:00:03. > :00:13.Those are the latest headlines from BBC World News. Now for the latest
:00:13. > :00:14.
:00:14. > :00:20.financial news with World Business Report.
:00:20. > :00:26.Welcome to World Business Report. I'm Sally Bundock. The headlines:
:00:26. > :00:30.More pain, no gain? Portugal's government unveils another five
:00:30. > :00:36.billion euros of cuts as it falls behind in plans to reduce national
:00:36. > :00:46.debt. 20 years after its creation we examine the challenges and
:00:46. > :00:52.
:00:52. > :00:56.successes of the European Union Single Market. We begin in Portugal.
:00:56. > :00:59.The government is set to unveil another 4.9 billion euros worth of
:00:59. > :01:03.spending cuts and tax rises when it presents its budget later. The
:01:03. > :01:06.country is already a year behind targets set when it received a 78
:01:07. > :01:10.billion euro rescue package from the EU and IMF. Portugal is in the
:01:10. > :01:18.midst of its deepest recession for a generation. Wealth is shrinking
:01:18. > :01:28.and tax receipts are falling short of forecasts. Nice to see you. No
:01:28. > :01:29.
:01:29. > :01:35.doubt this will be a bitter pill. That is right. We have had some
:01:35. > :01:40.indication there will be enormous tax increases. The deepest
:01:40. > :01:47.recession in a generation. The economy is doing worse than
:01:47. > :01:53.expected. That means more spending cuts, more tax increases in order
:01:53. > :01:58.to meet the more relaxed targets for this year. It is a coalition
:01:58. > :02:03.government. All of these problems with reaching the target and the
:02:03. > :02:12.issue of higher taxes has led to tensions within the coalition. This
:02:12. > :02:18.is going down to the wire. We will have a Cabinet meeting shortly.
:02:18. > :02:26.you say, it is a coalition government that is quite shaky.
:02:26. > :02:33.When it comes to tax increases, where is that going to fall?
:02:33. > :02:42.has already been increased to 23%. Many of the law rated goods have
:02:42. > :02:46.been increased to 23%. -- lower. The emphasis will be on income tax.
:02:46. > :02:52.That will be discussed at the cabinet meeting this morning. How
:02:52. > :02:58.many new tax brackets there will be. Who will be most badly affected.
:02:58. > :03:04.40% of Portuguese do not pay tax because they do not earn enough.
:03:04. > :03:12.The increases will fall more heavily on those who do pay. We are
:03:12. > :03:22.hearing that protests are planned. Yes, there is a process scheduled
:03:22. > :03:23.
:03:23. > :03:28.for 6pm local time. -- protest. It is being organised through social
:03:28. > :03:32.networks, not trade unions. There will be hundreds of people,
:03:33. > :03:37.possibly thousands. It will be quite ratty. So far we have not
:03:37. > :03:47.seen the violence we have seen in other countries. A lot of people
:03:47. > :03:52.
:03:52. > :03:55.are certainly very angry right now. Fresh from last week's surprise
:03:55. > :03:58.Nobel Peace Prize, European Union officials have a week of
:03:58. > :04:02.celebrations planned. It's to mark 20 years since the creation of the
:04:02. > :04:05.Single Market. In 1992, there were just 12 members of the European
:04:05. > :04:08.Economic Market. Its successor, the European Union, now has 27 member
:04:08. > :04:11.states. The agreement to remove customs and tariffs on cross-border
:04:11. > :04:16.commerce in the region is estimated to have boosted business by 240
:04:16. > :04:18.billion euros. It's thought to have created 2.5 million jobs. Our
:04:18. > :04:21.Europe business correspondent, Nigel Cassidy, caught up with one
:04:21. > :04:26.company, an underfloor heating specialist, which has grown and
:04:26. > :04:32.prospered over the past two decades. Born two decades ago in the early
:04:32. > :04:42.days of the European single market, this enterprise now exports the
:04:42. > :04:42.
:04:42. > :04:52.heating. Lower tariffs have helped build a pan-European business. 50%
:04:52. > :04:57.
:04:57. > :05:00.of the London staff were recruited for skills elsewhere in the EU.
:05:01. > :05:05.Underfloor heating still has to meet different standards.
:05:05. > :05:09.French have their own core principles for building houses and
:05:10. > :05:16.allowing usage of electricity. We have a lower density heater for
:05:16. > :05:20.France. We have to produce things that produce less electricity.
:05:20. > :05:27.single market has not relieved a requirement to record anything that
:05:28. > :05:32.moves. We know it is important to measure trade flows. We think it is
:05:32. > :05:39.a bit over-engineered. It probably uses 20-30% more manpower than we
:05:39. > :05:44.would like. We have to account for all of the products that we export.
:05:44. > :05:53.This is incredibly detailed. It relates to separate product codes
:05:53. > :06:00.for everything we sell in a book that is thousands of pages. It is a
:06:00. > :06:04.big administrative burden. future single market focus in
:06:04. > :06:09.Brussels will be on Europe's backbone, things like transport,
:06:09. > :06:13.energy networks. Electronic commerce and recruitment. With
:06:13. > :06:23.growth stalling across Europe right now, the renewed emphasis on
:06:23. > :06:26.
:06:26. > :06:29.freeing up the market will not come a moment too soon. Staying with the
:06:29. > :06:33.EU, Greece needs more time to reduce its debts according to
:06:33. > :06:36.international auditors. German magazine Der Spiegel reports that
:06:36. > :06:39.officials from the European Commission, European Central Bank
:06:39. > :06:42.and International Monetary Fund have asked EU finance ministers to
:06:42. > :06:45.give Greece two more years to meet its debt targets. The so-called
:06:45. > :06:55.Troika advise Greece should be given until 2016 to carry out
:06:55. > :06:58.reforms needed to cut 13.5 billion euros of costs. Executives from
:06:58. > :07:01.Chinese car maker Geely Automotive fly into the UK for rescue talks
:07:01. > :07:04.with black taxi maker Manganese Bronze. The maker of the
:07:04. > :07:07.distinctive hackney carriages warned it could run out of cash on
:07:07. > :07:11.Friday after it was forced to recall hundreds of faulty vehicles
:07:11. > :07:14.and suspend new sales. It's just the latest blow for the Coventry-
:07:14. > :07:17.based manufacturer which had already warned it would make a loss
:07:17. > :07:21.this year. Geely already owns a 20% stake in the company.
:07:21. > :07:24.The price of ordinary goods is rising at a more modest pace in
:07:24. > :07:28.China. The latest inflation data shows prices slowed to 1.9% in
:07:28. > :07:36.materials and components for manufacturers also fell 3.6% from a
:07:36. > :07:39.year earlier. That could free the central bank to pump money into the
:07:39. > :07:41.economy or cut the cost of borrowing without pushing prices up
:07:41. > :07:44.beyond the reach of ordinary Chinese households. Patrick
:07:44. > :07:47.Chovanec is an Associate Professor at Tsinghua University's School of
:07:47. > :07:50.Economics and Management. He joins us from our studio in Beijing.
:07:50. > :08:00.Thank you for being on the programme. Give me your take on
:08:00. > :08:00.
:08:00. > :08:06.these numbers. Is it positive or negative? The good news is that we
:08:06. > :08:12.are not seeing the run-up in food prices, in particular that we
:08:12. > :08:17.feared from the US drought. Whether this translates into the ability to
:08:17. > :08:21.ease monetary policy further, I do not think that follows. Just
:08:21. > :08:26.yesterday the Governor of China's Central Bank said he was still
:08:26. > :08:31.concern about inflation. Debt remains an issue for him. More
:08:31. > :08:37.importantly, China's Central Bank has been dumping a great deal of
:08:37. > :08:44.money through the summer into the banking system. Not through the
:08:44. > :08:51.reserve ratio. This has been keeping the banking system liquid
:08:51. > :09:01.in order to roll over a large man of bad debt. That is fine of the
:09:01. > :09:01.
:09:01. > :09:06.reasons he is concerned. -- large amount. -- one of the reasons.
:09:07. > :09:16.Central Bank chief is indicating there is no interest rate cuts to
:09:16. > :09:21.come. What will they do to try and boost the economy? This really gets
:09:21. > :09:26.to the heart of what the solution is. Does China need a new stimulus?
:09:26. > :09:32.Does China need a rebalancing? If you believe that China needs to
:09:32. > :09:35.rebalance away from export-driven growth towards more domestic
:09:35. > :09:40.consumption, some people argue, I am one of them, China should not be
:09:40. > :09:46.cutting interest rates, it should be raising them to help boost
:09:46. > :09:48.consumption by giving people a greater return on their savings. To
:09:48. > :09:58.diminish some of the over investment that has been driving
:09:58. > :09:59.
:09:59. > :10:04.this economy. We have to leave it there. Thank you. The news from