24/01/2018 BBC Business Live

This is Business Live from BBC News.

I'm Ben Bland in London.

And I'm Sally Bundock in Davos,

at the World Economic Forum.

Could Europe be set

for a big pay rise?

Germany's biggest union demands

an inflation-busting deal

for millions of workers.

Live from London and Davos,

that's our top story

on Wednesday 24th January.

The industrial workers union

normally sets the tone

for pay across Germany -

but will they end up

helping the Eurozone wind

down its stimulus programme?

Also in the programme...

Full steam ahead for

the Pacific's free trade deal.

Australia welcomes the new deal

that's been reached a year

after the United States withdrew.

Of climate change. I will be talking

to the boss of the world's biggest

wind energy producer, who is here in

Davos. And we want you to be a part

of the conversation.

As quitting smartphones is described

as the new "quitting smoking"

in the FT, we're asking,

are you addicted to your device?

And if you quit your smartphone,

what would you miss most?

Let us know - just

use the #BBCBizLive.

That's an easy question, I would

miss your tweets the most!

Hello and welcome to Business Live.

As Europe's biggest economy Germany

often sets the tone for what's

happening across the rest

of the continent.

And a big pay increase could be

on the cards if Germany's biggest

trade union, IG Metall, gets its way

in the latest round of talks

with the industrial manufacturers

that are the bedrock of the economy.

IG Metall represents

about 2.3 million workers and wants

an above inflation 6% pay rise.

The other key demand

is the flexibility of switching

to a 28-hour working week.

The union is threatening

more strikes.

But one of the big concerns

for companies is that unemployment

is at a record low 3.6%,

so they're worried there won't be

enough staff to fulfil all orders

if those workers have the option

of less hours.

Unemployment has also been falling

across the rest of the Eurozone

as the global economy continues

to pick up, so workers

are in a strong position

to demand higher wages.

If they get them, it

could prove helpful for meeting

the European Central Bank's target

inflation rate of just below 2%.

They've been struggling

to do that, but moving

forward, it will help them

unwind their stimulus programme.

With me is Karl Brenke,

an economist at the German Institute

for Economic Research -

he joins us from Berlin.

So, if these demands are met, what

do you think the impact would be on

the German economy and the wider

European economy?

Last year the

great unions, we have had wage

increase of about 2%. And the

inflation rate in Germany is nearly

2%. And therefore we have no

increase in real

2%. And therefore we have no

increase in real wages. On the other

hand the companies had a good

business last year and therefore I

think higher wages are necessary,

and in my opinion, the increase must

be 4% or more. And I think it is

important that we have a push for

the business cycle inside Germany,

for the domestic demand here.

And

how damaging do you think these

strikes would be?

Yes, strikes in

Germany! I think most of our leaders

of the great unions know strikes

only from history! I don't think we

will have strikes a! So, what do you

think as the rest of Europe watches

this round going on between unions

and the manufacturers, as I have

mentioned, which form the bedrock of

the German economy - do you think

there will be any discomfort

elsewhere at how this is unfolding

or not? Of course. We have a good

employment situation, and therefore,

the trade unions are in a strong

position. And I think it would be

good also for the other countries of

the Eurozone if we will have higher

wages in the manufacturing, because

in the last year's, from Germany, in

the last year's there was a pressure

from Germany to other countries

because of too slow wage increase.

So, you think that if they get their

wages increases in Germany, we could

see wage increases across the rest

of the continent?

I don't

understand?

So, if they get these

wage rises in Germany, do you think

that would be reflected by wage

rises elsewhere in Europe?

No. I

think we have a special situation in

Germany. We have nearly full

employment, and if I compare the

situation with the South, I think

there are others which will have not

such an increase in other countries,

like Greece or Spain. I think in

Germany, a stronger wage increase is

necessary, but not in the south of

Europe.

Karl Brenke from the German

Institute for Economic Research,

thank you very much indeed. If you

wanted a theme for the day at Davos,

as opposed today would be Europe

day. Angela Merkel and other

European leaders will be there,

Sally?

Yes, there's more heads of

state this year than there have been

for many years. We have got a

helicopter just above us and I think

that is delivering a guest, a

delegate who is arriving! US

president Donald Trump will be

arriving by helicopter tomorrow

morning. So, it is all going on

here. It is interesting to hear your

guest Karl Brenke, I wonder if

Angela Merkel was listening to him

as well as a man of course BBC World

News is broadcasting here in Davos,

and she is here and she is preparing

to deliver her special address to

all those who are gathered here for

the World Economic Forum. And I

would imagine many will be wondering

what she will have to say when she

has so much going on in Germany,

with the dispute between IG Metall

and businesses, but also, of course,

trying to form a coalition

government. So, a very busy day here

in Davos. We have got her and

Emmanuel Macron speaking later as

well as the Italian Prime Minister.

Back to you.

Let's take a look at some of

the other stories making the news.

US Senators have approved

President Trump's choice

of Jerome Powell for the next chair

of the US central bank,

the Federal Reserve.

The man taking over the world's most

powerful job in economics

is a Republican who is seen to back

low interest rates.

The former lawyer is expected

to take over from Janet Powell

The former lawyer is expected

to take over from Janet Yelen

at the beginning of next month.

The boss of Ikea Group has told

the BBC that the company pays

its fair share of tax worldwide.

Speaking in Davos,

Jesper Brodin said the Swedish

furniture giant thinks

it is "important to contribute

to society in many ways

and paying tax is one of them".

EU tax officials opened

an investigation last

month into Inter Ikea -

a seperate part of Ikea, which

controls the company's brand rights.

The entertainment giant Walt Disney

says it is giving 125,000 of its US

staff a one-time bonus of $1,000.

It's because of the tax reforms that

President Trump signed into law

just before Christmas.

The company also says

it is launching a $50 million

education fund for staff on hourly

conditions, in order

to help them earn degrees

and other qualifications.

Australia's Prime Minister has

become the latest to welcome

a big new trade deal.

The Trans-Pacific Partnership covers

11 countries and received a major

boost at Davos on Tuesday

when Canada confirmed it would join

the deal, a deal which the US

pulled out of last year.

Leisha Santorelli is in Singapore.

Tell us more about what the

Australian Prime Minister had to

say?

Well, Sally, after US President

Trump pulled America out of the TPP,

many analysts said it was dead in

the water. But it was clearly just

on life support because it has been

revived. Australia's Prime Minister

has hailed the new deal, calling it

a multibillion-dollar windfall for

his country. Australia along with

Japan was critical to convincing

Canada and Justin Trudeau to return

to the table after he refused to

finalise the TPP last year. However,

the critics and the Australian

opposition leader say that without

the US trade deal has pretty much

lost its shine and that there is a

lack of specifics, especially

because the US it counts for 40% of

the global economy, but without it,

just 13%. Earlier this month it was

reported that the UK was possibly

looking to join the TPP, so who

knows, after Brexit, could replace

the US?

Thanks very much to you

both.

Asian share markets took a time out

on Wednesday as investors were left

breathless at the breakneck pace

of recent gains, while a fresh burst

of speculative selling took the US

dollar to three-year

lows against the euro.

Japan's Nikkei lost 0.8%,

though that was coming down

from a 26-year high.

That reflects the strengthening yen,

which hits Japanese exporters.

The main stock markets across Europe

were steady at their open -

none of them moving much

in either direction.

The pound held above

$1.40 overnight.

Investors were betting on tighter

monetary policies from central

banks, bringing them in line with

the Federal reserve. It is a big day

for corporate earnings here in the

US, among the many companies

reporting results being General

Electric, which had to lay off

thousands of people in 2017 and it

also changed its leadership as it

tried to plug falling profits.

Investors will be keen to find out

if rumours about the conglomerate

splitting into smaller parts are

true. Ford Motor Company will also

announced results and its forecast

for 2018. Many will be waiting to

hear what tax reforms will mean for

the car-maker. Whirlpool is expected

to report an increase in revenue. It

stands to benefit greatly from the

latest tariffs imposed on washing

the genes in the US. There will be

interested to find out just how much

the company thinks it could gain.

Joining us is James Hughes,

Chief carket mnalyst at Axi Trader.

Good to see you. Sup of the dollar

doing really interesting things -

what is your take on what we're

seeing?

We're seeing some real big

moves. The overall dollar index,

which isn't paired against other

currencies, saw its biggest fall for

three years. So that is a big, big

move. Dollar weakness has been

almost a hallmark of Donald Trump's

presidency. We all talk about the

upside that we have seen in equity

markets and the Dow Jones hitting

new landmarks pretty much every day,

but the US dollar has been

particularly weak. If you couple

that with the fact that we've had

slightly better stories out of the

UK over Brexit, that is why you can

see sterling flying above 1.40

against the dollar. Stories out of

Europe as well, and we have seen the

bank of Japan, all positive for

their currency as well. Add that

towards the negativity in the dollar

and it all gets confounded. It

almost doesn't seem like a

continuation at the moment, it seems

difficult to find any positivity for

the dollar at the moment, because it

has been so aggressively lower.

As

you know, Sally is in Davos and I

think she has got a question for

you?!

I have always got plenty of

questions for James! What I wanted

to ask you, actually, is to what

extent you and your colleagues are

watching what is going on here in

Davos, because here we get a sense

that there's so much being said, so

many announcements, a lot about

trade, for example, especially with

Trump arriving tomorrow - are you

guys watching it or is it just

business as usual this week for you?

We do keep and eye on it. It is an

incredibly important weak. But I

don't think it necessarily causes

too much in the way of a big change

to the way we work. It is seen as a

lot of hot air sometimes over there.

It is a lot of political posturing,

and the markets don't really care

for anything too political. However,

when get so many heads of spray

state, Angela Merkel, Emmanuel

Macron and Donald Trump etc, but is

where we will get much more focus on

Davos.

Thank you very much, James.

Still to come: Plenty more here from

the World Economic Forum. I will

talk to the boss of the world's

biggest wind power energy supplier.

That's just coming up later here on

business life.

JD Wetherspoons reports a 6 %

increase in second quarter sales -

and says the unexpected increase -

may lead to better than expected

half year results Joining us now

is our business correspondent

Theo Leggett - tell us more.

As you say, like-for-like sales were

up 6%, and that is sales which are

directly comparable with previous

quarters. Overall sales were only up

4.3%, and that is because whether

spoons closed more pubs than it

opened, and that took a little gloss

from the figures. Overall, sales

have been better-than-expected,

meaning the first half results will

be better-than-expected. That is a

good thing this week because the

company has also had a bit of

embarrassment. Last night was

supposed to be steak night and due

to a supplier problem, the stakes

are to be recall, so customers were

offered things like quinoa and the

Leumi salad. That has generated

headlines like this. Other than

that, the company is doing well but

it does not know if it can sustain

that in the rest of the year.

Have

they said anything about the

company's performance going forward?

There are factors that may have an

impact. For example, increases in

the minimum wage and the sugar tax

may push up costs. The World Cup

happens in the second half of the

year, which is unpredictable. When

home nations do well, people pour

into the pubs, one to watch the game

and buy a lot of food and drink and

someone. If the home teams go out

early, it's not so good. That makes

things a little unpredictable. One

area that isn't such an issue is

Brexit. The chief executive of

whether spoons is a renowned

enthusiasm Brexit and he says that

even if there is no deal with the

EU, that doesn't mean prices will go

up or anything like that. He's very

positive about the future.

Thank you

very much. As always, plenty more on

our website. Just go to BBC .co .uk/

business. On there right now,

details about calls for road pricing

tailored to drivers based on factors

like the time of day and congestion.

Read more about that report. You can

also breed it via the BBC News app.

-- you can also read it on their BBC

news app.

You're watching Business Live.

Our top story:

Critical talks get under way later

between Germany's biggest trade

union and employers. The trade union

is demanding a 6% pay rise. Could

this lead to inflation busting pay

deals across Europe?

Speaking about

Europe, let's check on the markets.

All of them down to a greater or

lesser extent. At the bottom of the

screen, currency markets, the pound

holding above $1 40.

Climate change is a big topic for

discussion here at the World

Economic Forum at Davos. Plenty have

been talking about responsibility to

do more around the world to tackle

the issue. I am joined by a

representative of the world's

biggest wind energy producer.

Welcome to the programme. Among

those who have been appealing to

governments around the world to do

more about the issue of climate

change is Christine Lagarde, the

managing director of the IMF. Her

argument is, whilst the sun is

shining, fix the roof. This is the

area where Governments need to

share. What is your take?

The last

20 years, we have already invested

more than $100 billion in

renewables. In Britain we closed all

of our coal powered plants. My

position is very clear. 195

countries have already signed an

agreement to do everything necessary

to protect the world and diminish

climate change emissions. The time

is over and we need to take actions.

When you say 185 countries, you are

repairing to the Paris climate

change agreement which the United

States has said this is not happy

with. It may withdraw or want

changes to it. What impact has that

had to its relevance?

When you talk

about the United States, you talk

about the American administration.

It is true that the administration

has decided to withdraw from the

Paris agreement, but I think that

there is an alliance of different

cities promoting all the necessary

for diminishing emissions. The

business in the country will

continue investing heavily, and I

think many large corporations are

already signing contracts with us

because they would like to secure

clean energy for the future.

To what

extent was the announcement of US

tariffs on steel products coming out

of Asia, what impact does that have

on the trade of these goods? Where

do you source a lot of your steel

for the wind turbines that you guys

provide?

Most of them are produced

in the United States, and we have

using established companies. It is a

protection for the American solar

panel industry. We have bought some

from America in the past.

From your

perspective, and you deal with

governments all over the world, what

is the biggest obstacle to

significant progress in this area?

Always our investment is long-term.

We are investing for 40-60 years. We

need stable regulation, predictable

and maintaining the rules. When

countries change the rules,

introducing an intervention,

automatically opposes a risk, and

the flow of investment diminish. We

require predictability and a legal

framework that will be respected.

Thank you so much for being on the

programme. Back to you.

James is back. We will look at our

story in the FT talking about why

people are quitting these.

Apparently we are so addicted to our

devices. Can we actually live

without them?

This is the whole

point. I think it's becoming such a

part of life now that people are

becoming more addicted to them

rather than just using them on the

off chance. One of the interesting

things it says here is that it

compares it to junk food. You know

it's not particularly good for you

but you do enjoy it when you are

there. You know you shouldn't do it

all of the time. That is the feeling

we have with smartphones. There is

so much on a smartphone now that we

have to live with. You have to check

e-mails for work, there is all sorts

of different things, but of course,

the argument in the article is that

we don't actually need any of these

things. We got on pretty well

beforehand and we will get on

afterwards if we don't have to use

these. It is the classification of

these companies, very much like the

cigarette companies used to be in

the 90s, that the tobacco industry.

These companies are being

categorised as big tech, and

investors are saying, we want you to

do something about the addictive

nature or how many people are

becoming addicted to these devices,

to make sure it doesn't have a

knock-on effect on mental health,

the same way happened with big

tobacco in the 90s.

James, thank you

very much indeed. Thank you for all

the messages you have sent. We have

been having a look through those. We

will go through them a little later.

I want to bring some breaking news,

and we join Sally in Davos.

Thank

you. We're hearing through Reuters

news agency that they are quoting

Wilbur Ross, who is here, the US

commerce secretary, saying, trade

war is a thought every single day.

That is a quote coming from Reuters.

He is here. The US president arrives

here tomorrow. That is all from me

for now.

That's it from Business Live today.

There will be more business news

throughout the day on the BBC Live

webpage and on World Business

Report.

We'll see you again tomorrow.