:00:13. > :00:19.trees and blocked roads. Now for the latest financial news.
:00:19. > :00:24.Hello and a warm welcome to World Business Report. The headlines:
:00:24. > :00:27.Were Barclays trade as told to lie about bank borrowing costs? An
:00:27. > :00:32.executive faces tough questions from MPs today.
:00:32. > :00:42.Could the UK economy experience an Indian summer? A leading think tank
:00:42. > :00:44.
:00:44. > :00:54.predicts a consumer-Leadburn is telecom equipment manufacturer are
:00:54. > :00:54.
:00:54. > :01:02.plunging following a profit warning and an investigation.
:01:02. > :01:05.Good to have you with us. Other banks could face fines more than a
:01:05. > :01:10.$450 million Barclays received over the interest-rate fixing scandal.
:01:10. > :01:13.That's the warning from the bank in a memo from employees. Meanwhile, a
:01:13. > :01:20.former top executive at Barclays will today be grilled on his role
:01:20. > :01:26.in trying to manipulate the rate that banks used to borrow money
:01:26. > :01:30.from each other. He has already resigned and is thought to have
:01:30. > :01:33.talk trade has to lie about the Bank's borrowing costs. British MPs
:01:33. > :01:38.will also hear evidence from Lord Turner, their head of the UK
:01:38. > :01:42.financial regulator. It's becoming another long
:01:42. > :01:47.procession to confession in front of MPs. Two weeks ago came the
:01:47. > :01:51.former boss of Barclays, Bob Diamond. He expressed shock that
:01:51. > :01:58.his traders had been trying to manipulate lending rates. When I
:01:58. > :02:02.read the e-mails I got physically ill. It's reprehensible behaviour.
:02:02. > :02:10.Then came the Bank's chairman, who had to tell Bob Diamond that he
:02:10. > :02:14.ought to go. You were handing him a loaded revolver, won't you? Today,
:02:14. > :02:18.Lord Turner, the head of the Financial Services Authority, will
:02:18. > :02:23.give evidence. He's already accused Barclays of aggressive behaviour.
:02:23. > :02:27.As the regulator, he will face questions of his own. There is also
:02:27. > :02:31.another former Barclays executive - why did he apparently misinterpret
:02:31. > :02:35.a message from the Bank of England by telling trade is to
:02:35. > :02:41.underestimate the Bank's borrowing costs? There are two versions of
:02:41. > :02:49.events. The first is that, you know, he misinterpreted what was going on.
:02:49. > :02:53.The second is that he twisted it. I think that his evidence will leave
:02:53. > :02:56.the world and, indeed, the investigators, to try and make a
:02:56. > :03:00.better judgement about which of those it was. Even after today,
:03:00. > :03:04.many questions about this affair will remain unanswered. Though the
:03:04. > :03:08.issue was raised four years ago, why has the problem taken so long
:03:08. > :03:18.to tackle? How many other banks across Europe, the US and Japan
:03:18. > :03:21.
:03:21. > :03:24.have been doing the same thing? Can the reputation of banks ever now be
:03:24. > :03:29.restored? It's not just lawmakers in Britain
:03:29. > :03:33.who are concerned. He is a reminder of what's at stake. The committee
:03:33. > :03:37.that sets the rate is made up of 16 international banks based in London.
:03:37. > :03:42.They each submit a daily interest rate, which is what they are having
:03:42. > :03:47.to pay in order to borrow cash from other banks. The four highest and
:03:47. > :03:51.the four lowest submissions I then disregarded. To arrive at the day's
:03:51. > :03:55.rate is based on the average of the remaining eight. It means that if
:03:55. > :04:01.Barclays was acting alone it would have had very little ability to
:04:01. > :04:06.influence the rate. Hence this is a global scandal that could involve
:04:06. > :04:16.major US, Canadian, Japanese and European lenders that also make up
:04:16. > :04:23.
:04:23. > :04:28.the committee that sets these rates. Rate rigging is not the only
:04:28. > :04:32.scandal to rock the world. From occupy Wall Street in St Paul's in
:04:32. > :04:37.London and even Hong Kong, today, HSBC is launching legal action in
:04:37. > :04:47.an attempt to remove anti-capital as protesters who have cared that
:04:47. > :04:54.
:04:54. > :04:58.at its Asian headquarters for the past nine months. -- camped out.
:04:58. > :05:06.This is the entry to the headquarters of the HSBC in Hong
:05:07. > :05:09.Kong. Activists have been here for nine months... It is fair to say
:05:09. > :05:15.that the occupier movement has failed to gain as much traction in
:05:15. > :05:17.Asia as the rest of the world. That is, in large part, because the 2000
:05:17. > :05:27.and make financial crisis claimed far fewer victims in this part of
:05:27. > :05:32.the world. -- 2008. Here in Hong Kong, it has found support because
:05:32. > :05:35.of rising property prices and income problems. Two problems some
:05:35. > :05:40.people blame on the capitalist system. The court will decide who
:05:40. > :05:42.owns this space. If the judge decides that HSBC owns this
:05:42. > :05:50.passageway then the eviction process is expected to start very
:05:50. > :06:00.shortly. Reporting from Hong Kong.
:06:00. > :06:02.
:06:02. > :06:06.That's... The temporary buffer of a 9% capital ratio should become
:06:06. > :06:12.permanent. Because of the European crisis, banks need to be adding
:06:12. > :06:16.cash to their reserves, some say. Banks have boosted capital by a
:06:16. > :06:22.combined 94 billion euros. Credit-card companies Visa,
:06:22. > :06:25.MasterCard and some major US banks will pay over 7 billion dollars in
:06:25. > :06:31.a settlement that is considered the largest of its kind. The case has
:06:31. > :06:35.been going on for seven years, over the firms colluding to fix the fees
:06:35. > :06:40.that customers pay for credit and debit card payments.
:06:40. > :06:46.The United Arab Emirates has began operating a key overland oil
:06:46. > :06:52.passageway which bypasses the Strait of Hormuz. Iran has
:06:52. > :06:56.threatened to close the straight at its mouth. It has a handling
:06:56. > :07:02.capacity of 1.5 million barrels of crude per day.
:07:02. > :07:10.Could this be a bit of good news? In their latest forecast, the
:07:10. > :07:15.earnest and young think tank predict an Indian summer for a
:07:15. > :07:20.Britain's economy towards the end of the year. Will this be enough to
:07:20. > :07:28.pull the UK out of a double-dip recession? I am joined by the chief
:07:28. > :07:30.economic and -- economic adviser from...
:07:30. > :07:34.Why were we experience a better second half? A obviously it's not
:07:34. > :07:38.just the weather that's been bad. We've been hit by all sorts of
:07:38. > :07:42.economic conditions as well. Bad weather has also depressed spending
:07:42. > :07:46.on the high street. As we move into the second half of the year, as you
:07:46. > :07:52.have said, inflation will fall. That will mean that people's
:07:52. > :07:54.spending power will go up for the first time in 2-3 years. We have
:07:54. > :07:59.been looking at situations where spending power has been dropping.
:07:59. > :08:09.What has pushed down the inflation? The most obviously, petrol prices.
:08:09. > :08:13.The world oil price has fallen back to around $100. The fuel duty
:08:13. > :08:19.increase has been delayed as well. Food prices, though, could be an
:08:19. > :08:21.issue, couldn't they? We have been seeing on the market that corn and
:08:21. > :08:24.soya bean prices are rising rapidly because of the terrible weather we
:08:24. > :08:27.have had this summer perfecting the crops.
:08:27. > :08:30.That is a worry, but it really is for later in the year.
:08:30. > :08:34.What about the Olympics? What impact might they have?
:08:34. > :08:38.That is also a boost in factor. When you have a situation like that
:08:38. > :08:41.where people are spending, you're looking for a trigger. We think the
:08:41. > :08:45.Olympics could be the starting gun for this consumer boom.
:08:46. > :08:49.You talk about a consumer boom. Obviously we are in the midst of a
:08:49. > :08:52.double-dip recession at the moment. Why do you think we will be so
:08:52. > :08:56.willing to spend that money, given the fact that unemployment is very
:08:56. > :09:02.high, there's a lot of concern about the future next year as well
:09:02. > :09:06.- it's not looking so good. There's the eurozone, a dark cloud.
:09:06. > :09:11.A lot of family simply don't have the cash - they can't actually
:09:11. > :09:14.borrow. If they have the extra cash, they will spend it. A lot of other
:09:14. > :09:24.families have been trying to cut back on debt. They have been doing
:09:24. > :09:27.it successfully. The debt to income ratio has dropped from about 1.75
:09:27. > :09:32.to 1.5. The fundamentals are in place.
:09:32. > :09:35.Let's just hope you are right. Nice to hear some positive news,
:09:35. > :09:39.isn't it? Let's look at what's going on in
:09:39. > :09:42.China, because they're second largest telecoms equipment maker is
:09:43. > :09:52.warning their second half profits will be dropping by 80%. Let's go
:09:53. > :09:54.
:09:54. > :10:00.to Singapore with the details. What's going wrong?
:10:00. > :10:03.First of all, you have stiff competition and the US
:10:03. > :10:08.investigation into its sales. The firm said that tougher competition
:10:08. > :10:12.in the mobile phone business has got the company's profit margin
:10:13. > :10:17.falling. Also due to the European debt crisis, it has forced the
:10:17. > :10:25.company to take a foreign exchange loss in the second half, compared
:10:25. > :10:30.to one year earlier. There is also an FBI investigation over the sale
:10:30. > :10:33.of bad US computer equipment and its alleged attempts to cover it up.
:10:33. > :10:37.The probe will adversely affect the company's ability to bid for
:10:37. > :10:41.overseas projects. Moving forward, that will impact its stock in the
:10:41. > :10:45.Hong Kong stock exchange - it's down nearly 17%.
:10:45. > :10:50.Thanks very much. Let's show you the markets as well
:10:50. > :10:55.in Asia. Japan is closed today for a public holiday. The numbers you
:10:55. > :10:59.will see on your screen, I hope, if you look at Japan - don't be fooled,
:10:59. > :11:03.that was last week's close. The rest are open and trading. Beryl
:11:03. > :11:12.headed higher, which is good news. Given a boost by various things --
:11:12. > :11:16.they are all... Wen Jiabao has been talking over the weekend while