BERLIN (AP) — A survey has found that low unemployment and solid wage increases have helped push German consumer confidence to a nearly six-year high.
The GfK research institute said Wednesday that its forward-looking consumer climate index rose to 6.8 points for July from 6.5 in June. That's the highest level since a reading of 7.3 in September 2007.
Germany's unemployment rate was 6.8 percent in May, a contrast with rates above 20 percent in the European countries worst-hit by the debt crisis. Industrial workers and others in the country, which has Europe's biggest economy, have secured wage raises well above the inflation rate this year.
Earlier this week, a closely watched survey showed a slight increase in business confidence, underlining expectations of stronger economic growth in Germany.
BEIJING (Reuters) - China's biggest bank was uncertain of how to respond to turmoil in money markets last week because there was no clear direction from policymakers on what they wanted to achieve, according to its top executive.
Jiang Jianqing, Chairman of Industrial and Commercial Bank of China Ltd (ICBC) , stopped short of directly criticizing regulators for their handling of the stand-off over money market liquidity, which saw overnight borrowing rates soar and caused panic at some smaller banks.
But Jiang's comments are the clearest indication yet of frustration among senior bankers over how the central bank handled the situation, with markets only calming down after the People's Bank of China (PBOC) made public comments this week.
"We hope that in future, policy expectations can be clearer. That would be help us understand the overall market situation better and more deeply. Those few days, even for us, we were genuinely a bit tense," Jiang told Reuters in his wood-paneled office in downtown Beijing on Tuesday.
Jiang said ICBC's own liquidity situation was sound and that it was prepared to heed the call by the PBOC for big banks to lend to their smaller counterparts should they face short-term cash crunches to help stabilize the market.
But in order to play that role, he said, ICBC -- the world's biggest commercial bank by market value -- and other big banks needed a clearer sign of where things were headed.
He described a harried few days in the past week, when ICBC and other banks tried to assess what was happening in money markets as the central bank apparently decided to use the opportunity of a cash crunch to try to choke off funds flowing to speculative activities and the informal lending sector, sending rates to levels normally only seen during crises.
"We too needed a few days to finally become clear on the risks, and to understand the underlying reasons for the market movements," he said
"So during that process we too were a bit nervous. If we're going to be of help, we also need policy expectations to be even clearer and more stable," Jiang said, adding the market-wide situation was now improving.
Jiang said the market squeeze, which was followed by a brief interruption in ATM use and some other services at ICBC and other banks over the weekend that rattled some savers' nerves, had driven home the idea that banks need to respond quickly to potential crises of confidence, especially in the age of social media.
At one point last week, rumors spread on China's Twitter-like service Weibo that ICBC had received a cash injection from the PBOC, which the bank denied. ICBC also issued a statement this week saying the issue with the ATMs was a technical glitch that had been fixed.
The money market crunch had subsided somewhat by Wednesday, aided by the central bank saying on Tuesday that it had provided emergency cash to some banks and was prepared to do so in future as well. But it also reiterated banks needed to improve their cash management and lending practices.
The key rate for week-long lending to other banks fell back towards 7 percent, after some individual quotes late last week went as high as 28 percent.
Economists expect conditions to ease further in the next week or two as some of the underlying factors behind the initial cash crunch -- including quarterly tax and dividend payments -- pass.
Overall, the recent scare had been a good lesson for banks that they needed to be on better guard against possible financial risks as they expanded credit, Jiang said.
"This situation has pointed out to us banks that we might need to make some changes, make some adjustments to our balance sheets so that there's a better match between liquidity, security and return," he said.
"We can't stretch ourselves too thin for profits."
(Additional reporting by Xie Heng; Editing by John Mair)
MEXICO CITY (Reuters) - Seeking to dismantle a black economy dragging on economic growth, Mexico wants to lure informal workers into the social security net - and the reach of the tax man.
Six in 10 Mexican workers, or 30 million people, live in the informal economy, eroding Mexico's already-low tax base and hindering plans to set up a universal social security system.
"The country loses 3 or 4 percentage points of GDP every year because 60 percent of its workers don't generate any taxes and also don't have social security benefits," Labor Minister Alfonso Navarrete said on Tuesday.
"If there are no real incentives to make it attractive for informal workers to turn formal ... it's difficult to get this group to migrate."
Navarrete said the new program would get government and employers working with Mexico's powerful labor unions to bring workers into the formal fold and give them access to mortgage and lending programs set up for workers.
The initiative, to be launched in July, will complement fiscal reforms due for presentation in September which aim to boost Mexico's tax collection from a meager 9.7 percent of GDP and crack down on loopholes and tax evasion.
Tax reform, along with an overhaul of the state-dominated energy sector, is a key plank of the reform agenda promised by President Enrique Pena Nieto, whose plans to boost growth to 6 percent a year have captured the imagination of investors.
Carlos Cardenas, president of The Mexican Institute of Chartered Public Accountants (IMCP), estimates that taxing informal workers would raise the total tax take by 3 percentage points - about half the total tax take increase that experts say is needed.
"It's a growing problem ... If we don't do anything, in a year we will be talking about 65 percent (of workers), not 60 percent," he told Reuters earlier this year.
But senior finance ministry official Miguel Messmacher, charged with coordinating the hotly anticipated fiscal reform, said taxation policy can only do so much.
Messmacher, who maintains all options are still open on the fiscal reform, said 60 percent of informal workers lived in the country or in smaller towns and villages with few formal job opportunities.
"These people work in agriculture or in very small mom-and-pop type enterprises," he said in an interview in his Mexico City office last week.
Another 20 percent are self-employed professionals and the remaining 20 percent are the public face of the black economy, making a living from market stalls, selling chewing gum at traffic lights or as domestic staff.
"That's where tinkering a little bit with the tax structure and the social security contributions can help," Messmacher said, declining to give any details of the planned reform.
"We're analyzing all the different options and we haven't made any choices yet," he said, quizzed about a higher rate for top earners, taxes on capital gains and financial transactions and lowering the corporate tax rate from the current 30 percent.
Tax loopholes and exemptions, which he said had a net cost of about 3 percent of GDP, were also in the firing line.
(Additional reporting by Jim Gaines, Simon Gardner and Luis Rojas; Editing by Phil Berlowitz)