BUSINESS SATURDAY, NOVEMBER 1 , 2014 Euro-zone inflation up, unemployment steady BRUSSELS: Euro-zone inflation edged up to 0.4 percent from multi-year lows while unemployment was little changed, offi- cial data showed yesterday, providing only limited reassur- ance that a modest economic recovery remains on track. Analysts said the figures were far from encouraging, with the European Central Bank likely to come under additional pres- sure from anxious governments to do more to get the econo- my moving again. Inflation in the 18-nation euro-zone rose to 0.4 percent in October from 0.3 percent in September, which was the lowest in five years, the Eurostat statistics agency said. The unemployment rate in September came in at 11.5 per- cent, unchanged compared with August and July. The total September jobless numbers came to 18.34 million, down only 19,000 from August. The inflation figure remains far below the 2.0 percent tar- get set by the ECB, whose core mission is to ensure price sta- bility. Low inflation usually reflects soft demand in an econo- my and at current levels has stoked fears of deflation-when prices actually fall. If deflation takes hold, consumers put off purchases know- ing they can buy the same product cheaper if they wait, which undercuts demand further. Faced with that prospect, compa- nies defer investment, hitting jobs and salaries which in turn adds to the downward spiral. In recent months the ECB has MAZAR-I-SHARIF: Afghan laborers drink tea after work at a chalk factory as the sun sets on the outskirts of Mazar-i- taken increasingly radical action to try and pump up credit to sharif. Afghanistan’s economy is largely agriculture-based, though the country is endowed with a wealth of natural boost demand and fend off deflation. On the employment resources and mineral deposits. — AFP front, the figures highlight how the economy has slowed steadily, with job creation faltering to the dismay of govern- ments everywhere. With inflation “still close to zero in October and the unem- Trial of former UBS executive ployment rate holding near a record high, there remains a sig- nificant risk of deflation,” said Jennifer McKeown of Capital dredges up banks’ shady past Economics. The slowdown first began to show up in the fig- ures late last year, with euro-zone economic growth in the three months to December 2014 just 0.2 percent, followed by Prosecutors seek to paint Weil as ‘facilitator’ 0.2 percent in first quarter 2014 and then zero in the second quarter. — AFP FORT LAUDERDALE, Florida: From bun- mony at the trial. Eskander Ensafi, who will pay more than $2.5 billion in penal- dles of cash inside scraps of newspaper to banked with UBS, told the court about a ties. setting up shell companies, the trial in clandestine meeting in 2005 at a Los Since US authorities began to chip German retail sales post Florida of a former UBS executive is a Angeles hotel with bank adviser Claude away at the wall of Swiss banking secrecy reminder of the extreme methods some Ullman. The adviser handed him roughly in 2008, details have trickled out of the biggest drop for 7 years Swiss bankers used to hide clients’ cash. $50,000 in US bills wrapped in newspaper, extraordinary lengths bankers would go Raoul Weil, 54, is the highest ranking Ensafi testified, tax-free interest from a to in order to smuggle assets in and out of BERLIN: German shoppers cut back their spending sharply Swiss banker to be arrested in the United Swiss bank account in the name of the United States. in September, official data showed yesterday, adding to States and prosecutors are seeking to Ensafi’s father, who had just suffered a A US Senate report published earlier concern over whether consumers will help bolster growth in paint him as a facilitator of efforts that debilitating stroke. this year described how a customer at Europe’s top economy. Retail sales posted the biggest helped conceal up to $20 billion in tax- Ullman was sued by a number of US Swiss bank Credit Suisse was given state- monthly drop in September for more than seven years, the payers’ assets in secret offshore accounts. individuals-who were jailed for not paying ments tucked into the pages of an issue of data showed. German retailers’ sales, which tend to be Weil’s main defense has been that US taxes by hiding their money in Swiss Sports Illustrated magazine at a hotel volatile and frequently revised, slumped 3.2 percent in these efforts were done by people below bank accounts-for alleged racketeering, meeting. Former UBS financial adviser him and that the US cross border business along with UBS and a number of high Bradley Birkenfeld admitted in 2008 to September compared to the figure of August, the federal was a tiny fraction of his overall responsi- ranking bankers, including Weil, in a 2009 smuggling diamonds in a tube of tooth- statistics office Destatis said in a statement. bilities. If convicted, Weil faces up to five lawsuit in the Eastern District of California. paste for a client. Birkenfeld was a whistle- The drop was the biggest for the closely watched meas- years in prison for conspiracy to commit The case was dismissed with prejudice in blower in the tax fraud case against UBS ure of household confidence since May 2007 and far tax fraud. Weil and his attorneys declined September 2014. An attorney for Ullman and won a record-setting $104 million exceeded the 0.8-percent fall predicted by economists comment on t he trial. did not respond to a request for an reward from the US Internal Revenue polled by Dow Jones Newswires. On a 12-month basis, busi- At the trial, which pits Weil against sev- update on the case. German businessman Service. ness increased by 2.3 percent in September compared to eral former UBS colleagues who have cho- Juergen Homann, 72, who pleaded guilty On top of the fines forked out by the same month in 2013, Destatis said. And from January to sen to cooperate with US authorities in to a US charge of failing to report a for- Switzerland’s two biggest banks, about a September this year, it rose by 1.3 percent compared to the exchange for favorable sentencing, Swiss eign account to the Internal Revenue dozen smaller Swiss players are still under same period in 2013. bankers have testified about using an Service (IRS) in 2009, told the court one US criminal investigation and face serious Consumer confidence in Germany halted its recent arsenal of James Bond-like tactics to avoid UBS client adviser, Hans Thomann, helped penalties, while many more have joined a detection while in the United States, and him set up a Hong Kong-based shell com- government-brokered program allowing declines in October, as consumers appeared to be no longer to help US clients keep their accounts hid- pany. The company, the Prodon them to make amends if they aided tax fazed by economic fallout from geopolitical crises, a poll den from tax authorities. Bankers were Foundation, was then used to funnel evasion by wealthy Americans. The showed last week. And unemployment in Germany, given laptops with two hard drives, income Homann made from his raw min- United States is not the only jurisdiction Europe’s biggest economy, fell unexpectedly this month, Hansruedi Schumacher, who formerly ran erals business venture in China. Attempts that has cracked down on tax evasion by shrugging off a slowing economy. But recent data has sug- UBS’ cross-border business, told the trial, to reach Thomann for comment were its wealthiest citizens. gested that the German economy-traditionally Europe’s which began on Oct. 14 and is expected unsuccessful. UBS is under investigation in France growth engine-is stalling, threatening to pull the euro-zone to run for about four weeks. In 2012, he was charged in the over whether it helped wealthy individu- back into recession and put the brakes on the global recov- One hard drive was filled with any- Southern District of New York with con- als there dodge taxes. Investigating mag- ery. Meanwhile official data in France showed that house- thing from family photos and personal spiracy to defraud the United States and istrates have proposed that UBS pay a hold spending there fell by 0.8 percent in September, after a emails while another contained a pass- conducting an unlicensed money trans- fine of 4.88 billion euros ($6.2 billion), rebound of 0.9 percent in August, but over the third quarter word-protected database with the US citi- mitting business. according to a judicial source. The bank zens’ code-named bank records. Another also booked a near-$300 million charge it edged up by 0.2 percent. witness said the drive with the bank Shadow conspiracy in the second quarter of this year, mainly In July, spending had fallen by 0.8 percent. Consumer details could be wiped simply by typing in Switzerland’s biggest banks have paid to settle claims it helped wealthy spending is of central importance to growth in France, a short password. a heavy price to settle their US tax evasion Germans evade taxes. The bankers who which is currently extremely weak. France, with the second- “It was known all those account hold- cases. UBS admitted to helping US taxpay- helped move clients’ money around biggest euro-zone economy after Germany, is trying to ers were not paying their taxes, and for ers hide money and paid a $780 million undetected are themselves faced with a boost exports to reduce a huge trade deficit, in contrast to the Swiss bank it was a very profitable fine in 2009, while Credit Suisse pleaded legal bind that goes beyond financial German’s big trade surplus. — AFP business,” Schumacher said during testi- guilty in May to a US criminal charge and penalties.—Reuters