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Those are the latest headlines from BBC World News. Now for the latest | :00:03. | :00:13. | |
:00:13. | :00:14. | ||
financial news with World Business Report. | :00:14. | :00:20. | |
Welcome to World Business Report. I'm Sally Bundock. The headlines: | :00:20. | :00:26. | |
More pain, no gain? Portugal's government unveils another five | :00:26. | :00:30. | |
billion euros of cuts as it falls behind in plans to reduce national | :00:30. | :00:36. | |
debt. 20 years after its creation we examine the challenges and | :00:36. | :00:46. | |
:00:46. | :00:52. | ||
successes of the European Union Single Market. We begin in Portugal. | :00:52. | :00:56. | |
The government is set to unveil another 4.9 billion euros worth of | :00:56. | :00:59. | |
spending cuts and tax rises when it presents its budget later. The | :00:59. | :01:03. | |
country is already a year behind targets set when it received a 78 | :01:03. | :01:06. | |
billion euro rescue package from the EU and IMF. Portugal is in the | :01:07. | :01:10. | |
midst of its deepest recession for a generation. Wealth is shrinking | :01:10. | :01:18. | |
and tax receipts are falling short of forecasts. Nice to see you. No | :01:18. | :01:28. | |
:01:28. | :01:29. | ||
doubt this will be a bitter pill. That is right. We have had some | :01:29. | :01:35. | |
indication there will be enormous tax increases. The deepest | :01:35. | :01:40. | |
recession in a generation. The economy is doing worse than | :01:40. | :01:47. | |
expected. That means more spending cuts, more tax increases in order | :01:47. | :01:53. | |
to meet the more relaxed targets for this year. It is a coalition | :01:53. | :01:58. | |
government. All of these problems with reaching the target and the | :01:58. | :02:03. | |
issue of higher taxes has led to tensions within the coalition. This | :02:03. | :02:12. | |
is going down to the wire. We will have a Cabinet meeting shortly. | :02:12. | :02:18. | |
you say, it is a coalition government that is quite shaky. | :02:18. | :02:26. | |
When it comes to tax increases, where is that going to fall? | :02:26. | :02:33. | |
has already been increased to 23%. Many of the law rated goods have | :02:33. | :02:42. | |
been increased to 23%. -- lower. The emphasis will be on income tax. | :02:42. | :02:46. | |
That will be discussed at the cabinet meeting this morning. How | :02:46. | :02:52. | |
many new tax brackets there will be. Who will be most badly affected. | :02:52. | :02:58. | |
40% of Portuguese do not pay tax because they do not earn enough. | :02:58. | :03:04. | |
The increases will fall more heavily on those who do pay. We are | :03:04. | :03:12. | |
hearing that protests are planned. Yes, there is a process scheduled | :03:12. | :03:22. | |
:03:22. | :03:23. | ||
for 6pm local time. -- protest. It is being organised through social | :03:23. | :03:28. | |
networks, not trade unions. There will be hundreds of people, | :03:28. | :03:32. | |
possibly thousands. It will be quite ratty. So far we have not | :03:33. | :03:37. | |
seen the violence we have seen in other countries. A lot of people | :03:37. | :03:47. | |
:03:47. | :03:52. | ||
are certainly very angry right now. Fresh from last week's surprise | :03:52. | :03:55. | |
Nobel Peace Prize, European Union officials have a week of | :03:55. | :03:58. | |
celebrations planned. It's to mark 20 years since the creation of the | :03:58. | :04:02. | |
Single Market. In 1992, there were just 12 members of the European | :04:02. | :04:05. | |
Economic Market. Its successor, the European Union, now has 27 member | :04:05. | :04:08. | |
states. The agreement to remove customs and tariffs on cross-border | :04:08. | :04:11. | |
commerce in the region is estimated to have boosted business by 240 | :04:11. | :04:16. | |
billion euros. It's thought to have created 2.5 million jobs. Our | :04:16. | :04:18. | |
Europe business correspondent, Nigel Cassidy, caught up with one | :04:18. | :04:21. | |
company, an underfloor heating specialist, which has grown and | :04:21. | :04:26. | |
prospered over the past two decades. Born two decades ago in the early | :04:26. | :04:32. | |
days of the European single market, this enterprise now exports the | :04:32. | :04:42. | |
:04:42. | :04:42. | ||
heating. Lower tariffs have helped build a pan-European business. 50% | :04:42. | :04:52. | |
:04:52. | :04:57. | ||
of the London staff were recruited for skills elsewhere in the EU. | :04:57. | :05:00. | |
Underfloor heating still has to meet different standards. | :05:01. | :05:05. | |
French have their own core principles for building houses and | :05:05. | :05:09. | |
allowing usage of electricity. We have a lower density heater for | :05:10. | :05:16. | |
France. We have to produce things that produce less electricity. | :05:16. | :05:20. | |
single market has not relieved a requirement to record anything that | :05:20. | :05:27. | |
moves. We know it is important to measure trade flows. We think it is | :05:28. | :05:32. | |
a bit over-engineered. It probably uses 20-30% more manpower than we | :05:32. | :05:39. | |
would like. We have to account for all of the products that we export. | :05:39. | :05:44. | |
This is incredibly detailed. It relates to separate product codes | :05:44. | :05:53. | |
for everything we sell in a book that is thousands of pages. It is a | :05:53. | :06:00. | |
big administrative burden. future single market focus in | :06:00. | :06:04. | |
Brussels will be on Europe's backbone, things like transport, | :06:04. | :06:09. | |
energy networks. Electronic commerce and recruitment. With | :06:09. | :06:13. | |
growth stalling across Europe right now, the renewed emphasis on | :06:13. | :06:23. | |
:06:23. | :06:26. | ||
freeing up the market will not come a moment too soon. Staying with the | :06:26. | :06:29. | |
EU, Greece needs more time to reduce its debts according to | :06:29. | :06:33. | |
international auditors. German magazine Der Spiegel reports that | :06:33. | :06:36. | |
officials from the European Commission, European Central Bank | :06:36. | :06:39. | |
and International Monetary Fund have asked EU finance ministers to | :06:39. | :06:42. | |
give Greece two more years to meet its debt targets. The so-called | :06:42. | :06:45. | |
Troika advise Greece should be given until 2016 to carry out | :06:45. | :06:55. | |
reforms needed to cut 13.5 billion euros of costs. Executives from | :06:55. | :06:58. | |
Chinese car maker Geely Automotive fly into the UK for rescue talks | :06:58. | :07:01. | |
with black taxi maker Manganese Bronze. The maker of the | :07:01. | :07:04. | |
distinctive hackney carriages warned it could run out of cash on | :07:04. | :07:07. | |
Friday after it was forced to recall hundreds of faulty vehicles | :07:07. | :07:11. | |
and suspend new sales. It's just the latest blow for the Coventry- | :07:11. | :07:14. | |
based manufacturer which had already warned it would make a loss | :07:14. | :07:17. | |
this year. Geely already owns a 20% stake in the company. | :07:17. | :07:21. | |
The price of ordinary goods is rising at a more modest pace in | :07:21. | :07:24. | |
China. The latest inflation data shows prices slowed to 1.9% in | :07:24. | :07:28. | |
materials and components for manufacturers also fell 3.6% from a | :07:28. | :07:36. | |
year earlier. That could free the central bank to pump money into the | :07:36. | :07:39. | |
economy or cut the cost of borrowing without pushing prices up | :07:39. | :07:41. | |
beyond the reach of ordinary Chinese households. Patrick | :07:41. | :07:44. | |
Chovanec is an Associate Professor at Tsinghua University's School of | :07:44. | :07:47. | |
Economics and Management. He joins us from our studio in Beijing. | :07:47. | :07:50. | |
Thank you for being on the programme. Give me your take on | :07:50. | :08:00. | |
:08:00. | :08:00. | ||
these numbers. Is it positive or negative? The good news is that we | :08:00. | :08:06. | |
are not seeing the run-up in food prices, in particular that we | :08:06. | :08:12. | |
feared from the US drought. Whether this translates into the ability to | :08:12. | :08:17. | |
ease monetary policy further, I do not think that follows. Just | :08:17. | :08:21. | |
yesterday the Governor of China's Central Bank said he was still | :08:21. | :08:26. | |
concern about inflation. Debt remains an issue for him. More | :08:26. | :08:31. | |
importantly, China's Central Bank has been dumping a great deal of | :08:31. | :08:37. | |
money through the summer into the banking system. Not through the | :08:37. | :08:44. | |
reserve ratio. This has been keeping the banking system liquid | :08:44. | :08:51. | |
in order to roll over a large man of bad debt. That is fine of the | :08:51. | :09:01. | |
:09:01. | :09:01. | ||
reasons he is concerned. -- large amount. -- one of the reasons. | :09:01. | :09:06. | |
Central Bank chief is indicating there is no interest rate cuts to | :09:07. | :09:16. | |
come. What will they do to try and boost the economy? This really gets | :09:16. | :09:21. | |
to the heart of what the solution is. Does China need a new stimulus? | :09:21. | :09:26. | |
Does China need a rebalancing? If you believe that China needs to | :09:26. | :09:32. | |
rebalance away from export-driven growth towards more domestic | :09:32. | :09:35. | |
consumption, some people argue, I am one of them, China should not be | :09:35. | :09:40. | |
cutting interest rates, it should be raising them to help boost | :09:40. | :09:46. | |
consumption by giving people a greater return on their savings. To | :09:46. | :09:48. | |
diminish some of the over investment that has been driving | :09:48. | :09:58. | |
:09:58. | :09:59. | ||
this economy. We have to leave it there. Thank you. The news from | :09:59. | :10:04. |