EU admonishes Britain over continuing deficit
Brussels: The European Commission warned Wednesday that the British government was not doing enough to cut its budget deficit and urged it to take immediate action to reduce public borrowing below 3 per cent of the country's gross domestic product.

Joaquin Almunia, the European Union's monetary affairs commissioner, recommended that EU governments set a one-year deadline for Britain to get its public finances in order. Britain, one of Europe's biggest economies, might break the three per cent deficit ceiling set in the union's Stability and Growth Pact for four successive years unless action is taken.

The commission, however, has no real power to penalize the government, as Britain has not adopted the euro.

"Although the U.K. budgetary position is less worrying than that of others in the EU, in particular as far as its debt position is concerned, the commission recommends that the U.K. deficit be declared excessive and the U.K. asked to correct the situation," Almunia said.

The EU warning comes as an embarrassing rebuke to the chancellor of the exchequer, Gordon Brown, whose record in this position is seen as one of his main claims to succeed Tony Blair as prime minister. Brown is also prone to delivering sermons to his Continental counterparts on their economic policies.

So far the EU commission has not issued formal warnings to Britain, on the assumption that the country's budget deficits would not last. The commission said Wednesday, however, that the deficit could no longer be considered temporary and that it was recommending a one-year deadline to bring it back below 3 per cent.

In a statement Wednesday, the British Treasury said that its forecasts "were fully consistent with a prudent interpretation of the Stability and Growth Pact" and that Britain had "the lowest average debts and deficits" of any major European economy. It said Britain continued "to meet our fiscal rules over the cycle with the public finances sustainable and increases in public investment fully affordable."
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Johnson & Johnson to pick up Guidant for US$23.2bn
New Brunswick, USA: Johnson & Johnson, the world's biggest maker of medical devices, will pick up Guidant Corp. for US$23.2bn in cash and stock, beating a rival bid for the cardiac device maker from Boston Scientific Corp.

Johnson & Johnson agreed to pay US$68.06 a share, the New Brunswick, New Jersey-based company said today in a statement. The boards of both companies approved the purchase, Johnson & Johnson said in the statement. Indianapolis-based Guidant's shareholders are scheduled to vote on the agreement Jan. 31.

Guidant ranks behind only Medtronic Inc in sales of heart rhythm devices, a US$10bn-a-year market. J&J first agreed to pay US$25.4bn for Guidant in December 2004, then cut the price by $4 billion after Guidant recalled 109,000 faulty defibrillators linked to at least seven deaths.
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Bonuses at Wall Street firms rise to a record US$21.5bn
New York, USA: Wall Street firms are all set to pay their employees a record US$21.5bn in bonuses for 2005 after profits at companies including Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. reached an all-time high.

Average bonuses for the city's 174,000 investment bankers and other securities-industry workers will rise 10 per cent to US$125,500, also a record, New York's Comptroller said today in a statement. Total bonuses surpassed the previous peak of US$19.5bn set during the bull market in 2000.

Earnings at Goldman, Lehman, Morgan Stanley and Bear Stearns Cos., four of the top five U.S. firms by market value, jumped 15 per cent to US$14.6bn as trading revenue surged by a fifth.

Compensation on Wall Street typically consists of base pay of $175,000 to $250,000 for a senior managing director, plus bonuses. Bonuses are announced in December or January, after the end of the fiscal year, and paid during the following month.

Bankers who stand to gain the most include Jack Levy, 52, and Gene Sykes, 47, co-heads of M&A at Goldman, the world's biggest merger-advisory firm. Paul J. Taubman, 45, is their counterpart at No. 2-ranked Morgan Stanley.

Goldman worked on $594 billion of completed mergers and acquisitions in 2005, an increase of 22 percent from the previous year, according to data compiled by Bloomberg. Morgan Stanley handled 27 percent more completed deals.

New York State will collect US$1.5bn in tax revenue from the bonuses and New York City will get almost US$500mn, the comptroller said. According to his estimates, every job created in the local securities industry supports two more jobs in the city and a third in the suburbs.

Bonuses are linked to revenue, which surged almost 45 percent through the first three quarters of 2005 and reached the highest level since 2000 on the strength of mergers and acquisitions, the State's Comptroller office said.
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DuPont slashes fourth-quarter outlook
New York: DuPont Co., the No. 2 U.S. chemicals maker, on Wednesday said fourth-quarter profit would be much lower than expected on the back of hurricane-related plant closures and production cuts, as well as weak sales and higher costs in three of its businesses.

It is the second time in less than three months that the company has lowered expectations for the fourth quarter, citing the effects of Hurricanes Katrina and Rita.

DuPont is only the latest raw-materials company to indicate that Katrina and Rita, though long passed, continue to significantly affect operations.Earlier this week, Alcoa Inc. posted disappointing quarterly profit, saying the hurricanes had affected both production and materials costs, and oil major BP Plc said the hurricane-related shutdown of its Texas City refinery and other storm damage had cost it US$1bn in lost profit and repairs.

DuPont Chief Executive Chad Holliday told analysts on a conference call that the company underestimated the effects of the hurricanes. The company said it could be several years before a final determination could be made on recovery.
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