Page 12 - atoday oct 1
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WORLD NEWSThursday 1 October 2015
As sharing economy grows; Eurozone consumer prices falling
2 Uber executives face prison in France once again due to cheap oil price
LORI HINNANT hailing services eagerly entrepreneurs inspired by PAN PYLAS
Associated Press adopted by consumers its example. Associated Press
PARIS (AP) — Angry French against the fears of drivers. Blablacar, a French start- LONDON (AP) — Consumer prices across the
taxi drivers have torched France’s top constitutional up that connects travelers 19-country eurozone fell in September for the first
tires and snarled highways authority last week upheld who want to share a car time in half a year as energy prices tanked, offi-
in recent months while a law written with Uber in for long-distance trips, said cial figures showed Wednesday, in a development
top government officials mind. Authored by cen- it had raised $200 million that’s likely to ratchet up pressure on the European
denounced Uber’s busi- ter-left lawmaker Thomas in new funds from Ameri- Central Bank to give the region more stimulus.
ness practices. Police raid- Thevenoud, the legislation can and other investors. It The 0.1 percent annual decline reported by Euro-
ed the company’s offices takes aim at geolocalisa- hasn’t had the same regu- stat, the EU’s statistics office, was widely anticipat-
in March, seizing computer tion for car services, as well latory issues — drivers aren’t ed following the recent drop in global oil prices. En-
files, and then took two as any casual drivers who supposed to make a profit ergy prices were a whopping 8.9 percent lower in
executives into custody in want to charge to give on the ride, but merely split September than the year before, more than the 7.2
June. someone a ride — the es- the cost of travel. percent drag registered in August.
Now, Thiebaud Simphal sence of the UberPop ser- Heetch, another French The impact of energy costs is evident in the fact
and Pierre-Dimitry Gore- vice, which allowed nearly newcomer to the field, falls that, when they are stripped out of the calcula-
Coty, the executives, face anyone with a driver’s li- somewhere in the middle. tions, consumer prices were 1 percent higher in the
year to September. If food, alcohol and tobacco
Pierre-Dimitri Gore-Coty, general manager for western Europe of California-based Uber, left, are also taken out, the eurozone’s so-called core
inflation rate stood at an unchanged 0.9 percent.
and Thibaud Simphal, manager of Uber France, right arrive at the court house in Paris, France, Though anticipated, the negative headline rate is
likely to be a disappointment to policymakers at the
Wednesday, Sept. 30, 2015. Two Uber executives are facing the possibility of prison in a trial ECB who this year launched a 1.1 trillion euro ($1.2
trillion) stimulus program in the hope of getting infla-
hinging on the ride-hailing service’s outlawed low-cost service. (AP Photo/Michel Euler) tion back toward target. The ECB aims for an infla-
tion rate of just below 2 percent.
up to five years in prison cense to connect with po- The company uses casual For a while, the stimulus appeared to be helping to
and fines of 300,000 euros tential customers. drivers and operates only bring inflation back up. It weakened the euro, mak-
($335,000) per charge over “We have found, dare I late night till dawn, when ing imports pricier, and it helped boost the econo-
allegations of fraudulent say, a compromise be- public transit shuts down my by making exports more competitive and keep-
commercial activity, oper- tween competition — be- and taxis are scarce in the ing borrowing rates low. In April, a four-month run of
ating an illegal taxi service, cause competition is nec- city and non-existent in the negative inflation came to an end.
and maintaining illegal essary — and respect for suburbs. Its drivers are un- Falling prices sound good in principle and can be,
databases containing per- the rules of the game,” der pressure from the same if temporary — many economists think the current
sonal information of both Thevenoud told The Asso- police squad that targeted period of weak or negative inflation is a boon to
drivers and passengers. ciated Press in his offices, UberPop, co-founder Ted- economic activity since it’s largely due to weak oil
The company is contest- where the wall prominently dy Pellerin said. prices. Lower fuel costs mean consumers and busi-
ing the charges in a trial displays a car-top taxi light. Pellerin says Heetch doesn’t nesses have more money to spend elsewhere.
that began Wednesday, a France is not Uber’s tough- belong in the same cate- The problem is when falling prices become en-
week after France’s high- est critic — it is banned gory as UberPop — drivers trenched in an economy. So-called deflation can
est constitutional authority entirely in Italy and Spain, can make a maximum of weigh on economic activity, as in Japan in recent
upheld a law banning the and on precarious footing 6,000 euros ($6,720) euros years. Falling prices over a long period of time can
low-cost UberPop service. in Germany and the Neth- a year — the average cost prompt consumers to delay spending in hopes of
Uber discontinued Uber- erlands. But the company of keeping a car in France, bargains down the line and make businesses reluc-
Pop and operates other, countered with legal chal- and it works at times and in tant to invest and innovate.
more expensive services in lenges it hopes will eventu- places where taxis can’t — There has been some evidence that the eurozone
France, which the compa- ally bring vindication across or won’t — go. economy picked up some pace this year but it still
ny says it considers among the European Union. In the “We’re in a situation where lags the growth of the U.S. It still faces debt prob-
its most important markets. meantime, however, the we have drivers who drive lems in many countries, notably Greece, that mean
And France, like many oth- market for transportation with the risk of being ar- governments have to limit their spending. And the
er countries, is grappling alternatives is being ea- rested in the evening and eurozone is going to need a lot of economic growth
with how to balance ride- gerly divided among other held,” Pellerin said.q over a sustained period if unemployment is to come
down significantly. Eurostat said Wednesday that
unemployment across the region fell by a modest
1,000 in August to 17.60 million, which left the jobless
rate at 11 percent.
ECB President Mario Draghi has said the bank
stands ready to provide more stimulus for the eu-
rozone. Earlier this month, he said the bank could
increase the “size, composition and duration of the
program.”
The ECB is pumping 60 billion euros a month in newly
printed money into the eurozone economy by buy-
ing financial assets, mainly government bonds. The
program is slated to run at least through September
2016.
Bill Adams, senior international economist at PNC Fi-
nancial Services Group, said the drop in consumer
prices won’t be enough to prompt the ECB to take
further action just yet.q
