The pound has slipped slightly against the dollar, following a revised forecast of economic growth, which put the country slightly below where it had been previously anticipated. At the same time, the UK’s inflation expectation has been lowered, thus alleviating pressure to increase the interest rate. However, the pound rose marginally on the euro.
As the debt crisis in Spain is continuing to be resolved with sovereign debt being auctioned, so that the debt problems will be restricted, it is likely that the euro will continue to strengthen in the coming months. The euro has climbed by 7% against the dollar this year alone.
This has impacted many potential French real estate buyers’ budget and thus increased demand for higher French mortgages to minimise exchange rate loss.

Rising inflation rates across Europe, and notably in France, with a 2.3% increase in February alone, are encouraging the European Central Bank (ECB) to increase the interest rates in order to counter these unanticipated levels of inflation. The bank shifted its year-long and its 2012 overall inflation projections.

The interest rate increases are aimed to signal to investors that there is a focus on controlling inflation throughout the Eurozone. The ECB is tightening economic policy as the economy rebuilds and expands. The ECB Governing Council members expressed that monetary policy as it stands is too “accommodative”, thus necessitating the higher interest rates. Further, the rising interest rates are an indication that the economy is strengthening to be able to withstand the shifts in investment that may occur as a result of the changes. Additionally, the increased interest rates are an emphasis on the bank’s credibility.

The problem of balancing stronger economies, like Germany and France, which recovered the most quickly from the financial crisis, with the countries that have required aid in the form of foreign loans or World Bank bailouts remains a challenge for the ECB.

The IMF last week increased its growth prediction for the euro region to 1.6% in 2011 and 1.8% in 2012. The ECB is also trying to emphasize that while the euro’s exchange rate dipped slightly in mid-April with announcements over Greece’s bond rankings they are confident that the sovereign debt crisis, in terms of those countries requiring bailouts, is a restricted situation.

The primary policy goal of the ECB this year is inflation control. The ECB has not explicitly indicated whether its Euribor rate will indeed increase to 1.75%, a further increase of 0.5%, but there are indications that such increases are not out of the question. There is an expected raise in the interest rate by 0.25% each quarter through the end of 2012 so that the interest rate at that juncture would be 2.75%.

According to Business Week, investors in the European market can expect that the bank will be beginning to decrease its supply of liquidity to banks and to perhaps cut down on its bond purchase program as these two policies are not in line with the policies towards lessening dependency on the ECB by member countries.

Excerpts from the press interview with Jean-Claude Trichet, President of the ECB & Vítor Constâncio, Vice-President of the ECB - 3 February 2011

• Based on its regular economic and monetary analyses, the Governing Council confirmed that the current key ECB interest rates still remain appropriate. It therefore decided to leave them unchanged. Our monetary analysis indicates that inflationary pressures over the medium to long term should remain contained. Inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2% over the medium term.

• Overall, we expect price stability to be maintained over the medium term, and the current monetary policy stance remains accommodative.

• Turning to fiscal policies, it is now essential that all governments fully implement their fiscal consolidation plans in 2011. Where necessary, additional corrective measures must be implemented swiftly to ensure progress in achieving fiscal sustainability.  Experience shows that expenditure restraint is an important step towards achieving and maintaining fiscal soundness, notably when enshrined in binding domestic policy rules.

• Substantial and far-reaching structural reforms, complementing fiscal adjustment, should be urgently implemented to improve the prospects for higher sustainable growth and employment. Major reforms are particularly necessary in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. Sound balance sheets, effective risk management and transparent, robust business models remain key to strengthening banks’ resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability.

Source  : www.ecb.int

Key French tax deadlines to note for 2011

30/04/2011 is the deadline to submit :

• 2010 VAT declaration for French leasebacks
• 2010 income declaration for furnished French rental property
• 2010 French income tax declaration for French "Société Civile Immobilière" or “SCI”s

15/05/2011 is the deadline to submit the 2010 declaration of foreign company shareholders (or be subject to the 3% tax)

31/05/2011 is the deadline for French residents to submit their 2010 income tax declarations

15/06/2011 is the deadline to submit your 2010 declaration for the French “Impot sur la fortune” or “Wealth tax” if you are a French resident

30/06/2011 is the deadline for non-residents to submit their French income tax declarations for 2010

15/09/2011 is the deadline to pay your 2010 income tax bill

15/10/2011 is the deadline to pay your 2010 property tax bill or "Taxe fonciere"

15/11/2011 is the deadline to pay your 2010 occupation tax or “Taxe d’habitacion”

15/12/2011 is the deadline to pay your 2010 professional tax or “Taxe professionelle”

If you’re interested in buying or investing in French real estate, hiring a French mortgage broker will help you demystify how home finance works in France and save you time and money. Expert mortgage brokers have built and maintained strong relationships with numerous French mortgage lenders, so they can provide you with a comprehensive overview of which mortgage products are most suitable for your needs. A French bank will only present the products they are selling to you which may not be suitable. Further, most clients don’t have time or language skills needed to shop around 4 or 5 banks to get a clear picture of a competitive quote. Throughout the entire process of applying for, securing, and finalizing your mortgage option, your French mortgage broker will serve as the intermediary between you and the banks.

It’s possible to handle the entire mortgage application process on your own, but the primary reason that French mortgage brokers are hired is to reduce the time and effort needed to secure a French mortgage. Your mortgage broker will help you save significant amounts of time by providing you various mortgage quotes from different lenders, informing you of the missing documents that are needed to complete the application, and advising you on the pros and cons of each product.