Ivo Josipovic, Social Democratic Party candidate supported by the People's Party-Democratic Liberals (HNS), the Democratic Party of Istria (IDS), the Pensioners' Party (HSU), the Greens as well as by the outgoing Head of State, Stjepan Mesic, came out ahead in the second round of the presidential election on 10th January in Croatia. He won 60.62% of the vote ahead of Milan Bandic who won 39.74%. Turnout rose to 50.13%. Ivo Josipovic will officially succeed outgoing President Stjepan Mesic on 18th February next.

The Czech Republic registered a record budgetary deficit in 2009 of 192.2 billion crowns (around 7.3 billion euros), according to figures published on 4th January. "The deficit has reached an historical record high notably in the wake of a decline in revenue," admitted Finance Minister Edward Janota referring to the gross figure. The entire deficit in public finances in 2009 represents between 6.6% and 6.9% of the GDP. In 2008 the public finance deficit only totalled 2.1% of the Czech GDP. The minister deemed the 2009 figure unacceptable whilst one of the Maastricht criteria to join the euro area is a ratio between the public finance deficit in comparison with the GDP of 3% maximum.

In the wake of the announcement by the Icelandic President Olafur Grimsson not to promulgate the law allowing the reimbursement of loans totalling 4 billion euros lost by British and Dutch savers during the bankruptcy of the main banks in Iceland in 2008, the rating company Standard and Poor's has punished Iceland. The agency placed the country on CreditWatch negative. It maintained its score in the BBB category but it said that this might be decreased "by one or two points" in a month's time.

The 27 heads of State and government will be meeting on 11th February for an extraordinary European Council devoted to boosting economic growth said the President of the European Council, Herman van Rompuy on 4th January. "We need more economic growth in view of funding a sound basis for our social model and to protect our European way of life," he explained.

On 22nd December the Italian Senate approved the finance law for 2010 that notably includes budget cuts in the civil service, the reduction of the number of local councillors, the establishment of an Investment Bank for the Mezzogiorno and a solidarity fund for farmers, an increase in spending in support of universities, schools and SME's was well as for employment and healthcare. The text went together with a Provisional and Programming Report for 2010 and an Economic and Financial Programming Document for 2010-2013. These texts show an improvement in the international economy whilst highlighting the weaknesses of the economic recovery and the labour market. The slow progression in unemployment in Italy in comparison with the euro area average and the improvement recorded by OECD indicators will make it possible to put forward more optimistic forecasts with a GDP variation of -4.8% in 2009 and +0.7% in 2010. The planned deficit is 5% in 2010, 3.9% in 2011 and 2.7% in 2012.

The European Economic Sentiment Indicator increased more than forecast in December according to figures published by the European Commission on 7th January. It increased by 2.5 points to 91.3 in the euro area and by 4.1 points to 92 across the entire Union. It is the ninth consecutive rise since its low in March last although it is well below its long term average. The business climate indicator has also improved rising from -1.53 in November to -1.22, but the level is still low.

German Finance Minister Wolfgang Schäuble announced major savings measures to reduce the public deficit as from 2011 in an interview in the Berlin daily Tagesspiegel am Sonntag (TAS). As from 2011 the German state is to start reducing the deficit by 86 billion euros and the centre-right coalition government is to "prepare citizens for these savings measures," said Mr Schäuble.

The public deficit of Belgium in 2009 is due to reach around 20 billion euros ie 5.89% of its GDP. This result - the worst since the trough of 7.7% of the GDP recorded in 1993 - should be compared against the deficit of 1.2% in 2008.

The Danish Central Bank announced on 7th January a 0.05% reduction in its main interest rate to 1.15% heralding a new historical low as well as a rapprochement with the European Central Bank's main rates. "The lending rate has been reduced by 0.05% to 1.15%" indicated the institute in a press release.

Thanks to a greater surplus than originally forecast Hungary could maintain its public deficit under the 4% mark in 2009 according to the Finance Minister. "We easily achieved our goal in terms of the budgetary deficit because the surplus in December rose to 205 billion forints (760 million euros) instead of the expected 135 billion (500 million euros). Across the whole of 2009 the Hungarian budgetary deficit reached 3.6% of the GDP instead of the expected 3.8% according to a press release on the part of the Finance Ministry.

The public finance deficit in Poland represented around 6.3% of the GDP in 2009, in line with forecasts said Polish Deputy Finance Minister Ludwik Kotecki on 6th January. "In our budgetary previsions we forecast a 6.3% deficit (of the GDP). I think that the final result will not be different from this," he indicated. At the same time the budgetary deficit in 2009 did not rise beyond 25 billion zlotys, below the 27.7 billion zlotys forecast.

In an exclusive interview on the site of the European Council, Herman Van Rompuy, President of the European Council, declared that for the EU 2010 will be the year for the renovation of its institutions and policies.

The Directorate General for Competition at the European Commission presented three documents on 6th January that explain in detail how European Commission antitrust procedures work in practice to further enhance the transparency and the predictability of Commission antitrust proceedings. These texts will allow companies which are under investigation to understand more easily how the procedure will be undertaken. The Commission will implement these texts provisionally as from 6th January but it invited those concerned to put forward their observations so that it undertaken modifications if necessary.

The European Commission announced on 7th January that it had concluded three deals with ThalesAleniaSpace (Italy), OHB System AG (Germany) and Arianespace (France), thereby enabling it to make the European Satellite Navigation system operational by the beginning of 2014. The contracts will be signed in the next few weeks between the selected companies and the European Space Agency on the Commission's behalf. The services that will be operational in 2014 will be the basic ones, the regulated public service (for use by governments for security operations) and the search and rescue service (to come to the aid of people who have had accidents on the road or those who are lost). The "life rescue" service (that makes it possible to guide planes in flight or boats into ports) and the commercial service will be tested and will not be available until Galileo has reached a total operational capapcity of 30 satellites.

On 5th January the head of the Spanish government, José Luis Rodriguez Zapatero brought together a "council of elders" notably Jacques Delors and Felipe Gonzalez to discuss the end of the crisis in Europe and his project for "European Economic Government". Discussions focused mainly on the "enhancement of economic coordination policy" in Europe to counter the crisis that was launched in 2008. Participants mentioned the means to consolidate the internal market and to develop European innovation and competitiveness in the face of the other major world economies.

On 22nd December the Council of the EU authorised the Commission to negotiate a cooperation agreement on nuclear energy with Russia. The latter is one of the main world suppliers of nuclear materials and equipment. The European Commissioner for Energy, Andris Piebalgs said he was pleased with this decision believing that an agreement that creates a stable legal framework and which promotes strict security standards will be beneficial to both parties. This agreement will come in addition to those already in application with the USA, Canada, Australia and Kazakhstan.

On 22nd December the 27 Environment Ministers adopted conclusions relative to biodiversity (2010 will be the international biodiversity year), management of the marine environment and the effects of combining chemical products. Ministers looked into the results and the follow-up of the Copenhagen Conference on Climate. They stressed that the EU is trying to come to an international agreement that is legally binding for all parties and sufficiently ambitious in order to limit global warming under the 2° mark. In the process that will follow the Copenhagen Climate the EU is due to continue to show its ambitions and maintain a leading role. They extended anti-dumping rights on imports into the EU by 15 months; this notably concerns shoes with leather uppers from China and Vietnam . Finally they appointed new members - title holders and substitutes to the Committee of Regions for the next term in office running from 26th January 2010 to 25th January 2015.

The main European representatives, the new permanent president of the EU, Herman van Rompuy, the head of the Spanish government, José Luis Zapatero and the President of the European Commission José Manuel Barroso outlined the shape of the European economic "government" on 8th January which includes greater coordination between national policies in order to emerge from the crisis and low growth rates. "The main goal is to strengthen the EU, to move towards the economic unity of Europe" in order to bring back prosperity.

The radio-television company of Saarland (SR-Saarländischer Rundfunk) and its French and German partners have released the 2010 Franco-German Journalism Prize (PFAJ). Totalling 28,000 euros in all it will be given to four categories (radio, TV, written press, internet). It will be awarded to documentaries that help to understand the neighbouring country better or that present a view of a third country involving Franco-German themes. Candidates can come forward until March 1st. The Prize will be awarded on 22nd June in the ZDF HQ in Berlin.

German Chancellor Angela Merkel is the preferred European leader on the part of the Spanish according to a poll published on 3rd January by the Spanish newspaper El Mundo. "After having brought Germany out of the recession the Spanish think that Angela Merkel is much more appealing, a better manager and has a greater ability for leadership," than her European counterparts believes El Mundo. An article in Time on 8th January is also devoted to the German Chancellor. It reviews Angela Merkel's profile in detail and notably looks into her policy with regard to Iran and Afghanistan, as well as Germany economic policy.

Germany has finally lost its title as the leading exporter in the world to China which is taking greater advantage of the economic recovery according to foreign trade statistics published on 8th January. Europe's leading economy, whose trade surplus increased again in November, is still the champion of foreign trade however. With 82 million inhabitants it sold for a total 734.6 billion euros (1,050 billion dollars) of goods beyond its border over the first 11 months of 2009 according to the German institute Destatis.

Pierre Lellouche, Secretary of State for European Affairs and Secretary General for Franco-German cooperation was host to his German counterpart, Werner Hoyer in Paris on 7th January. This is their fifth meeting since the German government was formed in November last. During their discussions they continued joint preparation work for the Council of Franco-German Ministers that will take place at the beginning of February in Paris. They also addressed various topical European issues, such as the implementation of the European External Action Service, the EU energy policy, the preparation of the EU2020 strategy and enlargement.

In an interview granted on 24th December to the Trieste newspaper Il Piccolo Italian Foreign Minister Franco Frattini re-iterated Italy's support to Serbia's accession to the EU considered as "an opportunity for the north east of Italy". This region has privileged economic relations with Serbia and the Balkans which would be strengthened by Serbia's entry into the common market. Italy is Serbia's third trade partner.

According to seasonally corrected data published on 8th January by Istat in Italy the unemployment rate rose to 8.3% of the working population in November in comparison with 8.2% in October reaching its highest level since March 2004. The number of those looking for work rose to 2.079 million in November - again these are seasonally corrected figures. The 2 million mark was crossed for the first time in October 2004.

British Prime Minister Gordon Brown indicated on 8th January that the rights granted to energy companies to develop more wind powered energy in the world will help to reduce emissions and the emergence of low carbon print jobs in the UK. A certain number of companies were given the right to create new off-shore wind farms that may help the UK achieve an additional 32 GW of clean energy. According to the Prime Minister the off-shore wind industry may bring in 75 billion £ and provide 70,000 jobs by 2020.

Ivo Josipovic, the Social Democratic Party candidate easily won the second round of the Croatian presidential election on 10th January. He won 60.62% of the vote ahead of Milan Bandic, a dissident SPD candidate and Mayor of Zagreb who won 39.74%. Turnout in the second round rose to 50.13%. Ivo Josipovic will take office on 18th February next.

The Icelandic Parliament voted unanimously on 8th January in support of the holding of a referendum on the Icesave law as soon as possible and before 6th March - but no date has yet been set. 49 of the 63 MPs present approved the referendum on the issue before 6th March. The 14 remaining MPs were absent but none were against the decision.

According to figures published by Eurostat on 6th January the new industrial orders index decreased in the euro area by 2.2% in October 2009 in comparison with September 2009. The index recorded a rise of 1.7% in September. In the EU new orders declined by 1.6% in October 2009, after increasing by 1.4% in September. Excluding ship building as well as railway and aerospatial equipment, whose variations tend to be more volatile, new industrial orders decreased by 0.4% in the euro area and by 0.8% in the EU. In addition to this the industrial production price index increased by 0.1% in the euro area and by 0.2% in the EU in November 2009 in comparison with October 2009.

According to data published by Eurostat on 8th January the unemployment rate in the euro area lay at 10% in November 2009 (the highest level since August 1998), in comparison with 9.9% in October and 8% at the same time a year before that. With regard to the Union Eurostat observed an unemployment rate of 9.5% (its highest rate since January 2000), in comparison with 9.4% the previous month and 7.5% in November 2008.

In the third quarter of 2009 in comparison with the 2nd quarter the GDP increased by 0.4% in the euro area and by 0.3% in the Union according to estimates published on 8th January by Eurostat. In comparison with the same period last year the GDP recorded a decline of 4% in the euro area and 4.3% in the Union. Export increased by 3.1% in the euro area during this period and by 2.7% in the Union whilst imports rose respectively by 3% and 2.9%.

The new issue of "Cahiers Français" published by Documentation française offers an overview the major trends in employment and unemployment in the developed economies. It looks into the changes in the organisation of work and the qualitative aspects of employment before putting forward a summary of the various national models to counter unemployment.

The German Society for Foreign Policy (DGAP) has published a study by Christophe Blot and Stefan Kooths entitled "Zwei Wirtschaftssysteme in der Bewährungsprobe: Die deutsch-franzözische Debatte über die Wirkschaftskrise" (Two economic systems under test: the Franco-German debate over the economic crisis). Although the recession and the recovery of economic activity has been almost simultaneous both in Germany and France the crisis has not affected the two countries in the same way. We might ask why Germany experienced, like Japan, one of the biggest declines in GDP amongst the industrialised countries whilst France was one of the least affected. However the increase in its unemployment rate was greater. The authors look into measures taken by the two governments to boost the economy and ask whether both countries are pursuing appropriate growth strategies or whether these might be improved.

The German Institute for International Affairs and Security (SWP)has published a study "The EU as a Strategic Actor in the Realm of Security and Defence? A Systematic Assessment of ESDP Missions and Operations". The study analyses the strengths and weaknesses of the ESDP and assesses their pertinence and effectiveness as a means for crisis management and to strengthen the EU's work in the areas of security and defence.

From 13th January to 18th April the Cartier-Bresson Foundation is devoting an exhibition to Robert Doisneau. The exhibition is offering a selection of one hundred original photos, mainly selected from amongst the treasures of his workshop and various public and private collections. The pictures on show were taken between 1930 and 1966 in Paris and in the suburb where he lived. This review attempts to show how Robert Doisneau moved on from "the profession over to art" with incredible seriousness by photographing a world whose existence he wanted to prove.

From 23rd January to 18th April the Royal Academy is hosting a Van Gogh exhibition, showing his paintings and also letters written to his brother Theo. Rarely put on show because of their fragility these letters reveal a great deal about the work and life of the painter. Sometimes containing drawings and often bearing detailed descriptions of his work they comprise a unique critical instrument.

Spanish novellist Clara Sanchez won the 66th Nadal Novel Prize on 6th January in Barcelona for her book "Lo que esconde tu nombre" - (what your name hides)- this is one of the most prestigious prizes in Spanish literature.