08/12/2011 World Business Report

power of his office. Now it is time for World Business Report. The

headlines: In the eye of the strong. The PCP prepares another cut in

interest rates and new measures to ease the funding pressure on banks.

-- the ECB. Companies draw up their contingency plans in case of a

break-up of the eurozone. Thinking the unthinkable. On as you have

been hearing, tonight sees the start of the EU summit where

leaders will attempt to put in place a lasting solution to the USO

debt crisis. But before the summit, the ECB will be taking centre-stage.

They are expected to take action to ease pressures on the banking

system. Another cut in interest rates is on the cards, most likely

0.25%, taking borrowing costs to a record low of 1%. More details from

Brussels. It is very important that the ECB does take steps today ahead

of the meeting. Yes. BCP is the only European institution that is

able to regain the confidence of financial markets. -- the European

Central Bank. To what extent will it help economies like Italy and

Spain when their borrowing costs are so why? A cut would clearly

help their economies. That is a good thing because that point

cushion the recession we are already in. Do think they should do

more than a quarter-point cut? they did more they would send a

clear signal that they are willing to do quantitative easing, willing

to print money. Bake would say that interest rates are so let they have

no other option than printing money. What is your view on that? Many

have called for the ECB to do that quite some time ago. It is an

ongoing debate. The mandate of the ECB calls for price stability. That

is their main target. Printing money is for Big Ben by the

European treaties Foster we aren't making a crisis situation. -- for

bidden by the European treaties. Figures from the ECB yesterday

showed that banks are scrambling for a dollar funding at the moment.

Will they do something about that as well? They will relax the

landing conditions for European banks. They will extend liquidity

to be the lender of last resort for the banks. They will not do that

for governments. Briefly, after the summit, do you think there will be

more news from the ECB on bond buying? Yes. They are waiting for a

fiscal compact to be delivered. If they do so, I would not be

surprised if ECB announces something on Sunday evening of

Monday morning. Thank you. China says it is still confident in the

euro, but does this mean their economy is it willing to help the

eurozone? We speak to our correspondent in Singapore. This is

bringing a burst of confidence te EU leaders. China's timing is

everything. You as. Essentially, these were quotes directly from

China's Foreign Minister. -- yes. The website at sight seem as saying

that China would use a variety of means to help the European Union

and its sovereign debt problems. He was telling this to his German

counterpart in Berlin this week. He said it would benefit every country

in the world for the European economy to maintain stability and

continue developing. These comments come just before the EU leader's

summoned on proposals for tighter eurozone integration. China is the

owner of the world's largest foreign exchange reserves. Its

pockets are fairly deep. Europe cannot expect China to use a big

portion of its foreign exchange reserves to rescue Europe's

indebted nations. Questions also over how helpful China can be

because it is estimated that two- thirds of their reserves are locked

up in dollar assets and cannot be sold. Thank you for explaining the

helping hand that might be coming from China. Financial markets are

poised for the possible financial collapse. Businesses are also

starting to plan for the worst. Our correspondent reports. Business

life will be turned upside down for these small British business if its

main suppliers in breeze dropped out all were thrown out of the euro.

-- suppliers in Greece. Some organisations have already spent

entire weekends doing planning of scenarios, working out what they

would do if the worst case happened in various countries. They could

face dramatic inflation and devaluation and would find it

impossible to honour deals signed in euros. This company has a

contingency plan. We would to renegotiate the contracts in

drachma. There would be a devaluation and we would hope and

to realise a reduction in the prices of our holidays as a result

of that. If it did happen that they came out of the euro, it would give

them a benefit to tourism. The instability it would cost would

still be a problem with consumer confidence. Multinationals like the

Diageo drinks giant have been running computer models, trying to

second-guess what might happen. Some of their products would be 40%

more expensive. The smallest companies, which depend on exports,

might be the hardest hit. BBC News. Europe's banking regulator said it

will reveal later how much extra capital the banks will need to ride

at this crisis. The European banking authority will make its

announcement at 700 GMT, just a 70 banks in the region needed to

raise a combined $142 billion. That amount is expected to have

increased. The Bank of England is expected to leave interest rates on

hold at their record low of 0.5%. It is not expected to ramp up

stimulus measures. That is despite signs that the UK economy is

ticking back into recession. The markets today are fairly negative.

In Japan manufacturing orders have dropped. That was unexpected. That

gives you a sign that perhaps things are getting tougher for

Japanese exporters. Elite next year, 2012, Japan will be hitting a tough