08/02/2013 World Business Report

Those are the latest headlines. Now for the latest financial news with

Running out of credit. Shares in ratings agency Moody's slump on

fears it could be next to be sued over the 2008 financial crisis.

Plus, the trillion euro budget battle rages on. But is Europe

spending too much subsidising the economy of the past and not enough

Welcome. A quick look at the latest in the world of business and money.

We will talk about the EU budget battle shortly. First, we will talk

about this. Credit rating agency Moody's reports its numbers for the

last three months of last year. We will get those later today. It is

expected to say profits were up but that is likely to be overshadowed

by fears it could be next in line for a massive lawsuit over its role

in the 2008 financial crisis. This week, you -- you may remember

Standard & Poor's received a $5 billion civil suit from the US

Department of Justice, claiming it defrauded investors by giving

trouble a ratings to mortgage- backed investors. But that later

collapsed. Since then, Moody's shares have sunk more than 15%.

They have significant influence on investment decisions but since the

global crisis in 2008, the credibility of agencies has been

called into question. Reputations to investors and financial

institutions... Now, courtesy of a $5 billion lawsuit, the American

Department of Justice is no longer questioning the practices of credit

agencies. It is looking for accountability. Adding to Standard

& Poor's woes, more than a dozen individual states are also suing

the credit agency. We are suing them because they hold themselves

up to be objective and independent but in fact they were mixing their

business and profit-making side of the company with their analytical

side of the company. The result was investors across the world trusted

them for saying they were ejected when they were not. Of the three

major credit agencies in the US, American authorities are going

after Standard & Poor's. The question is whether this agency

Moody's is next. It is not clear to me that Moody's will also be the

pub -- target of this investigation. Even though Moody's and Fitch were

equally guilty, they had equally flawed models and saw themselves...

Sold their ratings to the investment banks. It looks like

Standard & Poor's might be the one that made the error. In making an

example of Standard & Poor's, the hope is that there will be lasting

reforms in how agencies operate. Five years since the financial

crisis, business models have not really changed.

Moving on.. As you have been hearing, EU leaders have been

meeting through the night to try and agree a budget for the next

seven years. The sums of money being proposed are vast, some 973

billion euros or almost 300 euros a year for every taxpayer in the EU.

There they are. That breaks down to 300 for every taxpayer. 40% is

earmarked to farmers and fishermen. The likes of Britain want to see

that reigned in, pitting them against nations in southern and

eastern Europe, the main beneficiaries. As the politicians

do battle, many in the business world want more spent on creating

future growth. The budget for research and innovation is only

less than a quarter of the spending on farming. Some fear that could be

an easy place to wield the axe. Cambridge in the UK, this is a

laboratory at the crossroads of science and technology. Researchers

from at least 15 EU member states collaborate on a flagship project

to exploit a revolutionary material. They are experimenting with a

carbon-based and extraordinarily thin substance, it conducts

electricity better than copper. The hope is that it could be a wonder

product for the 21st century, as plastic was in the 20th century.

More than 100 times stronger than steel, it is hoped it can be a

replacement for silicone. But without huge advance -- an increase

in the funds, they could lose sight of the project. We want to better

society in general and create jobs. As a priority project, this

research should be safe but the EU's Innovation Commission is

worried member-states could pull the plug on the very projects that

could bring new business to a low or no growth Continent. Some will

come looking for cuts, some will come with vested interests in mind

and supporting those. But in the middle of everything that goes on,

inevitably with these discussions, the danger is that the sacrificial

lamb or the casualty will be research and innovation. For a

country like the UK, which has done so fantastically well for research

and innovation, that would be catastrophic. So, EU research

funding is in the firing line as leaders embark on another bruising

round of bargaining to try and keep spending and rebates they -- they

want. A bruising round of bargaining.

Heading over to Asia. More evidence that China's economic recovery is

on track. Trade numbers in January show a big jump on last year in

both exports and imports. Good news, because we have got an export surge

by 25%, imports are up nearly 29%. But can we smell a new year that? -

- rat. It is more of a slithering snake. It is the Year of the water

snake. Better-than-expected trade data. The economy is perhaps

rebounding from the recent slowdown. Exports surged 25%, as you said, in

January. Forecasters called for a 17% jump. Imports were up nearly

13%. Of course analysts are saying that some of that momentum may be

due to the fact that figures for January were distorted by the

change in the timing of Chinese new year. That is when factories and

businesses shut for many days. That in packs production of goods. Last

year, the new year was celebrated in January. -- in -- impacts. It

also influences import numbers. Companies are restocking ahead of

the celebrations. But analysts contend that while the changing in

timing of the celebrations did have an impact on numbers, the overall

trend was that a recovery is happening in the Chinese economy.

Most of the markets today, with the exception of Japan, are all rising

on these numbers. And new year rat is exactly what I

was alluding to! These are some of the other stories

making headlines. The Boeing 787 Dreamliner will fly again for test

flights. That is to monitor the potentially faulty batteries. All

50 Dreamliners were grounded worldwide on 16th January after a

series of incidents, including a fire onboard apart 787 in Boston

and an in-flight problem on another plane in Japan, forcing them to

make an emergency landing. This has cost the airline tens of millions

of dollars. US regulators want to take a closer look at how the

batteries were approved, which could mean the debt remain out of

surface for weeks to come. Singapore Airlines has reported a

small rise in profits for the final quarter of last year. It made $115

million. It has been under pressure at the premium end of the air

travel market. These are the Asian markets. They were pretty much up