05/06/2014 World Business Report

Those are the latest headlines from BBC World News. Now for the latest

financial news in World Business Report.

Action stations. The ECB is primed to launch stimulus measures today

amid slumping growth and looming deflation. Plus, South Africa in a

hole and still digging. Union bosses push for wider industrial action, as

mining strikes push the country towards recession.

Welcome to World Business Report, I'm Sally Bundock. Also, we will

show you how markets are trading ahead of the key decision in

Frankfurt today. All eyes are on the German financial capital Frankfurt,

as businesses and markets around the world await the next move from the

European Central Bank. It's widely expected to announce measures to

boost the flagging economy across the 18 countries that use the

`` use the euro. Here's the situation. Economic growth across

the Eurozone slumped to just 0.2% between January and March, according

to official figures out on Wednesday. It's only thanks to

Germany that there was any growth at all. Many of its neighbours saw

their economies stagnate or shrink. Then there are the fears of

deflation. Prices in May were just half a per cent higher than a year

ago, according to last month's inflation data. The ECB targets

inflation of around 2%. It describes anything below 1% as the danger

zone. What might the ECB do? Well, it's pretty much certain, say

economists, that it will cut its benchmark interest rate, the amount

banks pay to borrow money, from its already record low of 0.25%. The ECB

could also introduce a negative deposit rate, effectively charging

banks for holding onto their money. It's a way of leaning on them to

lend it out. It's unlikely to join the Bank of England and US Federal

Reserve in launching QE, printing money to buy up assets. Experts

think it may keep that one in reserve. Nigel Cassidy reports now

from Ireland, where businesses are hoping for action from the ECB.

Selling more sweets to keep the business level. That's how this

60`year`old confectionery wholesaler is coping in a place where they are

in survival mode. Prices are falling. People might be more

confident but they are repaying debt, not spending. When the squeeze

is on, people have to box clever. These suites aren't selling well but

these, which retail for 10 cents each, are selling much better.

Ireland is out of its bailout but achieving consistent consumer

spending is going to take a lot longer. It's not just spending, it

is lending, or the lack of it. This boss says the ECB needs to wake up

banks, once all too willing to offer loans. As the European bank has been

dropping, the interest `` dropping interest rates, that a plus. More

important is ensuring the banks pass on the benefits of those decreases

to the likes of businesses, so that they can get access to funding at a

reasonable rate and make the investments which will increase

employment and develop the country further. I think anybody still in

business today in Ireland is very successful because they have

probably had the hardest five years they have ever had to go through. If

you are still here and employing people and your business is still

going and you are paying your bills, I think you need to be

congratulated. This adviser says there's no shortage of new business

ideas, only funding. The big issue is our banks are reducing their

balance sheets at an enormous rate. It's quite difficult to reduce your

balance sheet and be asking them to lend at the same time. They have

become so risk averse, they are finding it difficult to actually

lend. Many businesses or many bank managers have actually lost the

ability to assess risk. The European Central Bank might move financial

markets with its bank leading changes but altering behaviour on

the ground is more difficult. A country that still bears the scars

of those early years of euro membership and rather reckless

borrowing and lending. Jan Randolph is Director of

Sovereign Risk at IHS Global Insight.

today? I think everyone is, both conventional, in the form of a lower

cut in the base rate, park money overnight with the bank.

And the range of measures, there effective do you think they will be?

As we heard, the issue of banks lending is a key problem? It has

been a problem for several years. Banks are blocking the transition

from lower rates down through to the real economy, to people like you and

me and companies, mainly because they are cleaning up their own

balance sheets, sorting out bad loans, and also raising capital. It

is difficult for that to work for the rest of us. How can that be

fixed? It's interesting, the deposit rate... It will have a psychological

impact. It sounds dramatic but the impact will be less in an attempt to

ward off low inflation. We might see a weaker euro but that will be

priced in. Banks might use the cheaper funding to invest overseas.

The thing to watch out for is additional measures to circumvent

the banks. Funding for lending. For example, the ECB might provide cheap

credit to banks as long as they provide that to the real economy.

That is the sort of thing to look out for. For those watching this

morning in Europe thinking today is a big day, they might do something,

Powell will it affect us? What impact will it have? Very little, I

think. `` howl will it affect us? The thing to look out for are any

unconventional measures. Things like funding for lending schemes. Thank

you very much. As soon as we get the announcement from the ECB and the

Bank of England, we will update you. What we need to tell you about South

Africa. Mining output has seen its biggest slump since 1967, amid a

five month strike that has crippled the platinum industry. The battle

over pay in South Africa's mines is already threatening to push the

country into recession. Now the Association of Mineworkers and

Construction Union, AMCU, is asking a court for permission to widen its

strike action to the gold industry. From Johannesburg, Lerato Mbele

reports. This court in Johannesburg is where

the application to strike on the gold mines will be decided. In March

this year, they petitioned the courts to allow it to strike on the

gold mines but the judgement was delayed until early June based on

two reasons. Then needing more time to prepare for the strike and the

second being the union encouraged by the mining companies. It has led

major industrial action on the mines here. At the strike has been

characterised by violence and intimidation and it is for this

reason that the gold mining companies are insisting on ticketing

rules. The cost of the strike has seen workers lose more than $700

million in wages. `` picketing. The platinum mining companies have lost

more than $2 billion in revenues. This is one of many industrial

actions and court actions that AMCU has been involved in. Just this

week, the court dismissed a petition by AMCU to stop the platinum miners

from negotiating directly with workers. So, if the court rules

against AMCU, it will be a second blow for the union. But if the court

rules in favour of AMCU's bright strike on the gold sector, it will

have a significant bearing on South Africa's mining economy, which is

already suffering. `` right to strike.

In other news, General Motors will release the findings later of its

investigation into a recall of 2.6 million cars earlier this year.

Specifically, why it took the company so long to act over an

ignition switch fault in cars including the Chevy Cobalt, which

engineers at the firm knew about more than a decade ago. GM admits it

caused at least 13 deaths but lawyers suing the auto giant claim

the death toll is at least 60. Revenues in the UK's football

Premier League hit a record ?3.2 billion this season. That's

according to an annual review of football finance by consultants

Deloitte. The growth is the biggest in the big five leagues which also

includes Germany, France, Italy and Spain and has been driven by new

broadcast deals. However, three quarters of those earnings were

spent on player wages. Let's have a look at the markets to

have a sense of how things are going. The clients right across the

board. These markets are treading very cautiously ahead of the

decision from the ECB. `` declines. See you soon.

A group of people who suffered birth defects because their pregnant

mothers were given the drug thalidomide are taking fresh legal

action against its manufacturer and distributor. Eight victims are

seeking compensation, more than 50 years after their mums took the

anti`morning sickness tablets. Our Legal Affairs Correspondent