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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
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
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.
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?
So, if they get these
wage rises in Germany, do you think
that would be reflected by wage
rises elsewhere in Europe?
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
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,
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
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
Thanks very much to you
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
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
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.
you know, Sally is in Davos and I
think she has got a question for
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
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
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.
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.
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
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?
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?
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.
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
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.
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
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.
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
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
We'll see you again tomorrow.