25/11/2015 World Business Report

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Tightening border controls in Europe - what are

the economic consequences after 30 years of the free movement of people

And more money in your pocket - Japan's Prime Minister announces

a 3% increase in the minimum wage but will the Japanese save it or

We start with a system that has been in place for almost 30 years.

Since the mid-90's Europeans have enjoyed the freedom to move

between EU countries without border controls or checks.

Indeed freedom of movement, goods and services is the bedrock of its

But, the terror attacks in Paris and the current migrant crisis has cast

The Schengen Agreement - as the model is formally known - abolished

border controls in 1995 - allowing passport-free travel for 400 million

The only exceptions being the UK and Ireland who opted

And it's that control that countries across Europe

Germany, Austria, Denmark and other states have all

tightened border security in response to the influx of

And following the Paris terror attacks, France has put in place

checkpoints on major routes into Belgium with drivers and passengers

Passengers have also been searched on some cross-border trains.

But, the worry is that wholesale tightening

of border controls could impact commerce between member states.

It's estimated being in the Schengen area boosts bilateral trade by 0.1%.

It's a hot topic ahead of a meeting later in the week -

with no clear answer on how to increase security in Europe while

With me is Vasileios Douzenis a Consultant at Europe Economics.

Thank you for being on the programme. We have outlined how it

works and the changes that have been made. Your thoughts on Schengen,

should it be changed? Just to provide some thoughts on the context

behind the Schengen. Schengen is currently the second biggest

European project after the euro. Recent statements by the U

Commissioner for home affairs reaffirmed how significant Schengen

is. These statements attack the very centre of what it is. We need to

reaffirm the significance for policymakers that is attached to it

and speak to its future. Measures, short-term measures like a border

controls have been seen in the past. They have been increasingly

observed now. The extent to which they will be short-term or a lead to

long-term changes, this is debatable. But the correct focus is

to focus, rather than on the complete demolition of the Schengen

agreement, is to focus on structural changes. These are the main areas

this could lead to a facts. Is it possible to quantify the boost to

economic activity that Schengen provides? It is possible to

quantify. But it is confounded by a number of caveats and problems. I

can quickly think of three impact areas from which to gain estimates.

The first impact area, for example, is the negative impact that border

controls would have on the marginal traveller across borders. Travellers

for business purposes or for personal leisure. In particular,

those who are a bit more elastic in regards to their preferences.

Individuals travelling at particular peak hour times, these will be

particular challenges with delays at the borders exacerbated. That is one

of the areas. The second impact area will be the immediate cost that is

incurred to introduce and enforce border controls. Especially in an

area of austerity. Development can create fictions within government.

We will have to leave it there, thank you for coming in. Now we can

talk about Japan. Japan will raise the minimum wage

by 3% each year from next fiscal year as part

of a package of policies aimed at strengthening consumer spending

and stoking economic growth. Ali Mooore is in our

Asia Business Hub in Singapore It is good to see you. So it is all

good in theory, the question is, will the Japanese are out and spend

it, or will they say that? It is one I certainly cannot answer. Nobody

can just yet. It is a reform that many people have been looking for to

try and get the economy moving. Despite all the fanfare that has

been around Abenomics, the country is slipping back into recession. The

hope is that they will inspire more people to open their wallets and

spend. That will drive inflation and hopefully that inflation to the

central bank's target of 2%. But to give you an idea of what happens in

practice, Japan's average minimum wage is $6.36 per hour. 80% increase

will not buy you much more than a bowl of noodles. -- make

in Australia, it is a comparatively generous $12.57. In the UK, $10.12.

In Singapore, no minimum wage. Japan's government is committed to

winding back regulations. It is trying to encourage more capital

expenditure. It is going to bring forth corporate tax cuts. They hope

these measures will boost growth. But as you started this

conversation, it all depends on whether they spend or save. All the

measures being taken to try and get the economy going.

A unit of Deutsche Bank will pay more than $31 million to the U.S.

Justice Department to avoid possible prosecution for helping

Deutsche Bank's Swiss unit offered a number of services

and permitted some practices that it knew could assist US taxpayers

in concealing assets and income from the Internal Revenue Service,

The price of iron ore, the key ingredient for making steel,

The slump in global commodity prices has affected several countries where

oil production forms a major part of the economy.

The IMF has warned Angola about its public finances, estimating

that debt will climb sharply to 57% of GDP by the end of the year.

The BBC's Tanya Beckett caught up with Isobel Dos Santos, the daughter

of the Angolan President and Africa's richest woman.

She started off by asking her about what she believes to be the biggest

Definitely it is still something we need to do more of. We have been

looking at this very seriously. We have a better enrolment rate in

schools. We have a better literacy rate. We have been investing in new

universities. Education is still the gap. If anyone wants to help

Africa, they need to look at universities and help us gain more

knowledge. Also knowledge on things like agriculture or general skills

like construction. And this raises the question as to business in

Africa, what responsibilities they have to the community is now working

in. We have seen a change in mindset. Africa as a whole is

attracting short-term investments. People who want to come in and have

a good exit strategy. Now we have seen a shift in that. People setting

up businesses are thinking of long-term plans. They are going more

local. They are going into agreements with universities and

training facilities. That is very important, that change of mindset.

Do you closely observe the rise of the middle class in your travels

around Africa? Very much so. How do you observe that? When you go to an

African city, the number of cars are striking. We are experiencing

traffic jams and having to address those issues. But in a way, that is

just the fact of people having more money and being able to have their

own car, their own house, being able to start their own business. We also

have seen their is a number of homeowners in Africa are growing.

That is World Business Report, I will see soon.

A Scottish National Party MP has resigned the party whip as she

faces a police investigation into donations missing from a campaign