. The report Key Data on Education in Europe 2012, which was presented to member states' education ministers, indicates the number of graduates specialising in education falling while many current teachers approach retirement. The Commission also underlined that funding for education remained stable in most EU countries and stressed that higher education was still the best way to tackle unemployment. Education, Culture, Multilingualism and Youth Commissioner Androulla Vassiliou stressed the importance of the report as a source of policy guidance. The professional development of teachers is a key factor in ensuring high quality education for our students. That's why Erasmus for All aims to strengthen the professional development of teaching staff while at the same time modernising education systems," she said. Luxembourg funds industry rises ARTICLE | JANUARY 29, 2012 - 6:35PM The Luxembourg funds industry continued to expand over the last 12 months despite the eurozone crisis and declines in major stock indices. The number of funds in Luxembourg rose by 4.84% to 3,833 and net sales amounted to 16.998 billion, association of the Luxembourg fund industry (ALFI) reported on19 January. While total AUM decreased over the period by 101.453 billion, mainly as a result of market depreciation, total assets under management were still a steady 2,059.419 billion euro, second globally only to the US. The increase in net sales and funds enabled the Luxembourg fund industry to continue to maintain and even create employment in 2011. The Luxembourg financial centre, of which the fund industry is a key part, is a motor of the Luxembourg economy, with over 43,000 employees working directly for Luxembourg financial sector companies and many more working for non-financial companies that provide goods and services to the financial centre. There was also a heavy regulatory agenda in 2011, with a number of new rules coming into being, including UCITS IV and AIFMD. Luxembourg was well prepared and the process of transposing each into national law is already completed or well underway. Besides the European rules, we saw laws and rules emerging in non-EU countries that will strongly impact our industry, such as FATCA or the Volcker Rule in the US. Looking ahead to 2012, the global macroeconomic situation is hard to predict but markets are likely to remain volatile and investors, both retail and institutional, will probably remain cautious.

At the same time it is certain that regulatory pressure will increase. As in the past, ALFI will continue to advocate policies that are beneficial to the funds industry and its end-users and actively take a stand against others. ALFI is particularly concerned by the Volcker Rule and the Financial Transaction Tax (FTT).

Germany Cuts Growth Forecasts Linda Young HOME > WORLD

Berlin, Germany Germany says it expects slower growth next year because of anticipated lower demand for the nation's exports. Government officials cut the growth forecast for 2012 by nearly half, to 1 percent, from the previous prediction of 1.8 percent. The government also reduced the growth forecast for 2011 to 2.9 percent from the 3 percent it predicted in April. That compares to the 3.7 percent growth Germany had in 2010. Germany is the world's second-largest exporter behind China. However, the eurozone debt crisis, coupled with global economic woes, has slowed world demand. As Europe's largest economy, Germany has been the region's economic engine. Slower growth in the German economy will make it more difficult for Europe to escape falling into another recession. Under the definition of some economists, a recession is technically two consecutive quarters of negative growth or contraction. Germany's leading economic institutes last week forecast dismal growth of virtually nothing, with economists saying that they expected growth would drop to almost zero in the last quarter of 2011 and the first quarter of 2012.