29/12/2011 World Business Report

is not known. Those are the latest headlines. We now have World

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

Nerves return ahead of a key Italian bond sale. In Asia the euro

hit its lowest in a decade against the Japanese yen. Chaos for Iberia,

pilots walk out over plans for a new budget carrier. One-third of

flights are grounded. It may be the quite back between

Christmas and New Year but it is another big day for Italy and

anyone watching the eurozone debt crisis. Italy will auction 8.5

billion euros of its long-term debt, including three-year bonds. They

have to be financed. On Wednesday, some relief as an auction of short-

term debt went well. An average interest rate of 3.25 %. Half the

record level it was paying one month ago. The euro has sunk to a

ten-year low against the Japanese yen. That is not a good start, is

it? Not a good start. There was a better than expected debt auction

in Italy on Thursday, but the euro has hit its lowest level in ten

years against the yen. You have got the low volumes by investors being

on holiday. That is amplifying a lot of the news in the market.

Yields on Italy's ten-year bonds went up to 7%. That is as Portugal

and Ireland look for international assistance. There isn't -- a

opinion that long-term debt is harder to sell right now. Banks may

be hoarding cash and they're worried about lending to each other.

Let's get further analysis on this. In terms of how the sale goes today,

these European banks got hold of some liquidity from the European

Central Bank, will that help? weeks ago the European banks

borrowed 500 billion euros from the European Central Bank. Part of that

money will go towards repaying there are in debt. Part of that

money will go into European sovereign debt. -- their own debt.

Italian bonds at 7% is a very attractive trade. The money is

there. As a result, I would be surprised if this option today,

which is very important, I would be surprised if it is a complete

failure. Today is very important. But it is not the end of the story

by any means. By the end of April it needs to raise 90 billion euros.

For the rest of this year, it is a phenomenal amount. Italy has debt

of 1.9 trillion euros. In 2012 it will have to refinance 340 billion

euros. The key question is, has the eurozone crisis been resolved?

There is still a lot of work to be done. The banks need a

recapitalisation. The support mechanism has inadequate money. If

we look at French, Spanish and Italian debt, the totality is in

excess of four trillion euros. One thing that worries us going into

March and April his political risk in France. You might see the

tension shift away from Spain and Italy towards France ahead of the

presidential election. We will be watching with great interest. Let's

move on. Winter holiday plans across Europe could be disrupted

today as pilots from Iberia hold a one day strike. They want to stop

managers from hiring pilots from a budget subsidiary at lower rates of

pay. It flies millions of not Europeans to the Spanish sun, but

it is being eroded by a Easyjet and Ryanair. Iberia plans a no service

of its own, Iberia Express. Pay for pilots will be lower. Pilots will

be holding strikes over the Christmas period. The management is

trying to move to pilots who are not unionised or have collective

labour agreements. They have substantially less beneficial terms

of condition. British Airways started this in 2008 when it

established a French subsidiary. Lufthansa or -- is also employing

pilates at lower pay. Iberia pilots are the first to take action. The

airline wants to have future strikes banned. The unions are

acting unlawfully. The unions want success to chalk up some success in

protecting the interests of their members. The Iberia strike is seen

as important opening skirmish in what is seen to be an industry-wide

dispute between airlines and pilots. The end of the Celtic Tiger economy

in Ireland has led to another wave of Irish emigration. 40,000 people

left last year and with the unemployment rate 15%, a similar

number will leave next year. We report from one of the worst-

affected areas. Ireland is recovering from an economic storm.

Not quickly enough. A new immigration generation has taken

flight. One of the Catholic cathedrals has put its services

online so that those living in Australia and America can watch

what is happening back home. Sunday Mass, even funerals, can be seen

live on the internet by people from County Galway living abroad.

would like to think that in some ways they feel connected with their

home place. It is ingrained in the Irish psyche. Gaelic football is

engraved in the Irish psyche. They have lost 25 players to emigration.

Including four of their successful use -- youth team. Shane Heggarty

is back from Australia. Just to see his family at Christmas. Will he

ever come back for a good? I would like to come back some day. Five-

ten years. The west of Ireland is being hit hard by the mass exodus.

Emigration is a tradition in Ireland, even during the good times

of the Celtic Tiger economy, thousands were leaving every year

out of choice. What is happening at the moment is very different.

Unemployment is almost 50%. For the 2,000 people emigrated last year,

who will be next? -- 42,000. When you have no money you start getting

depressed. Community events are keeping spirits up. You can forget

about budgets and the euro crisis. These are the people in Ireland who