The Irish Independent reports that two new surveys reveal that private sector confidence in the Irish economy remains strong.

The Irish Examiner reports that a supermarket price slashing war could be in full swing by Christmas, Enterprise Minister Micheál Martin indicated last night.

The consumer boost is set to be triggered by the Government’s long anticipated decision to repeal the Groceries Order which prevents retailers passing on certain discounts they get from suppliers to customers.

The move could save families up to €1,000 a year, according to Rip Off Republic presenter Eddie Hobbs.

Mr Martin stressed he would also be beefing-up competition laws in a bid to reassure independent traders who fear the abolition will see them swept out of the market by chain stores.

The Enterprise Minister said he did not rule out having the new regime in place by Christmas, however Oireachtas observers saw that as optimistic given the amount of parliamentary time which would be needed to effect the changes.

Mr Martin insisted the Government had “no option” but to revoke the order as it had acted against the interests of consumers for the past 18 years.

“There is substantial evidence that consumers are paying higher prices because of the order,” he said.

The minister pointed to the fact food inflation in the Republic since 1996 had risen three times faster than in Britain and by twice the EU average.

Mr Martin added the Groceries Order was “flawed”, difficult to enforce and had not stopped 2,500 shops going out of business since it was introduced in 1987.

Mr Martin insisted community businesses would be protected by strengthening the Competition Act 2002 to guard against “predatory pricing” - whereby supermarket chains try to force small competitors to shut by reducing the price of “loss leaders” intended to lure in customers.

New regulations will also be brought-in to prohibit the use of “hello money” - where retailers receive a non-invoiced payment for stocking certain goods.

Independent retail groups such as RGDATA warned that the abolition would lead to the closure of many family-run corner shops who could not compete on price against the chains.

But the Competition Authority welcomed the abolition of the order, which it branded “one of the most anti-consumer and protectionist devices from the Irish statute book.”

The Society of St Vincent de Paul said it supports cheaper food choices, but does not believe the repeal will achieve this in the absence of wider changes.

National Consumer Agency chairperson Ann Fitzgerald described the move as a “triumph for the Irish consumer. She added that less well-off households, who spend proportionately more on groceries, stood to benefit most.

In an attempt by the ECB to warn European governments about the consequences of overspending, the bank is to state that it will only accept bonds with at least a single A- rating from one or more of the main rating agencies as collateral in its financial market activities, European Union financial policy-makers said. A refusal by the ECB to accept a government's bonds would amount to a humiliating swipe at that government's policies, and make its bonds harder to sell. So far, no eurozone government bond has been excluded, but the ECB's existing list of eligible collateral does not include assets rated below A-.

The eurozone has been dogged by the failure of many countries to keep budget deficits under control, in spite of political efforts by Brussels to rein them in. The ECB appears to hope that the market mechanism will help impose fiscal discipline where political pressure has failed. But the move will not put additional pressure on France and Germany which enjoy high credit ratings in spite of having broken EU rules on budget deficits.

Jean-Claude Trichet, ECB president, last week described the outlook for the deficits of some eurozone countries as "a matter of great concern". EU government officials said the ECB had discussed its collateral strategy in meetings with eurozone finance ministers. A formal announcement is expected soon.

Greece's credit rating was downgraded last year by Standard and Poor's to single A, only one notch above the ECB's minimum and the lowest among the 12 eurozone countries. S&P reaffirmed that rating on Tuesday.

The ECB refused to comment on its plans. The Frankfurt-based institute is likely to explain the move as part of efforts to increase transparency. It has faced claims that it could do more to put pressure on governments breaking EU rules on public sector deficits and debt levels.

Greece's government deficit reached 6.6 per cent of gross domestic product last year - compared with the maximum of 3 per cent allowed under EU rules.

Of the other eurozone countries, eight are rated by S&P at AAA, its highest grade. Belgium has a rating of AA+. Italy and Portugal are on AA-, but Italy has a negative outlook, according to S&P.

The ECB's move is likely to divide finance ministries. Some are expected to regard it as a welcome embrace of market-based pricing mechanisms but others may worry about the increased importance given to ratings agencies.

Banks have to provide collateral to the ECB if they want to borrow money. The convergence of bond spreads since the introduction of the euro in 1999 has meant that less fiscally disciplined governments have largely escaped punishment by the markets, although the ECB argues that investors have priced in different risks in recent months.

The euro hit a two-year low against the US dollar as continuing social unrest in France exacerbated the effects of widening interest rate differentials between the US and eurozone.

It fell a cent to $1.171, a level not seen since November 2003. It also fell sharply against the yen.

The FT also reports that Germany's grand coalition is planning to shake up the country's federal system to speed up the pace of political decision-making.

Reform of the country's postwar political model would reduce the overlapping roles of the Bundesrat, or upper house, where states are represented, and the Bundestag, or federal parliament, officials from the Christian Democrat and Social Democratic parties confirmed on Tuesday.

The plan, to be implemented next year, was presented by the coalition partners as proof that their left-right alliance can deliver results that will aid the economy and ease political decision-making.

Public attention during the lengthy coalition talks has focused on expected tax increases and social security cuts, sparking criticism that the coalition would focus only on cost-cutting.

The federalism changes, expected to be endorsed on Friday by party leaders as part of the overall coalition agreement, will centralise issues, such as environmental protection and some police powers, in the hands of the federal government, while increasing the 16 regional states' responsibilities for education.

The proportion of draft laws adopted by the Bundestag that require the support of the Bundesrat is expected to fall from approximately 60 per cent to about 35 per cent as a result.

National and regional politicians have for years advocated a modification of Germany's postwar constitution in order to disentangle regional and federal responsibilities.

Conflicting interests have caused costly delays in decision-making and on several occasions have led to a watering down of economic reforms. In 2003 the CDU-dominated Bundesrat altered key aspects of Chancellor Gerhard Schröder's Agenda 2010 reform programme.

The CDU and SPD failed last year to agree similar federalism reforms to those endorsed yesterday. The constitutional changes will require a two-thirds majority in both houses of parliament.

The coalition, once formed, will hold such a majority in the Bundestag, and is expected to gain the support of states where the liberal Free Democrats are in government in the Bundesrat.

¦The coalition has agreed to support the stock market listing of RAG, a state-backed coal-mining company, the Financial Times Deutschland reports. Up to €5bn ($5.9bn, £3.4bn) of the proceeds from the share offering will be used to cut state subsidies to the coal-mining industry.

The New York Times reports that the dollar rose on Tuesday to its highest level against the euro in two years, propelled by rising interest rates in the United States and rising pessimism about Europe.

The dollar's move, the latest in a climb that has been under way in fits and starts for months, continued the trend away from traders' fixation last year on the United States' large and rising foreign indebtedness. The dollar also gained strength against the Japanese yen.

But the steady rise of the dollar may not be an unalloyed cause for celebration on either side of the Atlantic. For Americans, the stronger dollar stems in part from expectations that the Federal Reserve will push interest rates higher than investors had previously thought. And if the dollar's rise continues, it is likely to make it harder for American manufacturers to compete in world markets, increasing political pressures to protect some industries from foreign companies.

For Europeans, the decline of the euro reflects new gloom - possibly aggravated by 12 days of rioting in poor neighborhoods across France - about growth in the euro zone's biggest economies. Germany, France and Italy, which together account for more than half of the euro zone's economic activity, are growing at barely 1 percent or less this year. Aside from the riots in France, Germany remains bogged down in a political stalemate that has greatly reduced the chances for a long-promised overhaul of economic regulations.

The euro has declined by nearly 5 percent against the dollar since August, but its slide became more pronounced about a week ago. On Tuesday, the euro dropped briefly to $1.1711, slightly lower than its value at the time of its inception in January 1999.

Robert Simche, chief currency strategist at Bank of America, said the dollar's surge stemmed primarily from expectations of higher interest rates in the United States, which have been moving up while rates in Europe and elsewhere around the world have stayed relatively low.

"It is hard to find a period in the last 5 or 10 years when expectations about future interest rates been so dominant in the foreign exchange markets," Mr. Simche said. "It's become the dominant issue." Higher interest rates attract investors and tend to drive up a nation's currency. The Fed has been pushing up short-term rates in small steps ever since June 2004, but many investors had been betting that it would pause once rates hit 4 percent or so - especially when energy prices surged after Hurricane Katrina.

But Fed officials have delivered a raft of speeches over the last month that emphasized their concerns about rising inflation and a determination to avoid a return to the "stagflation" of the 1970's.

Fed officials have also been buoyed by signs of continued strong growth, despite soaring oil and gas prices and the devastation caused by Hurricane Katrina.

Alan Greenspan, the Fed chairman, told a Congressional committee last week that the outlook for growth and employment was fairly good but that inflationary pressures were building.

The prospect of higher interest rates appears to be trumping any investor anxiety about the United States' huge trade and financial deficits. The nation's imbalance in trade and investment with the rest of the world - known as the current account - is on track to exceed $700 billion, about 6 percent of the gross domestic product. That sum, which is financed by funds from abroad, is coming at the same time that American household savings rates have plunged to zero.

Asian central banks have financed much of the United States' borrowing; the central banks of Japan and China now hold more than $1 trillion in dollar-denominated securities between them.

Yet for all the talk about global imbalances, demand for dollars has yet to falter.

"All the talk about U.S. current-account deficits hurting the dollar has vanished from the markets," said Carl Weinberg, global economist at High Frequency Economics, a forecasting firm in Valhalla, N.Y. The dollar has climbed 13 percent against the euro this year. The euro's most recent peak was nearly $1.2587 in early September, about 8 cents higher than its value at the close of trading in New York Tuesday, $1.1785.

Though interest-rate differences accounted for most of the dollar's recent climb, analysts said the riots in France may have weakened the euro even further.

"The riots are definitely doing something," said Ashraf Laidi, currency analyst at MG Financial Group in New York. "It's the usual story of growing unemployment in the euro zone, social unrest that is at first attributed to ethnicity but is really about unemployment and the lack of jobs."

But the dollar has gained against other major currencies, recently hitting a two-year high against the Japanese yen and climbing sharply against the Swiss franc.

Analysts disagree about how much of the dollar's rise is part of a longer-term trend. Mr. Laidi, eyeing the United States' huge trade imbalances, predicted that the euro would climb back from $1.17 to $1.23 by the end of the year.

By contrast, Edward Yardeni, chief investment strategist at Oak Associates, predicted that the euro would continue to fall, plunging to just $1 within two years.

Many analysts and traders contend that the dollar's most recent rise stems largely from a one-time tax break that allows corporations to bring overseas profits back to the United States at a small fraction of normal tax rates.

Mr. Simche, from Bank of America, estimated that companies were poised to bring back as much as $85 billion and that two-thirds of that money could flow back in the final quarter of this year.

A stronger dollar reflects to some extent investors' faith in the American economy and helps keep inflation under control. But powerful movements in either direction also serve as a warning signal of potential economic problems ahead. Ian Shepherdson, who tracks the American economy for High Frequency Economics, predicted Tuesday that rising interest rates could lead to a crunch in the housing market and a slowdown in overall economic growth by the middle of 2006.

The NYT says that as Iowa finishes harvesting its second-largest corn crop in history, Roger Fray is racing to cope with the most visible challenge arising from the United States' ballooning farm subsidy program: the mega-corn pile.

Soaring more than 60 feet high and spreading a football field wide, the mound of corn behind the headquarters of West Central Cooperative here resembles a little yellow ski hill. "There is no engineering class that teaches you how to cover a pile like this," Mr. Fray, the company's executive vice president for grain marketing, said from the adjacent road. "This is country creativity."

At 2.7 million bushels, the giant pile illustrates the explosive growth in corn production by American farmers in recent years, which this year is estimated to reach a nationwide total of at least 10.9 billion bushels, second only to last year's 11.8 billion bushels.

But this season's bumper crop is too much of a good thing, underscoring what critics call a paradox at the heart of the government farm subsidy program: America's efficient farmers may be encouraged to produce far more than the country can use, depressing prices and raising subsidy payments. In other words, because the government wants to help America's farmers, it essentially ends up paying them both when they produce too much and when their crop prices are too low.

Indeed, this season's huge volumes weigh heavily on farmers, who already have suffered a string of misfortunes: a large overhang of grain from last year, coupled with soaring energy costs and two Gulf Coast hurricanes that stymied transportation, and a severe drought that distorted prices. Together, these events have conspired to depress corn prices and potentially make this the most expensive harvest ever for the federal government.

Even as the Bush administration tries to persuade member nations of the World Trade Organization that it is serious about trimming agricultural subsidies, federal spending on farm payments is closing in on the record of $22.9 billion set in 2000, when the Asian financial crisis caused American exports to fall and crop prices to sink, pushing the Midwest farm belt into recession.

If export sales stay weak, this year's subsidies could hit a new record. Just last week the United States Agriculture Department raised its projection of payments to farmers by $1.3 billion, to $22.7 billion. In 2004, the subsidies were only $13.3 billion.

In response to pressure, the Bush administration said last month that the United States was prepared to cut its most trade-distorting farm subsidies by 60 percent over five years. The world's poor nations, which tend to be heavily dependent on agriculture, complain that American and European Union farm subsidies spur growers to produce gluts that depress crop prices throughout the world.

The Agriculture Department's $1.3 billion revision comes primarily from higher loan-deficiency payments, which are now estimated to total $6.2 billion, said Keith Collins, the Agriculture Department's chief economist. Such payments are meant to cushion the blow for farmers who borrow money to raise crops but then have to sell them in the market for less than the outstanding loan.

Most of that money will flow to corn growers. Based on loan-deficiency rates that have recently topped 50 cents a bushel, the government probably will pay corn farmers about $4.5 billion this year in that subsidy category alone, said Bob Young, the chief economist for the American Farm Bureau Federation.

For critics of the American subsidy system, the record corn production highlights the tenuous assumptions underlying the program. Farmers are encouraged to produce as much as they can with the idea that greater exports will soak up the excess production. More recently, there are high hopes for using corn to produce ethanol for gasoline, but the infrastructure to produce large amounts of ethanol will take time.

But the huge volumes in recent years have not been matched by greater demand for American corn, and the woes created by two big harvests, along with the stifling effect of Hurricane Katrina on the transport of grains, have kept exports in check, analysts and grain traders said.

"We are still in a condition of grossly overproducing for what the market can pay, at least what the market can pay that is acceptable to our corn producers," said Ken Cook, president of the Environmental Working Group, an environmental research group based in Washington that has been critical of farm subsidies. "We can't make up the difference in the export market, and the taxpayers are on the hook."

The government spent $41.9 billion on corn subsidies from 1995 to 2004, according to the Environmental Working Group.

So far, current and future corn shipments of 550 million bushels are running 11 percent behind last year's level of 640 million bushels in early November, according to government figures. But lately foreign and domestic buyers, sensing fire-sale conditions, have started to snap up corn at historically cheap prices, said Steve Bruce, a grain trader with Man Financial in Chicago. "We have reached the saturation point where the grain elevator managers have said we just have to sell the stuff," he said.

With corn spilling out everywhere, the Agriculture Department predicted last month that American corn growers would receive an average of $1.85 a bushel for their new corn, which would be the lowest price since the late 1990's. The government is expected to release new estimates for crop production and exports on Thursday.

Storm damage and transportation bottlenecks sharply raised costs this year for producers, so that Midwest farmers had a tough time this fall finding buyers.

Hurricane Katrina in late August damaged grain-exporting operations around New Orleans. Some 60 percent of corn and soybeans are normally exported through that city's port. A shortage of river barges and damage to the ports created domestic bottlenecks and added to internal freight costs, eating into farmers' profits and briefly making American crops less competitive than those of some foreign competitors. Barge rates have tripled in some places.

Higher costs for gasoline and diesel also led railways and trucking firms to increase their rates to haul the crops, in some cases by four to six times the normal rates. The rail system, in particular, was already strained coming into the harvest season, and grain merchants have struggled at times to find available rail cars. In Iowa, some grain elevators simply closed down when they got too full. For farmers in recent weeks, the morning harvest call was to "call two or three elevators and see which ones were open," Mr. Fray said.

To be sure, the last two years of bumper harvests have shown how good American farmers have gotten at producing corn. More drought-resistant varieties, improved pesticides and more efficient farming practices have all contributed to higher yields, farmers and grain managers said.

Nearly perfect growing conditions helped produce last year's record crop. But this year the biggest surprise came in Illinois, which despite suffering its worst drought since 1988, still managed to produce a large crop. The drought made many farmers hesitant to sell their corn at depressed prices, decisions that worsened what became an excessive surplus. "The big lesson this fall is don't believe the farmers when they say they don't have a crop," said Jeff Hainline, a commodities broker at Advance Trading in Bloomington, Ill.

Government incentives to produce flat-out have also helped make the large corn harvests possible. Farmers are hardly shy about exploiting the government safety net provided by guaranteed loan-deficiency payments. "Everybody leans on the L.D.P.'s as much as they can," said Ash Kading, a farmer in western Iowa who was harvesting his last few rows of corn late last week. "It is like opening up the federal Treasury. There were quite a few people this year that wish corn prices would go to zero because they would have a bigger L.D.P."

While farmers and grain merchants like Mr. Fray expect even more corn to be planted next year, some traders believe that higher natural gas prices will cause farmers to grow less corn - natural gas is used to make fertilizer, pesticides and herbicides. "With higher energy costs you will see more wheat acres and soybean acres," Mr. Bruce said.

This year grain piles are everywhere across Iowa and parts of Illinois, the two biggest corn-producing states. In Iowa, the amount of grain being stored on the ground for lack of storage is averaging more than 19 percent, its highest level in at least 25 years, Mr. Fray said, citing private industry data.

Lately the giant piles have become the butt of jokes in farm country. They were spoofed in a fake picture, widely e-mailed, that showed a skier airborne atop West Central's biggest pile, with the caption that said "one thing you can do with a 3-million-bushel pile of harvested corn: Ski Iowa."

Mr. Fray smiles when he recalls the fake picture. But he has hardly become attached to his largest corn creation. West Central, which markets corn for more than 8,000 farmers, is planning to dismantle the 2.7-million-bushel pile before year-end to avoid rains that could ruin the corn, he said. Last year the company built a similar-size pile and gambled on the weather, only to suffer the misfortune of repeated late-season rains that badly damaged the quality of the corn, trimming the cooperative's profit by 34 percent, to $4.8 million.

This year, with corn bursting out of storage bins and lots of dry weather, West Central put 13.4 million bushels on the ground in 11 piles; 12.8 million bushels were left outside last year. But with customers moaning about a possible repeat of last year, the co-op tried to plan ahead this time, spending $4.5 million to build additional storage and buy giant tarps to cover some of the piles. As of last week, the co-op had covered half of the corn.

The 2.7-million-bushel pile, however, is too big to cover, since there are no walls to tie a tarp to. For that one, the company can only pray for dry conditions while it tries to find buyers for the corn. "So far," Mr. Fray said, "we have dodged a bullet."

Failing that, West Central could always build a ski lift on the hill.