New Year cheer

German Finance Minister Wolfgang Schäuble made a positive prediction for the New Year on Sunday claiming he expected markets to settle in the coming year - paving the way to greater financial stability.

"I believe the situation to be manageable," said Schäuble in comments to the German Sunday newspaper Bild am Sonntag. "In the EU there is a great commitment to keep the situation stable."

"There will be a few surprises and excitement, but we are in a position to manage. I advise a little more composure."

The upbeat prediction appears to contradict a rather gloomier picture painted by Schäuble's erstwhile French counterpart Christine Lagarde, who is now managing director of the International Monetary Fund (IMF).

Concerns about the eurozone meant that the IMF was almost certain to cut its world growth forecast, Lagarde said ahead of the Christmas break.

"I am almost certain... that the forecasts will be revised down," Lagarde told the Niger National Assembly on a visit to the African nation.

"Clouds building up, especially over Europe, mean we have to lower our outlook."

"There is a danger of a... vicious circle driven by a loss of confidence, increased instability on the financial markets and a build up in public debt which often becomes unsustainable."

The debt crisis is set to continue for at least some time into 2012 after a European Union summit earlier this month failed to fully calm markets.

EU leaders drafted plans for a new treaty to deepen economic integration, but it is not certain that the agreement will resolve the debt crisis which started in Greece but which now threatens to engulf the eurozone as a whole.

Author: Richard Connor (AFP, Reuters)
Editor: Andreas Illmer