09/11/2011 World Business Report

see widespread antibiotic-resistant bacteria. It is time for World

Business Report. This is World Business Report. The headlines:

Will Italy avoid a financial bail- out with a promise from Silvio

Berlusconi to go? We assess what is at stake. Inflation in China has

eased to a five-month live. Food price rises slowed down. -- five-

month low. As you have been hearing, he has promised to go. Silvio

Berlusconi is saying only after the Italian parliament has approved

plans for economic reform. In the meantime, investors have been

punishing the country for its high debt. On Tuesday the cost of

borrowing for the Italian government hit a record high. 6.67

%. It has now fallen back slightly in Asia trade this morning. Thank

you for coming in. To a degree, for now, the markets have got what they

have -- wanted? It is going to be a very short window of opportunity.

We have seen the stock market's rally yesterday and this morning on

the back of good news with a new great coalition government in place

and now the news that Berlusconi is going to force the Italian

parliament to accept austerity. The problem for the euro is a long-term

issue. What really changes? We do not even know if Silvio Berlusconi

is going. Well he just force another election? -- will he. The

reaction of the bond market will be harder than the stock market.

have seen the cost of borrowing come down a little bit. One thing

I'm hearing over and over again, record highs, if it reaches 7%,

that is the point where Ireland and Portugal need a financial bail-out,

is that where we are going? That is pretty major because the Italian

economy is so large. You are absolutely right. There is nothing

written in stone that says when a country gets to a certain level

that is the crisis point. I think the market is assuming the worst

about Italy and wants to be convinced otherwise. What could

convince them that things will get better? What is there to stop Italy

it from going to financial meltdown? The main thing is this

European bail-out fund. Unfortunately, that is not fully

formed yet. It is certainly not large enough. It is a bit like the

Titanic, it is sailing into the icebergs with no lifeboats. The

markets are saying that is not going to work. If recede the

European Central Bank promising unlimited liquidity to the

Financial Fund to buy bonds, that may change things around. -- if we

see. The key is the financial stability fund having the firepower

to see through a meltdown? It is one of the critical aspects. What

are the prospects for Italy itself? Italy has had low growth for the

last ten years. How do they turn that around? That is a long-term

structural change. Thank you for clarifying things. We will see you

again and --. Let's take a look at Greece. The make-up of a coalition

government will be announced, that will be announced today. No signs

of progress yet. Prime Minister George Papandreou has agreed to

step down. He will meet the Greek precedent in a few hours' time. --

Greek President. China's inflation has eased to 5.5% in October. That

is the third month in a road it has calmed down. That shows a

reasonably controlled slow down. It is a long way from the official

target of 4% for inflation. Let's speak to our correspondent in

Beijing. We are looking at some good news this morning. A relief

for the authorities? Exactly. It will be welcomed by the authorities.

Inflation is down for the third successive month. It is still above

4%, the government's target. Food inflation remains above 10%. That

is a politically explosive point. Generally speaking, it is good

economic news from China on this front. It will allow the

authorities more room for manoeuvre to stimulate more economic growth.

If that were to happen, it could be a move that would be welcomed by

the West. It is looking to China for global economic growth. It is

very important for China to have that movement. The European trading

market is looking very weak. That is its largest trading partner.

That is right. China is the largest exporter in the world. What happens

in Europe affects here. Authorities are concerned about that. They are

also concerned about the property market. Property prices have

started to dip in the last couple of months. There is concern about

the extent of bad loans across the country. They were issued by state

banks. You are right in pointing out that the Chinese authorities in

the long run want to stimulate the domestic consumption. They want to

do that because they are so reliant on exports to the West. That is a

process that will take many years. Thank you are very much indeed.

That story has boosted the markets in Asia today. Let's move on to the

international Energy Agency, says gloomy forecast last month, the

debt crisis in the eurozone has barely been out of the headlines.

We take a look at how the turmoil in some European countries may hit

the global energy market. While economic growth remains fragile,

particularly with the eurozone's debt crisis, global oil demand has

increased at a slow and steady rate. As austerity measures are imposed

across the eurozone, economies are slowing. The demand for energy is

falling. The question is, to what extent that will have an effect on

energy pricing in the long-term? Some experts say even though demand

may slay in the near term, the outlook is still one of rising

prices and limited supply. -- make it slow. The outlook will depend

what happens in China. If China has a hard landing, that could have a

significant impact on prices and the future of oil. Most people are

anticipating that China will continue to grow at a strong break

and we will see oil demand growth. -- strong rate. Investment in oil

has to be supported by higher prices because the sources of oil

are becoming more expensive to produce. Oil prices hit a 2011 high

in April. As the conflict in Libya shut down supplies. Even though the

war in Libya is over, prices are expected to continue rising over

the long-term. The risk of unrest remains a concern. Especially if it

affects major exporting countries. Any unexpected drop in oil supply

could lead to a surge in energy prices. That could tip the global

economy back into recession. One company is doing well in Europe

despite the financial crisis. This company has seen a 37% jump in

recurring and -- earnings. Operations in the region are very