28/09/2016 World Business Report

Strikes, falling industrial production and the threat

of terrorism have all had an effect on the faltering French economy.

The last budget before next years election is unveiled today.

And as the dust settles on the first presidential debate,

what effect is the US election having on the economy of Mexico?

The currency, the Peso, has been reacting wildly.

The Eurozone's second biggest economy, France,

The economy has contracted after being hit by a fall

in manufacturing, industrial action and continued fears over security.

In a few hours time the finance minister Michel Sapin

delivers his last budget before next year's elections.

Mr Sapin had promised to improve finances this year and next,

while also lowering taxes and boosting growth and cutting

unemployment - but has any of that been achieved?

France is unlikely to meet its targets for next year

of cutting its costs, and spending, to less than 3% of the value

of what it produces every year, or its GDP.

This is according to France's independent regulator,

In a recent report the regulator even claimed the government's

forecast of 1.5% economic growth for this year

And earlier this week the jobless figures for August rose

The biggest jump in the number of unemployed for nearly three years.

Laurent Clavel is an economist at AXA Investment Managers in Paris

Good morning. It is the tip of the iceberg. I have mentioned only a few

issues. When you look at the French economy as it stands, give us your

take on Howard is doing. I will need to make a rosier picture on what you

are doing. I agree that there are structural issues and we made it

back to that later on. The fact is the second quarter contraction of

GDP is not really an early sign of a technical recession art, rather, a

fairly anticipated I would say drop, after a very sharp increase at the

beginning of this year. The growth of 7% quarter to quarter which

boosted by temporary factors. We expected the second quarter to be

rather low. There is still disappointment but we were expecting

it to be lower. The growth forecast that will be released together with

the budget for the French economy may be too optimistic at 1.5%. I say

that what we expect from next year is a rather a slowdown because of

several factors, the drop in oil prices, the euro depreciation and

some fiscal measures favouring corporate investment. We expect a

slowdown but the forecast we have in mind is not that much lower than the

one that the IMF provides and we are discussing a couple of tens of

points of growth next year. It is true to say, isn't it, that the

Treasurer needs some giveaways in his budget to encourage voters next

year. What is he likely to say? On the part you are definitely correct.

You cannot square the circle. You cannot have an increase in

expenditure, which we expect, in favour of education. 2 billion will

go to households which is quite clearly aid gesture of amendment. It

is seen by many left-wing voters as going into fiscal austerity. On the

top of that you will see another following of corporate. It is

balancing what happened in terms of tax increase on corporate tax.

Employers contribution, social contribution at beginning of the

mandate. Altogether we expect several measures, as you pointed

out, Gross is not likely to be extremely strong, between one and

1.5% so something will have to give. My guess is that the front figure

for the deficit is going to be overly ambitious and there will be

some fiscal slippage. I'm sorry we need to leave it there. Thank you

for joining us so early this morning.

The first televised US presidential debate saw Donald Trump

and Hillary Clinton clash over the economy, terrorism and race -

and it was watched by millions of people around the world.

One nation taking a very keen interest is Mexico -

where even the country's currency is being affected

by what is happening in the race for the White House.

For Mexicans their weekly shop is getting more and more expensive.

Since the election of the president four years ago the value of the peso

has fallen by a third. It is also impacting shopowners who have to

import products. And it is costing the Mexican government its

credibility. TRANSLATION: People have seen so much corruption and

cynicism that we are no longer putting up with what we did what

three years ago. We have run out of patience and every day it gets worse

and worse. We do not know when it.. .. Is going to stop. TRANSLATION:

People have reined in some of their spending, our wage does not go as

far as it used to. We are selling our petrol today and I could by the

same stuff cheaper in there than in here. The peso was being compared to

a pinata that gets filled with sweets and smashed at parties. It is

getting a walloping at the moment. The peso was one of the top ten most

traded currencies in the world. It acts as a hedge for other emerging

markets so in volatile times it gets old. With concerns about US rate

hike and oil markets, it does not help the peso. American politics is

also playing a part. When Donald Trump gains in the poll for the peso

falls and vice-versa. Look at what happened after this's debate. The

peso jumped when markets felt that Hillary Clinton came out on top. But

the suggestions of Mr Trump that he would renegotiate Nato and build a

wall are damaging. 80% of Mexican exports go to the United States and

it is worth about $25 billion a year. The election of Donald Trump

could have an impact on the Mexican peso because of the proposals

related with NAFTA. Not only that, it has an important impact in

Mexican economy. If Donald Trump does not allow immigrants to go to

the US, the Mexican economy is going to be very bad. For now, traders

need to work and sell harder to make the mass out. Depending on which way

the vote goes in November, something for this pinata could turn out to be

quite profitable. The World Trade organisation has

cut its forecast for global trade growth this year by

more than a third. Let's go to Ricoh. Ricoh does this

sound good? The world trade organisation currently is blaming

the slowdown in countries such as China and Brazil and lower levels of

imports into the United States. This new figure of 1.7% is down from the

April estimate of 2.8%. That is one third of a percent down and this

would be the slowest space of trade and output since the 2009 financial

crisis. It is also the first time in 15 years that international commerce

has been left trailing behind the global economy. You have the

director general speaking up saying that the dramatic slowing of trade

growth is serious and should serve as a wake-up call. He stressed that

it is particularly concerning in the context of growing anti-

globalisation and creeping protectionism. This is, indeed,

insights that governments and several banks will need to look at

thoroughly as they fix their economic policies going forward.

That's all from me. I will see you soon.

Plans to restrict the use of bail for suspects in England and Wales

who haven't been charged have been criticised by the organisation