:00:01. > :00:11.husband. Those are the latest headlines.
:00:11. > :00:17.
:00:17. > :00:21.Welcome, you love with World Business Report. Here are the
:00:21. > :00:26.headlines: Getting used to austerity - the Spanish government
:00:26. > :00:31.prepares to announce taxes going up and salaries going down.
:00:31. > :00:39.And a warning, the number of people at of work could rise sharply in
:00:39. > :00:46.all eurozone countries. Lower palm prices in China, cutting
:00:46. > :00:52.retail petrol prices for the third time in two months. - megawatt pump
:00:52. > :00:56.As you have been hearing, the Spanish Prime Minister is expected
:00:56. > :01:01.to announce further austerity measures when he addresses MPs
:01:01. > :01:07.today. Even though he previously argued against a rise in VAT, it is
:01:07. > :01:11.thought he will announce exactly that. The tax is currently 18%.
:01:11. > :01:15.Public employees may have to work longer hours and receive cuts in
:01:15. > :01:21.salaries. It follows yesterday's deal with the EU under which Spain
:01:21. > :01:25.has been granted an extra year to reduce its budget deficit.
:01:25. > :01:30.Spain is so used to austerity that many feel like that they are
:01:30. > :01:36.travelling backwards. This man says when the factories he closed down,
:01:36. > :01:40.he, like others, returned to farming. 27 billion euros of
:01:40. > :01:46.earlier government cuts have taken their toll. TRANSLATION: They are
:01:46. > :01:52.and the jobs you can get these days. We work and keep our spirits up.
:01:52. > :01:56.For many, life is about to get even tougher. Earlier this week, the
:01:56. > :02:02.finance minister said VAT would have to go up because avoidance is
:02:02. > :02:07.so high. TRANSLATION: If VAT was paid by more of those who are
:02:07. > :02:10.supposed to pay, it would not have to be raised by so much.
:02:10. > :02:14.Spanish shoppers may be the first to bear the burden of increased
:02:14. > :02:19.taxes. It is likely to make the prospect of growth in the economy
:02:19. > :02:22.even more distant. The government has been given an extra year to
:02:22. > :02:32.reduce its budget deficit, but questions remain about whether the
:02:32. > :02:33.
:02:33. > :02:35.The International Labour Organisation is warning that
:02:35. > :02:40.unemployment in the eurozone will rise sharply if policy makers do
:02:40. > :02:43.not take action. The effect will ripple right across the global
:02:43. > :02:49.economy. The report says 22 million people could be looking for work
:02:49. > :02:54.over the next four years, a rise of 4.5 million. The report says it is
:02:54. > :02:58.not just southern Europe at risk, but also stronger economies. It
:02:58. > :03:01.also says there is a window of opportunity to improve things and
:03:01. > :03:06.that leaders need to focus on investing in growth and not more
:03:06. > :03:11.austerity. Raymond Terrace is director of the Institute for
:03:11. > :03:14.Labour Studies. They queue for being on the programme. How do
:03:14. > :03:20.these governments concentrate on helping the labour market without
:03:20. > :03:24.increasing their spending? first and most important element is
:03:24. > :03:31.renewing credit game to small enterprises. These are the main
:03:31. > :03:39.engines of job creation. At the moment, in many countries, they do
:03:39. > :03:43.not have access to credit. Small enterprises in Europe want to
:03:43. > :03:49.export but do not get access to credit. As long as that is the case,
:03:49. > :03:53.it is difficult to imagine a recovery. Be specific about that. I
:03:53. > :03:57.understand in Germany they have that system that works very well,
:03:57. > :04:04.where small businesses are able to get access to loans quite easily.
:04:04. > :04:08.If you look at Germany, they have a system of credit guarantees for
:04:09. > :04:18.small enterprises. It is engineered by a public credit institution.
:04:19. > :04:21.
:04:21. > :04:25.That is something that needs to be created or enhanced. That is a very
:04:25. > :04:32.big element. In addition to that, you can do something more specific
:04:32. > :04:37.to important groups like young people. For example, a youth job
:04:37. > :04:41.guarantee could be instituted. This was the case in Sweden in the early
:04:41. > :04:46.90s. In Sweden there was a very serious financial crisis in the
:04:46. > :04:50.early 90s and Sweden managed to overcome this successfully, both by
:04:50. > :04:55.the credit policy I mentioned earlier, but also of youth
:04:55. > :05:02.guarantees. Any young unemployed person had a solution, either going
:05:02. > :05:12.back to school or getting work experience in an enterprise. It
:05:12. > :05:22.also subsidised jobs. Very briefly, do you believe that the measures
:05:22. > :05:28.
:05:28. > :05:33.being asked of Spain or Greece by the authorities are actually wrong?
:05:33. > :05:39.Austerity will not work. It failed for the past two years, so it is
:05:39. > :05:44.very important to shift policy to growth and employment strategies.
:05:45. > :05:52.In the medium term, deficit have to be reduced, but the austerity is
:05:52. > :06:02.the main backbone of the policy. The efforts in Spain in reducing
:06:02. > :06:08.
:06:08. > :06:17.the deficit have been eaten up by increased in to spend. It is
:06:17. > :06:21.important to look at medium-term Such a big subject, but we do have
:06:21. > :06:25.to move on. Let's talk about what is happening
:06:25. > :06:30.at Farnborough. 16 countries are meeting in Washington at the end of
:06:30. > :06:36.the month to decide their steps in increasingly bitter row over
:06:36. > :06:40.Europe's new emission trading status for airlines.
:06:40. > :06:48.The world's biggest air show is not the place great new industry taxes
:06:48. > :06:53.are likely to be welcomed, but here, or a high oil prices are seen as
:06:53. > :06:58.speeding the move towards more sustainable air travel. But the
:06:58. > :07:05.Continent's della Dubbo approach, asking airlines to submit carbon
:07:05. > :07:08.data, is seen as coming at a bad economic time. For Malaysia, the
:07:08. > :07:16.arrival of the a free ad year marks the quite a turning point and will
:07:16. > :07:21.make it easier to make it widgets emission Trading's levels. Some
:07:21. > :07:25.airlines in China are not co- operating with the scheme at all.
:07:25. > :07:29.Malaysia finds itself rather court as a member of the One World
:07:29. > :07:34.Alliance between its European partners and the rest of the world.
:07:34. > :07:43.As long as we fly into Europe we have to comply to the roles of the
:07:43. > :07:47.area. Obviously this has to be seen as a global issue. Qatar's chief is
:07:47. > :07:50.among those negotiating for compromise in Europe. At the end of
:07:50. > :07:56.the day the taxes will be paid by the customer. The airline will have
:07:56. > :08:03.to pass any additional costs to its customers. We are compliant, we
:08:03. > :08:09.want to be compliant. We do not like to go against the regulations.
:08:09. > :08:17.At the same time, I quite sympathise with China, India,
:08:17. > :08:23.Russia and the rest of the world. I think the emission trading scheme
:08:23. > :08:29.is unfair to airlines and the travelling public. And it applies
:08:29. > :08:35.in your airspace as well? Yes, it does. I think it is unfair for them
:08:35. > :08:42.to interfere in the sovereignty of the airspace of their country.
:08:42. > :08:47.hangs on the US and India's next move at the end of the month, but
:08:47. > :08:51.the risk of a trade dogfight over emissions remains.
:08:51. > :08:57.But have a look at the cut in fuel prices in China. They have dropped
:08:57. > :09:05.them again for the third time. We had the D cows live from Sinn the
:09:05. > :09:12.ball. -- de Taylor's wife from Singapore.
:09:12. > :09:21.Winner China is the biggest user of fuel in the world. The oil demand
:09:21. > :09:31.there is falling for the first time in three years. Some analysts say
:09:31. > :09:41.this cut could be an attempt to increase your consumption. Diesel
:09:41. > :09:41.
:09:41. > :09:45.has been slashed as well. The move is in response to Bower
:09:45. > :09:48.international crude oil prices and changes in the conditions of
:09:48. > :09:52.domestic and international economy is, as well as the domestic refined
:09:52. > :09:58.oil market. Analysts warned that if there are further cuts it could
:09:58. > :10:04.start to squeeze profits at state- owned and private refineries. Good
:10:04. > :10:12.news for the drivers, but not so good news for the companies. Under