04/08/2016

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:00:00. > :00:22.The Bank of England weighs up action as the economy teeters

:00:23. > :00:32.A move on interest rates today would be the first cut -

:00:33. > :00:45.is Rio 2016 an event that will pay off for its corporate sponsors?

:00:46. > :00:58.Welcome to World Business Report, I'm Aaron Heslehurst.

:00:59. > :01:04.I hope this is an exciting snapshot into the world of business.

:01:05. > :01:07.We'll be going live to Shanghai to talk about that sponsorship issue

:01:08. > :01:15.We start in the City of London where in a few hours' time the Bank

:01:16. > :01:18.of England is widely expected to take action to boost the UK

:01:19. > :01:24.economy - following the vote to leave the European Union.

:01:25. > :01:26.Remember, straight after the referendum in June,

:01:27. > :01:28.Bank chief Mark Carney said that action would likely be needed

:01:29. > :01:35.The Bank surprised the markets by holding off last month.

:01:36. > :01:38.But a string of very weak economic data in recent days

:01:39. > :01:40.has led some experts to say an interest rate cut today

:01:41. > :01:44.Interest rates are already at a record low of 0.5% -

:01:45. > :01:52.as you can see they have been there for eight years.

:01:53. > :01:56.The last time they went up was in 2007.

:01:57. > :02:01.Today they could be cut further - to 0.25%.

:02:02. > :02:05.Leading economists now fear that there's a 50/50 chance of the UK

:02:06. > :02:09.falling into recession as a result of the Brexit vote and lower rates

:02:10. > :02:14.are one of the ways to reduce that risk.

:02:15. > :02:19.The theory goes that lower rates make saving money less attractive

:02:20. > :02:22.while reducing the cost of borrowing.

:02:23. > :02:26.This in turn drives people to borrow and spend more,

:02:27. > :02:29.and encourages firms to invest - all of which should

:02:30. > :02:35.That all sounds great but unfortunately there are also

:02:36. > :02:40.With rates already so low there are fewer levers to pull

:02:41. > :02:47.Japan and the EU have both tried negative rates -

:02:48. > :02:49.effectively charging people to deposit money.

:02:50. > :02:53.But many economists argue that this has done more harm than good.

:02:54. > :03:00.Prolonged ultra-low rates also tend to encourage unsustainable debt

:03:01. > :03:07.With borrowing so cheap - people and businesses are far more

:03:08. > :03:15.likely to pay over the odds for things they can't really afford.

:03:16. > :03:29.Many experts think we will see a car of .25% maybe more action to come. I

:03:30. > :03:34.think that is mainly more of a signal to markets that they are

:03:35. > :03:40.there. It is more of a case of what happens after that. Do we see more

:03:41. > :03:44.credit lending to businesses. Do we see more plans to back loan small to

:03:45. > :03:46.medium enterprises. James Hughes is Chief market analyst

:03:47. > :04:02.at the brokerage GKFX A quarter point is what people are

:04:03. > :04:08.expecting but will it make any difference? Probably not. It is for

:04:09. > :04:14.the markets and for the markets to say, sorry fall last month, we built

:04:15. > :04:22.you up and let you down. They need to do something if just to keep the

:04:23. > :04:26.market more stable. And the reason they would do something is some of

:04:27. > :04:33.the numbers that are out, manufacturing, and GDP... We had

:04:34. > :04:39.numbers at this week showing how the economy has not been doing that well

:04:40. > :04:44.but the point is we just had more data now. We still do not have a lot

:04:45. > :04:50.of data but we have something and it is pointing to the fact that we need

:04:51. > :04:55.to do something, the Bank of England need to act in some way. A cut in

:04:56. > :05:03.interest rates would push the pound lower? It would. It is positive news

:05:04. > :05:08.in terms of equity markets that negative for our currency. It has

:05:09. > :05:17.been a little bit more negative anyway so a little bit more downside

:05:18. > :05:22.is not too bad. The move by the central bank will mirror, if you

:05:23. > :05:27.will, the global picture out there because in the past week, we have

:05:28. > :05:35.seen action by the Aussies and the bank of Japan? They are both keen to

:05:36. > :05:42.drag the rate further, especially in Australia. Negative is not

:05:43. > :05:47.necessarily a bad thing. I think these rates are here for quite a

:05:48. > :05:50.long time. James, great stuff. You will come back and look through the

:05:51. > :05:54.papers with us later. We are also talking sponsorship

:05:55. > :05:56.ahead of the Rio Olympics Some $2 billion have been committed

:05:57. > :06:00.to the games by corporate sponsors - But the list of negative

:06:01. > :06:06.associations seems to grow Brazil is in the midst

:06:07. > :06:11.of a political and economic crisis, with many Brazilians criticising

:06:12. > :06:15.a perceived lack of inclusivity and the use of scarce

:06:16. > :06:18.public resources. Then there are concerns over

:06:19. > :06:24.pollution and the Zika virus. Not to mention the growing doping

:06:25. > :06:28.scandal overshadowing sport. All of which threaten to make

:06:29. > :06:31.the games a questionable investment Vladimir Djurovic, is CEO

:06:32. > :07:00.of Labbrand -a branding consultancy. Halo two years. Good morning. The

:07:01. > :07:08.brand itself, rio 2016, is it to fire damage now? Yes, actually, we

:07:09. > :07:20.have been following the Olympic ran, especially after the Beijing

:07:21. > :07:28.addition and definitely -- edition. There is a lot going on in Brazil,

:07:29. > :07:35.from the Zika academic, delayed deliveries of facilities and so on.

:07:36. > :07:39.This is only one of the issues that the Olympics are facing because also

:07:40. > :07:46.in terms of sponsorship, there has been raised concern about the

:07:47. > :07:55.exclusion of some brands, according to the famous Article 40. There are

:07:56. > :08:02.some things also out of Brazil's control. Let's talk about the doping

:08:03. > :08:08.scandal. I would imagine that has tarnished sport so you would have to

:08:09. > :08:16.be corporate looking at it and say we do not want to be associated with

:08:17. > :08:24.that. I think the Olympic brand is a much more diverse organisation, in

:08:25. > :08:31.terms of customers and viewers minds. Definitely, there are

:08:32. > :08:40.concerns around the Olympics at the moment but, even for the brands

:08:41. > :08:48.using the Olympics as a sponsorship platform, there are ways to go, to

:08:49. > :08:54.use the example of the outlets more thoroughly but those type of

:08:55. > :09:00.figures, instead of maybe images of Rio de Janeiro which may be having

:09:01. > :09:08.some issues with the facilities, unrest in the street... So the row

:09:09. > :09:16.was for the brand to still benefit. -- there are ways. Thank you for

:09:17. > :09:18.joining us from Shanghai. Good on you.

:09:19. > :09:26.Electric car maker Tesla lost $293m in the three months to June.

:09:27. > :09:33.That's the thirteenth quarterly loss in a row.

:09:34. > :09:37.It also missed analyst's sales forecasts and fell short

:09:38. > :09:42.Tesla delivered 14,402 cars during the quarter -

:09:43. > :09:49.The company though insists it is on track to deliver 50,000

:09:50. > :09:54.Model S and Model X vehicles in the second half of the year.