The Irish Independent reports that homeowners face a pre-Christmas mortgage increase that will chill their festive cheer.

But it may be the only one they'll have to endure for some time.

The 0.25pc increase in interest rates was effectively copperfastened by European Central Bank chief Jean Claude Trichet yesterday.

But, in an unusual move he signalled that, far from being the first of many expected hikes, next month's may be the only one for the foreseeable future.

The 0.25pc increase will add €81 a month to average repayments on a typical new €300,000 mortgage.

Homeowners feared the bank would begin a series of rises that would put their ability to repay under severe strain. And prospective buyers were uncertain if much higher interest rates would topple house prices.

Mr Trichet appeared at pains to emphasise that the proposed December increase would be used to help curb inflation and not choke European economic growth.

While it is still early days to speculate, the prospect of a minimal interest rate rise means house prices are unlikely to be significantly affected in the medium term.

However, the longer term outlook was clouded with a dire warning yesterday.

The Economist magazine insisted that house prices here are 'seriously' over inflated and warned they could fall by 20pc over the next five years.

Speaking at a Simply Mortgages conference in Dublin, the magazine's economics editor Pam Woodall warned of a crash.

And she said the fall would have serious repercussions for the economy.

She said Ireland, the UK, USA, France, Spain and Australia have enjoyed big house price increase in recent years.

She claimed these far outweigh either rental income or average earnings.

Amd she argued prices have been rising much faster than general inflation and a long-overdue correction is imminent.

With inflation so low, it could take five years for house prices to come into line.

More immediately, borrowers will feel a slight tightening of cash flow as they have to come up with an extra €27 per month for every €100,000 borrowed.

The basic bank rate is expected to rise by a quarter per cent to 2.25pc which will cost Irish mortgage-holders an extra €27 per month for each €100,000 borrowed.

Mortgage-holders generally pay just over 1pc more than this on homeloans from their lenders.

Mr Trichet said: "After two-and-a-half years of maintaining interest rates at a level historically exceptionally low, I would consider that the Governing Council is ready to take a decision to move interest rates." He said by "moderately" raising rates, it would help curb inflation.

A rate rise will be the first since October 2000.

It will mean that the Eurozone will start to play catch-up with the US where interest rates have been raised 12 times since June 2004. At 4pc the US rates are now almost double those in Europe.

Repeating comments he used last week that fuelled speculation the European Central Bank will raise rates from a 60-year low on December 1, Trichet said a pre-emptive strike against inflation was necessary to keep economic growth on track.

"Prevention is always better than cure," he said.

And in a move to divert criticism from senior politicians, he said "our move would maintain and preserve confidence".

The Irish Independent also reports that Míchéal Martin, Minister for Enterprise Trade and Employment said that now is not the time to raise Corporation Tax.

The Irish Times reports that AIB will hold 25 per cent of the merged Hibernian and Ark Life pensions business that it and UK giant Aviva are expected to announce shortly.

AIB and Aviva, which owns Hibernian, have been working on a merger of the two businesses for several months, and could confirm that the deal is likely to go ahead as early as today.

The combined Ark and Hibernian Life and Pensions business will be hived off to a new holding company in which AIB will hold 25 per cent and Aviva will take the remaining 75 per cent, sources said yesterday.

A large part of the businesses of both Ark Life and Hibernian will transfer to the new venture.

However, they will both keep their separate identities. AIB's branches will continue to sell Ark Life-branded products, while Hibernian will continue to sell its products through its network of brokers.

The new partnership between AIB, the Republic's biggest bank, and Aviva, a major European player in insurance, will be the the third biggest operator in the Irish life insurance market.

The two larger players will be Irish Life, the market leader, and Bank of Ireland Life, which is a subsidiary of AIB's biggest rival, Bank of Ireland.

Between them, the three will hold about 70 per cent of the total market here.

Speculation about Ark Life's future and a possible AIB-Aviva deal has been growing since early this year. Both parties are understood to have been in talks since the early summer.

Aviva already has insurance alliances with a number of banks throughout Europe, and it is not breaking new ground by entering a similar arrangement in the Republic.

However, some reports have said that the move could force AIB to look at the possibility of leaving the asset management business, although this speculation was dampened last week.

Its division in this sector, AIB Investment Managers (AIBIM) relies on Ark Life for about one third of the €9.9 billion it currently has under management.

A spokesman for AIB would not comment last night, while it was not possible to contact a Hibernian representative.

AIB had profits of €851 million in the first six months of this year, a 20 per cent increase on the €706 million it recorded for the same period in 2004

The group has businesses here, the UK, Poland and the US.

Aviva is based in the UK and is listed on the London Stock Exchange. Last year it wrote close to £30 billion (€44 billion) in insurance premiums and made a profit of close to £1.5 billion.

Aviva's balance sheet for the year showed that it had assets of £232.7 billion and shareholders' funds of £8.3 billion.

The group claims to be the the sixth-biggest insurer in the world and and the biggest in the UK. It has 30 million customers.

Along with Hibernian, its brands include Norwich Union and the Royal Automobile Club (RAC) in the UK. Norwich Union is one of the biggest sellers of household insurance in Britain.

The Irish Times also reports that the housing market is set for a soft landing, according to David Duffy of the ESRI.

Mr Duffy was speaking at a presentation on the housing market held to mark the fifth anniversary of mortgage lender Simply Mortgages.

The presentation was also addressed by Pam Woodall of the Economist magazine, who said that Irish property prices were overvalued by as much as 20 per cent.

Mr Duffy said that rising property prices had been justified by economic fundamentals and this would continue into the future.

"The labour market and rapid rises in personal disposable income will continue to support the property market," he said.

Mr Duffy said that those previously excluded from buying a house would be able to do so in the future and that this would help prices remain high.

He said the market would also be supported by falling rates of headship - the average number of persons per household - as well as by SSIA money entering the economy from next year.

But Ms Woodall said that Ireland's house prices were based on low interest rates and had reached unsustainable levels.

"House prices are seriously overvalued not just in Ireland, but also in Australia, New Zealand, the US and the UK. A 20 per cent fall in prices is likely over the next five years," she said.

Ms Woodall said that ratios of house prices to average incomes had reached historically high levels. She said housing market trends in Australia and the UK proved that house prices could fall, even without sharp rises in interest rates, and that even modest falls in house prices could impact on the economy.

"This is the biggest financial bubble in history," she said.

The Irish Examiner reports that a new compromise text will be presented to European Union farm ministers when they begin three days of negotiations in Brussels today on proposals to radically reform the sugar industry.

The latest document was described yesterday as “a first compromise text” by the European Commission, which said it will be the basis for discussions that will continue over the coming days.

Fisheries is the first major item on the agenda for the Farm Council when it convenes this morning and formal negotiations on the radical sugar reforms may not be reached until tomorrow.

However, a series of bilateral and trilateral meetings are likely to take place beforehand in a bid to break the negotiations logjam and broker a deal ahead of a world trade talks ministerial conference in Hong Kong next month.

Ireland is one of 11 member states opposed to the Commission’s package, which proposes a 39% price cut in the institutional price for sugar, a corresponding reduction in the minimum price for sugar beet and 60% compensation to farmers for the price cut. Farmers in Ireland have warned it will be uneconomic to grow beet at €25 per tonne and they will be forced out of an industry that has been a cornerstone of tillage production here for 80 years.

Minister Mary Coughlan, who will lead the Irish negotiating team, said it is a very serious issue and the negotiations are very complex and complicated.

“As they stand, I do not agree with the European Commission proposals. I feel that they are unfair and unbalanced,” she said.

The Financial Times reports that Google has thrown its weight behind an ambitious and potentially controversial US-led project to put the world’s cultural memory online.

The plan, which was hatched by the Library of Congress, would create digital copies of the large stores of historical manuscripts, personal diaries, voice recordings and other cultural items held by national libraries around the world. Even its backers, though, concede that US leadership of something that gets so close to the cultural roots of other nations is bound to provoke opposition.

“There’s no question [but] that somebody’s going to object,” said James Billington, head of the Library of Congress, which is behind the initiative. “Some people will object to almost anything that is American, I suppose,” he added, but: “It won’t be about America, it will be about [each] culture.”

Commenting on US sponsorship of the global repository, Sergey Brin, the Russian-born co-founder of Google, said: “We are going to defer to the experts – they have a great tack record in international cooperation. This is useful for everybody, I hope it’s not going to be controversial.”

Google has donated $3m for the initial work of devising technical standards and carrying out pilot studies for the project, known as the World Digital Library. Items to be included will be chosen and presented based on recommendations from specialists in each of the countries concerned, said Mr Billington. He added that commentaries on the items, in both the original languages and in English, would be included, though the text would be intended only to explain the context of each item.

While saying that US values would not play a part in the ambitious global plan, Mr Billington pointed to his library’s origins in Thomas Jefferson’s personal book collection to explain the motivation behind the idea. The American Founding Father had believed that greater public access to knowledge and information was essential “if democracy is ever going to work on a continental scale,” he said.

Google and its rivals including Microsoft are already competing to digitise the world’s leading libraries such as those at Harvard and Oxford universities.

The FT also reports that Vodafone, T-Mobile, Telefónica and other large telecoms groups will on Tuesday demand an overhaul of the way Europe's main telecoms standard-setter deals with intellectual property rights.

The groups' criticism is directed at the European Telecommunications Standards Institute, the body responsible for standardisation of information and communication technology in Europe. ETSI's biggest success to date has been the creation of the GSM mobile phone standard, but more recently the body has been attacked for its allegedly lax rules on intellectual property rights [IPRs].

The telecoms groups have now tabled a proposal for today's general assembly of ETSI members warning that the body's current IPR rules leave companies exposed to "unsustainable" and "excessive" demands for royalties. They even warn that the "benefits of standardisation are being eroded".

The European Commission has already demanded that ETSI tighten its rules to ensure that none of its members can pull off a so-called "patent ambush".

The practice usually involves companies trying to turn their patented technology into an industry standard without telling other companies about their patent claim. If their technology is accepted as a new standard, companies can then demand royalties from other groups forced to use the patented technology.

Last month, Nokia and other leading handset makers formally complained to Brussels about Qualcomm, the US mobile chipmaker. They alleged that Qualcomm had unfairly used its patents on third-generation technologies to squeeze excessive royalties and licensing deals out of the industry.

Vodafone and its allies want ETSI to improve its policies so as to avoid similar disputes in the future. They suggest that IPR terms should be agreed before a standard is even set, and argue in favour of putting a cap on the "maximum royalty payment from individual IPR users to the combined IPR holders".

Their proposal, seen by the Financial Times, states: "Cumulative patent royalties/'patent stacking' can raise the licence burden to an extent unbearable to our industry."

It adds: "IPR licence fees have become a commercial issue that is limiting the industry's ability to continue to drive down costs. The issue has the potential to limit competition through direct and indirect impact on pricing."

Vodafone and the other groups point out that the problems outlined in their proposal not only affect third-generation, but technologies such as MP3 and copy protection.

The proposal's other sponsors are Alcatel, Hutchison Europe, Orange, Portugal Telecom, Research in Motion, SFR, Swisscom, TDC, Telecom Italia, Telenor and TeliaSonera.

The New York Times reports that when Dan Fairbanks received word from General Motors early Monday morning that his plant had been tagged for closing next year, there were few people in the factory to tell.

About two-thirds of the 300 hourly employees at the Lansing Craft Center, where Mr. Fairbanks is the president of a local chapter of the United Automobile Workers, are temporarily laid off. In fact, they have not worked for most of the year. The Lansing Craft Center is still scheduled to ratchet up production early next month but will close for good sometime next year.

"There are going to be some casualties, and we are one of them," Mr. Fairbanks said. In many ways, the plant is symbolic of the problems facing General Motors. The automaker slowed production there to a trickle as demand for the vehicle it produces, the $40,000 high-performance Chevrolet SSR pickup truck, failed to keep pace with capacity. Although most employees do not come to work, under their union contract G.M. is still required to pay them.

A cold drizzle fell in a mainly empty parking lot at the center as this city took in the news that G.M. would close all or part of 12 operations in North America. Here in Lansing, where two of those plants are situated, the automaker's cuts will be deep.

Still, G.M. employs thousands of people in the area at four plants and is currently building a new factory, with modern equipment. The plants that will remain open will provide some cushion for workers who do not take buyouts.

On Monday, G.M. workers across the country met the news of the plant closings and the job cuts with a mixture of shock, resignation and frustration at the company's management.

"There's a lot of people who rely on G.M., especially in this town," said Michael McCoy, 52, a production worker at the Lansing Metal Center with 30 years at the company. The metal center, a sprawling industrial complex across the street from the craft center that makes sheet metal parts for various vehicles, is also scheduled to close.

About the time the G.M. corporate headquarters in Detroit informed union officials at the craft center of the closing next year, Mr. McCoy and his co-workers on the morning shift at the metal center were summoned to the shop floor by their union chairman and told the news.

Art Baker, the chairman of the local auto workers union that represents the 950 hourly workers at the metal center, said he learned of G.M.'s decision just 15 minutes before he told employees. "It was not the expectation that General Motors was going to get lean and mean," Mr. Baker said. "It was a real shock."

The union called the job cuts and plant closings "extremely disappointing, unfair and unfortunate." The union's president, Ron Gettelfinger, and its vice president, Richard Shoemaker, said in a statement that for workers, "hope is diminished, the future is unclear and communities are less stable."

In Oklahoma, Georgia and other states where G.M. is closing its only plants, G.M. workers will have fewer options than their counterparts in Lansing for jobs that offer such high pay and generous benefits.

"I was awakened out of my sleep and told the plant was closing," said Tammy Andrews, 35, a line worker at the General Motors assembly plant in Doraville, Ga., just outside Atlanta. "I'm going to cry when I go home tonight."

Many of the plants that will close, like Doraville Assembly and the Lansing Metal Center, are more than 50 years old and date back to an era when G.M. held a commanding share of the American car market. As Asian competitors with lower labor costs and vehicles that many Americans consider more desirable have cut G.M.'s market share down to about a quarter of all American vehicles, the automaker has grappled to regain its competitiveness. Closing under-used plants and trimming its work force is one way it hopes to do that.

For cities like Lansing and Flint, Mich., that have for decades looked to the American auto industry to provide much of their livelihood, G.M.'s downsizing means the end of an era in which generations of families could depend on steady work at a car company and a generous retirement plan after 30 years of service.

"It used to be our kids would come in here and follow us, but that's not the trend anymore," Mr. McCoy said. "I just think it'd be nice if General Motors could get everything together, get it fixed and get going again."

Alvin Jones, 59, a line worker at the metal plant, has 40 years of experience but said he resented the idea of taking a retirement buyout. "Once you take the buyout, what's going to be left for you to do?" he asked. Mr. Jones moved to Lansing from the South in the mid-1960's to take a job with G.M. that he assumed would be his as long as he wanted to work.

Throughout his four decades at G.M., Mr. Jones said he had seen the domestic auto industry at some of its highest and lowest points. As he stood outside the Lansing metal plant on Monday and absorbed the news his plant would be closed, he said, "I've never seen it this bad, and I've been around for a lot of years."

Daniel Crane, 27, who installs glass on minivans at the Doraville plant, criticized G.M. for not making cars that sell well. "Who buys a minivan?" he asked. "G.M.'s not coming out with a product anybody wants."

As news of billion-dollar losses, job cuts and benefit reductions has rolled out of G.M. with alarming regularity this year, some workers said they saw the writing on the wall well before Monday. "Everybody in the G.M. system is trying to speculate on where they stand," said Mr. Fairbanks, the Lansing union president. "A total surprise? No. Not with the way things are going."