British auditors under scrutiny
This week, the Department of Trade and Industry published a review of the accounting industry, which called for the rotation of company auditors and the enhancement of corporate audit committees.
The report hints at the creation of an independent accounting watchdog, but stops short of recommending the separation of consulting and auditing services of the big accounting firms.
The recent rash of American auditing scandals has prompted calls for the stricter regulation of accounting companies in the United Kingdom. UK accountants may also face tougher disclosure requirements, but as of yet the British government has not indicated how it will reform corporate law.
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Europe delays trade sanctions
In retaliation to US steel import tariffs, the European Commission (EU) threatened to impose $380 million worth of trade sanctions on the US by August 1, 2002, on everything from orange juice to textiles.
The EU has now delayed the decision on the promise of further concession by the United States.
Although the EU said the concession the US has already tabled are 'manifestly insufficient', it will give the States until the end of August to process the 1,200 product exemption requests it has so far submitted.
The EU claims the steel tariffs are illegal under World Trade Organization rules but does not want to wait the several years it may take for a WTO ruling on the matter. Despite the acrimony, EU representatives are calling the disagreement a trade dispute rather than a trade war.
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Ericsson looking for cash
This week, Swedish mobile phone maker, Ericsson, announced that it would attempt to stem recent losses by selling $3.3 billion in stock to existing investors.
The losses, caused by plummeting demand for mobile phones, forced Ericsson to heavily discount the offering in order to persuade investors to buy the shares. The discounted shares started at 41 cents -- a quarter of the previous day's closing price.
Ericsson has also lowered industry sales forecasts and warned it would eliminate an additional 5,000 jobs, bringing the total job cuts to two-thirds of the work force to date.
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European Markets hit hard by Wall Street fall
European markets dipped severely at the beginning of the new week, hit by the same news that sent Wall Street plummeting —the bankruptcy of WorldCom.
The FTSE 100 fell more than 2 percent amid fresh corporate scandals and bleak earnings prospects, while the Paris bourse was down 2.4 percent and Frankfurt fell 1.8 percent. Banks chopped 18 points from the FTSE in London, and life assurers were also hit, all raising new worries over solvency levels.
European equity markets are experiencing one of their most turbulent periods in recent history. They dropped and then bounced back last week. They are down 26 percent in the year to date.
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UK sees property boom
UK house prices are going through the roof again, signaling the fourth boom in 30 years. The number of properties exchanged in April and May showed an increase of 18 percent.
Borrowers are paying an average of 20 percent more for their houses than they did a year ago --- the highest rate since before 1990's collapse.
This turn of events is surprising, as this acceleration in house prices has occurred just as the economy is stalling. The housing boom, however, is limited to the southern sections of the country.
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