:00:02. > :00:12.BBC World News. Now for the latest financial news with World Business
:00:12. > :00:20.
:00:20. > :00:26.Time to face life after QE - Fed chief Ben Bernanke says he'll start
:00:27. > :00:30.winding down stimulus measures if the US economy keeps improving.
:00:30. > :00:40.Plus, back on the market - the UK Government says preparing to sell
:00:40. > :00:42.
:00:42. > :00:45.its stake in bailed-out bank Lloyds. Welcome to World Business Report.
:00:45. > :00:52.I'm Sally Bundock. Also in the programme - no end to the Eurozone
:00:52. > :00:55.recession this year, with unemployment continuing to rise.
:00:55. > :00:59.It was the news global financial markets were waiting for - and
:00:59. > :01:01.fearing. The head of the US Federal Reserve Ben Bernanke has confirmed
:01:01. > :01:04.he'll start to wind down his massive economic stimulus programme
:01:04. > :01:14.this year and end it altogether next year if America's economy
:01:14. > :01:17.continues to improve as it is doing. Let's just remind ourselves of what
:01:17. > :01:20.that programme is. Known as quantitative easing, the Fed has
:01:20. > :01:22.been keeping interest rates close to zero, below 0.25% and pumping
:01:22. > :01:32.$85 billion a month into the economy by buying US government
:01:32. > :01:39.bonds. It has had a vast global impact, boosting stock markets and
:01:39. > :01:41.assets around the world. But it could soon be coming to an end.
:01:42. > :01:51.Samira Hussain has been at the Federal Reserve in Washington and
:01:52. > :01:53.
:01:53. > :01:58.sent his report. In assessing the state of the American economy, the
:01:58. > :02:04.chairman of the US Federal Reserve was fairly optimistic. He said the
:02:04. > :02:07.US is seeing growth. Given those gains, many people are asking when
:02:08. > :02:12.the central bank will start pulling back support from the hip American
:02:13. > :02:18.economy. The groans the chairman, the unemployment rate would be to
:02:18. > :02:21.fall significantly. Other economic indicators, but the number of
:02:21. > :02:26.people participating in the labour force, would need to increase
:02:26. > :02:35.significantly. I would like to emphasise the point that our policy
:02:35. > :02:40.is in no way predetermined. It will depend on the incoming data and the
:02:40. > :02:46.ongoing situation. If things go better than expected, we can reduce
:02:46. > :02:50.its more quickly. If it becomes less favourably, or financial
:02:50. > :02:57.conditions are inconsistent with the process in the labour markets,
:02:57. > :03:01.it just what will be delayed. US markets have been jittery,
:03:01. > :03:07.reacting to any possibility that the pullback may be started earlier
:03:07. > :03:17.than expected. Our policies are tied to how the outlook it evolves.
:03:17. > :03:18.
:03:18. > :03:24.They should provide some comfort to markets. There -- they should
:03:24. > :03:31.understand we are providing would have the support is necessary.
:03:31. > :03:36.Stimulus may be around for the next while.
:03:36. > :03:39.Will have a look at another key economy. There is another sign this
:03:39. > :03:47.morning that the slowdown in growth in China is deepening. Rico Hizon
:03:48. > :03:53.is at our Asia business hub in Singapore. Thick smog behind you.
:03:53. > :03:59.Tell us about what is going on in China. Part of all Asia and
:03:59. > :04:08.Singapore. Right now we're seeing a slowdown in the manufacturing
:04:08. > :04:11.activity on the mainland. In the month of June. It is at its lowest
:04:11. > :04:20.point in nine months. That is due to weaker demand for Chinese
:04:20. > :04:26.products. HSBC's preliminary index fell to a reading of 48.3. A
:04:26. > :04:36.reading below 50 indicates a contraction. This follows a slew of
:04:36. > :04:39.
:04:39. > :04:45.weak economic numbers. When you speak with economists, they said
:04:45. > :04:52.the drop in manufacturing output raises questions over whether there
:04:52. > :04:55.is a recovery taking place in the Chinese economy. Growth slowed
:04:55. > :05:04.unexpectedly in the first quarter. Analysts have now cut the growth
:05:04. > :05:09.outlook for the year. The basis his responses from 90% of 420
:05:09. > :05:14.manufacturing companies surveyed every month. The full data will be
:05:14. > :05:16.rich -- relies on 1st July. Britain's finance minister,
:05:16. > :05:20.Chancellor George Osborne, has signalled the UK Government is
:05:20. > :05:23.ready to start selling its shares in Lloyds Banking Group. He made
:05:23. > :05:26.the comments as part of his annual address to top London Bankers,
:05:26. > :05:33.known as the Mansion House speech. But he acknowledged a similar sale
:05:33. > :05:36.of rival Royal Bank of Scotland could be some way off. The British
:05:36. > :05:42.taxpayer has owned 39% of Lloyds and 81% of RBS since they were
:05:42. > :05:47.bailed out in the 2008 crisis. A sale of Lloyds shares could be this
:05:47. > :05:52.autumn. But any re-privatisation of RBS would have to wait until after
:05:52. > :05:55.the next election. And the Chancellor will consider if RBS
:05:55. > :06:05.should be split up, with its weak assets like bad property loans put
:06:05. > :06:06.
:06:06. > :06:10.into a so-called bad bank. Here's what he had to say about Lloyds.
:06:10. > :06:16.Lloyd's is in a good position. Investor interest is up. Shares are
:06:16. > :06:21.trading at the price were selling would reduce the national debt.
:06:21. > :06:26.That is something we all want to see. We are actively considering
:06:26. > :06:33.options with a share sales. We will only proceed if we get value for
:06:33. > :06:37.the taxpayer. We have no prefix timescale of disposal. An
:06:37. > :06:46.institutional placement is likely to be the most effective way of
:06:46. > :06:49.managing risk and getting everything back. Five years on, we
:06:49. > :06:55.can take the first steps to returning Lloyd's to the private
:06:55. > :06:59.sector. For later shares and their sales, we will consider a retail
:07:00. > :07:04.offering to the general public. will talk more about that when we
:07:04. > :07:06.review the newspapers in about five minutes. As finance ministers from
:07:06. > :07:09.the Eurozone gather in Luxembourg, there's a warning this Thursday
:07:09. > :07:11.that Europe's recession is getting worse, with no sign of recovery
:07:11. > :07:14.until next year. According to a report by
:07:14. > :07:19.accountants Ernst & Young - the combined economies of the nations
:07:19. > :07:22.sharing the Euro will shrink 0.6% in 2013. That's a bigger
:07:22. > :07:28.contraction than last year - and they see no return to growth until
:07:28. > :07:35.2014. Unemployment will also keep rising this year - hitting a peak
:07:35. > :07:45.of 12.7% in the first quarter of 2014. Marie Diron is senior
:07:45. > :07:50.economist at Ernst &Young. You're out here with good news for us.
:07:50. > :07:56.am not, I'm afraid. This recession is going on for longer than we had
:07:56. > :08:03.expected. It has been going for six quarters. We believe it is coming
:08:03. > :08:10.to an end. The recovery is very weak. The only positivity is the
:08:10. > :08:14.relaxation of fiscal policies. One look elsewhere in the economy, we
:08:14. > :08:21.have just said about China not growing as strongly as we thought,
:08:21. > :08:27.that is important for the eurozone. The domestic side of the economy is
:08:27. > :08:31.still facing higher unemployment. Why is this phase taking longer
:08:31. > :08:38.than we first thought it would? Is it because of the key issues you
:08:38. > :08:43.have just mentioned? It is. Unemployment is a big one. It is a
:08:43. > :08:48.symptom of a deeper structuring. The reshaping of the eurozone is
:08:48. > :08:52.necessary. Companies are going through their pay rolls and
:08:52. > :08:59.assessing how many staff they need. They are going through balance
:08:59. > :09:06.sheets and trying to reduce. All this combined makes for quite a
:09:06. > :09:13.long process. In 2014 you say the eurozone could return to growth.
:09:13. > :09:20.When? Made year, when the think? expect some slight positive numbers
:09:20. > :09:25.from the beginning of the year. The fiscal drag will be less. We expect
:09:25. > :09:33.some recovery in the rest of the world. Some areas are already being
:09:33. > :09:38.more competitive in the eurozone. Thank you. That's all from World