25/04/2014 World Business Report

nation's fallen, veteran soldiers and those still serving. Those are

the latest headlines from BBC World News. Now for the latest financial

news with World Business Report. Looking for the road to recovery `

can a Chinese bail out save France's struggling Peugeot` Citroen?

Goodbye, low`cost China. Hello, affordable America. We look at the

changing map of global competitiveness. Welcome to World

Business Report. A big boost for Japan in its battle against

inflation, but first, we start with French car giant Peugeot, otherwise

known as PSA Peugeot`Citroen. These are critical times for Europe's

second biggest car maker. Over the past two years it has lost over $10

billion, forcing it to seek a bail out from a Chinese partner earlier

this year. Later this morning, we will find out whether the company is

managing to stem the losses when it releases results for the first three

months of the year. Jeremy Howell reports. Following Volvo and Saab,

Peugeot`Citroen is the latest to collapse into the arms of a Chinese

rescuer. Last month, the company raised $2 million to keep itself in

business by selling stocks to the Dongfeng group and the French

government. The new chief executive plans to cut the number of models

the group makes from 45 to 26. The DS range will be developed so it can

compete more strongly in the luxury car sector against the likes of BMW

and Mercedes`Benz. The aim is that in two years, the group will be

running at a profit again. They have set themselves a target of a 2%

operating margin. That seems to be a realisation that they will lose

money in the bad years but made a small profit in the good years. It

is not ambitious enough. There is a problem with moving up market

because it costs a lot of money and is not always successful.

Peugeot`Citroen sells 60% of its cars in Europe but demand has

slumped since 2008. Forced to cut supply, the company has closed its

plant near Paris in the face of union opposition. But in the past

three months, Peugeot`Citroen 's European sales have by over 20 ``

over 10%. Does that mean the bad times are over? That would be a

mistake. Some companies act as though the problems will go away but

the forecasters are aiming for very modest growth throughout the EU.

Some markets are doing better than others and some are still struggling

big changes in the global economy very badly.

big changes in the global economy over the past decade. Let's take a

look at some of the winners and losers. The US has seen a plunge in

energy costs thanks to the boom in shale gas, while wages have remained

stable. Meanwhile, China is among those that have seen big increases

in wages. Its cost advantage over the US has been eroded to just 5%.

Brazil is now more expensive to manufacture in than most of Western

Europe. The UK has been one of the big winners. It now has the lowest

manufacturing costs in Western Europe. That's largely down to wages

remaining steady and workers becoming more productive. Thank you

for joining us. Tell us some of the major findings of this report. The

main finding is that low`cost countries are not always low`cost

and fundamentally, countries in Western Europe and the US, which

have always been viewed as high cost, many of them are starting to

become low`cost and very competitive. The world is changing

very fast. I listed some examples of that earlier. The top 25 export

economies were examined in terms of how they each stack up. Tell us

about that. Some of those economies are under pressure. Countries like

Russia and Brazil, as you mentioned earlier, are under a lot of

pressure, facing very significant cost pressures. There are other

countries that are losing ground. Much of Western Europe including

Sweden and Belgium and France. They are becoming uncompetitive. There is

one group of countries that is basically holding steady. The UK and

the Netherlands are included in that, and so are India and

Indonesia. The US and Mexico are the rising stars. We are seeing a very

big seachange in economics. When we look at some of the criteria you

used to measure the competitiveness of these different economies, we are

looking at labour costs, wages, energy costs. What has fracking done

to the cost of gas in the US? Currency fluctuations... What are

some of these criteria? There are four main factors when you look at

it from a large`scale perspective. Productivity, wages, exchange rates

and energy costs. Right now, the US is seeing favourable results on all

four of those. And in other countries, there have been some

shifts and this is having a" trade. This will continue over the next

five years. `` this is having a big impact in global trade. Were there

many surprises in your research? Most people would believe that

Brazil is a low`cost country but it was one of the highest cost

countries in our study. At the same time, people would have said that

the UK is very high cost, but relative to the rest of Western

Europe, the UK is leading in terms of being the lowest cost Western

European country overall. Fascinating. Redrawing how we view

the competitiveness of different countries around the world.

Good news from Japan in its battle to end more than ten years of

deflation. Consumer prices in Tokyo rose at their fastest pace in 22

years in April, according to early data. Good to see you. Talk me

through what is going on here. Well, it is all to do with the sales

tax rise, the consumption tax. From the 1st of April this year, that

rate went up from 5% to 8%, pushing up consumer prices. I spoke with

analysts earlier and they say that the data suggests companies have

passed all of that increase on to the consumers and that is not a bad

thing because it sends out a very clear message to Japanese consumers

that prices are starting to rise in the country. Unlike other countries,

Japan has been fighting deflation, falling consumer prices, for the

best part of the last 20 years. What that has done is hurt domestic

consumption, as consumers and businesses tend to put off purchases

in the hope of getting a cheaper and better deal later. Japanese

policymakers have been very keen to end that trend and have been pushing

for consumer prices to rise in the hope that such a move will let

consumers and businesses start spending more money. On that front,

these numbers are definitely encouraging. Thank you.

Microsoft's new boss Satya Nadella got off to a good start with Wall

Street after the software giant reported much better than expected

quarterly profits after the closing bell ` the first results since he

took charge. Mr Nadella is trying to refocus the company towards mobile

and cloud computing amid a slump in PC sales. Online retailer Amazon

also reported revenue ahead of Wall Street expectations ` up 23% to

$19.7 billion in the first three months of the year. It's seeing

sales growth slow, though, and faces rising competition abroad from

rivals like China's Alibaba, which is preparing for a massive stock

market flotation soon. Exciting times in the technology sector.

That's it from me. Goodbye. A collection of street art by the

anonymous graffiti artist Banksy is due to be auctioned after being

removed from walls around Britain. The works are expected to fetch

millions but Banksy himself claims it is going ahead without his