A look at economic developments around the globe

AP News
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Posted: Dec 18, 2009 2:54 PM

A look at economic developments and activity in major stock markets around the world Friday:

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LONDON _ The British government's growing budget deficit blew out by an additional 20.3 billion pounds ($33 billion) in November, the largest monthly figure since records began in 1993.

The figure was not as bad as the 23 billion pounds feared by economists.

The Office for National Statistics said the shortfall was up from 15.5 billion pounds in the same month a year earlier, pushing national debt to 60.2 percent of economic output.

Brown and Treasury chief Alistair Darling have resisted calls for tougher steps such as deep spending cuts or tax increases to curb government borrowing. They say the need to support Britain's tentative economic recovery outweighs immediate desires to reduce the deficit.

Darling has instead pledged to halve the deficit _ which has reached 83.2 million pounds so far this year _ over the next four years.

In markets, European stocks reversed earlier gains as a number of investors began to shut up shop for the Christmas holiday by booking profits built up over the last nine months. The FTSE 100 index of leading British shares closed down 0.4 percent, Germany's DAX fell 0.2 percent and the CAC-40 in France fell 1 percent.

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TOKYO _ Japan's central bank said it was crucial for the country to beat deflation and it would not accept continued price declines.

Bank of Japan policy members also voted unanimously to hold its key interest rate unchanged at 0.1 percent, as widely expected, to support a recovery in the world's No. 2 economy.

The central bank's statement on deflation came after pressure from the government for a more proactive stance.

In Asian trading, Japan's Nikkei 225 stock average fell 0.2 percent, Hong Kong's Hang Seng shed 0.8 percent, South Korea's Kospi eased 0.1 percent, Australia's index dropped 0.4 percent and China's Shanghai market lost 2.1 percent.

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ATHENS, Greece _ Greek Finance Minister George Papaconstantinou said the country's tax system will be overhauled by early March to broaden the tax base, boost revenues and fight tax evasion as part of efforts to pull Greece out of an economic crisis.

Athens is facing its worst debt crisis in decades and has come under intense European Union pressure to straighten out its finances and comply with deficit limits intended to support the shared euro currency.

The government announced a raft of measures this week to reduce Greece's mountain of public debt by 2012 and gradually bring the budget deficit _ projected at 12.7 percent for 2009 _ to below the European Union's euro-zone requirement of 3 percent of GDP by the end of 2013.

Papaconstantinou did not give any new details of the planned reforms and told a news conference that the government was aiming to introduce a new tax law in Parliament in early March.

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BERLIN _ German business confidence rose for a ninth consecutive month in December as Europe's biggest economy continued to recover steadily from its worst recession in decades, a leading survey showed.

The Ifo business climate index rose to 94.7 points _ its highest level since July 2008 _ from 93.9 points in November. The increase was modestly higher than market expectations and stoked hopes that the recovery is on track.

The Ifo index is based around 7,000 monthly survey responses from firms in manufacturing, construction, wholesaling and retailing. Its long-run average stands at just below 96.

Overall, Ifo indicated that firms are more positive about their current situation.

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LONDON _ The trade surplus with the rest of the world in the 16 countries that use the euro rose massively in October as imports fell and exports remained at recent high levels _ despite the ongoing strength in the euro.

The figures provide further evidence that the eurozone is benefiting from recovering global demand as its leading export markets emerge from recession.

But the figures also show that the economies at home in Europe remain weak. The fall in imports suggest that consumers remain reluctant to spend.

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BRUSSELS _ Income for farmers in the European Union fell 12.2 percent this year, largely in line with a drop in food prices.

The EU said Friday that income fell most in Hungary, by 35.6 percent _ where the Hungarian forint has slid in value against neighboring nations _ followed by Italy with 25.3 percent.

Among the major EU nations, income fell by 19.8 percent in France and by 21 percent in Germany, but rose 14.3 percent in Britain. The weakening of the British pound against the euro has made British products less expensive for buyers in Europe and Britain.

Farmers throughout the EU have protested this year a crash in food prices, demanding more subsidies and aid to make their exports more attractive.

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HELSINKI _ Finland's economy will shrink 7.6 percent this year, its worst performance in more than 50 years, the government said.

The Finance Ministry had earlier predicted a 6 percent drop in GDP in the small Nordic economy severely hit by the recession because of its dependence on exports.

But the ministry said the worst is over.