11/07/2012 World Business Report

husband. Those are the latest headlines.

Welcome, you love with World Business Report. Here are the

headlines: Getting used to austerity - the Spanish government

prepares to announce taxes going up and salaries going down.

And a warning, the number of people at of work could rise sharply in

all eurozone countries. Lower palm prices in China, cutting

retail petrol prices for the third time in two months. - megawatt pump

As you have been hearing, the Spanish Prime Minister is expected

to announce further austerity measures when he addresses MPs

today. Even though he previously argued against a rise in VAT, it is

thought he will announce exactly that. The tax is currently 18%.

Public employees may have to work longer hours and receive cuts in

salaries. It follows yesterday's deal with the EU under which Spain

has been granted an extra year to reduce its budget deficit.

Spain is so used to austerity that many feel like that they are

travelling backwards. This man says when the factories he closed down,

he, like others, returned to farming. 27 billion euros of

earlier government cuts have taken their toll. TRANSLATION: They are

and the jobs you can get these days. We work and keep our spirits up.

For many, life is about to get even tougher. Earlier this week, the

finance minister said VAT would have to go up because avoidance is

so high. TRANSLATION: If VAT was paid by more of those who are

supposed to pay, it would not have to be raised by so much.

Spanish shoppers may be the first to bear the burden of increased

taxes. It is likely to make the prospect of growth in the economy

even more distant. The government has been given an extra year to

reduce its budget deficit, but questions remain about whether the

The International Labour Organisation is warning that

unemployment in the eurozone will rise sharply if policy makers do

not take action. The effect will ripple right across the global

economy. The report says 22 million people could be looking for work

over the next four years, a rise of 4.5 million. The report says it is

not just southern Europe at risk, but also stronger economies. It

also says there is a window of opportunity to improve things and

that leaders need to focus on investing in growth and not more

austerity. Raymond Terrace is director of the Institute for

Labour Studies. They queue for being on the programme. How do

these governments concentrate on helping the labour market without

increasing their spending? first and most important element is

renewing credit game to small enterprises. These are the main

engines of job creation. At the moment, in many countries, they do

not have access to credit. Small enterprises in Europe want to

export but do not get access to credit. As long as that is the case,

it is difficult to imagine a recovery. Be specific about that. I

understand in Germany they have that system that works very well,

where small businesses are able to get access to loans quite easily.

If you look at Germany, they have a system of credit guarantees for

small enterprises. It is engineered by a public credit institution.

That is something that needs to be created or enhanced. That is a very

big element. In addition to that, you can do something more specific

to important groups like young people. For example, a youth job

guarantee could be instituted. This was the case in Sweden in the early

90s. In Sweden there was a very serious financial crisis in the

early 90s and Sweden managed to overcome this successfully, both by

the credit policy I mentioned earlier, but also of youth

guarantees. Any young unemployed person had a solution, either going

back to school or getting work experience in an enterprise. It

also subsidised jobs. Very briefly, do you believe that the measures

being asked of Spain or Greece by the authorities are actually wrong?

Austerity will not work. It failed for the past two years, so it is

very important to shift policy to growth and employment strategies.

In the medium term, deficit have to be reduced, but the austerity is

the main backbone of the policy. The efforts in Spain in reducing

the deficit have been eaten up by increased in to spend. It is

important to look at medium-term Such a big subject, but we do have

to move on. Let's talk about what is happening

at Farnborough. 16 countries are meeting in Washington at the end of

the month to decide their steps in increasingly bitter row over

Europe's new emission trading status for airlines.

The world's biggest air show is not the place great new industry taxes

are likely to be welcomed, but here, or a high oil prices are seen as

speeding the move towards more sustainable air travel. But the

Continent's della Dubbo approach, asking airlines to submit carbon

data, is seen as coming at a bad economic time. For Malaysia, the

arrival of the a free ad year marks the quite a turning point and will

make it easier to make it widgets emission Trading's levels. Some

airlines in China are not co- operating with the scheme at all.

Malaysia finds itself rather court as a member of the One World

Alliance between its European partners and the rest of the world.

As long as we fly into Europe we have to comply to the roles of the

area. Obviously this has to be seen as a global issue. Qatar's chief is

among those negotiating for compromise in Europe. At the end of

the day the taxes will be paid by the customer. The airline will have

to pass any additional costs to its customers. We are compliant, we

want to be compliant. We do not like to go against the regulations.

At the same time, I quite sympathise with China, India,

Russia and the rest of the world. I think the emission trading scheme

is unfair to airlines and the travelling public. And it applies

in your airspace as well? Yes, it does. I think it is unfair for them

to interfere in the sovereignty of the airspace of their country.

hangs on the US and India's next move at the end of the month, but

the risk of a trade dogfight over emissions remains.

But have a look at the cut in fuel prices in China. They have dropped

them again for the third time. We had the D cows live from Sinn the

ball. -- de Taylor's wife from Singapore.

Winner China is the biggest user of fuel in the world. The oil demand

there is falling for the first time in three years. Some analysts say

this cut could be an attempt to increase your consumption. Diesel

has been slashed as well. The move is in response to Bower

international crude oil prices and changes in the conditions of

domestic and international economy is, as well as the domestic refined

oil market. Analysts warned that if there are further cuts it could

start to squeeze profits at state- owned and private refineries. Good

news for the drivers, but not so good news for the companies. Under