:00:13. > :00:18.Obama in November. They offer the latest financial news. -- now for.
:00:18. > :00:26.Welcome to World Business Report. Balancing the books. France braces
:00:26. > :00:31.itself of spending cuts days before the presidential election. Italy
:00:31. > :00:37.forced it to raise debt just as borrowing costs to return to
:00:37. > :00:47.historic highs. Cameron's
:00:47. > :00:52.
:00:52. > :00:57.Cameron's trip to Asia and his It is a question of credibility.
:00:57. > :01:01.For 30 years, France has spent more than it has raised in taxes. It was
:01:01. > :01:06.punished this year with the loss of its AAA credit rating. Now managing
:01:06. > :01:10.their finances of the eurozone's second biggest economy has become
:01:10. > :01:14.an election issue. The government will reveal tax and spending plans
:01:14. > :01:17.on Wednesday, just before France goes to the polls to elect a new
:01:17. > :01:24.president. France's economic wheels are
:01:24. > :01:27.turning. It is the only European nation to just avoid the negative
:01:27. > :01:33.growth since 2009. It is also nursing some of the largest public
:01:33. > :01:38.debt. President Sarkozy promised changes, such as the end to a 35-
:01:38. > :01:48.hour working week. The markets want a clear many of further working
:01:48. > :01:48.
:01:48. > :01:54.measures. Both main contenders know that the traditional way of life is
:01:54. > :01:58.threatened by a public debt of 65% GDP and rising. Its own plans
:01:58. > :02:04.envisage getting the budget in balance by 2017. The markets know
:02:04. > :02:08.that does depend on growth of 2.5% a year or more and they think that
:02:08. > :02:12.does not achievable. France will watchers say the market will take
:02:12. > :02:22.some convincing that the incumbent ministers can balance the budget a
:02:22. > :02:27.
:02:27. > :02:33.year ahead of the Courage redden their arrivals. -- a year ahead of
:02:33. > :02:40.their arrivals. It is difficult to say whether the plan will be OK. It
:02:40. > :02:44.will not stick to the same measures. So far, plans to reduce the budget
:02:44. > :02:49.deficit just one year later. Market attention has been on France as
:02:49. > :02:53.recently as last year. Government borrowing costs are rising up to
:02:53. > :03:03.four Prasad and that is something the French government will need to
:03:03. > :03:07.avoid happening again. -- 4%. badly needs faster growth. With new
:03:08. > :03:13.registrations of French cars down 1/3 in March, the road to recovery
:03:13. > :03:21.is a slow one. Prudent finances now enshrined in
:03:21. > :03:26.the eurozone's fiscal package. They have given the cost of borrowing
:03:26. > :03:32.back up to historic highs in Italy. Yields on Spanish bonds hit 6% at
:03:32. > :03:42.an auction on Tuesday. Italy faces a yield of five when 7% as it tries
:03:42. > :03:43.
:03:43. > :03:47.to raise 11 billion euros. -- 5.7%. Why are we here? It is from a
:03:47. > :03:52.combination of things. We just revised down our growth forecast
:03:52. > :03:55.for Spain. Revised up Germany a little bit. Those divergences in
:03:55. > :04:01.the European economy are becoming more stark and that is really not
:04:01. > :04:06.what we want. We had payrolls last Friday in the US and employment
:04:06. > :04:12.figures. It was not as good as expected. Yesterday we had trade
:04:12. > :04:17.figures out of China. This fear that growth in the world is perhaps
:04:17. > :04:21.a little soft and these countries need growth. The concentration of
:04:21. > :04:28.the markets have been mostly on Spain. Italy has problems as well.
:04:28. > :04:33.Let us concentrate on Spain. Spain has to go for a bail out. It is
:04:33. > :04:40.going to happen. What do you think will happen to Spain? It is really
:04:40. > :04:45.difficult to tell. They are in an incredibly difficult position. 300
:04:45. > :04:50.% of GDP is what the private debt is. It is much bigger than the
:04:50. > :04:55.public debt and the public debt is going up. You have got problems
:04:55. > :05:00.there. One light, one little ray of light is they have dumped 45% of
:05:00. > :05:05.their funding for 2012 already. That will help them. Adding
:05:05. > :05:10.generally with Spain, it is difficult to see a way out.
:05:10. > :05:20.Austerity is making it worse. If they have to go to the Europeans,
:05:20. > :05:25.the IMF, are they going to get it? Have they got enough money? Long-
:05:25. > :05:29.term funding - would that help? It would probably help a bit. As we
:05:29. > :05:36.see coming it helped for a while but it was temporary. Is there and
:05:36. > :05:40.of money in the bail out fund? Nobody is quite sure. -- enough
:05:40. > :05:45.money. Spain is a big country. There has a lot of this coming up.
:05:45. > :05:52.We have the French election coming up. Another problem. And then in
:05:52. > :06:02.May, and the Irish are going to vote on a fiscal compact. Fear is
:06:02. > :06:04.
:06:04. > :06:09.back in the markets. I will look at her headlines on the newspapers.
:06:09. > :06:13.Holidaymakers face more disruption in Greece. Ferry services will be
:06:13. > :06:18.halted for a second day of strikes. Tourists and passengers have been
:06:18. > :06:23.left stranded in the lead-up to Orthodox Easter. They have not been
:06:23. > :06:28.paid for months. They oppose government cuts to pension and
:06:28. > :06:32.healthcare benefits. Money is not the issue at Apple forced of the
:06:32. > :06:39.electronic giant confirmed its position as the world's richest
:06:39. > :06:43.electronic company on Monday. It outlined plans to spend some of its
:06:43. > :06:52.huge cash pile of two payments to shareholders. The world's biggest
:06:52. > :06:59.stock market is poised to create its own security exchange. Measures
:06:59. > :07:07.to open up the company's economy to foreign investments were discussed
:07:07. > :07:12.meetings earlier this month. They were set up a new exchange.
:07:12. > :07:18.Correction and they will. At the moment, the UK sells most of its
:07:18. > :07:21.good within the European Union. Demand for British products and
:07:21. > :07:28.services is weak. Exports and growth could boost national wealth
:07:28. > :07:32.and generate much-needed jobs. It needs new export markets. David
:07:32. > :07:39.Cameron is going to arrive in Indonesia on talks for trade ties
:07:39. > :07:44.following meetings with Japan earlier this week. What do you
:07:44. > :07:49.think Mr Cameron will get added this? I think primarily, he is
:07:49. > :07:52.looking to come and sell British business to Indonesia. The UK has
:07:52. > :07:55.historically been a big investor in the country but in the last few
:07:55. > :08:00.years, it has struggled to compete with the likes of the United States
:08:00. > :08:07.and China. It is looking to increase its presence back in South
:08:07. > :08:12.East Asia's largest economy. Some members of the delegation include
:08:12. > :08:17.representatives from sectors in the UK like financial-services, energy
:08:17. > :08:21.and construction and retail. He is likely to come and press and
:08:21. > :08:25.certainly have raised the attention of Indonesian businesses to the
:08:25. > :08:30.expertise that the UK can provide. Interestingly, he is also going to
:08:30. > :08:35.be bringing members from the defence sector, the defence
:08:35. > :08:39.industry in the UK and comments coming out from the British Prime
:08:39. > :08:44.Minister in an interview with that the Indonesian newspaper - he was
:08:44. > :08:50.quoted as saying that Britain has a some of the best defence equipment
:08:50. > :08:54.in the world and it is right that countries like Indonesia,
:08:54. > :08:57.responsible democracies like Indonesia, should be able to also
:08:57. > :09:02.avail of these goods. These comments are likely to be seen as
:09:02. > :09:10.quite controversial certainly by human rights groups who allege that
:09:10. > :09:18.the Indonesian military and police forces often still commit human
:09:18. > :09:23.rights violations that go unchecked. It has escaped us much of the
:09:23. > :09:28.problem of the Western economies. I think that is very much down to the
:09:28. > :09:33.fact that growth in this country is largely domestic driven. You have
:09:33. > :09:36.to remember it has a huge population. Some 245 million people
:09:36. > :09:41.and every day, millions more are being added to this country's
:09:41. > :09:45.middle class. There is also a significant portion of the