On 21st January the Chairman of the European Central Bank (ECB), Jean-Claude Trichet spoke to the members of the Economic and Monetary Affairs Committee of the European Parliament with regard to the economic and financial crisis. He believes that "economic recovery should occur in 2010" and that for the time being "there was no deflationist threat hanging over the EU". He underlined the protective role of the euro and said that remarks with regard to a collapse of the euro area given the differences in salaries and public debt burdens as unfounded. He called on governments to avoid an uncontrolled explosion in public finances and to implement structural reforms. With regard to financial supervision he said that Member States could unanimously decide, after consultation with Parliament, to grant specific surveillance tasks to the ECB and stressed that the ECB was "ready" to assume tasks such as these.

According to interim forecasts for 2009-2010 published by the Commission on 19th January the EU will experience a recession of -2% in 2009. The downturn will be particularly dramatic in Latvia (-6.9%), Ireland (-5%), Estonia (-4.7%), Lithuania (-4%) and the UK (-2.8%). Germany (-2.3%), Italy (-2%), Spain (-2%) and France (-1.8%) will come within the community average. Greece (0.2%), Slovenia (0.6%) and Malta (0.7%) will have positive growth but it will be almost nul whilst Cyprus (1.1%), Bulgaria (1.8%), Romania (1.8%) and Slovakia (2.7%) will have low growth but it will be effective.

The international rating agency Standard & Poor's (SP) announced on 21st January that it was downgrading the rating on Portugal's long term debt from "A+" to a previous "AA-". "Portugal is facing serious challenges although it is trying to improve its competitiveness and to stimulate growth that remains low," explains the agency. In its draft finance law announced last week the Portuguese government reviewed its economic forecasts anticipating a GDP decline of 0.8%, a public deficit at 3.9% of the GDP and an 8.5% rise in unemployment.

On 19th January Spain's AAA sovereign credit rating was downgraded by the agency Standard and Poor's(S&P). The rating that estimates Spain's ability to reimburse its public debt long term was downgraded to "AA+" in comparison with a previous rating of "AAA" which was the best possible. Spanish Economy Minister Pedro Solbes insisted on minimising the announcement stressing that Spain still enjoyed a sound financial reputation: Spain's situation "is still comfortable". According to forecasts broadcast on 19th January by the European Commission, Spain is due to enter recession in 2009 with a GDP contraction of 2% and will find it more difficult than its neighbours to recover growth in 2010 with another GDP decline of 0.2%.

Foreign investment flows in the world fell by more than 20% due to the financial and economic crisis ie twice that of previous forecasts said the UN Conference on trade and development on 19th January (UNCTAD). Direct world foreign investment flows totalled 1400 billion $ (1050 billion euros) in 2008, a 21% decline in comparison with the previous year. "2008 marks the end of a four cycle of direct foreign investment growth," said UNCTAD. The decline is due to continue in 2009 because major world groups are reducing costs and investments due to the poor economic outlook.

According to the Finnish daily Helsingin Sanomat published on 20th January the unemployment rate in Finland which lies at 6.6% at present will increase until 2010 and may even reach between 8% and 10%. Moreover Nokia, the Finnish mobilephone company announced on 22nd January that its profit before tax had fallen to 476 million euros in the fourth quarter of 2008 in comparison with 2.57 billion in the fourth quarter of 2007. This decline in profit will inevitably lead to dismissals in order to reduce costs according to the company's Director General. However according to Angel Gurria, OECD Secretary General who travelled to Finland on 21st January, the country is better equipped to face the crisis in comparison with other countries notably thanks to the public sector surplus and its relatively low debt.

Whilst the share price of bank-insurer KBC has continued to fall to reach its lowest ever level ie 7.50€ recorded at the Brussels Exchange on 21st January the Flemish government decided on 22nd January to inject 2 billion euros into the group. In addition to this Fortis Bank, that resulted after the dismantling of the Belgian-Dutch Fortis announced very poor results on 22nd January; this might be used as an argument to convince small shareholders to accept purchase by BNP Paribas. Out of nine months in 2008 Fortis Bank made a net loss of 14.1 billion euros and "the continuing world crisis" may lead to "an additional net loss" during the fourth quarter "lying at between four and five billion euros," according to a press release.

According to statistics published by the National Statistics Office (NSO) on 23rd January the UK entered recession in the second half of 2008 for the first time since 1991. The British GDP fell in the fourth quarter by 1.5% in 2008 after a drop of 0.6% in the third quarter ie two consecutive quarters of negative growth. It is mainly the 4.6% fall in industrial production which is driving the decline.

On 21st January the German government announced that its GDP is due to decline by 2.25% in 2009. Although German growth still lay at 1.3% in 2008 and the government is forecasting a slight rise (0.2%) in the GDP in 2009, German Economy Minister, Michael Glos, declared that it was the "greatest decline in Germany's recent history." This fall is said partly to be due to a net decline in exports estimated at 8.9% and which is due to cause a rise in unemployment. He believed that the numbered of unemployed was due to rise by 500,000. However the minister also said that the 50 billion euro recovery plan would enable an improvement in the second half of 2009.

Swedish Finance Minister Anders Borg and Enterprise Minister Maud Olofsson presented a draft law to the Riksdag (Parliament) on 22nd January covering the measures announced to face the economic crisis. This draft law notably includes aid to the car industry with emergency loans of 20 billion crowns for bank guarantees for more ecological car manufacturers and "rescue" loans to a total of 25 billion crowns. The government is also suggesting to grant companies extra time to pay their taxes in exchange for interest and commission. According to recent estimates the Swedish public debt will be 1.1% in 2009 and 2010.

The International Monetary Fund (IMF) has reviewed its forecasts for Germany and is forecasting a recession of -2.5% in 2009 in comparison with -0.8% previously. According to the IMF report Germany is due to suffer from the severe decline in world trade and the continued weakness of domestic demand. This new IMF forecast is slightly more pessimistic than that of the German government which is forecasting a GDP decline of 2.25% this year after 1.3% growth in 2008. The IMF believes that Germany is due to recover slowly in 2010 with growth at 0.1%. The IMF welcomed the country's budgetary rigour that has been applied over the last few years but it believes that the deficit is due to grow in 2009 and 2010 due to an economic weakening and a worsening in the labour market.

On 22nd January French Economy Minister Christine Lagarde co-signed a convention planning for the opening of a credit line of 300 million euros by the European Investment Bank for SMEs to be distributed by the Société Générale. She said that this credit line had been requested of the EIB on 12th and 13th September by the EU economy and finance ministers. Since then the EIB has made an overall 1.5 billion euros loans available to France. This sum was shared between the Société Générale (300 million) BNP Paribas, Oseo, Arkea and the Federative Bank Crédit Mutuel who are to distribute the sums to companies with less than 250 employees.

After the National Assembly the Senate gave its greenlight to the recovery plan totalling 26 billion euros presented by the government in December - they adopted the "acceleration of the construction and investment programmes" chapter. The other part of the plan included in the Finance Project 2009 was approved on 22nd January. The project, which now forecasts a higher provisional deficit in 2009 at 86.8 billion euros, includes major financial measures for the recovery plan - 11.4 billion of which will be used to support company treasuries.

On 20th January European Commission President José Manuel Barroso announced that gas supplies from Russia via the Ukraine had resumed. He condemned the fact that European consumers had been taken hostage in the conflict between the two countries. He stressed that solidarity had been effective between Member States in limiting interruptions in gas supplies. Above all he said that lessons had to be learned from the crisis. In his opinion the EU must take the energy security issue seriously: it must diversify its energy and supply sources to be prepared if more crises should occur. He notably stressed the need to invest in new infrastructures, to complete the single gas and electricity market and to adopt the directive on gas supply security.

On 22nd January the European Commission published two reports with regard to European progress in terms of innovation. The report "Science, technology and competitiveness," highlights the growth in the number of researchers, who are notably foreign, private R&D investment from the USA and investments on the part of Member States. However the report reveals many limitations: the share of expenditure on R&D in the GDP has stagnated at 1.84%, far behind the Lisbon goal of 3%, and the investment levels of companies in R&D is still low. The European 2008 Innovation Scoreboard shows notable progress achieved before the financial crisis in all Member States with strong progress on the part of Romania and Bulgaria. Sweden, Finland, Germany, Denmark and the UK are the champions of innovation. The relative difference with the USA and Japan has reduced in size but continues in terms of expenditure in R&D and ITs.

Cancer is the second cause of death in the EU. Amongst women breast, cervical and colorectal cancer are responsible for 32% of cancer related deaths whilst amongst the male population colorectal cancer represents 11% of deaths. The EU has committed to ensure adequate diagnonsis of breast, cervical and colorectal cancer. In an initial report about the implementation of this recommendation the Commission points out that although a great amount of progress has been achieved in terms of diagnosis, Member States have not entirely established the measures expected with regard to this. The EU Member States undertake under half of the minimum number of recommended examinations.

The European Commission adopted the pluriannual programmes 2007-2013 for three European immigration related funds. The European Commission has allocated an envelope of 129.49 million euros to the UK for the integration of citizens from third countries. The other beneficiaries are the Netherlands (17.7 million euros), Poland (15.8 million euros), Sweden (13.4 million euros), Hungary (13 million euros), Latvia (11.2 million euros), Estonia (7.9 million euros), Bulgaria (3.7 million euros) and Malta (3.7 million euros). With regard to the European Return Fund the UK has been allocated 95 million euros and Italy 71 million euros, the other beneficiaries being Poland (17 million euros), Slovenia (8 million euros), Finland (6 million €), Estonia (3 million €) and Latvia (3 million €). Finally with regard to the External Borders Fund Lithuania received an additional 32 million euros after an initial 108 million euros to fund a special transit plan associated with the special status of the Russian enclave of Kaliningrad. Poland received 78 million euro, Finland 51 million euros, Portugal 35 million euros, the Czech Republic 21 million euros and Sweden 15 million euros.

On 20th January the 27 Economy and Finance Ministers noted the economic forecasts published by the European Commission with regard to the recession in 2009. They looked into the measures taken stressing that they would take time to take effect and indicated that these measures should go hand in hand with structural reform. They recalled their mid-term goal of reducing public deficits. They spoke of banks' own funds and called for a modification in international and accounting rules. With regard to the investment framework established in 2008 in support of the Western Balkans they said they were pleased with this initiative but they call for more rapid and more substantial progress. Finally they approved the granting of a 3.1 billion euro loan to Latvia to enable it to face the financial crisis.

The 16 Finance Ministers of the Eurogroup, who met on 19th February discussed the Commission's economic forecasts which they "agree" with. They insisted on "re-iterating the need to respect the stability and growth pact" since, as Eurogroup President Jean-Claude Juncker explains, "the euro area is the only monetary area in the world that does not have a central government, therefore it has to have a body of rules that must be adhered to by all and we intend to watch this carefully." With regard to the financial market situation they observed "a certain number of improvements" that remain "insufficient" however and they again appealed to the loans sector to lend money to companies, notably SMEs.

The 27 Ministers responsible for employment and social affairs who met between 22nd and 24th January addressed the issue of mobility which plays a role in enhancing the flexibility of the labour market, social cohesion and economic growth in the EU. The review of the directive on working time was also the focus of discussions. The Czech Presidency will try to achieve an agreement with the European Parliament in the conciliation process but Member States do not agree on the EPs amendments. The present directive is not quite satisfactory in some sectors notably in the area of healthcare, transport and fire service.

On 26th January the 27 EU Foreign Ministers expressed their support of the closure of Guantanamo and their desire to help American President Barack Obama in this task for humanitarian reasons. Several countries including France have said they want a case-by-case examination of the prisoners' requests if they want to come to Europe, stressing the need for "co-ordination" between governments. A European mission, including the Czech Presidency of the Council of the EU, European Commission Vice-President for Justice, Freedom and Security, Jacques Barrot and the European anti-terrorist co-ordinator Gilles de Kerchove is due to travel to the USA within the next few weeks to discuss this problem with the American administration.

On 21st January the Spanish Parliament approved the deployment of 395 soldiers to integrate the European force to fight against piracy off the Somalian coasts. Nearly all of the MPs approved the deployment of the contingent. This operation "is of vital importance for the defence of the geostrategic and economic interests of Spain," and it will "provide greater security to our fishermen," who are off the Somalian coasts, declared Defence Minister, Carme Chacon to the Parliament. The EU launched its first ever naval operation on 8th December : "Atalante", to track down pirates with six ships and three patrol planes under British command. In the spring Spain is due to take over command of the force that was created in the wake of a joint initiative with France.

Spanish unemployment continued to rise at the end of 2008 to stand at 13.91% of the working population in the fourth quarter ie the highest level in the EU thereby confirming the extremely violent deterioration in the Spanish labour market. This figure represents an increase of 609,000 unemployed in comparison with the third quarter when the unemployment rate reached 11.33%. Over 2008 as a whole the number of unemployed increased by 1,280,300 people to stand at 3,207,900 according to figures published on 23rd January by the National Statistics Institute (INE).

The present chairperson of the ADEME - the French environment and energy agency - Chantal Jouanno, was appointed Secretary of State for Ecology on 21st January. She succeeds Nathalie Kosciusko-Morizet who took over the digital economy portfolio last week.

On 20th January Polish Justice Minister Zbigniew Cwiakalksi resigned from office after another suicide of a prisoner convicted in a kidnapping and assassination case which caused a scandal in Poland. "I have placed myself at the Prime Minister's disposal and the Prime Minister has accepted my resignation," declared Minister Zbigniew Cwiakalski to the press. He will be replaced by Andrzej Czuma.

Following visits to Finland, Albania and Kosovo the Committee for the prevention of torture and inhuman or degrading treatment or punishment of the Council of Europe published three reports on 20th and 21st January analysing the treatment in detention centres and the conditions of imprisonment. Although the report is generally positive with regard to Finland the Committee noted that in Kosovo material conditions remain inadequate in nearly all of the police stations and detention centres visited. It also notes a number of allegations of ill-treatment inflicted on prisoners by members of the Kosovo police-force. As for Albania the Committee said it was pleased with the work done notably with regard to the physical treatment of prisoners. However conditions in some police stations are still inadequate. The Committee called on the public authorities to implement certain measures according to the situation in each country.

According to figures published by Eurostat on 22nd January in the third quarter of 2008 the EU recorded a deficit of 39.5 billion euros in its current trade account, but a surplis of 19.3 billion euros in its services account. The EU recorded a surplus with the USA (+24.5 billion euros), Switzerland (+7.5), Canada (+2.5) and Brazil (+1.9) but there was a deficit with China -41.9 billion), Russia (-14.2) and Japan (-6.7).

The European Union Institute for Security Studies has published a report under the guidance of Alvaro de Vasconcelos and Marcin Zaborowski entitled "The EU and the World in 2009: European Perspectives on the New American Foreign Policy Agenda". The authors believe that it is possible to improve EU-USA relations under the new Obama administration. They believe that Europeans and Americans should discuss the improvement of European security structures, especially the anti-missile defence system and the enlargement of NATO.

The European Centre for Policy Studies (CEPS) has published a study by Elena Gnedina and Michael Emerson entitled "The Case for a Gas Transit Consortium in Ukraine: A Cost-Benefit Analysis". The authors believe that in the wake of the gas crisis in January 2009 long term measures have to be taken and notably suggest that the EU, Russia and the Ukraine negotiate for the creation of a new gas consortium which would be granted the concession for transporting gas via the Ukraine.

The Danish Institute for International Relations (DIIS) has published a paper by Ian Manners entitled "Small, open €uro economies". The author presents the various arguments put forward by economists for small European economies to join the euro area. He concludes that Denmark and Sweden's membership of the euro area may help to strengthen the EU's role as protector against the excesses of globalisation and help to build a more sustainable international financial structure.

French Senator Hubert Haenel published a report on the institutional consequences of the non-implementation of the Lisbon Treaty. The implementation of the latter was planned for 1st January 2009. With the perspective of a second referendum in Ireland on the horizon it might be accomplished on January 1st 2010 at best. After discussing the Irish problem Hubert Haenel develops three subjects: the European elections, the appointment of the Commission and the stable presidency of the Council. On these three points he highlights the problems caused by the postponement of the Lisbon Treaty.

On 5th February the Enescu Society, created by the Romanian Cultural Institute in tribute to Romanian composer, George Enescu, will be receiving violonist Yuko Inoue for a recital in London together with pianist Kathron Sturrock. Yuko Inoue was the winner of the 17th International Violin Competition in Budapest and has played in numerous orchestras in Europe and Japan, whilst Kathron Sturrock has won the International Opera Prize in Sofia twice. The Enescu programme includes Bach, Bruch, Brahms and Hawkins.