:00:10. > :00:19.of prayer. Those of the letters headlines. Time now for the money
:00:20. > :00:24.
:00:24. > :00:33.Accidental austerity as US lawmakers are paralysed
:00:33. > :00:41.bipartisanship. A $5 billion is cut from the government's pocket.
:00:41. > :00:47.A refuge for the wealthy no more as Switzerland is to rein in a fat cat
:00:47. > :00:51.pay in a vote this weekend. Good morning. Welcome to World
:00:51. > :00:58.Business Report. In just a moment, will have more on the Swiss Eddie
:00:59. > :01:06.fat cat movement. First, there is sweeping austerity cuts in the US.
:01:06. > :01:10.$85 billion worth of cars are said to go into effect today. As the
:01:10. > :01:14.partners and ship paralyses Washington, the sequester will cut
:01:14. > :01:18.deeply into defence spending. In a town in Virginia, almost half of
:01:18. > :01:22.the local economy is dependent on federal funds which are now at risk.
:01:22. > :01:25.We report on how government wrangling is hurting this small
:01:25. > :01:29.town. America's politicians are not
:01:29. > :01:33.popular among the lunchtime crowd here in the junior. Washington may
:01:33. > :01:40.only be a three-hour drive away but they do not think much here of how
:01:40. > :01:44.the nation's capital is handling the latest Budget showdown. How can
:01:44. > :01:50.Congress let that happen? You cannot let all of these people get
:01:50. > :01:55.laid off. The economy is recovering. Other countries are looking to last
:01:55. > :01:59.to see what we do. They are making judgements about how we have a
:01:59. > :02:03.allowed our failures. As home to the main shipyard for the US Navy
:02:03. > :02:09.and the East Coast fleet, the region is exposed to Budget cuts
:02:09. > :02:13.that could shave 0.5% of American growth. Behind me is a retired
:02:13. > :02:17.battleship. It is another kind of the forced retirement that is
:02:17. > :02:22.worrying people in the region. Unless a deal is done to avoid
:02:22. > :02:27.these Budget cuts, then defence workers are forced to take unpaid
:02:27. > :02:31.leave. As many as 90,000 people could be affected in Virginia alone.
:02:31. > :02:35.Private shipbuilders in this region would also be forced to lay off
:02:35. > :02:39.workers. It is not just the military that is worried about
:02:39. > :02:43.these cuts. School life were all for be affected. Fewer teachers
:02:43. > :02:47.will mean a larger class sizes and programmes designed to help the
:02:47. > :02:52.neediest children will also be hit. That means a tough decisions ahead
:02:52. > :02:57.for those on the local school board. It could have impacts across the
:02:57. > :03:01.board. We will have to determine how we are going to provide the
:03:01. > :03:09.same level and quality of support and education structure for those
:03:09. > :03:14.children, given that another $3 million are lost. Even the mayor
:03:14. > :03:23.cannot see any light at the end of the tunnel. I'm already getting
:03:23. > :03:26.letters from defence contractors. I have won the received yesterday.
:03:26. > :03:32.The leader of General Dynamics may lie off hundreds of workers.
:03:32. > :03:38.Another has sent me a letter talk about 1,600 job reductions. They
:03:38. > :03:42.are getting these daily. This will be felt immediately. Back at the
:03:42. > :03:52.diner, they know that this is the beginning of America's politicians
:03:52. > :03:55.
:03:55. > :03:59.continue to get to grips with their Budget battles.
:03:59. > :04:04.I am now joined by a senior market analysis. How one markets reacting
:04:04. > :04:10.to this? The markets are quite sanguine about it and have been for
:04:10. > :04:13.some time. The Dow was at a five- year high. I think that they are
:04:13. > :04:20.sanguine are simply because the Fed is pumping a $5 billion per month
:04:20. > :04:26.into the US economy. The effective ad $5 billion of sequester cuts for
:04:26. > :04:36.the year it is probably a pinprick. This is political risk. This is
:04:36. > :04:38.
:04:38. > :04:42.part as a chip at the very most basic level. -- partisanship. As
:04:42. > :04:47.much goes on, the pressure will increase was some sort of
:04:47. > :04:54.resolution. We have seen the effect from the fiscal cliff. There will
:04:54. > :04:58.be an effect. It will impact US growth.
:04:58. > :05:03.Swiss voters are going to the polls this weekend to decide on measures
:05:03. > :05:06.which would strictly limit the salaries for top managers and ban
:05:06. > :05:10.and golden handshakes. The proposals known as the Fat Cat
:05:10. > :05:14.initiative come in the wake of catastrophic losses for big Swiss
:05:14. > :05:21.businesses such as UBS. Continued with continued high salaries and
:05:21. > :05:25.bonuses. Once a byword for reliability and
:05:25. > :05:30.caution, some of Switzerland's top companies have had a bumpy ride in
:05:30. > :05:35.recent years. Multi-billion-dollar losses, especially at the banking
:05:35. > :05:40.giant UBS, had gone hand-in-hand with multi-million-dollar salaries
:05:40. > :05:45.for top managers. Now voters will decide on proposals to limit pay
:05:45. > :05:50.for those that the Swiss had begun to call fat cats. TRANSLATION: It
:05:50. > :05:53.is a rip-off and it is damaging splits economy. It is not about
:05:53. > :05:59.high salaries in general but excessive compensation -- the Swiss
:06:00. > :06:05.economy. Especially for banks that I mismanaged. The fat-cat proposals
:06:05. > :06:08.would give shareholders a veto over manager salaries and ban golden
:06:08. > :06:17.handshakes all together. The Swiss government is uncomfortable with
:06:17. > :06:22.the idea. They -- so our business leaders who has spent $800 million
:06:22. > :06:28.on the ad campaign fought know. would be a bad signal for
:06:28. > :06:36.Switzerland as a business location and we are concerned about that
:06:36. > :06:41.because it is an international issue. We think that it will be
:06:41. > :06:47.very strict. Opinion polls show that almost 66% of voters will say
:06:47. > :06:53.yes to reining in the fat cats. The recent proposed pay-off of seven $8
:06:53. > :06:59.million for outgoing chief -- for an outgoing chief has an did many
:06:59. > :07:02.even though he finally agreed not to take the money. The Swiss are
:07:02. > :07:07.traditionally very protective of their businesses and banks but it
:07:07. > :07:11.seems as though many voters I do want more control over the salaries
:07:11. > :07:21.of the bosses. If the opinion polls are correct, those fat cats could
:07:21. > :07:26.
:07:26. > :07:29.be facing a diet. Some are then used: -- Some other
:07:29. > :07:32.news: Once the darling of the start-up world, Groupon founder
:07:32. > :07:35.Andrew Mason was fired today after yet another round of disappointing
:07:35. > :07:38.earnings this week. Groupon has lost 75% of its value since its
:07:38. > :07:41.public debut just over a year ago. In a letter to employees, Mason
:07:41. > :07:44.said the change would give the company room to break bad habits.
:07:44. > :07:46.Japan's unemployment rate edged down to 4.2% in January while the
:07:46. > :07:52.struggling economy remained mired in deflation. The jobless rate
:07:52. > :08:02.slipped to 4.2% from a revised 4.3% in December. The figure was in line
:08:02. > :08:03.
:08:03. > :08:06.with economists' expectations. For the third straight month,
:08:06. > :08:16.prices in Japan have declined, a worrying sign for the country's new
:08:16. > :08:17.
:08:17. > :08:21.government. Deflation is a problem for Japan?
:08:21. > :08:25.It is a problem that Japan knows very well. It has been caught in
:08:25. > :08:30.the spiral for the best part of a decade. The numbers today really
:08:30. > :08:32.highlight the problem facing Japan's Prime Minister and the new
:08:32. > :08:37.governor of the central bank his appointment was announced just
:08:37. > :08:42.yesterday. Consumer prices including food -- excluding food
:08:43. > :08:47.fell 0.2% in January. The third straight month of decline. Those
:08:47. > :08:50.falling prices have been a big hurdle to Japan's bid to boost
:08:50. > :08:53.domestic consumption. It is difficult to get people to buy
:08:53. > :08:58.things when prices are falling because they believe that if they
:08:58. > :09:02.put it off, then they can get a better deal chip -- later on. If
:09:02. > :09:06.prices rise, buyers are not inclined to delay a purchase. That
:09:06. > :09:12.is why Japan's new government has said that creating inflation is key
:09:12. > :09:15.to reviving the sluggish economy. Especially with exports being one
:09:15. > :09:19.of the biggest growth drivers and they are much slower because they
:09:19. > :09:24.have been hit by the global slowdown in demand. The question is
:09:24. > :09:27.on how you drive that domestic consumption. The news on these
:09:27. > :09:33.falling prices is just how big a challenge it will be to find the
:09:33. > :09:39.answer. That is the key question. Many
:09:39. > :09:43.thanks. Let us look at how markets are
:09:43. > :09:50.doing at this time of day. In Europe, that is how they finished
:09:50. > :09:55.the session on Thursday. Across the board. Let us look at how they did
:09:55. > :10:00.in the US. A different picture. I cannot bring the stocks in Asia but
:10:00. > :10:03.I can tell you that there were currently mixed. Confused numbers