:00:13. > :00:19.Tonight, Israel saw him as a top terrorist, today killed the Hamas
:00:19. > :00:22.military leader. After further strikes in Gaza tonight, civilian
:00:22. > :00:25.deaths and blood curdling promises of retaliation, could the
:00:25. > :00:29.assassination of Ahmed al-Jabari, lead to an even more bloody
:00:29. > :00:32.conflict in the Middle East. Also tonight, strikes across Europe,
:00:32. > :00:36.hundreds of thousands of workers take to the streets to protest at
:00:36. > :00:40.austerity and cuts. In Spain, rubber bullets and
:00:40. > :00:45.teargas, fired at protestors in central Madrid, temperatures
:00:45. > :00:50.inflamed by the evictions of those losing their homes. Here at home, a
:00:50. > :00:54.ray of sunshine, as unemployment is down again, sag flaigs might be
:00:54. > :01:00.coming back. Stagnant growth, -- stagflation, might be coming back,
:01:00. > :01:03.stag grant growth and higher inflation. We will discuss this
:01:03. > :01:08.with economist, protestors and politician. The soldier, the
:01:08. > :01:14.secrets and the sex scandal the, all America is talking about,
:01:14. > :01:19.General Petraeus pet talks to Newsnight. I'm under no illusion
:01:19. > :01:23.that he knew it was the right decision that he personally had to
:01:23. > :01:28.take. Tomorrow sees a by-election in a seat, which for 30 years has
:01:28. > :01:32.predicted the British political weather, Corby. How do you go about
:01:32. > :01:40.replacing Louise Mensch. You are not going to start writing chicklit
:01:40. > :01:46.books, Have I Got News To You? No connection to heavy rock bands?
:01:46. > :01:50.20 years older than Louise, and I wouldn't know what to do with a
:01:50. > :01:52.rock star if I found one. Good evening. There is no doubt
:01:52. > :01:58.that Ahmed al-Jabari was a big player in the struggle between the
:01:58. > :02:05.Palestinians and Israel. He was the military commander of Hamas in Gaza.
:02:05. > :02:12.A man described bit Israeli Defence Forces as someone with blood on his
:02:12. > :02:17.hands the IDF assassinated him, and strikes across the country have
:02:17. > :02:19.followed. Israel has said only the start of an operation to hit
:02:19. > :02:26.militant groups. NATO strikes have been launched tonight. In Egypt,
:02:26. > :02:31.the first country to sign a peace treaty with Israel, and now under
:02:31. > :02:33.the leadership of the Muslim Brotherhood. Mohamed Morsi
:02:33. > :02:38.immediately recalled Cairo's ambassador. What does the killing
:02:38. > :02:44.of Ahmed al-Jabari tell us about the new and explosive geography of
:02:44. > :02:49.the Israeli-Palestinian conflict. What happened here? I have to show
:02:50. > :02:56.you rather graphic images. This is the scene in Gaza City today,
:02:56. > :03:00.immediately after the destruction by Israel. This is the Carrying
:03:00. > :03:04.Ahmed al-Jabari, the Hamas military chief, and one other Hamas official,
:03:04. > :03:07.they were killed. As far as Israel is concerned this is a highly
:03:07. > :03:12.successful operation against a man responsible for many missile
:03:12. > :03:22.attacks against Israel. Also responsible for Hamas's links with
:03:22. > :03:24.
:03:24. > :03:29.the main military backer, Hamas. The Israeli army res -- released
:03:29. > :03:34.this film which shows the car being tracked and hit. His body was taken
:03:34. > :03:38.to hospital, followed soon afterby some very young casualties of other
:03:38. > :03:42.naval and air strikes. At the end of the day, Gaza's health ministry
:03:42. > :03:45.said that a further nine people had been killed, at least in various
:03:45. > :03:50.strikes. But, of course, we expect that number to rise.
:03:50. > :03:54.What do you make of the timing of this? Well, Israel's killed many
:03:54. > :03:59.Hamas military commanders over the years, including one senior
:03:59. > :04:04.commander, who was suffocated in a hotel in Dubai two years ago. But,
:04:04. > :04:09.this is the most senior target since 2004. There is no doubt, I
:04:10. > :04:15.think, this is linked to a rather sudden upsurge in missile attacks
:04:15. > :04:19.from Gaza into Israel, particularly in the last couple of weeks. Indeed
:04:19. > :04:24.110 rocket attacks since Saturday. What the Prime Minister, Binyamin
:04:24. > :04:31.Nethanyahu, said, is we have to give a clear signal against Hamas.
:04:31. > :04:36.And also in other strikes, the main aim was to try to reduce or get rid
:04:36. > :04:40.of Hamas's stockpile of rockets. Those are the Iranian rockets that
:04:40. > :04:45.can go rather further and target main population centres in Israel.
:04:45. > :04:50.There has been a lot of rhetoric after this attack today. Does the
:04:50. > :04:54.conflict seem, now, likely to escalate? What Mr Nethanyahu said
:04:54. > :04:59.today was that if necessary the operation, Israelis operation
:04:59. > :05:05.against Hamas, would be broadened. I spoke to the former head of
:05:05. > :05:09.planning in the Israeli Defence Force, Giora Ireland, and asked
:05:09. > :05:14.what that might mean. He said, this is only possible, he said it would
:05:14. > :05:18.be logical to extend the attack, not only to strictly military Hamas
:05:18. > :05:23.tarts, but also to Hamas infrastructure, to police stations,
:05:23. > :05:28.to bridges, as a way of punishing Hamas. Hamas's reaction to this was
:05:28. > :05:35.very predictable. It talked about opening the gates of hell against
:05:35. > :05:40.Israel. And already today it has been reported that intercepted by
:05:40. > :05:43.Israel's shield there have already been 13 Hamas rockets successfully
:05:43. > :05:49.intercepted. I suppose what is also different is the whole political
:05:49. > :05:52.context now, the Middle East has changed. Mohamed Morsi in Cairo,
:05:52. > :05:56.Muslim Brotherhood, his political party, were saying Israel has to
:05:56. > :06:00.get its head round the fact that things have changed? Absolutely,
:06:00. > :06:04.this is a completely new landscape, this is the first conflict of this
:06:04. > :06:08.kind between Hamas and Israel, since the Arab Spring, and since
:06:08. > :06:13.the election of a Muslim Brotherhood Government in Egypt, by
:06:13. > :06:18.ideolgical is at one with Hamas. Egypt very, very strongly of course,
:06:18. > :06:22.has condemned this attack. I think it will remain principally at the
:06:22. > :06:25.level of rhetoric. Because even the new Government in Egypt has
:06:25. > :06:31.indicated very clearly it is committed to the peace treaty with
:06:31. > :06:36.Israel and so on. The main danger is, Israel has very important
:06:36. > :06:39.security co-operation with Egypt in the Sinai Peninsula, where we have
:06:40. > :06:43.seen a big upsurge in terrorism, since the Egyptian revolution. For
:06:43. > :06:48.both sides, they would really suffer if that co-operation was
:06:48. > :06:52.curtailed. The other part of this political context is that within
:06:52. > :06:55.Israel itself, where we are in a run up to an election, and as you
:06:55. > :06:59.well know in the run up to the election the Prime Minister tends
:06:59. > :07:03.to want to look tough on security? Certainly, because of the missile
:07:03. > :07:07.attacks on Israeli towns and village, there has been even more
:07:07. > :07:12.annual a big, big demand in Israel for action against Hamas, and
:07:12. > :07:17.certainly that is what Binyamin Nethanyahu was responding to. Right
:07:18. > :07:21.across the boar, in Israel, at -- board, in Israel, at least to begin
:07:21. > :07:27.with, this will be welcomed. Certainly it will do Mr Nethanyahu
:07:27. > :07:33.absolutely no harm at all in the elections in January.
:07:33. > :07:38.Daniel Ayalon, the Israeli deputy minister joins me now. What do you
:07:38. > :07:45.think that Israel has achieved by killing Ahmed al-Jabari? We have to
:07:45. > :07:51.remember that Ahmed al-Jabari was the Bin Laden of Hamas. He has many,
:07:51. > :07:57.many innocent lives on his head. The fact that he was overseeing the
:07:57. > :08:02.new attacks on Israel for the last two week, by actually taking him it
:08:02. > :08:11.is not only self-defence, it is a classic self-defence, and hopefully
:08:11. > :08:17.a message and prevention and preefplive -- pre-emptiveness for
:08:17. > :08:20.the future. There is no way to reason with the terrorists, but by
:08:20. > :08:27.defending yourself in a way where they won't be able to operate again.
:08:27. > :08:34.You have in the past killed Hamas founder Yassin and his successor,
:08:34. > :08:37.you have killed previous military commanders, and while you have
:08:37. > :08:41.successively removed one enemy of Israel today, you have probably
:08:41. > :08:50.created a whole lot of other one. There will be a successor to this
:08:50. > :09:00.man? Well, I would beg to differ. We did what we had to do in killing
:09:00. > :09:03.
:09:03. > :09:07.the head of terror. We did achieve deterrence. We gave Gaza entirely
:09:07. > :09:14.to the Palestinians, we left Gaza all together in 2005, seven years
:09:14. > :09:19.ago. Since then, instead of having a responsible part, taking
:09:19. > :09:26.responsibility and managing the lives in Gaza and negotiating with
:09:26. > :09:30.us on peace and reconciliation, we saw, actually, that ham maz was
:09:30. > :09:34.emboldened, getting -- Hamas was emboldened getting an Arsenal of
:09:34. > :09:38.terror, long range missiles, and terrorising more than one million
:09:38. > :09:44.Israeli civilians in the population on the southern border and southern
:09:44. > :09:47.parts of Israel. What we see now. Picking up on the point of
:09:47. > :09:52.civilians, there were civilians killed on the other side today,
:09:52. > :09:58.would you like to apologise for those needless deaths? Anybody
:09:58. > :10:04.innocent civilian who gets killed is deplorable, and I would
:10:04. > :10:08.apologise for anything. We would not like to do that. But, I would
:10:08. > :10:13.say that the responsibility for the death and the killing is of the
:10:13. > :10:16.Hamas. Because what do they do? Not only do they target the civilian
:10:16. > :10:20.population in Israel, but they plant themselves, implant
:10:20. > :10:23.themselves in the midst of the civilian population in Gaza. In
:10:23. > :10:28.fact, they use the Gaza population as a human shield for their hidious
:10:28. > :10:31.attacks. We will leave it there.
:10:31. > :10:36.Workers and students in more than 20 countries across the European
:10:36. > :10:39.Union took part in strikes and protests today, to show their
:10:39. > :10:42.disgust at cuts and austerity measures. As you might expect, the
:10:42. > :10:47.largest protests were in those Mediterranean countries where the
:10:47. > :10:51.budget axe is making the deepest impact. In the new Sick Man of
:10:51. > :10:56.Europe, Spain has an even more emotional issue, some people are
:10:56. > :10:59.being forced out of their homes in a wave of prepossessions and
:10:59. > :11:09.evictions. We report on -- repossessions and evictions. We
:11:09. > :11:09.
:11:09. > :11:14.report on the human cost of the economic mess.
:11:14. > :11:18.Again they came, from the factories, from the public sector, from their
:11:18. > :11:22.homes. Some who marched in tonight's demonstration, were from
:11:22. > :11:26.Spain's nearly six million unemployed. Some were pensioners.
:11:26. > :11:30.This is the second general strike in Spain this year. They wanted to
:11:30. > :11:38.protest against the Government's austerity, and to show their anger
:11:38. > :11:42.at its effect on ordinary Spanish people. Here, in a suburb of Madrid
:11:42. > :11:46.this morning, one family looked set to suffer the most extreme
:11:46. > :11:50.consequence, losing their home. Inside this block were three
:11:50. > :11:54.generations, six people on the brink of being evicted. The police
:11:54. > :11:59.came, the bailiffs were there, protestors learned of it and
:11:59. > :12:06.gathered. Earlier this week, Spanish banks had said the
:12:06. > :12:11.evictions of the most needy people would be suspended. They had come
:12:11. > :12:15.under pressure after two suicides linked to evictions and an outcry.
:12:15. > :12:20.Today, perhaps because of the general strike, they haven't
:12:20. > :12:27.arrived, so it is almost certain, although we will have to wait for a
:12:27. > :12:33.while, that this eviction has not, will not be carried out. Then,
:12:33. > :12:40.celebration. The official responsible for the eviction had
:12:40. > :12:47.not turned up. The family were immensely relieved. TRANSLATION:
:12:47. > :12:57.I'm really happy, she told me. And I'm nervous. But when I asked her
:12:57. > :13:00.
:13:00. > :13:05.what happens next? She had no idea? The bank could go back to court and
:13:05. > :13:10.get a new eviction date. She's the only wage earner in her family now,
:13:11. > :13:13.a cleaner, she can't pay the mortgage of 1300 euro every month.
:13:13. > :13:17.They are celebrating a small victory in this Madrid
:13:17. > :13:21.neighbourhood, but nobody knows what will happen next, not even the
:13:21. > :13:24.lady herself, and nobody knows either whether this is to be the
:13:24. > :13:28.pattern going forward, fewer evictions, fewer repossessions. If
:13:28. > :13:33.so, what will be the consequences of that for Spanish banks, and for
:13:33. > :13:37.Spain itself. Spain has to make its mortgage law
:13:37. > :13:41.more lenient, to bring it into line with the rest of the EU. If there
:13:41. > :13:45.is a freeze on evictions, some say, that could have an impact on the
:13:45. > :13:49.banks. It will surely have an impact, because it will increase
:13:49. > :13:53.the debt of the banks. But I don't think that's the worst problem the
:13:53. > :13:59.banks have. So it will be just an added problem, and could be
:13:59. > :14:02.properly solved. We then have to think that going on with the
:14:02. > :14:06.evictions will also cause serious problems, not just in human terms,
:14:06. > :14:10.or in social terms, but also in economic termsment we are talking
:14:10. > :14:15.about now those evictions we are seeing now is people who lost their
:14:15. > :14:20.jobs in 2009, because the law is very slow. This is just a gathering
:14:20. > :14:25.storm, we will see it worse in the coming years.
:14:25. > :14:30.Beatrice is a nurse, supporting today's strike, taking part in
:14:30. > :14:37.tonight's march. In 10% of Spanish families now, both parents are out
:14:37. > :14:42.of work. Even those with one income worry. Beatrice has finished her
:14:42. > :14:49.temporary contract, her husband works in the often unpredictable
:14:49. > :14:57.building industry. They are worried about the future. TRANSLATION:
:14:57. > :15:00.any point you could lose your job, we could maybe stay afloat on
:15:00. > :15:02.unemployment benefit and savings for a year at most. There will be a
:15:02. > :15:08.moment where we have to choose between paying the mortgage and
:15:08. > :15:11.eating, obviously I have a daughter and I have to feed her.
:15:11. > :15:16.TRANSLATION: It is a difficult situation. The Government are
:15:16. > :15:20.making it tougher for us, with two salaries, you really struggle to
:15:20. > :15:26.pay your bills every month. If one of the salaries goes, it is even
:15:26. > :15:29.worse. Unions claim the turnout today and
:15:29. > :15:33.tonight has been strong, police estimates were far more modest, the
:15:33. > :15:38.night is not over though. These demonstrations have been
:15:38. > :15:42.taking place across the country, not just in Madrid, and police say
:15:42. > :15:46.there have been over 100 arrests during the day. It is quite late
:15:46. > :15:52.now in the capital, but some people still have an appetite for protest.
:15:52. > :15:56.The main rally is over, they are on their way to another demonstration.
:15:56. > :16:01.And their mood was defiant. They will do it again, this English
:16:01. > :16:07.teacher told me. We have to go to the streets, we have to be a group
:16:07. > :16:13.of people, not people individually, you know. We have to fight for our
:16:13. > :16:18.rights. The Government says it will not change its policies. And the
:16:18. > :16:22.country's current economic position leaves little room for manoeuvre.
:16:22. > :16:28.More strikes, more protests, seem certain.
:16:28. > :16:32.We have a PhD student and supporter of the demonstrations today,
:16:32. > :16:36.Mariana Mazzucato is professor of economics at Sussex university, and
:16:36. > :16:38.Jose Maria Beneyto is a spokesman for Spain's People's Party on
:16:38. > :16:43.Spanish affairs. Was this another day of
:16:43. > :16:49.demonstration in Spain, or have things changed? No, it wasn't just
:16:49. > :16:52.a demonstration. First, it was the largest cord flated strike and
:16:52. > :16:57.protest movement -- co-ordinated strike Europe has ever seen. It
:16:57. > :17:02.shows the nature of change in protests. At the Spanish level, it
:17:02. > :17:05.was the outcome of an increasing social unrest that has been
:17:05. > :17:12.developing over the last year as people get to live the consequences
:17:12. > :17:18.of the socialisation of the financial crisis. Evictions is that
:17:18. > :17:25.part of it, you are losing your home, 350,000 people since 2008?
:17:25. > :17:29.People are getting evicted from their own home by the very same
:17:29. > :17:32.banks the taxes helped to bail out. The Government have been
:17:32. > :17:35.controlling the interests of the financial sector and not the
:17:35. > :17:39.interests of those they are meant to represent. You have an economic
:17:39. > :17:46.crisis, you have a social crisis, now perhaps you have a public order
:17:46. > :17:53.crisis? Well, I wouldn't dramatise too much the situation. Because, of
:17:53. > :17:57.course, you know, the right to strike is granted by the
:17:57. > :18:03.constitution, there were protest and demonstrations today, they were
:18:03. > :18:08.very peaceful. There were also -- they were also limit the in their
:18:08. > :18:11.skom. There has been an -- limited in their scope, there has also been
:18:11. > :18:16.an expression of the people's feelings. But I wouldn't dramatise
:18:16. > :18:20.it and say it is a general unrest in the country. When you have a
:18:20. > :18:23.third of a million people over the past four years losing their homes.
:18:23. > :18:29.You have somebody who apparently committed suicide as a result of
:18:29. > :18:34.being evicted, things have changed in Spain? The person who committed
:18:34. > :18:41.suicide was linked to an eviction, they were not directly evicted from
:18:41. > :18:48.the house. Of course the situation is not easy. We have, as a
:18:48. > :18:52.Government, we are in a position negotiated with a moratorium for
:18:52. > :18:57.the extreme cases of need. We are fully aware of the situation of a
:18:57. > :19:03.number of the Spanish citizens. Of course, you know, the course of
:19:03. > :19:07.fiscal consolidation is not an easy path, but I don't think we have
:19:07. > :19:13.another one. We need growth and jobs, but we need, particularly,
:19:13. > :19:18.first, to tackle the problem of too much public expenditure of the past.
:19:18. > :19:22.The years before. Let me bring in Mariana Mazzucato here. It's tough,
:19:22. > :19:26.it's hard, is Spain on the right course, because, basically, in
:19:26. > :19:30.slightly different ways, all of Europe is doing broadly the same
:19:30. > :19:33.thing? I think it is absolutely on the wrong course. Because basically
:19:33. > :19:37.what we are seeing are these massive cut, which are not creating
:19:37. > :19:40.any gain. It is all pain with no gain. This is why we have these
:19:40. > :19:45.demonstrations. So, in fact, Spain was a country that before the
:19:45. > :19:48.crisis had quite a low deficit, 3- 4%, it is very hard to say that
:19:48. > :19:51.Spain's problems today are because it was spending too much. Perhaps
:19:51. > :19:55.it was spending in the wrong place, but for sure it was not the public
:19:55. > :19:59.debt that was the problem. It was the private. Instead what we are
:19:59. > :20:02.seeing is public sector wages are come down, public services are
:20:02. > :20:06.being put, and this, of course, is hurting demand, as well as general
:20:06. > :20:09.confidence in the economy. We don't have any investment. And we don't
:20:09. > :20:14.really see the end, it will get worse. It will be a 50%
:20:14. > :20:20.unemployment amongst the young. 25% for the whole economy, and this is
:20:20. > :20:23.only getting worse. You are going a way of grief, in other words, which
:20:23. > :20:30.is you are taking the pain, but the gains are not there? It has nothing
:20:30. > :20:36.to do with the situation in Greece. I do not agree with what has just
:20:36. > :20:42.been said. If you look into the figures, now Spain is having
:20:42. > :20:46.positive data. We have increased enormously our exports,
:20:46. > :20:50.productivity is increasing. It is not that we are in the path of
:20:50. > :20:54.Greece. It is a completely different situation. What do you
:20:54. > :20:57.think the Government should do, then, as suggested, broadly,
:20:57. > :21:05.European Governments are practising austerity, one end to another, they
:21:05. > :21:11.all seem to think it is working, in some ways, you have just heard the
:21:11. > :21:15.argument for it? The situation is not working, and the Government is
:21:16. > :21:20.hiding behind this narrative. There are plenty of other options to take,
:21:20. > :21:25.they have chosen not to. instance? There has been
:21:25. > :21:29.conversations on a whole range of measure, including taxes on
:21:29. > :21:34.financial transactions, abolition of tax havens o at least
:21:34. > :21:37.prohibiting to give Government contracts to those companies in the
:21:37. > :21:41.tax havens, and not putting the bad on the most vulnerable. Many things
:21:41. > :21:45.have been suggested, the Government is choosing to ignore them. What
:21:45. > :21:49.would you be the alternative, broadly is that what was just
:21:49. > :21:59.advocated? I would support those measure, with very interesting in
:21:59. > :22:01.
:22:01. > :22:04.Spain, and it differentiatates it from Greece. -- grease. They were
:22:04. > :22:09.lead investors in wind and solar energy, that has all gone down here
:22:09. > :22:12.since the crycy is, those kinds of investments in new technologies,
:22:12. > :22:20.was positioning Spain to become what Germany is today. The real, I
:22:20. > :22:26.think, problem right now, is unlike what we saw today, which is a co-
:22:26. > :22:30.ordinated action by the European Trade Union's Confederation. We
:22:30. > :22:32.don't have the same level of co- ordination in the European
:22:33. > :22:37.Commission, in what all the countries should be doing to become
:22:37. > :22:40.competitive like Germany. Germany is investing a lot in all sorts of
:22:40. > :22:44.things, they have patient capital through a state investment bank, by
:22:44. > :22:48.is funnelling resources directly to the companies who need it, as
:22:48. > :22:52.opposed to always going indirectly via private banks, which is not
:22:52. > :22:57.working. What do you fear might happen now, if this is the route
:22:57. > :23:02.that Spain is going? Government's seriously doing its
:23:02. > :23:05.best to sink the country as much as it can. All the measures they have
:23:05. > :23:10.taken have produced this horrible human crisis. Now it is not a
:23:10. > :23:19.financial crisis, it was a financial crisis had a has turned
:23:19. > :23:22.into a social and human crisis. have produced a human crisis?
:23:22. > :23:28.is certainly not the case. The human crisis comes from the fact
:23:28. > :23:31.that we had a deficit of 9.4% last year. With a the previous
:23:31. > :23:35.Government. -- with the previous Government. Our Government was
:23:35. > :23:41.putting public expenditure to the top in Spanish history. This was
:23:41. > :23:45.the real problem. You cannot find, as a country, with a 9.4% deficit
:23:45. > :23:50.every year. This is the real issue that we have to tackle, first, and
:23:50. > :23:55.then, of course, you need growth, and you need jobs. You need
:23:55. > :23:56.measures in order to improve those two points as well. We're running
:23:57. > :24:04.out of time, thank you all very much.
:24:04. > :24:07.In the 1960s, the Conservative politician, Iain MacLeod coined the
:24:07. > :24:09.phrase "stagflation" to describe low growth and rising inflation.
:24:09. > :24:12.Today the Governor of the Bank of England talked of a long and
:24:13. > :24:17.winding road to recovery, in which low growth is likely, and inflation
:24:17. > :24:22.is a danger. But the latest figures continue to show one bright spot,
:24:22. > :24:26.unemployment continues to fall. Not quite the old stagflation of the
:24:26. > :24:30.60s. Economist, Howard Archer, has coined a new definition of what is
:24:31. > :24:35.ahead, perhaps a DIRE decade, Disappointing Inflation, Rotten
:24:35. > :24:45.Expansion. We have been trying to figure out where growth might come
:24:45. > :24:54.
:24:54. > :24:57.from, Gerard Lyons reports. These people are in fashion, they
:24:57. > :25:01.call themselves the Bloomberg of the fashion sector. They are a
:25:01. > :25:04.dotcom that started up three years ago and is now hiring one new
:25:04. > :25:08.employee a month. There are two places in a month where you could
:25:08. > :25:12.do a business like our's, either you New York or London, we looked
:25:12. > :25:17.at New York or London, it seemed like the talent pools were fairly
:25:17. > :25:20.equivalent. It seemed like the friction for doing business of
:25:21. > :25:24.maybe a tiny bit lower in New York, but getting much better in London.
:25:24. > :25:27.Also, critically, in the fashion industry, fashion moves faster in
:25:27. > :25:34.London as well. It really seemed like London was the right place to
:25:34. > :25:40.set up. There are already 300 start-ups in
:25:40. > :25:45.tech city, nicknamed "sill conround about", and many wider in the East
:25:45. > :25:52.London area. They could be the answer to the question, why is the
:25:52. > :25:57.UK economy so weak, yet creating so many jobs. Unemployment has fallen
:25:57. > :26:02.to 2.51 million people, or 7.8%, signal as robust labour market. The
:26:02. > :26:07.number of people collecting jobseeker's allowance rose to 1.58
:26:07. > :26:11.million. The number of time work stands at a record of 8.1 million.
:26:11. > :26:15.Temporary workers are also near record highs of 1.6 million. This
:26:15. > :26:20.suggests the figure for those underemployed could be close to 10%
:26:20. > :26:26.of the work force. I don't think one would say that the data release
:26:26. > :26:33.this morning were weak. Some signs in the claimant count of a small
:26:33. > :26:38.increase, that may -- maybe it is beginning to move. There were still
:26:38. > :26:42.falls in unemployment, a rise in employment, a big increase in total
:26:42. > :26:47.hours work. It is still a strong labour market. There is very little
:26:47. > :26:51.unemployment in tech city, business is booming and it is creating a
:26:51. > :26:55.virtueous circle, meaning its success attracts the best software
:26:55. > :27:02.developers in Europe. They are not paid peanuts, most of the staff are
:27:02. > :27:05.earned over �40,000 u and the average age is over 28. There are
:27:05. > :27:11.hundreds of families barely surviving on the minimum wage.
:27:11. > :27:15.Unemployment in some neighbourhoods is 40%. Campaign groups like London
:27:15. > :27:19.Citizens, are hoping to place a thousand less well off people with
:27:19. > :27:22.technology firms nearby. It is really hard to have two Londons in
:27:22. > :27:27.such a small area, on the one side you have the rich, the other side
:27:27. > :27:30.you have the really poor. You can see where the money is. And how
:27:30. > :27:34.people just throw away money, literally. And then I'm coming to
:27:35. > :27:39.work and working with families that are really struggling. There is
:27:39. > :27:43.families that do not have the money, at all, to access to feed their
:27:43. > :27:47.children. I'm having to find food vouchers for them. So that at least
:27:47. > :27:54.Friday, for the rest of the weekend, they have got food to eat. That's
:27:54. > :27:58.really hard to see. It may not be very aesthetic, but silicone round
:27:58. > :28:01.about and its people may yet to prove to be a thing of great beauty.
:28:01. > :28:06.An ecosystem of hundreds of start- ups, employing thousands of well-
:28:06. > :28:09.paid people. It happens just as the banking sector, long an engine of
:28:10. > :28:13.growth, appears to be entering a period of irreversible decline.
:28:13. > :28:17.The financial sector accounts for 10% of the UK economy, but few
:28:17. > :28:20.people believe it will remain that high in the coming years. An
:28:20. > :28:27.estimated 250,000 people are directly employed by banks and
:28:27. > :28:32.insurers in the City at the moment. Down from its precrisis peak of
:28:32. > :28:36.2350,000. With all major banks cutting staff, especially in
:28:36. > :28:42.investment banking, staff numbers will be probably at a 20-year low
:28:42. > :28:48.by the end of next year. The hope is that places like the Google
:28:48. > :28:51.Campus, will create a shrew of self-employed people who hire
:28:51. > :28:56.themselves, and others in cafe-like environments like this. What the
:28:56. > :28:59.Government is doing right is championing Tech City and the tech
:29:00. > :29:02.cluster in the UK. Opportunities to improve are in the areas of
:29:02. > :29:07.immigration, enabling technical talent coming to the UK. In the
:29:07. > :29:10.area of education, strengthening the education system, especially
:29:10. > :29:13.the technical degrees and the skills that people come out with
:29:13. > :29:19.from university, and financing. the meantime, the rest of the old
:29:19. > :29:23.economy, on which Britain is still very dependant, will have to limp
:29:23. > :29:29.on with anaemic growth for a few years, before a new economy emerges
:29:29. > :29:34.from the Chris lisence. Mark Hoban was the co-founder of
:29:34. > :29:40.lastminute.com, and an invester in start-up, and Gerard Lyons is chief
:29:40. > :29:42.economist at the Standard. One economist said it was a DIRE decade,
:29:42. > :29:45.Disappointing Inflation, Rotten Expansion, is that how you see
:29:45. > :29:50.things? The world economy is doingle with, it is continuing to
:29:50. > :29:55.grow. What the UK, like western Europe needs to do, address
:29:55. > :29:58.underlying problems. If we start to do that we can become more positive
:29:58. > :30:01.the reality of the situation is whatever economy one looks at, the
:30:01. > :30:04.outcome depends on the interaction between the fundamentals and public
:30:04. > :30:08.confidence. In the UK the fundamentals are not great, but
:30:08. > :30:12.better than they were. Policy doesn't really have much room for
:30:12. > :30:15.manoeuvre, but could do more, unfortunately confidence is pretty
:30:15. > :30:20.rock bottom. The question is if policy could do more, what policy
:30:20. > :30:23.would be doing the more, what would you like to see? I would like to,
:30:23. > :30:27.obviously, entrepeneurs, we have record levels of people starting
:30:27. > :30:31.companies in this country. That's the good news. The thing is s they
:30:31. > :30:35.are just not getting big enough. They are not expanding faster. The
:30:35. > :30:39.emphasis that has been coming on international trade, I do think,
:30:39. > :30:42.actually, is very relevant. I think it is actually still much harder
:30:42. > :30:45.than one thinks. Using the Internet as a network to help people trade
:30:45. > :30:49.international, out of the UK, this great trading nation, I think there
:30:49. > :30:55.is lots of room for optimisim there. If we don't do it, the world's
:30:55. > :30:58.going to be belonging to Amazon, is that a possibility? That is
:30:58. > :31:02.something I would love to seat economists focus on, what happens
:31:02. > :31:06.in ten years time if e commerce and the Internet sales will be as big
:31:06. > :31:10.as we think it will be, and most of the companies are maerpblg. That is
:31:11. > :31:13.why the sec saving -- American. That is why the tech savings is
:31:13. > :31:17.more important, there is so much economic value that could be taken
:31:17. > :31:20.away from the UK by the big American tech giants. Do you
:31:20. > :31:23.broadly agree with that, that is one part of the future. The
:31:23. > :31:26.Government talks about rebalancing the economy, away from financial
:31:26. > :31:30.services, that may happen for all kinds of reasons, high-tech is one
:31:30. > :31:35.part of the future? I think what is interesting when we look at these
:31:35. > :31:39.big companies, like Google, Amazon, Apple, in the US, and talk about
:31:39. > :31:44.how can we in Europe and the UK create them? There is this myth
:31:44. > :31:50.that the reason we don't have those kind of companies is we don't have
:31:50. > :31:54.enough angel investors and venture capitalists. If you look at Silicon
:31:54. > :31:58.Valley, there was a huge state of investment, going goggle as all
:31:58. > :32:04.georhythm was funded by the science division. Everything behind the
:32:04. > :32:07.iPhone, that makes it a smartphone, touch screen display, the Internet,
:32:07. > :32:12.the voice-activated personal assistant, is state-funded. You
:32:12. > :32:17.need the venture capitalist, but in the US with nano tech and the
:32:17. > :32:20.internet, the VC model is good after the state has made the huge
:32:20. > :32:25.investments that venture capitalists can ride N this country
:32:25. > :32:28.we don't have the confidence of a Government that feels it does have
:32:28. > :32:32.the manoeuvring possibility to confidently invest in these new
:32:33. > :32:39.areas. I personally wouldn't like to see Government invest. Already
:32:39. > :32:42.the European investment, Europe invests 40% of venture capital.
:32:42. > :32:47.That is the limit you are wondering. What the Government can do,
:32:47. > :32:51.encourage through the tax system it, entre pent nurses to keep investing.
:32:51. > :32:54.That is what they are doing -- entrepeneurs, to keep investing.
:32:54. > :32:59.That is what they are doing. There is the question of unemployment
:32:59. > :33:02.going down, I have seen a lot of analysis, one is they are not good
:33:02. > :33:06.jobs and part-time. Another analysis is real wages in Britain
:33:06. > :33:10.have gone down, which helps a flexible labour market? A whole
:33:10. > :33:13.host of things are happening. Public sector jobs are being shed.
:33:13. > :33:17.Although those in public sector jobs now are getting paid more. In
:33:17. > :33:23.terms of the rest of the economy, part-time work, temporary jobs are
:33:23. > :33:26.rising. It is a mixed picture. We saw this in Japan, when the
:33:26. > :33:29.financial crisis happened 20 years ago. People held on to workers in
:33:29. > :33:33.the hope that the economy would turn round. Also because it is
:33:33. > :33:37.difficult to rehire worker. I think the key issue, coming back to the
:33:37. > :33:41.wages point. The big problems we have in Britain and continental
:33:41. > :33:44.Europe is a lack of demand. What should the Government be doing,
:33:44. > :33:49.trying to get more demand into the economy. We have talked about
:33:49. > :33:52.infrastructure, there needs to be tax cuts to get money into people's
:33:52. > :33:55.pockets, the excise duty on petrol, all these things help. At the same
:33:55. > :34:00.time you need to encourage big companies, who have the finances
:34:00. > :34:06.available, to start investing. does that square with the view that
:34:06. > :34:11.the cuts haven't started yet and it will get deeper next year? Stp do
:34:11. > :34:15.any of you foresee -- do any of you foresee the kinds of troubles we
:34:15. > :34:18.have seen in Spain happening here? The problem is demand, but both in
:34:18. > :34:22.terms of the consumers, because we have had this, basically what we
:34:22. > :34:27.need is a Government that doesn't act like a business. Business
:34:27. > :34:31.invested too little during the boom and too little during the bust. We
:34:31. > :34:36.need a counter cyclical Government that makes up for the fall in
:34:36. > :34:39.investment. What guides private sector investment? GDP in all
:34:39. > :34:43.countries is the most volatile part of GDP. This notion that some how
:34:43. > :34:51.it will be tax cuts that will make this country more entrepeneural,
:34:51. > :34:54.and lead investments, I think is really flawed. Two wrongs don't
:34:54. > :35:00.make a right. The previous Government spent too much in the
:35:00. > :35:05.good times and not in the rest. The issue would be to stop spending in
:35:05. > :35:12.the bad times. We need more money in people's pockets, but we need an
:35:12. > :35:14.innovative industrial sector. I was at the Guildhall on Monday, the
:35:14. > :35:19.Government was talking about an industrial policy.
:35:19. > :35:25.We need more money in the economy. The etoric and branding of Britain
:35:25. > :35:28.-- rhetoric and branding of Britain being open for business to attract
:35:28. > :35:32.more business. We will get the Skype message out. People were
:35:32. > :35:37.talking today in Brussels about why are so many start-ups are moving to
:35:37. > :35:41.London. That is great use. We will get some billion-dollar companies,
:35:41. > :35:46.it is about tax cuts, and Britain is open for business, that is a
:35:46. > :35:50.message coming across. I completely disagree, there is a big poster
:35:50. > :35:54.outside the British and skills administration, saying Britain is
:35:54. > :36:01.open for business, lowest tax and lowest registration. People are
:36:01. > :36:06.leaving the UK. Not because we haven't demand in the economy.
:36:06. > :36:10.go to companies with a strong strategic investment policy S
:36:10. > :36:14.Pfizer went to Boston. Other companies are coming to London.
:36:14. > :36:16.have invested in several coming from Spain moving to the UK.
:36:17. > :36:21.green companies are the new -- the new companies are internet, the
:36:21. > :36:25.green companies are leaving. Recent political history shows
:36:25. > :36:28.whichever party wins the seat of Corby ends up in Downing Street.
:36:28. > :36:33.There is little wonder the by- election campaign has been keenly
:36:33. > :36:38.fought. Tomorrow, following the transient political comment, Louise
:36:38. > :36:42.Mensch who quit to spend more time with her family, Corby voters will
:36:42. > :36:48.have a chance to tell us what they think of the Government and the
:36:48. > :36:54.opposition parties. We have been zoo see -- see which way the wind
:36:54. > :37:00.is blowing. First to bury a non-fact about
:37:01. > :37:05.Corby. I was a bit bored so I dismandled the Corby trouser press.
:37:05. > :37:08.It is not the home of the Corby trouser press, let's dismandle the
:37:08. > :37:13.Corby by-election, because this is the home of some very interesting
:37:13. > :37:18.politic. For a start, it feels like several constituencies, the
:37:18. > :37:22.agricultural, the industrial, the affluent and less well off. Because
:37:22. > :37:25.of this diversity, Corby acts as a national opinion poll. In fact, in
:37:25. > :37:35.every single general election, since the constituency of formed,
:37:35. > :37:39.the seat has been won by the party that goes on to form a Government.
:37:39. > :37:44.They loved Maggie, and pipped for John, just, and then fell for tone
:37:44. > :37:47.he yoo, then David came along. There is -- Tony, then David came
:37:47. > :37:51.along. They were general elections where voters asked who do you want
:37:51. > :37:55.to be a Government. This is a by- election, very different. Voters
:37:55. > :37:58.here are answering the question, what message do you want to send to
:37:58. > :38:05.the Government. The toughest fight belongs to the
:38:05. > :38:12.Conservatives, defending a 3.5% majority, in, well, let's not say,
:38:12. > :38:22.the best of circumstances. The outgoing MP was very outgoing. For
:38:22. > :38:26.some reason, Louise Mensch, the glamorous game-show inhabiting
:38:26. > :38:30.novelist, decided to give up politics to go to America with her
:38:30. > :38:33.rock star husband had. I'm 20 years older.
:38:33. > :38:37.The Conservative candidate replacing her, promises to be
:38:37. > :38:43.different. Is the electorate listening. The limiting polling in
:38:43. > :38:48.the seat has been suggesting Labour has a lead. What is dragging your
:38:48. > :38:53.ticket? Is it national politics, David Cameron, local factor, Louise
:38:53. > :38:58.Mensch and that baggage, or is it simply the economy in the electoral
:38:58. > :39:03.cycle. What is hold you back? not being held back, the economy is
:39:03. > :39:07.holding up, a million new jobs created since the coalition came
:39:07. > :39:12.into power. 5 new companies set up in Corby and east Northamptonshire
:39:12. > :39:16.in the last quarter. Apprenticeships are up 124%. There
:39:16. > :39:22.are lot of good signs on the economy. I think people recognise
:39:22. > :39:26.that. This being a by-election, plenty of other parties are
:39:26. > :39:31.fighting Corby. But, as they say, Corby is fighting back.
:39:31. > :39:35.They are banned from canvasing in the town centre, and well, were
:39:35. > :39:41.these signs put up specially. The Lib Dems are smiling for
:39:41. > :39:44.photographs, but it is unlikely they will be come Friday. The polls
:39:45. > :39:48.suggest the only hope they have is their candidate, Jill Hope. A by-
:39:48. > :39:55.election should be a classic Lib Dem opportunity. How difficult is
:39:55. > :39:59.it this time when Lib Dems are in Government? Obviously it is very
:39:59. > :40:02.difficult, I spent many years in opposition, it is so easy, you
:40:02. > :40:05.criticise others and say you could do better, you never have to
:40:05. > :40:09.promise anything concrete. All of a sudden we are delivering
:40:09. > :40:11.policiesering but it is wonderful. I have spent many years as a
:40:11. > :40:18.Liberal Democrat watching Government make really bad
:40:18. > :40:21.decisions. Now 75% of our manifesto has been delivered. Jostling the
:40:21. > :40:27.Liberal Democrats for third place is UKIP. At the general election it
:40:27. > :40:31.was the BNP that came forth. That time UKIP didn't stand. We are
:40:31. > :40:34.speaking common sense, we are really identifying with common
:40:34. > :40:39.sense policies and politic. People are really, they can't put a pin
:40:39. > :40:42.between the other parties. So they are looking for change. They are
:40:42. > :40:48.looking for an independent voice. If they vote for the other three
:40:48. > :40:53.they know there will be no change. Which brings us on to labour,
:40:53. > :40:57.trying not to look too confident, but, according to the polls, poised
:40:57. > :41:02.for their first by-election gain from the Conservatives for 15 years.
:41:02. > :41:07.How much of this do you think that you are detecting pro-Labour, and
:41:07. > :41:12.how much of this is anti- Government? People will make up
:41:12. > :41:17.their mind on Thursday, I hope people vote. They will make up
:41:17. > :41:22.their mind on a range of things. It is important people choose the best
:41:23. > :41:25.person to be the MP, I have shown I'm there for the families. I have
:41:25. > :41:35.ran a campaign to fight for the truth in the hospital. People can
:41:35. > :41:44.see I'm a fighter for this area. We leave the Corby campaign with
:41:44. > :41:53.the Conservatives in a familiar- sounding village. We are in
:41:53. > :41:58.Warmington, shall I say don't panic? That was Warmington-on-Sea.
:41:58. > :42:01.General David Petraeus was, amongst other things, the thinking man's
:42:01. > :42:04.soldier, genuine and curious, and very much admired in the United
:42:04. > :42:11.States and beyond. Now the sex scandal in which he's embroiled has
:42:11. > :42:14.led to him being forced out of the CIA and led to the US military
:42:14. > :42:18.apparatus being subject to a certificate yes, sir investigation.
:42:18. > :42:24.We assess the significance -- serious investigation. We assess
:42:24. > :42:29.the scandal with the help of the British soldier General Petraeus's
:42:30. > :42:33.second in command in Afghanistan. So the man lioniseed by the
:42:33. > :42:37.Americans, pressed for turning around the war in Iraq, called upon
:42:37. > :42:42.to try the same in Afghanistan, and then sent off to the CIA has fallen.
:42:42. > :42:47.There was a time when he could do no wrong, in front of congressional
:42:47. > :42:53.committees. But now, he has gone, like some hero of the ancient age,
:42:53. > :42:59.because of a woman. General Graham Lamb was his deputy
:42:59. > :43:04.in Iraq, and became a close friend. So the loss of him as an individual,
:43:04. > :43:11.in my view, in no way is insignificant. The loss to the
:43:11. > :43:14.organisations, though. Should also be taken into account. His actions
:43:14. > :43:19.were inappropriate. They were unworthy. They were just to people
:43:19. > :43:24.like myself, who will always look up to David, before, now and in the
:43:24. > :43:29.future. We are just disappoint ed. He knows that. But the implication
:43:29. > :43:34.and the consequences to the organisations, both the institution
:43:34. > :43:40.of the US military, and the likes agency, in effect, will be impacted
:43:40. > :43:44.by these event. What could be lost policy wise is
:43:44. > :43:48.Petraeus's advocacy for more action on Syria, or a reduction of drone
:43:48. > :43:52.strikes in Pakistan. I first interviewed General
:43:52. > :43:57.Petraeus in Baghdad four years ago, and have met him several times
:43:57. > :44:03.since. Once he introduced me to Paula Broadwell, the woman he
:44:03. > :44:07.subsequently admitted having an affair with. Whatever his drive and
:44:07. > :44:11.extraordinary intellect, David Petraeus's long years on
:44:11. > :44:16.operational tours and perhaps his brush with cancer, left him open to
:44:16. > :44:20.the attractions of a driven young woman.
:44:20. > :44:25.Miss Broadwell was investigated by the FBI, originally, as the
:44:25. > :44:31.possible source of threatening e- mails to Gill kely, another friend
:44:31. > :44:35.of General Petraeus. However explanation of Mrs Kelley's e-mails
:44:35. > :44:40.revealed thousands from General John Allen, current NATO commander
:44:40. > :44:44.in Afghanistan. The scandal has now engulfed the White House too.
:44:44. > :44:48.General Petraeus had an extraordinary career. He served
:44:48. > :44:57.this country with great distinction, in Iraq, in Afghanistan, and as
:44:57. > :45:02.head of the CIA. By his on assessment, he did not meet the
:45:02. > :45:05.standards that he felt were necessary as the director of the
:45:05. > :45:12.CIA, with respect to this personal matter that he is now dealing with,
:45:12. > :45:19.with his family, and with his wife. It is on that basis that he
:45:19. > :45:25.tendered his resignation, and it is on that basis that I accepted it.
:45:25. > :45:33.Does a man who has wielded powers of life and death, but brought down
:45:33. > :45:37.by an apair signal American purience or is it a symbol of bath
:45:37. > :45:41.Sheba ism, they are looking at modern King Davids in America, of
:45:41. > :45:47.high command. The question becomes why do successful and moral good
:45:47. > :45:51.people get caught up in doing wrongful things, it is a lack of
:45:51. > :45:58.supervision, accountability, too much praise, not enough, I think
:45:58. > :46:01.completeness in their life, if you would, social isolation, the
:46:01. > :46:06.biggest one could be that people don't believe the rules apply to
:46:06. > :46:12.them, or they believe, wrongly so, that they have the power to cover
:46:12. > :46:18.their wrongdoing. That is what we have come to call the bath Sheba
:46:18. > :46:23.syndrome. General McChrystal because of staff indiscretions,
:46:23. > :46:28.Petraeus to infidelity, and now John Allen is being investigated
:46:28. > :46:33.for his correspondence with Gill Kelly, that runs to more than
:46:33. > :46:38.20,000 e-mail, many suggestive. What advice does a veteran
:46:38. > :46:43.commander offer those settinging to wield high command? You are in the
:46:43. > :46:48.constant space of being blamed. You are in the constant space of risk
:46:48. > :46:54.to reputation and career. You're in the constant space of catastrophic
:46:54. > :46:59.failure. So, you know, this is a big deal. But our expectations
:46:59. > :47:06.should be and should continue to be, that we look to the very highest of
:47:06. > :47:11.standards of those individuals, and continue to expect that of them.
:47:11. > :47:14.But, when they stumble and fall, as many will surely do, and David,
:47:14. > :47:18.General David is an example of that, we want to be a little careful in
:47:18. > :47:23.just being too harsh in our judgments. What was once a private
:47:23. > :47:28.matter, between a man and his wife, has brought down a celebrated
:47:28. > :47:34.American hero. But, the model of the modern general, has to be
:47:34. > :47:38.morally impecable as well as skilled on the battlefield.