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Deficit Mending
Last week, during negotiations among E.U. Finance Ministers, Luxembourg 's Prime Minister Jean-Claude Juncker sounded like a calculus professor who'd run out of blackboard space. He's struggling with a difficult problem: how to revamp the stability and growth pact — the much-violated E.U. doctrine designed to govern fiscal rectitude — a task that falls to Juncker while his country holds the rotating E.U. presidency.

The pact caps euro-zone countries' deficits at 3% of GDP; Germany and France want to change the rules on what spending gets counted in deficit calculations. Germany, for example, wants the billions it has spent on reunification to be taken into account. Other

INDICATORS Closing Up Shop French retail group Carrefour announced the sale of its Japanese and Mexican operations. The world's second-largest retailer needs to focus on its flagging domestic hypermarket business. Net profits slid 15% last year to €1.39 billion. A Stronger Signal Investors gobbled up shares in Premiere, the once-struggling German pay-TV broadcaster. An initial public offering raised up to €1.18 billion, the biggest German IPO so far this year. Taking The Biscuit British biscuitmaker McVitie's unveiled a mannequin, complete with a motorized mouth and plastic teeth, to sample its products and measure the amount of crumbs produced.

proposed exemptions: defense spending, R&D costs and contributions to the E.U. budget. The proposals drew fire. "Adding a long list of exemptions would blur the picture," says an Estonian diplomat. "Inflation, investment and credit ratings are all at stake." Juncker even warned the pact could be left as is, which would rile France and Germany. Next week, he'll bring ministers together again to try to find a compromise. But few expect a solution until E.U. leaders meet in Brussels later this month — if then.

BA Gets A New Pilot
Talk about getting an upgrade. Willie Walsh, former boss of Ireland's state carrier Aer Lingus, was last week appointed to succeed British Airways' departing CEO Rod Eddington in September. BA shares rose on the news of Walsh's new job, and the airline — in the midst of a turnaround — hailed the 43-year-old as "the very best person for the job." Walsh's main accomplishment was rescuing Aer Lingus from bankruptcy after taking over the controls in late 2001.

Now "it's the only European flag carrier making money on short-haul" regional flights, points out Joe Gill, research director at Goodbody Stockbrokers in Dublin. Walsh clipped Aer Lingus' staff numbers by about a third and trimmed costs, part of a "culture to pare everything down to the bone," says Gill. But the ex-pilot failed to push through further job cuts before his departure in January. And rising fuel costs and chronic staff troubles could make it hard to get similar steps at BA off the ground. — By Adam Smith

Trading Flaws
Frankfurt's Deutsche Börse bowed to pressure from rebel shareholders and shelved its $2.5 billion bid for the London Stock Exchange. LSE shares promptly tanked. Pan-European rival Euronext, its remaining suitor, has yet to name a price.

The Bottom Line
	We set — hell, I set — a higher standard here. I violated my own standards
		HARRY STONECIPHER, after resigning as aerospace manufacturer Boeing's CEO, following his extramarital affair with a senior colleague