02/01/2013 World Business Report

BBC World News. Now for the latest financial news

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

politicians step back from the fiscal cliff and put in measures to

deal with the budget crisis. And Asian shares she -- hit five-

month highs. And WPP returns its headquarters to London.

The US House of Representatives has backed a deal to end America's

immediate budget crisis. The Bill includes higher taxes for

households households ore than $450,000 a year but delays cuts to

government spending for two months. The Senate has already passed the

Bill but a number of House Republicans had been trying to

amend it, to include new spending cuts. President Obama welcomed the

outcome of the vote. Under this law, more than 98% of

Americans and 97% of small businesses will not see their

income taxes go up. Millions of families will continue to receive

tax breaks to help raise their kids and send them to college. Companies

will receive tax credits for research and the investments they

make and the clean energy jobs they create.

Michelle Fleury has been up all night watching events on Capitol

Hill. She joins us from our New York bureau. Good to see you. We

have a bit of a snapshot of what he had to say. had to say. this

new Finance Bill. What we saw his the House Republicans essentially

holding their noses and passing this deal through. About one-third

of them voted in favour of it, along with Democrats. That was

enough to get it through and they detain law that can be signed... An

act that can be signed into law by the President. It raises the taxes

$450,000 $450,000 a year. It also means that,

for many unemployed Americans who are worried that their benefits

might dry up, they will still be able to collect that. And there

will be changes to inheritance tax and how much tax people have to pay

on dividends, capital gains tax. Some big changes. The fiscal cliff

averted. More of a slope, less of a cliff. And it finally got done if

you like in the final award before the business day resumes in America.

But it's a short-term fix and the battle will return in February,

about debt limits? That is right. There are a couple of things you

have to remember. Their only addressed the tax side of things

and did not cut the spending cuts. Those were deferred for two months.

That conversation will begin all over again. And of course there is

this debt ceiling which you mentioned. The US Treasury at the

same time as the fiscal cliff was being negotiated talked about, on

December 31st, how the US Treasury hit the debt ceiling. How much

money it can borrow before it has to seek permission at Congress to

borrow more. The Treasury can move finances around so that it can

carry on paying its bills for the it will have to beat permission

Presidoney. President Obama, as well as

welcoming the deal we have reached, also said he would not allow the

debt ceiling to become a big issue in the months ahead. He said it was

thought possible for America not to live up to its financial

commitments. Of course you may debt rating downgraded as a result

of a tussle between Congress and Treasury.

Thank you. Let's take a look at how the

markets are reacting to the result in Washington. Sharanjit Leyl is in

Singapore. Talk us through the market. As you can imagine, Asian

stocks reacted very positively to that news. The dollar fell after

that last minute deal, to stave off the fiscal cliff. Asian investors

are cheering these developments. They have been many concerns about

a US slowdown from the tax rises and spending cuts that could plunge

the US economy into recession and that would impact Asia's export

relied economy, which count on the US market and consumers to buy a

lot of their products. A huge relief to investors in Asia. There

has been a slow recovery here in demand from Europe due to the debt

crisis. And also the slowdown in China. We have heard in the last

few days that Hu Jintao said China would work towards global growth

this year. This is after signs of stronger manufacturing over in

South Korea, manufacturing expanded their for the first time since May

All All of this obviousl obviousl

outside outside Japan continued to extend

year. Thank you. The world's The world'sadvertising

group, WPP, moves its headquarters back to London today. The head and

founder of the company, Sir Martin Sorrell, moved its base to Dublin

in 2008 due to Labour government plans to tax overseas profits. The

return follows changes to tax laws made by the current UK government.

The question of how much tax big international companies pay in the

UK was a big theme in 2012 which embroiled big names like Starbucks,

Google and Amazon in very public rows. Sir Martin told our business

correspondent that the company's move was symbolic.

We were very transparent about this. We moved our headquarters. You

don't have to move your headquarters out of the UK to

have an have a procurement department in an

offshore base. You can have a branding operation in an offshore

base. And the criticism of some companies, like Google all

Starbucks for Amazon, a because they have done that. They don't

happen to be based in the UK but companies Even in the UK can do

that. -- even. We operate in 110 countries, some operate in more.

Starbucks have coughed up a bit of money to do the decent thing. That

can't be the right way to decide how much tax a company should pay?

They did negotiate ahead of time and agreed a royalty. It was

perfectly transparent. You have to be very careful. You get into

dangerous territory. Starbucks decided they would make a minimum

corporation tax payment. They have actually invested in apprenticeship

schemes. How should they make the rules better? For the right model

is set to make a contribution. -- the right. I hate the phrase

corporate social responsibility. All of the contributions you make

to stakeholders are a question of judgement. If companies choose,

just as they do environmentally for sustainably or socially responsible

projects, if they choose in terms of building their long-term rounds

to make a contribution to all this they called us on a long-term basis,

all credit to them. Every company with deal with without exception

knows that doing good is good business. That was Martin Sorrell,

chief executive of WPP, with his views as to why they decided to

move the world's biggest advertising agency back to London.

The markets are very strong and robust at the start of the new year

of trading, in the affection to the result we got in the US to that

debate going on amongst politicians in Washington about how to balance

their budgets. The markets are strong today. Japan is closed.

Chinese markets also closed for public a new year holidays. But

Hong Kong is up 2%. Australia, 1.2%. South Korea up 1.6% and Singapore

also up over 1%. Singapore is coming out with some good news

about its economy and the outlook in general, I would say for the

global economy is, is much more positive today. They are very

grateful that those politicians met the deadline and cam

could vote, in favour of solving the fiscal cliff issue before