tv Business Briefing BBC News September 12, 2019 5:30am-5:46am BST
this is the business briefing. i'm sally bundock. how low can they go? europe's central bank poised to cut interest rates deeper into negative territory, as it tries to revive the region's flagging economy. plus, goodwill gesture — president trump postpones higher tariffs on chinese goods, raising hopes for a truce in the trade war. and on the markets... asian stocks hit a six—week high, shares boosted by hopes of a peace deal in the us china trade war, and expectations of stimulus for the european economy.
we start in frankfurt, where all eyes are on the european central bank, as it wraps up one of its most important meetings in years. later today it's expected to take action to try and boost the region's flagging economy. the rate of economic growth across the countries that share the euro has slumped to just 0.2% in the three months tojune. the region's biggest economy germany may well already be in recession. annual inflation, the rate prices are rising, has also slowed sharply, tojust1% injuly. that's just half the ecb's target rate and the lowest since 2016. that has raised fears of a return to deflation, where prices actually fall.
it's a big worry in europe where levels of debt have soared. inflation means debts shrink over time, deflation has the opposite effect. so what action will the ecb take? it's likely to cut interest rates further. they are already in negative territory. the ecb's deposit rate is already at minus 0.4%. meaning banks are charged almost 0.5%, to keep excess money at the ecb, piling pressure on them to lend it out. more controversially, it could bring back so called quantitative easing, printing money and spending it in the bond market to pump cash into the system. it had already spent 2.3 trillion euros, when the scheme was suspended last year, or more than 7,500 euros for every single person in the eurozone. expectation of more stimulus has been boosting stock markets.
translation: many including myself expect a rate cut that would make it clear that seb remains in the fast lane aspires monetary policy is concerned. i can also imagine a new bond process is envisaged and that is helpful for the stock market. as long as the eurozone exist, they can never again any real interest rate increases. we are excessively in that and we need to keep you in together which is done with the chief money. i am convinced, especially looking at italy, that's will be granted and the ecb is there to help. sharmila whelan is from aletheia capital. good morning. what are you expecting? i think the ecb will deliver under the deposit cut, ten basis point cut taking it to 0.5. market is restarting 20 to 30
billion worth of purchases every month. whether the ecb will be able to deliver, i wonder. there is resista nce to deliver, i wonder. there is resistance from france and germany and the netherlands, saying there is no need. but also the question is, to what extent will it help? exactly. we have seen a lot of money being spent as a purchase programme, both by the ecb and the bank of japan and the us and all it has done is fuel asset prices. the little has grown into real economy and growth. when you think about that process, if they were to announce quantitative easing, what will be the consequences around the world? that is the real question. the biggest risk to the global growth outlet as well as the euro area is
that the ecb's action triggers another round of competitive devaluation by non— dollar area central bankers and we get a rerun of 2014- 2015 in central bankers and we get a rerun of 2014— 2015 in which global trade goes into a deeper downturn and global profits go into a downturn and we get a slowdown everywhere.” am hearing that traders, finances and economist are really worried about this cycle kicking in. do you think governments are thinking about this and thinking we need to do fiscal spending on infrastructure and things like that to get our economy is going as a poster looking to central banks, in the case of germany, for example? what
governments are thinking is your guess is as good as mine. what is more widely being acknowledged is there are limits in extraordinary measures is fast being reached and the onus is on government spending and, especially if you're running a surplus like germany, where they do have the scope to follow through with counter cyclical easing. nice to see. that was the last meeting for mario draghi. christine lagarde is taking over. let's stay in frankfurt, which is also hosting its bi—annual motor show. 0ur reporter theo leggett is there. he's been talking to the european boss of ford about plans to cut 12,000 jobs across the region and close down 5 factories, in order to refocus on electric and hybrid vehicles. we announced our programme in january and we summarised
it injune. 20% of our workforce in europe. we are well on track with implementing that plan and more importantly we shared with employees and unions that everything we are considering in this period is on the table. so you shouldn't expect any new news. there's a lot of pain here, are you confident it will be worthwhile and you should get back to profitability? the environment isn't easy for the car industry. absolutely. we expect a significant improvement in results in europe this year and we intend to return to profitability as soon as possible. in addition, we have a more fundamental redesign of the business under way and we want to achieve competitive returns and 6% margin for the business in europe. 0n the outside, looking globally, of course there's trade tensions between north america and china. the possibility there might be tariffs on exports from europe to the united states. what kind of impact
does that have on you? yeah, of course, we are in a dynamic environment, whether globally, as you referred to, north america and china, or with brexit in europe. we are clear in our communications with governments, either in the uk or europe, that what matters to us is tariff—free trade and we hope we can get you a deal and our business can continue and we can serve consumers in the uk and the eu. you mentioned tariffs, but if there is no deal on brexit, one thing we are likely to is tariffs on trade across the channel. what impact will that have on your company and your consumers? firstly, it doesn't necessarily mean there will be tariffs. that will be a decision for the uk government in terms of how they wish to manage the automotive industry.
customers will be paying more? if ta riffs customers will be paying more? if tariffs were imposed, yes, i would expect prices to go up. markets have been getting a boost after the trump administration extended an olive branch to china in their trade war, ahead of talks scheduled for the coming weeks in washington. mariko 0i is following the story. what's the latest? talks will be resuming on both sides are doing what they can to make them successful? that's right. possible olive branch. president trump treated he will delay traitorous on china by two weeks, to the 15th of
0ctober china by two weeks, to the 15th of october and his tweet came after beijing announced it would exempt some american products from tariffs. us president called it a goodwill gesture and some may see these latest developments as a softening of their stances ahead of the talks scheduled for next month. but let's be honest, delay of two weeks will not have a major impact on businesses and how damaging this trade war has been an china's exemption only applies to 16 of over 5000 products and fundamental differences remain so, while this is good news, the trade wall is far from over. —— trade war. now let's brief you on some other business stories... the london stock exchange is preparing to reject a $39 billion takeover offer from its hong kong rival, according to press reports. lse shares soared on the news of the bid from hkex, but fell back sharply, signalling scepticism among investors the bid will succeed.
hkex is controlled by the hong kong government, those close links to china could prove a major concern for uk politicians. president trump says his administration will ban flavoured e—cigarettes, after a spate of vaping—related deaths. e—cigarette manufacturers have been blamed for fuelling childhood addiction by offering flavoured products such as mango. market leaderjuul, which is 35% owned by tobacco giant altria, stopped selling most of its flavoured devices last year in order to defuse mounting criticism. us energy tycoon and philanthropist, t boone pickens, known as the ‘0racle of 0il‘, has died aged 91. he started his first oil and gas firm in the 1930s, later to become mesa petroleum, one of the world's largest independent oil companies, before branching out into hedge funds and wind power. he gave his 2008 book the title:
the first billion is the hardest. it is really tough, that first billion. i am struggling to make mine! children should be banned from buying video game extras using real money under measures unveiled by mps today. there are concerns so—called loot boxes encourage gambling with some gamers spending up to £1,000 a year chasing mystery virtual items. three quarters of 5—15 —year—olds play on line games and mps say the company ‘s behind them depend for
their profits and keeping those plays include two that screen. they are calling on firms to protect players from the harm caused. there has been a big switch so that a lot of games art freeze play but then you are encouraged to purchase things as you play the game. players can spend real money on virtual goods such as footballers in fifa. 0ne goods such as footballers in fifa. one player said they spent up to £1000 a year. mps want that regulated and say they should not be sold to children where there is an element of chance involved. the mps say that companies home game like fifa and a fortnight had not done any research into the potential harm they might cause and they said it was unacceptable that companies with millions of users, any of them children, should be so ill—equipped to discuss the impact of their
products. the games industry insists it behaves responsibly. we want place to play safely, in a balanced way. we provide technical settings, measures and education, robust guidance and age ratings and information sources. the mps say he spots where players compete in professional competitions is a fast growing business in the uk but they called for the same duty of care to protect players as applies in other spores. —— sports. rory cellanjones, bbc news. this is the briefing from bbc news. the latest headlines: more pressure on the prime minister as the government is forced to reveal the no deal brexit plans that outline the risks of food and medicine shortages and major hold—ups at channel ports. after the devastation caused by hurricane dorian across the bahamas, 2,500 people are now registered as missing. president trump says he may ban
flavoured e—cigarettes — after a number of deaths in the united states. now it's time to look at the stories that are making the headlines in the media across the world. this front page is a little standard today, the daily mirror which leads under scotland's highest court ruling that the prime minister ‘s move to suspend parliament was unlawful. suggesting that he may have lied to the queen about his motives in order to push the suspension through. next, the financial times takes a look at hong kong's £30 billion bid for the london stock exchange. according to the paper, the london stock exchange is preparing to rebuff the takeover bid. buzzfeed has the details on president trump's plans to tackle the rise of e—cigarettes in the us, by removing non—tobacco vape flavors from the market.