Exchange rates are once again a primary focus in Europe, as the euro has risen to all-time highs vs. the dollar—recently above US$1.40—and shows no signs of reversing anytime soon. Most finance officials have put on a brave face, but it is clear that there is growing concern that the strengthening euro will curtail European growth prospects.

Thus far there is no sign that the European Central Bank (ECB) is considering rate cuts to stem the currency’s rise, despite political pressure from France. Coordinated intervention among major economic powers to drive down the currency’s value does not seem to be on the agenda either, and it is clear that unilateral intervention in currency markets by the ECB has little chance of success. Nonetheless, central bankers and politicians in the euro zone—the 12 nations that share the euro as their common currency—will push for some form of verbal intervention and a joint statement at the meeting of the Group of Seven (G7) industrialized nations next week.

The euro has appreciated 8.1% vs. the dollar in the first nine months of the year, after already rising 8.2% in 2006. On a trade-weighted basis, the appreciation looks somewhat less dramatic, as the nominal trade-weighted index (TWI) rose just 3.7% year-over-year in September. Nevertheless, the TWI is also at the highest level since the start of European Monetary Union.

A stronger euro undermines the competitiveness of euro zone goods on international markets and could affect foreign demand, which has been a supporting factor for growth in the region. So far, low wage growth and larger productivity gains have cloaked the impact of the real exchange rate appreciation. Also, world growth has been robust, which helped to offset the impact of the stronger currency. Euro Strength and World Growth

But while some companies have sufficient margins to tide them over in a period of extended euro strength, it is clear that many will come under pressure. Indeed, while European companies have, for a long time, remained relatively relaxed about the euro’s rise, they are now increasingly voicing concern. The German exporters’ federation, BGA, has cut its export forecast for next year on the back of the currency appreciation.

This is likely due both to the stronger currency as well as a potential slowing in Europe’s major trading partners. In general, world growth is more important for export demand than the exchange rate. According to the European Union (EU) commission, a 10% drop in world demand cuts euro zone exports by 8%. And the fallout from the U.S. subprime crisis will have an impact on U.S. growth that could hit other major economies as well.

On Oct. 9 the International Monetary Fund (IMF) posted surprisingly large reductions in its 2008 growth forecast for major economies as a reaction to financial market turmoil. U.S. growth is now seen at just 1.9%, compared with 2.8% expected previously. And the forecast for world growth has been cut to 4.8% from 5.2%. Yet this is still relatively robust growth and, assuming the commission’s estimate of the correlation between world growth and exports is symmetric, the positive impact from still-strong world growth would far outweigh even the impact of a 10% euro appreciation. So far, surveys suggest that confidence about the future for exports has peaked, but remains relatively strong.

Furthermore, a stronger euro also means lower import prices, which ultimately will have a downward effect on consumer price inflation. The stronger euro has helped to dampen the impact of a renewed rise in oil prices. Ultimately, the prolonged euro appreciation will improve purchasing power and may strengthen domestic demand. Rate Hikes Or Cuts?

To the extent that the stronger euro has a positive impact on the medium-term inflation outlook, it also affects ECB policy. Earlier in the year, the ECB would clearly have preferred a tightening of monetary conditions via interest rate hikes rather than through the exchange rate channel.

CHILDREN have been banned from bringing birthday cakes to school to share with classmates.

The ban, said to be supported by most parents, has been introduced by around half the primary schools in East Lothian over concerns about disruption to lessons, healthy eating, and allergy sufferers being left out.

Teachers are said to have grown concerned that parents felt under pressure to provide expensive cakes, as youngsters bring in ever more elaborate confections. Food allergies have been raised as another reason to back the ban.

Peter McKenzie, education leader with East Lothian Council, said the ban did not go far enough, adding that he would like to see a complete removal of unhealthy treats in school.

But one ex-teacher called the move an “absolute piece of nonsense” and an intrusion into the lives of parents and children.

Maureen Tremmell, headteacher at Gullane Primary School, near North Berwick, defended her decision to introduce the policy.

She said: “Teachers really don’t have time to share out birthday cakes during class time. Children’s birthdays are special without cakes and sweets. We still sing ‘happy birthday’ in class.”

She said most parents had been supportive, with only one raising concerns about the policy. Ms Tremmell called on parents to back her stance in a recent school newsletter in which she pointed out that many children suffer from a range of allergies.

She added: “There is also a thought that children and parents may feel under pressure to bring things in so their child does not feel ‘left out’.”

Ailsa Kellagher, the chairwoman of the parent-teacher association, who has four children at the Gullane school and nursery, said: “The majority of parents are absolutely fine with the decision. This has been a dilemma for a while. Some children are bringing in bigger and bigger cakes, and you don’t want others to feel left out if they can’t do that.

“By the time the teacher’s shared out the cake, it could take half an hour.This is time better spent teaching, in particular in the early years.”

A spokeswoman for East Lothian Council said 20 out of around 40 primary schools had adopted similar policies. The decision is up to individual schools.

Councillor McKenzie said: “You never know the origin of that cake. In view of the obesity epidemic, anything we can do to discourage eating sweets has to be good. Parents should be encouraged to send their children to school with healthy food.”

But Robert Dow, 73, a former teacher and grandfather-of-two from Tranent, said: “This is taking the healthy eating message too far. What’s wrong with taking in a birthday cake to share?

“The whole thing is an absolute piece of nonsense. There’s far too much intrusion in people’s lives already. If they are concerned at childhood obesity, they should be building more playing fields.”

Councillor Marilyne MacLaren, Edinburgh’s education leader, said all schools in the Capital were promoting healthy eating.

She said: “It is the responsibility of the headteacher in consultation with parents to introduce initiatives where parents can voluntarily stop their children from taking foods such as sweets and crisps into school. You can’t force people to eat healthy food, you can only encourage them to do so.”

NEW YORK — plans to raise the cover price and home-delivery rates for the newspaper next month, Janet Robinson, the company’s chief executive, told an investor conference Wednesday.

Robinson said the price increases would result in about $7 million to $8 million in additional revenue in 2007, and $14 million to $16 million on an annual basis going forward.

A spokeswoman for the newspaper, Catherine Mathis, said later that home-delivery rates for The New York Times would increase 3 percent to 4 percent, while the newsstand price would increase from $1 to $1.25 beginning July 16. Sunday newsstand prices will increase from $3.50 to $4 on July 15 in the New York metropolitan area only.

Last week said it would raise the cover price of from $1 to $1.50, also on July 16.

Newspaper publishers throughout the country are looking for additional ways to increase revenues amid a slump in advertising as marketers shift spending to other media and online. Last week the Times reported its advertising revenue for May declined 8.5 percent from the same month last year and 4.4 percent so far this year.