tv World Business Report BBC News May 13, 2022 5:30am-6:01am BST
this is bbc news with the latest business headlines for viewers in the uk and around the world. crypto carnage! $200 billion wiped out in 2a hours, as investors dump digital currencies. has the boom turned to bust? on the brink of recession. the uk economy shrank in march as soaring prices take their toll on consumers. tackling the energy crisis. spain subsidises gas, having slapped firms with a windfall tax. is it time for the uk to do the same? plus, no more null points. can tiktok help revive the uk's disastrous eurovision fortunes?
hello there. cryptocurrency investors around the world are reeling after $200 billion was wiped off the value of digital assets injust21i hours. the sell—off in risky assets, sparked by fears about inflation and rising interest rates, means the crypto market has lost well over half of its value since its peak in november — much of that in the past week. spooking investors further, falls in so—called stablecoins that are supposed to be linked to the us dollar and therefore stable. the term �*cryptocrash�* has been trending on twitter and google search, as bewildered investors look for answers. so, has the crypto bubble finally burst? and if so, could it spark wider contagion on global markets? michelle fleury reports from new york.
for those in the crypto world, these are dark days. it going, best—known cryptocurrency, is down a few % from its november peak, part of a market way that has wiped out more than $1.5 trillion from the overall market. terra, which is meant to trade at parity with us dollar, is significantly below and kevin mclean has completely collapsed, by that it means it has gone to almost zero. many small investors piled into crypto as the market boomed, but now the tide has turned. 1 will say that at this time the market for such stable queens and crypto more generally, is too small to pose a systemic risk to the traditional financial system, risk to the traditional financialsystem, if risk to the traditional financial system, if we were having this thomas aiken two or three years from now in the future and crypto or stablecoins made up a much greater portion of economic activity in the world, a precipitous drop or the implosion of a stablecoins
could pose a systemic risk. crypto was billed by some as a hedge against inflation. with prices are soaring, it should be thriving, but it turns out this digital gold is not as valuable as real gold, traditionally considered a safe place to put your money during turbulent times. american billionaire mark cuban about what is happening in crypto right now is to what happened in the internet bubble, the period in the early 1990s sent the value of internet so skyhigh before the crust back to earth in the early 2000. the prolific crypto investor said that as with the early internet, companies that are providing useful services will survive, even if many disappear and was now looks to be a widespread sell—off. us treasury secretary janet yellen was facing questions from congress on thursday. she was asked about the possible risks to the financial system posed by crypto, particularly stablecoins supposedly backed by reserves of cash or bonds, which have become central to the crypto market. here's what she had to say.
i wouldn't characterise it, at this scale, is a real threat to financial stability, but they are growing very rapidly and they present the same kind of risks that we have known for centuries in connection with bank runs. centuries in connection with bank rum-— centuries in connection with bank runs. , ., david gerard is author of the 2017 book attack of the 50 foot blockchain, an in—depth investigation into the rise of cryptocurrencies. can i ask you the question i am often asked myself — does crypto actually stack up as a bona fide investment? well, not really. there isn't anything you can actually do with a pile of crypto except traded to someone else. every dollar you when someone else lost. it'sjust dollar you when someone else lost. it's just a speculative investment at this stage. it's quite huge for a lot of people,
but it doesn't affect real markets yet. crypto tries very hard to get its way into these systemic parts of the economy, but so far it hasn't managed to. so last thursday, the nasdaq went down, that did affect bitcoin, but it doesn't go the other way yet. ﬁk. affect bitcoin, but it doesn't go the other way yet. ok. you sa it is go the other way yet. ok. you say it is not — go the other way yet. ok. you say it is not creating _ go the other way yet. ok. you say it is not creating a - say it is not creating a contagion in the wider market, it is certainly having an effect on real people. they know that suicide hotline numbers were pinned onto sub red rates for the crypto that michelle fleury was talking about, people have lost their entire life savings, and this week the chelsea foot club, they are getting a new shirt sponsor on the sleeves, that is a company gamba kepa, that offers a gateway into these fascinating and terrifying investments. how vulnerable are
first time investors to the market and this world? incredibly vulnerable. we are at the tail end of the crypto acid bubble. it is an ordinary asset bubble, bitcoin did this before, everyone has been waiting for the air to leak out of the bubble, there is a lot of the bubble, there is a lot of temptation to small investors, because times are tough, people are desperate, they think this is a way out, but it is a false hope. we need a lot more protection for investors on this stuff on the way people promote this stuff. people who don't remember the 2008 crisis, this really echoes 2008. we had a small speculative dollar substitute that collapsed and took the rest of crib go with it. that's what happened in 2008. a small speculative dollar substitute collapsed and took the us and uk economies with it. it is
like they did their own 2008 miniature, which is ironic because bitcoin is often said to have started as a reaction to have started as a reaction to governments bailing out banks after 2008... to governments bailing out banks after 2008. .. crosstalk. they couldn't _ banks after 2008. .. crosstalk. they couldn't resist _ banks after 2008. .. crosstalk. they couldn't resist the - banks after 2008. .. crosstalk. they couldn't resist the chance i they couldn't resist the chance to do it themselves. the they couldn't resist the chance to do it themselves.— to do it themselves. the other interesting _ to do it themselves. the other interesting aspect _ to do it themselves. the other interesting aspect to - to do it themselves. the other interesting aspect to this - to do it themselves. the other interesting aspect to this is . interesting aspect to this is what's going on on the other side of this, which is the young up and coming exceptionally bright people who might potentially go into a traditional world of finance, they are being luiten to crypto and that world and entering this marketplace, how real is the threat of a brain drain into crypto and where does that leave the wider investment immunity and regulation of this market if all of the very bright new entrants in the market are going in the place where there is the least regulation? lured. ithink there isn't— regulation? lured. ithink there isn't a _ regulation? lured. ithink there isn't a lot _ regulation? lured. ithink there isn't a lot of - regulation? lured. ithink there isn't a lot of that. i there isn't a lot of that. anyone who is capable will be able to find anotherjob
somewhere else. markets go up and down. if they are young and just starting out they can find somewhere in probably finance in short order if they are any good. in short order if they are any aood. in short order if they are any ood. . ~' in short order if they are any nood. . ~' in short order if they are any ood. . ~' , good. david, thank you very much for — good. david, thank you very much for your _ good. david, thank you very much for your time. - good. david, thank you very much for your time. david l much for your time. david gerard there. let's bring in susannah streeter, senior investment analyst at hargreaves lansdown. david saying he doesn't think it is affecting the broader market yet. what risk is there of what's happening in digital assets spilling over into the real world? i assets spilling over into the real world?— realworld? i think the risk isn't here — realworld? i think the risk isn't here right _ realworld? i think the risk isn't here right now, - realworld? i think the risk isn't here right now, but. real world? i think the risk i isn't here right now, but there has been concern voiced by regulators around the world that so many more individuals, individual traders, and, increasingly, institutions were putting their money into crypto assets and if that trend continued there was a fear that this could, in the future, have an effect on the stability of the financial system and that's
why you've been seeing moves by central banks and discussion papers launched on the way forward looked at to try and establish what types of cryptocurrency should be brought into the regulatory sphere. they have an issue, because by doing so they could add more legitimacy to what is considered an extremely risky asset but, certainly, from what we have heard from janet yellen, from what we are hearing in the uk as well, in the queens beach, for example, there is a real desire to bring in more regulation. but at the same time not quash innovation on the blockchain. so it is a tricky balancing act, but right now, as investors flee risky assets, the risk actually that it could have an effect on the financial system in the short term, i think, financial system in the short term, ithink, is financial system in the short term, i think, is fading. financial system in the short term, ithink, is fading. qm. term, ithink, is fading. 0k, really interesting. _ term, ithink, is fading. 0k, really interesting. thank- term, ithink, is fading. 0k, really interesting. thank you. susannah streeter, thank you. to the uk now, where the government's finance chief,
chancellor of the exchequer rishi sunak, has been telling the bbc he is not ruling out a windfall tax on energy firms to help struggling families. there are warnings the uk could be on the brink of recession after the latest figures show the economy shrank in march, as households began to feel the impact of rising prices and cut back on spending. 0ur economics editor faisal islam has the latest. in cheshire, the small town of middlewich — squeezed middlewich right now. costs are only going one way. at the local cafe, new menus arrive, reprinted with rising prices, reflecting rising costs. like the economy generally, they had been recovering strongly out of the depths of covid, but now the clouds of inflation loom. it is part of a growing economy, but at the moment, it feels like absolutely everything is going up.
like, there's no relief. and a big amount, rapidly. i'm sure before, you'd never really notice the jump, jump, jump, but now it seems to be this, this week, it's something else the week after. that reflects this morning's economic data, showing the good news that the economy grew over the first quarter of the year, finally making up all the lost economic ground during the pandemic. but dig down into the start of this year, and all that growth happened injanuary. february was flat, and by march, the economy was shrinking, as consumers held back from big ticket purchases and making journeys using increasingly pricey fuel. and that has further raised recession fears among economists and calls for further and faster support. i'm completely aware of what the challenges that people are facing... you say you're aware. but are you really taking the action right now that's needed by so many millions of households? we've taken significant action already, but what i've always
said is i stand ready to do more. and every week that's gone on since the spring statement, we're learning more about what's going on in the economy... you've got enough information now, chancellor. you know it's going to go up £500 or £600. direct debits are already going up. and that's why we provided £9 billion to support them with that increase in the energy price. but this is really important, i've always said i stand ready to do more as we learn more about the situation. as you learn more, are you looking again at the case for a windfall tax on the oil and energy companies? what i want to see is significant investment back into the uk economy, to supportjobs, to support energy security, and i want to see that investment soon. and if that doesn't happen, then no options are off the table. if only the growth we've seen in the first three months of this year could extend to the whole of 2022. but this covers russia's invasion of ukraine, the latest major economic shock to be layered upon others, such as the hangover from the pandemic, now a fall in sterling, and the possibility of a trade war between the united kingdom and the european union over northern ireland.
0n the outskirts of this town, an industrial estate, another small family business trades dinosaur models and toys with the world. we're trying not to go extinct! but sue and mike's business — like the uk economy — facing a series of shocks at the same time. it's taking twice as long to get goods as it used to. it's costing twice as much to actually get them here. at the moment, it's difficult to sell into europe, but not impossible. but if we have issues and we enter a trade war with europe, for example, and they put on more tariffs or financial barriers, then that will have a significant impact on our business. and whether we can continue to sell into the eu, that is a question that we'll have to ask ourselves very seriously. the chancellor is saying today, no government economic package can make all these inflationary pressures disappear. they will continue to cast a dark shadow over the economy. faisal islam, bbc
news, in cheshire. as the energy debate rages in the uk, governments in spain and portugal are taking action to keep a lid on prices. today they will impose a maximum price of a0 euros per megawatt—hour on natural gas used to generate electricity — in force for the next 12 months. that's less than half the current market rate for gas. spain's energy and environment minister has said consumers will pick up the final bill, without giving details of how. spain has already hit energy firms with a windfall tax, allowing it to remove taxes on domestic energy bills. james huckstepp is from s&p global commodity insights where he analyses the gas market in europe. james, in your view is it over the uk to be the same thing? good morning, victoria, thank you for having me. in my view,
the way that they look at the market, we are not trying to prescribe policy here, i'm a market analyst, we are trying to forecast the impact of these policies and i the market concern with these measures is that it can actually exacerbate the wider problem that we have in europe, which is the gas supply crisis. in europe, which is the gas sunply crisis-_ in europe, which is the gas supply crisis. how so? how would a _ supply crisis. how so? how would a policy _ supply crisis. how so? how would a policy to _ supply crisis. how so? how would a policy to try - supply crisis. how so? how would a policy to try to - supply crisis. how so? how| would a policy to try to help people largely make the energy crisis worse?— crisis worse? welcome in the case of what _ crisis worse? welcome in the case of what we _ crisis worse? welcome in the case of what we are - crisis worse? welcome in the case of what we are seeing i crisis worse? welcome in the case of what we are seeing in spain and portugal, this is, as you say, essentially a subsidy on the price of energy for the end user, is going to lower bills and we definitely understand why that is needed at the moment to address the affordability crisis. but, ultimately, what that does for our forecasts is increased demand, it displays investment in alternatives and investment
in alternatives and investment in renewables and heat pumps and hydrogen and the other things that we need in order to reduce our reliance on russian gas, ultimately. and that is our concern, that this will, in some ways, exacerbate the problem, it will increase prices elsewhere and that's why we can't really see these types of subsidies right across europe if we really want to lower our reliance.- lower our reliance. now, vladimir _ lower our reliance. now, vladimir putin _ lower our reliance. now, vladimir putin has - lower our reliance. now, | vladimir putin has talked lower our reliance. now, - vladimir putin has talked about the energy market and called it the energy market and called it the weaponisation of energy, eu nations pulling away from russian oil and gas, but if the eu nations themselves start splitting off and doing their own thing, as spain and portugal are doing now, isn't there a danger that vladimir putin is winning this war on weaponising energy? that is the danger and we definitely need to take a co—ordinated approach here and the eu is attempting to do that, setting up plans to
reduce our reliance completely from russia, over the next five years, but to do that we not only need to reduce demand but also to find alternatives, in terms of supply, so that means investing in our own production, investing in infrastructure to import more gas and other energy commodities from elsewhere in the world as well.— the world as well. thank you very much. _ the world as well. thank you very much, james. - stay with us on bbc news. still to come: can the uk put the years of null points behind it? we take a look at the changing business of eurovision.
forces in ukraine. the white house says president biden is taking steps to address an acute shortage of baby formula that has seen empty shelves and rationing of the product in shops across the united states. it's eurovision this weekend, and while the ukrainians have to be firm favourites to win, british fans have high hopes that at least this year, unlike 2019 and 2021, the uk won't come last. it will all depend on a strong performance from uk entrant sam ryder and his song space man. it is actually quite good. to revive the uk's eurovision fortunes, the industry enlisted a top management company, responsible for the likes of dua lipa and ellie
goulding, to find a star. social media has been key to his success so far. he's of the uk's most followed singers on tiktok, with 12 million fans on the app vick bain is president of musicians' trade body, the incorporated society of musicians here in the uk, she's in cornwall. hello, they. you have been in this industry are really long time. 25 years or so. you know this inside out. why as we have such a strong music seem to get it right at eurovision? basically, we have not done well since the late 90s and, really, that is because i think we had... we have not taken it seriously enough and we have relied on using artists who may be had a profile many decades ago or complete unknowns, so
this time it is different. we were talking _ this time it is different. we were talking about sam and how many followers he has. how influential do you think tiktok might be to his success this weekend? i might be to his success this weekend?— weekend? i think it is absolutely _ weekend? i think it is absolutely crucial - weekend? i think it is - absolutely crucial because he comes from the tiktok world. he has been an artist for at least a decade but never really achieving much success. in lockdown, he started doing covers and, yes, he has become wildly successful with over 12 million followers, the most popular artist to count in the uk and giving us the best chance we have bad in 25 years. ——we have had. i5 chance we have bad in 25 years. --we have had.— --we have had. is there a clear connection _ --we have had. is there a clear connection between _ --we have had. is there a clear| connection between commercial success of eurovision winners to go on and do well in the
wider world or is it seen as something not really cool to be part of? something not really cool to be art of? ~ , ., part of? well, the rest of euro -e part of? well, the rest of europe has _ part of? well, the rest of europe has never- part of? well, the rest of europe has never fallen l part of? well, the rest of. europe has never fallen out part of? well, the rest of- europe has never fallen out of love with your revision and i think for a few decades we have. but i know lots of people love it and i think it was a fantastic move for the bbc to work in partnership with a commercial music company who had real success, as you mentioned in the intro, with finding and nurturing real superstar so finding sam ryder has been a real genius move. [30 has been a real genius move. do ou has been a real genius move. do you think that kind of genius move will mean we will see a turning point in how artists and management companies view your revisions and may our prospects will be brighter in the future? i prospects will be brighter in
the future?— prospects will be brighter in the future? i definitely think so. it is putting _ the future? i definitely think so. it is putting credibility i so. it is putting credibility back into the eurovision song contest and i really think it is a turning point.- is a turning point. how exciting- _ is a turning point. how exciting. i— is a turning point. how exciting. iwill- is a turning point. how| exciting. i will certainly is a turning point. how - exciting. i will certainly be watching. thank you very much. let's see how the asian markets are faring today: quite a choppy week for trade. the big tech sell—off and also we have seen that in riskier assets. some recovery in the asia market. we are seeing some rises in brent crude and it looks like it has been stabilising at that price. this is how the us market closed. some stabilisation, very little
movement between them. you can reach me you can reach me on you can reach me on twitter and you can meet all of the team as well. and before i go, he's probably wondering what i am doing. my reducer, that evidence, it is his birthday tomorrow and i want to say a very happy birthday. ——he is my producer, matt evans. he does a wonderfuljob and he has been doing it for many years. if you like what you see here, it is a result not of me but of mad. we can we count we have been doing it very long time. thank you for your hard work and a happy birthday. a quick reminder of our top story, day 79 of the
water in your claim and the un's human rights council is ordering an investigation into possible war crimes committed by oscar's forces. —— moscow's forces. hello again. we're looking at a fairly windy day today across northern areas of the country, and there's a bit of rain around, as well. this is where the rain's been over recent hours, it's been quite wet in northern ireland. a few splashes from northern england, north wales, but the majority of the rain has been working its way across scotland. it will continue to move its way eastwards over the next few hours, the rain tending to become confined, really, to north—western areas of scotland, where it will be quite heavy at times, quite windy, as well. these are kind of temperatures as we head into the first part of friday morning. so it is a mild start to the day, 9—11 celsius. then for many of us, it's a bright enough start, as well. some sunshine to come for england and wales, but a different story for scotland, where low
pressure will be pushing this band of rain, particularly across northern and western areas. through the day, there should be an improvement with a bit of sunshine coming through across eastern and southern scotland, but perhaps staying quite damp across northern areas, particularly for the northern isles. the rain reluctant to push away. in the sunshine across england and wales, the winds a little bit lighter to the south, and there will be a bit more of that sunshine, so warmer — temperatures reaching 22 celsius or so, but quite cool underneath those windier conditions in scotland with that rain, as well. well, into the weekend weather prospects, well, we have some thundery showers that we are watching to come up from the south. however, saturday should be a largely dry day with sunshine for the majority of the country, given those brighter skies are working in across scotland, and to a degree northern england and northern ireland, as well, we'll see those temperatures climbing a little bit here. 17 celsius or so for glasgow, 17—18 in parts of northern ireland. but it's in eastern england that we will see that day's highest temperatures — up to 22—23 celsius. saturday night time, there probably will be some thunderstorms coming up from the south. now, these are going to be hit or miss in nature. the first batch of thundery showers probably not bringing a huge amount of rain,
but could bring lots of lightning, but, as we get into sunday and then monday, as well, there is a greater chance of seeing some heavier downpours develop over time. still on sunday, there will be some places that stay dry with some hazy spells of sunshine. it will start to feel a little bit more humid in the south compared with recent days. 19 celsius in glasgow, still into the low 20s across parts of the south and east, but then monday, we've got rain or thundery showers that will break out a little bit more widely. some of the rain quite heavy.
good morning, welcome to breakfast with charlie stayt and naga munchetty. 0ur headlines today. a damehood for deborahjames — the podcaster and cancer campaigner is honoured by the queen. ministers are asked to cut up to 90,000 civil service jobs, with the savings earmarked for tax cuts. calls for more money and more staff, as the number of people waiting for adult social care services in england continues to rise. it's getting tense in turin, as the clock ticks down to eurovision 2022. and the uk's entry, sam ryder, is right up there amongst the favourites.