26/07/2017 World Business Report

OK, time, now, for World Business Report, with Rachel.

After the disappointing growth outlook the UK received from the IMF

last week, today we get some real numbers for the British economy.

And, after "emmissionsgate" is a new scandal brewing or VW?

If so this time it's not alone, all the main German car-makers

are accused of having operated a cartel.

Sharanjit will tell us what to expect from the gamemaker's

later this morning the UK will unveil its latest growth

numbers for the three months to the end of June.

Earlier this week, the International Monetary Fund

economic activity means both the US and UK will expand more slowly

However, in the numbers due out this morning,

economists are expecting the UK's growth rate will have risen slightly

Following the Brexit vote, the pound fell.

This put pressure on prices - last month inflation stayed

above the Bank of England's 2% target rate.

And higher prices, partly from imported goods,

are having an impact on consumer spending.

According to Visa, household expenditure fell 0.3%

month, the lowest figure in almost four years.

But government figures suggest uncertainty

The UK continues to be the top investment location in Europe,

with more than 2,200 new foreign direct investment projects announced

in the last year - that's 2% up on the year before.

And on Tuesday BMW announced it had chosen Oxford as the location

of where it will build its new fully electric Mini.

With me is Dean Turner, an Economist at UBS Wealth

Thank you for coming in. If we get that 0.3% figure that many are

predicting, how does that set in the context of how the UK has grown over

the last couple of years, and how the rest of the world is going now?

If we get to positive numbers, it would mark the 80 consecutive

quarter of positive growth. That is a good outcome. But you need to put

that in the context of the four years at the start of this year. The

quarter on quarter growth rate was averaging at 0.6%. So it a slowdown.

And what about Europe? Compare to the UK, how is it doing? This is an

important point. What we are seeing globally with the IMF upgrading

forecasts of the globe, and with the sentiment numbers coming out of

Europe, this suggests strong activity over there. A small economy

like the UK, we expect to be doing better this time of the cycle. --

smaller. So you are saying we should be expecting the UK to do better? A

couple of trends are following the Brexit vote and are coming through

now. We saw in the first quarter numbers in the all-important service

sector, which makes up 80% of the economy, that is where we saw a big

slowdown in Q1. I think that will continue into the current quarter as

we see the effect of inflation on households, squeezing consumers.

There are other areas that we will look out, and that is what is

happening to business investment, now. As you pointed out already,

business investment is not in decline, but it is the rate of

change and growth that is important here. And I don't think we will seep

particularly positive numbers here as that data comes through. As you

said, the services sector is important, with 80% of our growth

based on services. So that is a part that you are specifically be looking

at, today? Absolutely. It is what is there to be happening in the service

sector. We have had some data recently suggesting that the

manufacturing sector is doing well. We expect a decent number they're

showing that manufacturing output is probably expanding. But ultimately,

it is services that are going to have the biggest role. But we have

the bank Bank of England inflation result coming up. Remind us what

that is and what it could do? Will next Wednesday -- bon Expose, it is

super Thursday. There has been speculation in the market is given

the hawkish rhetoric we've had from the Bank of England of late that we

could see a rate hike. My sense is that barring a strong upset in

today's numbers, that is unlikely to happen. Growth of .2% or .3% is

below the Bank of England's expectations as they printed in

their last inflation report. It will be also important to look at what

the Bank of England's expectations are for the rest of the year. That

will give us a clue as to what would happen with policy further down the

line. But think any immediate concerns about an interest rate hike

next week are overdone. So you think if it is .3% as expected, we will

not see a high? Exactly. Thank you very much for joining us, Dean.

The Japanese gaming giant will release quarterly earnings later.

The big question - whether the portable Switch console

will be the money-spinner Nintendo has been hoping for.

Sharanjit Leyl is in our Asia Business Hub in Singapore.

What do we expect to hear? That is right. Those numbers are due out

after the Japanese market closes. As you say, expectations are that

Switch will take Nintendo from strength to strength. It launched in

March and immediately Nintendo sold about 2.7 million units. We should

compare that to its rivals, Xbox, which sold about 3 billion units. --

2.7 billion units. Nintendo is essentially saying it hopes to send

out 10 million India to come. The company did not expect that they

would have promised meeting demand, but Switch production was lower than

what the company, based on Kyoto, plant. There were reports of people

lining up to buy Switch consoles, suggesting that demand for the game

remains strong. But do not expect new announcements about smart phone

games from Nintendo or any of those products at their media briefing,

which they said they will not be doing for these first quarter

numbers. Sharanjit Leyl in Singapore, they give that analysis.

-- thank you for that. Volkswagen is set to hold

an emergency supervisory board meeting later today

regarding allegations that the carmaker operated

a cartel alongside Audi, Porsche, Mercedes and BMW,

to control pricing on parts. If true, the reports would be

a further blow to the German car industry, which is trying

to recover after the recent Damien McGuinness

reports from Berlin. VW, BMW, Daimler, Audi, Porsche. All

German car brands accused of collusion. The allegation is that

since the 1990s, they regularly held talks to agree costs, either for

parts or for technology. The aim was, allegedly, to block

competition. All five car companies deny the claims or refused to

comment. And it is possible that the talks were legal, held steadily to

discuss how to standardise technology across the industry. But

the news has rattled investors. When German media first published the

reports, last Friday, VW shares fell by 4.9%. Shares for BMW and Daimler

dropped more than 3%. The European Commission and the German cartel

office have not yet launched an official probe, but are looking into

the allegations. If true, this would open up a whole new chapter in the

diesel emissions scandal. That is because engine exhaust technology is

also allegedly involved in the cartel. VW and other German brands

are only now starting to recover from the emissions row. So another

scandal would be a blow to the industry's reputation. Damian

Maginnis, BBC News, Berlin. Britain is hitting the breaks

on new petrol and diesel vehicles. The government plans to ban new cars

and vans powered by fossil Government officials are expected

to unveil a $332 million fund to help cut down on pollution

to improve the air quality. The money could go

towards retrofitting buses The reported move follows a similar

announcement earlier this month President Trump says

Apple's chief executive, Tim Cook, is committed to building

three plants in the US. Such an investment would help

the administration follow through on a big campaign promise -

reviving the country's manufacturing When asked, Apple

declined to comment. Now, before we go, let's look at the

markets.