:00:12. > :00:16.Now it is time for World Business Report.
:00:16. > :00:21.A deal is struck on Capitol Hill but that does not mean that the US
:00:21. > :00:25.is out of the woods. They still have a huge deficit to consider and
:00:25. > :00:34.the rating agencies are lurking in the wings.
:00:34. > :00:36.Japanese markets on the alert for a possible intervention in the
:00:36. > :00:42.currency. Asian stock markets are on the
:00:42. > :00:52.downturn as investors digest more weak economic data from the US
:00:52. > :00:54.
:00:54. > :01:02.despite the debt agreement. As many have predicted, the debt --
:01:02. > :01:06.deadlock over the US debt ceiling was broken out the last minute.
:01:06. > :01:11.However, as the fears of the default on US debt have receded,
:01:11. > :01:15.America faces the task of dealing with its deficit. Rating agencies
:01:15. > :01:21.have not made a comment on the deal and their threat to downgrade
:01:21. > :01:25.America's credit rating remains. America's politicians may have
:01:25. > :01:34.averted one crisis but the country is unlikely to default on the steps
:01:34. > :01:39.Saines to a deal that would increase borrowing. -- default on
:01:39. > :01:44.its debts as a result to a deal. will avoid default. But they could
:01:44. > :01:49.be another problem around the corner. America still owes
:01:49. > :01:54.trillions of dollars and faces losing its triple A credit rating.
:01:54. > :01:58.That would be bad for Wall Street and the US economy. This would be
:01:58. > :02:03.very bad for a number of reasons. The credibility and standing of the
:02:03. > :02:08.US on a global basis. Despite the spectre of a credit downgrade and
:02:08. > :02:14.rising interest rates, investors are still eager to buy US debts in
:02:14. > :02:18.the form of Treasury bonds. The US needs to keep the confidence of
:02:18. > :02:25.investors. The US relies heavily on overseas investors to finance its
:02:25. > :02:31.budget deficit. If those investors find the US to be a poor place to
:02:31. > :02:36.invest, they will lose faith and go home. America is still the most
:02:37. > :02:41.powerful global economy, the holder of the world's reserve currency.
:02:41. > :02:46.But with these unsustainable debts, the fight over cutting spending and
:02:46. > :02:50.increasing taxation is only just beginning.
:02:50. > :02:53.The strength of the Japanese yen has turned into a problem for the
:02:53. > :02:58.government there as they struggle with reconstruction after the
:02:58. > :03:02.earthquake and tsunami in March. On Monday, the currency traded at a
:03:02. > :03:06.record high. There are concerns about a possible intervention to
:03:06. > :03:12.force the currency down. The finance minister of Japan has said
:03:12. > :03:15.that Tokyo is in close communication with eurozone and US
:03:15. > :03:21.counterparts in relation to the strength of the yen. And what have
:03:21. > :03:25.you been hearing? Certainly there are reports in Japan that the
:03:25. > :03:30.government is considering some sort of intervention. There is the
:03:31. > :03:36.possibility that when the Bank of Japan convenes later this week, it
:03:36. > :03:42.will expand an easing policy to purchase assets, a form of quality
:03:42. > :03:46.to be easing. The government is not confirming those reports. The
:03:46. > :03:50.finance minister has said that it is desirable that the market rate
:03:50. > :03:55.reflects the economic fundamentals. He says that when you look at it
:03:55. > :04:01.like that, the yen is stronger than it should be. The problem is for
:04:01. > :04:08.Japanese companies. At the moment, the currency is trading at 77.5. On
:04:08. > :04:14.average, companies have been hoping for betting and that the yen would
:04:14. > :04:17.trade at 82.5. That underlines the quality of exporters. Why has the
:04:17. > :04:22.currency been so strong considering all the troubles we have seen in
:04:22. > :04:27.that country over the last few months? There are a number of
:04:28. > :04:32.factors. Japan is being seen as a safe haven. Even if a deal is done
:04:32. > :04:36.on the debt in the US, there are signs that the US economy is
:04:36. > :04:41.slowing down. Companies that want to diversify their holdings are
:04:41. > :04:46.looking at Japanese bombs. The disaster in March, the earthquake
:04:46. > :04:49.and tsunami actually serve to strengthen the yen. Rebuilding will
:04:49. > :04:54.cost hundreds of millions of dollars and that money is going to
:04:54. > :05:00.have to come from Japan pulling out of its foreign investment abroad.
:05:00. > :05:06.That has helped to make the yen stronger as well. That is what is
:05:06. > :05:13.happening in Tokyo, but what about the Asian markets? Our
:05:13. > :05:22.correspondent is in Singapore. It is a negative day for most of
:05:22. > :05:28.the regional markets. Investors are not focusing on the debt ceiling
:05:28. > :05:33.agreement passing in the US House but on this native US data fuelling
:05:33. > :05:43.fears that the economy might be sliding back into recession --
:05:43. > :05:44.
:05:44. > :05:48.negative. And these markets are being shared by -- scared by the
:05:48. > :05:52.sell-off. Analysts are saying that investor sentiment has shifted from
:05:52. > :05:57.focusing on the debt issue to the states of the American economy.
:05:57. > :06:02.They will also examine the US monthly jobless numbers this Friday.
:06:02. > :06:09.The economy generated only 1,000 -- 100,000 jobs in July and that is
:06:09. > :06:15.not enough. Barclay's, the world's sixth-
:06:15. > :06:19.biggest bank, has announced its own in today. Its bond trading
:06:19. > :06:24.operations have taken a big hit because of the European sovereign
:06:24. > :06:33.debt crisis that we have seen over the past few months.
:06:33. > :06:41.Barclays has gone from being -- has become the world's sixth largest
:06:41. > :06:47.bank. It is expected that they will announce profits of $4 billion
:06:47. > :06:51.compared to $6.4 billion last year. They had to set aside money mis-
:06:51. > :06:56.sold a law and insurance. Other aspects of its investment arm have
:06:56. > :07:01.been hit by volatility in a European bond markets. Barclays is
:07:01. > :07:09.exposed to European sovereign debt. They hold a $2 billion worth of
:07:09. > :07:16.government bonds in Spain and others in Portugal and Ireland.
:07:16. > :07:19.will see banks like this and German banks taking cuts on their
:07:19. > :07:24.expenditure. The concern for Barclays is going to be their
:07:24. > :07:29.particular exposure to Ireland, Portugal and Spain. If those
:07:29. > :07:34.companies -- countries in any shape or form renegotiate their debt...
:07:34. > :07:38.With these pressures facing the Bank, there is talk of a possible
:07:38. > :07:43.split up between its risky and unprofitable international
:07:43. > :07:49.investment banking Into -- investment banking operations and
:07:49. > :07:53.is risk free and profitable UK retail operations. A split up of
:07:53. > :07:57.Barclays would be made more likely if the UK government goes ahead
:07:57. > :08:02.with ring-fencing the money of retail banking operations so they
:08:02. > :08:07.cannot be lost in investment banking operations. That would
:08:07. > :08:11.result in some major structural changes. There are already rumours
:08:11. > :08:17.that the investment bank as a whole might be split off if the
:08:17. > :08:21.government is too harsh in terms of this ring-fencing of capital.
:08:21. > :08:25.Analysts say Barclays will try very hard to avoid a break up but to
:08:25. > :08:34.restore its profits, it may not to slim down both its foreign holdings
:08:34. > :08:39.and investment banking operations. Ford is recalling 1.2 million pick
:08:39. > :08:49.up trucks in the US and Canada over fears that their fuel tanks could
:08:49. > :08:53.
:08:53. > :08:56.fall off and start fires. It is feared that the straps holding the
:08:56. > :09:02.tanks could be corroded by road salt.
:09:02. > :09:06.The Harry Potter franchise has lost none of its magic with the final
:09:06. > :09:16.film rising to the top spots in the international box-office ratings
:09:16. > :09:17.
:09:17. > :09:22.this weekend. The American markets closed down
:09:22. > :09:28.low over worries about the debt ceiling and at the prospect of a
:09:28. > :09:38.downgrade from credit rating agencies. That's all we have time
:09:38. > :09:47.
:09:47. > :09:53.for on BBC World Business Report. Thank you for joining us.
:09:53. > :09:57.In the UK, a report from the Trade Unions Congress suggests that more
:09:57. > :10:02.than 2000 charities across England have seen their funding cut by
:10:02. > :10:06.local councils. More than �10 million has been cut from the
:10:06. > :10:11.charity's budget but the final figures are likely to be higher
:10:11. > :10:17.because some charities have not yet finalised their savings plans.
:10:17. > :10:21.An autograph book containing signatures from RAF pilots who took
:10:21. > :10:27.part in the Battle of Britain went up for auction today. Winston
:10:27. > :10:34.Churchill referred to the art of that as a book of heroes. Never in
:10:34. > :10:40.the field of human conflict was so much owed by so many to so few.
:10:40. > :10:43.Winston Churchill said it was their finest hour. Today, a unique
:10:43. > :10:48.memorial of the Flying officers of the Battle of Britain does under
:10:48. > :10:55.the hammer. An autograph books signed by 107 men as they returned
:10:55. > :11:02.from duty. Many of these people never survived the war. To have
:11:02. > :11:08.their signatures is very unusual. Page after page, named after name,
:11:08. > :11:12.some of the true heroes of the Second World War. Not least the man
:11:12. > :11:20.who is said to have found the book would never he cut from a chair in
:11:20. > :11:24.his mess hall. The story is immortalised on the silver screen.
:11:24. > :11:30.Despite losing two lanes in flying expeditions, he returned to duty
:11:30. > :11:38.and flew in the battle. When told about the book, Winston Churchill
:11:38. > :11:46.described it as not a book of names but a book of euros.
:11:46. > :11:54.-- heroes. Breakfast is next. And we will be
:11:54. > :11:58.looking at one of Britain's biggest secret gardens.
:11:58. > :12:03.This is BBC World News. The headlines: The US House of
:12:03. > :12:13.Representatives has voted in favour of an agreement that would raise
:12:13. > :12:14.
:12:14. > :12:21.the debt ceiling. The legislation was passed by 269 votes to 161. The
:12:21. > :12:25.tension over future cuts and possible tax rises are due to
:12:25. > :12:29.intensify. These new members of Congress, these so-called Tea Party
:12:29. > :12:34.people, believe in smaller government and lower taxes and they
:12:34. > :12:37.are extremely influential. They are shaping this debate. Bear in mind
:12:37. > :12:42.that there are still large decisions to be taken about the
:12:42. > :12:46.nature of these cuts that have been agreed upon. That debate will
:12:46. > :12:50.continue over the months ahead. UN Security Council has held
:12:50. > :12:54.emergency talks over the situation in Syria following reports that
:12:54. > :12:59.tanks have been shelling residential neighbourhoods.
:13:00. > :13:05.The African Union has announced it will hold a summit to plait held
:13:05. > :13:10.for victims of Somalia's drought. The crisis is spreading across the
:13:10. > :13:14.country's southern regions. 25 people found dead in a boat that
:13:14. > :13:18.landed on the island of Lampedusa in Italy were killed by