04/08/2016 World Business Report

The Bank of England weighs up action as the economy teeters

A move on interest rates today would be the first cut -

is Rio 2016 an event that will pay off for its corporate sponsors?

Welcome to World Business Report, I'm Aaron Heslehurst.

I hope this is an exciting snapshot into the world of business.

We'll be going live to Shanghai to talk about that sponsorship issue

We start in the City of London where in a few hours' time the Bank

of England is widely expected to take action to boost the UK

economy - following the vote to leave the European Union.

Remember, straight after the referendum in June,

Bank chief Mark Carney said that action would likely be needed

The Bank surprised the markets by holding off last month.

But a string of very weak economic data in recent days

has led some experts to say an interest rate cut today

Interest rates are already at a record low of 0.5% -

as you can see they have been there for eight years.

The last time they went up was in 2007.

Today they could be cut further - to 0.25%.

Leading economists now fear that there's a 50/50 chance of the UK

falling into recession as a result of the Brexit vote and lower rates

are one of the ways to reduce that risk.

The theory goes that lower rates make saving money less attractive

while reducing the cost of borrowing.

This in turn drives people to borrow and spend more,

and encourages firms to invest - all of which should

That all sounds great but unfortunately there are also

With rates already so low there are fewer levers to pull

Japan and the EU have both tried negative rates -

effectively charging people to deposit money.

But many economists argue that this has done more harm than good.

Prolonged ultra-low rates also tend to encourage unsustainable debt

With borrowing so cheap - people and businesses are far more

likely to pay over the odds for things they can't really afford.

Many experts think we will see a car of .25% maybe more action to come. I

think that is mainly more of a signal to markets that they are

there. It is more of a case of what happens after that. Do we see more

credit lending to businesses. Do we see more plans to back loan small to

medium enterprises. James Hughes is Chief market analyst

at the brokerage GKFX A quarter point is what people are

expecting but will it make any difference? Probably not. It is for

the markets and for the markets to say, sorry fall last month, we built

you up and let you down. They need to do something if just to keep the

market more stable. And the reason they would do something is some of

the numbers that are out, manufacturing, and GDP... We had

numbers at this week showing how the economy has not been doing that well

but the point is we just had more data now. We still do not have a lot

of data but we have something and it is pointing to the fact that we need

to do something, the Bank of England need to act in some way. A cut in

interest rates would push the pound lower? It would. It is positive news

in terms of equity markets that negative for our currency. It has

been a little bit more negative anyway so a little bit more downside

is not too bad. The move by the central bank will mirror, if you

will, the global picture out there because in the past week, we have

seen action by the Aussies and the bank of Japan? They are both keen to

drag the rate further, especially in Australia. Negative is not

necessarily a bad thing. I think these rates are here for quite a

long time. James, great stuff. You will come back and look through the

papers with us later. We are also talking sponsorship

ahead of the Rio Olympics Some $2 billion have been committed

to the games by corporate sponsors - But the list of negative

associations seems to grow Brazil is in the midst

of a political and economic crisis, with many Brazilians criticising

a perceived lack of inclusivity and the use of scarce

public resources. Then there are concerns over

pollution and the Zika virus. Not to mention the growing doping

scandal overshadowing sport. All of which threaten to make

the games a questionable investment Vladimir Djurovic, is CEO

of Labbrand -a branding consultancy. Halo two years. Good morning. The

brand itself, rio 2016, is it to fire damage now? Yes, actually, we

have been following the Olympic ran, especially after the Beijing

addition and definitely -- edition. There is a lot going on in Brazil,

from the Zika academic, delayed deliveries of facilities and so on.

This is only one of the issues that the Olympics are facing because also

in terms of sponsorship, there has been raised concern about the

exclusion of some brands, according to the famous Article 40. There are

some things also out of Brazil's control. Let's talk about the doping

scandal. I would imagine that has tarnished sport so you would have to

be corporate looking at it and say we do not want to be associated with

that. I think the Olympic brand is a much more diverse organisation, in

terms of customers and viewers minds. Definitely, there are

concerns around the Olympics at the moment but, even for the brands

using the Olympics as a sponsorship platform, there are ways to go, to

use the example of the outlets more thoroughly but those type of

figures, instead of maybe images of Rio de Janeiro which may be having

some issues with the facilities, unrest in the street... So the row

was for the brand to still benefit. -- there are ways. Thank you for

joining us from Shanghai. Good on you.

Electric car maker Tesla lost $293m in the three months to June.

That's the thirteenth quarterly loss in a row.

It also missed analyst's sales forecasts and fell short

Tesla delivered 14,402 cars during the quarter -

The company though insists it is on track to deliver 50,000

Model S and Model X vehicles in the second half of the year.