:00:00. > :00:00.have devastated the small town in the area. Those are the latest
:00:00. > :00:20.headlines on BBC World News. Now Sally has World Business Report.
:00:21. > :00:27.Another safety crisis at General Motors, the US car giant says it is
:00:28. > :00:32.recalling a further 3 million cars for technician issues. And the rise
:00:33. > :00:41.and rise of London house prices, but could the bubble be about to burst?
:00:42. > :00:47.We take a closer look. Hello and a very warm welcome. You're with World
:00:48. > :00:50.Business Report. Also coming up, it is called high`frequency trading but
:00:51. > :00:56.is it high risk? We looked at what it is and why US politicians are
:00:57. > :00:59.worried. But first, more problems for American carmakers General
:01:00. > :01:05.Motors. Late last night they announced they are calling 3.2
:01:06. > :01:10.million cars relating to an ignition switch malfunction. `` recalling. On
:01:11. > :01:18.Friday they announced a recall of more than 500,000 Cameros for the
:01:19. > :01:22.same problem, both in addition to the 2.6 million cars they already
:01:23. > :01:28.recalled earlier this year. The faulty switches have been linked to
:01:29. > :01:35.more than 12 deaths. This latest recall of almost 3.2
:01:36. > :01:42.million cars also has to do with an ignition switch problem. In this
:01:43. > :01:45.instance, a driver's needs cannot the keys and sedately out of the
:01:46. > :01:53.running position, causing an engine stall. Now this is in addition to
:01:54. > :01:56.another recall earlier this year of 2.6 million cars and that also had
:01:57. > :02:02.to do with ignition switch problem is. GM is now setting aside an
:02:03. > :02:09.additional $300 million in the second quarter to cover the costs of
:02:10. > :02:13.these new recall is. In 2014, GM has recalled almost 17 million cars,
:02:14. > :02:19.that is more cars than the company sold in all of last year. Its Chief
:02:20. > :02:22.Executive Officer Mary Berry will be facing some tough questions on
:02:23. > :02:30.Wednesday when she goes to Washington to face congressional
:02:31. > :02:32.leaders and they will be asking questions about these problems with
:02:33. > :02:40.ignition switches, how much the company knew, and for how long.
:02:41. > :02:44.Something the 2008 financial crisis brought into view was the fact that
:02:45. > :02:49.due to the rapid changes in technology, the way financial
:02:50. > :02:54.markets work have become incredibly compensated `` has. Regulators don't
:02:55. > :02:58.understand a lot of the intricacies and even some of the chiefs of the
:02:59. > :03:01.biggest banks had to admit they didn't understand what their traders
:03:02. > :03:06.were up to. We all played a big price. Today a Senate panel is
:03:07. > :03:14.focusing on high`frequency trading `` we all paid a big price.
:03:15. > :03:19.The popular idea of trading is this. And surely this is closer to
:03:20. > :03:24.what it really looks like, endless computers spitting out orders. US
:03:25. > :03:28.lawmakers are concerned high`frequency trading, a type of
:03:29. > :03:32.algorithmic trading, has created an uneven playing field. There are
:03:33. > :03:37.concerns, especially about increased volatility and possible breakdowns.
:03:38. > :03:43.What happens when the entire market is made up, or most of the market,
:03:44. > :03:47.is made up of these firms that use computer algorithms. It's not humans
:03:48. > :03:53.making decisions. If an algorithm goes wrong, what are the checks on
:03:54. > :03:58.that? Scrutiny of high`frequency trading intensified with the
:03:59. > :04:05.publication of the book/ Boys. In April the author told the BBC about
:04:06. > :04:10.the problems he saw with the market `` Tim Mack to. We had crashes,
:04:11. > :04:15.exchanges going down from hours at a time `` Flash Boys. Even within the
:04:16. > :04:20.financial system, there is a misgiving about the way things are
:04:21. > :04:23.structured and a concern that a catastrophe could happen because the
:04:24. > :04:26.technology has become too compensated. The book has since
:04:27. > :04:31.prompted the US Justice Department and others to investigate the
:04:32. > :04:36.claims. The suggestion that US stock markets, the most iconic in the
:04:37. > :04:41.world, could somehow be rigged, has sparked fierce debate.
:04:42. > :04:44.High`frequency traders say they are being unfairly attacked and they
:04:45. > :04:50.help promote greater market liquidity. But with regulators and
:04:51. > :04:55.lawmakers now focused on this issue, this could be the first
:04:56. > :05:02.chapter in the battle over fast trading.
:05:03. > :05:07.Now, onto a UK accession and consequently it is a rare day to
:05:08. > :05:11.pick up a newspaper and not see a headline about the soaring value of
:05:12. > :05:13.property, especially in London and in the last year house prices in the
:05:14. > :05:26.UK capital have risen sharply, driving fears there is a bubble
:05:27. > :05:35.waiting to burst. According to RightMove, the average price has
:05:36. > :05:45.gone up by ?80,000, just over $135,000.
:05:46. > :06:03.Compare that to the national average,
:06:04. > :06:09.The Bank of England committee has been tasked with stopping a housing
:06:10. > :06:13.bubble forming in London. They meet today to discuss what to do about
:06:14. > :06:19.these rapidly rising prices. I am joined by the head of UK residential
:06:20. > :06:27.research at an estate agents in the UK. The Bank of England committee is
:06:28. > :06:31.more arms than it was last week thanks to the UK Finance Minister's
:06:32. > :06:36.speech. What are they likely to do to try to pull down these prices?
:06:37. > :06:40.They have been given powers to intervene in the market and what
:06:41. > :06:43.they could do is insist banks have more capital requirements so
:06:44. > :06:48.mortgage lending is backed up by a bigger pool of money. Or they could
:06:49. > :06:52.intervene and say to banks you can't lend over a certain loan to value
:06:53. > :06:57.rate, or loan to income rate. If a borrower comes to you you shouldn't
:06:58. > :07:03.lend over four times their income. Is that the problem with the markets
:07:04. > :07:08.specifically in London? Not really. What we have seen in London is a big
:07:09. > :07:11.return in demand domestically. The economy has improved over the last
:07:12. > :07:18.year and people feel confident about making the move and they go to buy a
:07:19. > :07:24.house and the supply isn't there. As forest and has acknowledged, we have
:07:25. > :07:26.a chronic undersupply of housing in London `` as Boris John and has
:07:27. > :07:33.acknowledged. London is very attractive to foreign investors. It
:07:34. > :07:39.is a known fact that having a property in London is a good asset
:07:40. > :07:43.in your portfolio. London has benefited from that safe haven tag,
:07:44. > :07:52.as have property areas around the world. People want to invest in
:07:53. > :07:57.property where there is safety. You have seen a benefit all around the
:07:58. > :08:03.world from that trend. Is there a bubble waiting to burst? Or is there
:08:04. > :08:08.a lack of supply, therefore this market can go on and on. There is a
:08:09. > :08:11.lack of supply and that will underpin prices in London, we want
:08:12. > :08:22.to see these apply stepping up so we can bring the house price to lending
:08:23. > :08:25.ratios come down. When you start to see the interest rates come down,
:08:26. > :08:32.that could weigh on sentiment in the market. Thanks very much. As I said,
:08:33. > :08:38.and of session just like the weather for British people. The Chinese
:08:39. > :08:42.Prime Minister is due to have an audience with the Queen today and
:08:43. > :08:48.with... At a summit with David Cameron. He arrived in London
:08:49. > :08:52.yesterday and the Home Office said they would announce a new visa
:08:53. > :08:55.service allowing business and tourists to use a single application
:08:56. > :09:02.to process their visa is for Britain, as well as a Shenzhen
:09:03. > :09:09.visa, which allows access to 26 European countries. Royal Dutch
:09:10. > :09:14.Shell is cutting its stake in Australia's Woodside in a sale that
:09:15. > :09:18.will net it $5 billion. Upon completion its stake in Woodside
:09:19. > :09:24.will be reduced from its current 23% to 4.5%. Shell said in a statement
:09:25. > :09:29.it wants to focus its Australian growth indirectly owned assets. The
:09:30. > :09:34.Russian energy giant gas prom has cut off its supplies to Ukraine
:09:35. > :09:39.after a deadline passed for Kiev to repay $2 billion, which Moscow says
:09:40. > :09:46.it is owed. The EU says European gas supplies should not suffer in the
:09:47. > :09:50.short`term. Markets, investors still don't have much appetite for risk
:09:51. > :09:55.because of Iraq and also the spat between Russia and Ukraine about gas
:09:56. > :09:58.prices. In Asia, a better day for Japan. Japan was hit hard yesterday
:09:59. > :10:04.because of the strength of the Japanese yen. You can see the
:10:05. > :10:09.Japanese market is up by 0.4%. A quick look at the currencies, the
:10:10. > :10:14.dollar is in favour a bit because of the issue as far as concerns about
:10:15. > :10:22.the risk. The Yen is doing well as well. I will see you soon for a look
:10:23. > :10:28.at the newspapers where we will talk about those stories a bit more.
:10:29. > :10:33.The government needs to spend more money on flood defences or face a
:10:34. > :10:38.repeat of the devastation we saw earlier in the year, according to a
:10:39. > :10:40.report from a group of MPs, which says funding for clearing rivers and
:10:41. > :10:41.routine