tv World Business Report BBC News May 31, 2022 5:30am-6:01am BST
this is bbc news with the latest business headlines for viewers in the uk and around the world. the european union agree on further sanctions against russia, but holds off on a total ban on russian oil. caught in a bind. how rising prices are forcing small business to make hard choices. a special report from india. would you rent rather than by your t—shirts andjeans? well, several uk retailers seem to think so we'll explore the phenomenon of fashion rental.
european union leaders have agreed a compromise plan to block more than two—thirds of russian oil imports. european council chief charles michel said the deal cut off "a huge source of financing" for the russian war machine. he added that it put "maximum pressure on russia to end the war". european commission president ursula von der leyen praised the deal. i'm very glad that the leaders were able to agree in principle on the sanctions package. this is very important, thanks to this council should now be able to finalise a ban on almost 90% of all russian oil imports by the end of the year. joining me now is janet mui, investment director, brewin dolphin. yesterday the oil price was up around $120 a barrel.
what will this do to relieve the pressure on the oil price? this will incrementally support the oil prices, of course we also have the story that china is reopening shanghai so that will also put pressures on oil price. i think so far the supply from russia will be diverted to asia, for example india being potentially the biggest market for these russian oil so some of that wouldn't be huge in the near term because the overall supply wouldn't be changed that much but actually the revenue for russia would decrease because asia is buying russian oil at a huge discount versus the global oil prices so overall russia would be losing $10 billion a year of revenue because of this proposed and. 50 year of revenue because of this imposed and-— proposed and. so a general loner proposed and. so a general longer gets _ proposed and. so a general longer gets to _ proposed and. so a general longer gets to get - proposed and. so a general longer gets to get slightly l longer gets to get slightly cheap russian oil but where do
customers now go for their oil? how do they feel their homes and factories?— and factories? first of all, the pipelines _ and factories? first of all, the pipelines are - and factories? first of all, the pipelines are still- the pipelines are still delivering oil, this is not and yet. that will be one third of the current import of russian oil. across the incremental loss would have to be shipped to other nations, for example from 0pec countries and the us for example, and of course oil isjust one of for example, and of course oil is just one of the energy sources that can generate power, so there are also other sources such as gas which is not banned and there are also other sources like renewables, for example wind and solar but of course incrementally that will be negative on the supply of energy to europe.— will be negative on the supply of energy to europe. looking at the wider picture _ of energy to europe. looking at the wider picture here - of energy to europe. looking at the wider picture here do - of energy to europe. looking at the wider picture here do you . the wider picture here do you think it is likely that some of the opec countries, saudi in
particular, might start ramping up particular, might start ramping up some of its production and releasing a little bit more into the bucket because they have so far been very, very quiet on this issue of russian oil and the market more generally. oil and the market more generally-— oil and the market more generally. oil and the market more aenerall . , ~ ., generally. yes, i think we have to see how _ generally. yes, i think we have to see how it _ generally. yes, i think we have to see how it goes _ generally. yes, i think we have to see how it goes this - generally. yes, i think we have to see how it goes this week i to see how it goes this week for the opec countries. i think there are some expect patient that the opec countries including saudi arabia of course will pump more oil but not substantially more. they will pump more because the oil price is getting more attract, but equally i think increasingly global leaders are concerned about the risk of a recession and of course slowing down growth already so i wouldn't think that they would pump a lot of oil at the time when global growth is slowing but incrementally more, probably yes. but incrementally more, probably yes-_ but incrementally more, probably yes. but incrementally more, robabl es. . , . and of course if we do get a
lower oil price that will help with fuel prices as well which is of course part of what is going on around the world in terms of inflation. prices in the uk are rising by 9% a year, the highest rate for a0 years, and later today we'll find out whether inflation in the eurozone is continuing to rise — it's already at a record high of 7.4%. on monday, german inflation hit 8.7% in may, putting growing pressure on the european central bank to act and raise rates in july. joining me now is christian schulz, economist at citi. good to see you. how much pressure is inflation putting on the eu project? well, the inflation rates are a big problem for consumers. first of all wages are rising but perhaps 2% or 3% per year
and prices are rising by 8% per year so in real terms, people's incomes are falling sharply. that is a problem and we see that in political terms and in various elections, incumbent governments are under pressure to do a lot and if they don't deliver enough to households, that becomes problematic. so far we haven't actually seen elections turning in a very unexpected way, the french elections were not annexed to, so i don't think there is immediate pressure but clearly it drives what governments are doing including, you had the story earlier today on the sanctions, governments are wanting to protect their consumers against a big spike in oil prices and that is why they are a bit cautious about shutting off supplies of oil and gas. shutting off supplies of oil and as. �* . ., , and gas. and certainly pertinent's _ and gas. and certainly pertinent's aim - and gas. and certainly pertinent's aim had i and gas. and certainly i pertinent's aim had been and gas. and certainly - pertinent's aim had been a sort of divide and conquer when it comes to russian oil and gas because everyone is affected
slightly different across the eurozone on that. i want to talk to you specifically about germany. inflation then there a 50 year high, we are talking at levels we haven't seen since the country was reunified after the country was reunified after the fall of the berlin wall. what impact is this having on european supply chains? well, first of all, inflation in germany for households is something that we are not used to. other countries have much higher inflation traditions so the record levels we are talking about in germany may be the highest in 40, 50 talking about in germany may be the highest in 40,50 years, thatis the highest in 40,50 years, that is not something you would see in italy orfront that is not something you would see in italy or front where such inflation is a more recent and that means it is more concerning for people at the moment but germany isn'tjust hit by households and i think you are right to point that out. it is very much involved in the global manufacturing supply chains. we can see that input costs for companies are rising very fast and to some degree they can pass that on to their customers, customers
abroad and their customers at home, but the more households are squeezed, the more difficult companies will find it to pass on these costs and thenit it to pass on these costs and then it squeezes their margins, squeezes their profits and if it stays like this, they are going to have to cut costs somewhere else in order to maintain profits and that is ultimately going to mean fewer jobs, lowerwages ultimately going to mean fewer jobs, lower wages and then we get the kind of counter if you like. ., ., ,., get the kind of counter if you like. ., ., ., like. you mention some of the mediterranean _ like. you mention some of the mediterranean countries, - like. you mention some of the mediterranean countries, you| mediterranean countries, you mention spain for example. spain also talking estimates when it comes to inflation stopping just how entrenched you think inflation currently is in the eurozone? it you think inflation currently is in the eurozone?- you think inflation currently is in the eurozone? it is not as entrenched _ is in the eurozone? it is not as entrenched as _ is in the eurozone? it is not as entrenched as it - is in the eurozone? it is not as entrenched as it is - is in the eurozone? it is not as entrenched as it is say i is in the eurozone? it is not as entrenched as it is say in the us in the uk. we can see that wage growth isn't as high. it is certainly not as entrenched as it is in the 19705 entrenched as it is in the 1970s in a period that many people compared to what's going on at the moment when we came out of the bretton woods system and people had a much less
anchored inflation expectations than they do now but the risk is we will see the second round effects, labour markets in europe are also tight, wage growth will be picking up and that then threatens a wage price spiral i think in europe we are still in the very early stages of the sender can still be nipped in the bud but it is still certainly something that the ecb cannot ignore and therefore it is going to raise interest rates.— interest rates. thank you so much for — interest rates. thank you so much for your _ interest rates. thank you so much for your time - interest rates. thank you so much for your time and - interest rates. thank you so| much for your time and your analysis. let's get some of the day's other news. india has a new number one trade partner. according to data from india's commerce ministry, trade with the us amounted to some $119 billion for the financial year ending march 2022. for the same period trade with china stood at about $115 billion. china was previously india's
biggest trading partner. and before we go, an update on the price of bitcoin — the world's largest cryptocurrency is trading at about $31,600, up by over 7.5%. it's been a turbulent year for bitcoin which has seen its value consistently tumble. bitcoin was trading atjust over $25,000 earlier this month. that's less than half of the value of its peak from november. china's factories still struggled in may, but the slower pace of contraction suggests that the worst of the current economic fallout may be coming to an end. joining me now is duncan wrigley, chief strategist at everbright securities international. is the world going to swerve a global recession if china's factories pick up the pace? yeah, ithink yeah, i think that china's
factories are going to pick up the pace, the most intense part of the slowdown was in mid april and since then, policy has gradually shifted as the various outbreaks were under control, especially in shanghai and elsewhere, shifted from virus control to economic resumption, that's where we are at now and the government is readily adding policies to support domestic demand, investment and consumption as we go forward. the investment and consumption as we go forward-— we go forward. the chinese government _ we go forward. the chinese government faces - we go forward. the chinese. government faces something we go forward. the chinese - government faces something of a cash crisis, doesn't it, a growing shortfall because of 0micron and the measures that it introduced to stymie it. how much of the incoming stimulus measures that we are seeing from the government are going to be swallowed up byjust filling this black hole? to be swallowed up by 'ust filling this black hole? yeah, a aood filling this black hole? yeah, a good part _ filling this black hole? yeah, a good part of— filling this black hole? yeah, a good part of the _ filling this black hole? yeah, a good part of the stimulus l a good part of the stimulus measures are aimed directly at keeping a lot of companies
alive, a lot of very small individual companies serving consumers, obviously were very hit as well as the supply chains so a chunk of the fiscal spending is going to think like vat rebates in that kind of thing but there is also a large chunk of also trillions that are aimed at spending on things like infrastructure projects and supporting consumption stop car sales, appliances, to get the economy going again and i would say right now actually that the amount of government spending has been below a lot of market expectations. i think the government is being relatively conservative compared with some expectations or maybe it is taking a phased approach to say that right now we're going give this much is the economy, as output starts to resume, we will take another temperature reading to see how much support is needed in the months to come. £31 much support is needed in the months to come.— much support is needed in the months to come. of the past 20 ears or months to come. of the past 20 years or so _ months to come. of the past 20 years or so china _ months to come. of the past 20 years or so china has _ months to come. of the past 20 years or so china has very - months to come. of the past 20 years or so china has very much | years or so china has very much been the biggest and most
reliable source of growth in the world economy. how much danger do you think china is in at the moment? i danger do you think china is in at the moment?— at the moment? i that this ear, at the moment? i that this year. china _ at the moment? i that this year, china will— at the moment? i that this year, china will struggle i at the moment? i that thisj year, china will struggle to get towards its targeted growth of 5.5% without substantial further support and that may well be coming, but nonetheless, there is no doubt that this year has been a year in which china's priorities of maintaining public health, in the sense of containing the coronavirus has been balanced against growth and there has been some back—and—forth. i think once we get into next year, especially once a lot of the vulnerable population, the elderly population get vaccinated, triple vaccinations, i think china will have the ability to kind of resume much more of a kind
of resume much more of a kind of normal economic growth that we have seen in the past. i guess we willjust have to wait and see what we, thanks very much duncan. stay with us on bbc news, still to come: would you rent rather than by your t—shirts and jeans? well, several uk retailers seem to think so we'll explore the phenomenon of fashion rental. the queen and her husband began their royal progress to westminster. the moment of crowning, in accordance with the order of service, by a signal given, the great guns of the tower. tributes have been paid around the world to muhammad ali, who has died at the age of 74. outspoken but rarely outfought, ali transcended the sport of boxing, of which he was three times world champion. he was a good fighter. he fought all the way to the i end, even through his illness. yes, he did.
uefa imposes an indefinite ban on english clubs playing in europe. today is the 20th anniversary of the release of the beatles�* lp sgt pepper's lonely hearts club band, a record described as the album of the century. this is bbc world news, the latest headlines: european union leaders have agreed on a sanctions plan to block more than two—thirds of russian oil imports. european football's governing body, uefa, has commissioned an independent inquiry into the chaotic scenes that delayed saturday's champions league final in paris. to japan now, where eight
carmakers' global production dropped by a combined 21% in april, compared to the same month a year ago. monica miller is following the story from our asia business hub in singapore. should hub in singapore. we we —— should we be worried should we we —— should we be worried about this? should we we -- should we be worried about this?— worried about this? these companies _ worried about this? these companies are _ worried about this? these i companies are experiencing worried about this? these - companies are experiencing deja vu since the shutdown is taking place between mark and itjust goes to show you the rest of the world is feeling its aches and pains as the covid—19 lockdowns in china had continued. car parts of the tough thing to get because of these factories in places like shanghai had been closed down again for two months, also shipping has been a logistical nightmare for companies trying to assemble these cars in japan. honda suffered the largest year decline at 54% in april, followed by mr and mitsubishi, only subaru saw
outputjumped by 63%, in comparison to the sharp decline they saw last year at this time in april 2021, the numbers we are comparing because the company had to cut production at home and abroad. toyota did had to suspend production until the end of april is its passenger car plant in the north—east of china was shut down due to covid—19. even though these lockdowns are expected to live tomorrow, analysts are being incredibly cautious, they say they are still grappling with the global, semiconductor crunch, and it has also been a delay on these manufacturing numbers, and until all the supply chain disruptions are ironed out, we should expect more volatility in this space. some breaking news, i wonder whether they were listening to
our broadcast in china. the chinese cabinet has unveiled a series of new policy measures for the economy boosting it they say stabilising jobs, including acceleration of local government special bond issues, just as we were talking, to cover the cash shortfall, they are issuing more debt looking to fund some of this through debt, and cash support for firms to hire college graduates. thisjust firms to hire college graduates. this just coming to us in the last minute or so, tax credit to allow firms and industries hard—hit by the curbs to, for covid—19 to defer social security —— social security payments. this had been flagged on a routine meeting last week, thisjust coming into us now, we will see what effect that has on the asian market, while they are still trading. india's economic growth
figures for the period january to march will be revealed later. even though the economy is expected to continue its slow recovery, many sectors are still struggling. archana shukla has more from mumbai. it is still dark times for india's small industries. the steel used in making these everyday utensils now cost nearly 1.5 times more. prices of other raw materials and manufacturing processes have gone up as well. this has drain profits for small factories like this one in the mumbai suburbs. it meant making hard choices. they have to cutjobs and limit production. it is difficult to _ and limit production. it is difficult to operate - and limit production. it is difficult to operate a - and limit production. it is difficult to operate a fulll difficult to operate a full eight hour shift so we shut early. we sent high—power staff back to their villages. raw material prices need to
stabilise, volatility affects our market mall. ~., .. our market mall. manufacturing units like these _ our market mall. manufacturing units like these not _ our market mall. manufacturing units like these not only - our market mall. manufacturing units like these not only ones i units like these not only ones affecting the economic growth of india. even though they have seen some business recovery that hasn't been a proportion of growth in the jobs market. coupled with rising prices of everyday goods has affected the ability of people to spend. india's consumption driven economy, consumption is suffering and travel and tourism is recovering from the pandemic. india needs fresh investment to support growth. there are lots of plans on and fall, try to kickstart investment. so the government has set aside a lot more money than before. 0n capital expenditure, roads, railways, ports. that's one good part.
unfortunately our track record on execution of these reforms has been missing. as things stand i'm not holding my breath this will happen. the stand i'm not holding my breath this will happen.— this will happen. the largest employer— this will happen. the largest employer agriculture - this will happen. the largest employer agriculture has - this will happen. the largest | employer agriculture has had this will happen. the largest i employer agriculture has had a good harvest so far. but rising labour costs and unpredictable weather patterns could cast a dark cloud on growth moving forward. while it's always been possible to rent a ball gown, tuxedo or a fancy—dress costume, rentalfirms are now chasing the market for everyday wear. maybe working from home where. in the uk high street, retailers like marks and spencer and john lewis have recently teamed up with rental websites to offer ranges. and as the cost of living continues to rise and circular fashion becomes mainstream, more consumers who are looking to save money and possibly
the environment are sizing up where they can rent from. joining me now is nina van volkinburg, from the london college of fashion. thank you forjoining me. is this the future of fashion? absolutely, when we think about the rental sharing economy, the value is not then owning that dress and keeping it in your wardrobe, it's about wearing it, drawing it, living your best life on it in a way. when we think about renting garments, is the most affordable solution when we think about it, wedding season instead of buying the £400 dress we can rent it for £20 instead. we can about the pacher tally of renting especially with children is close, we have seenjohn lewis partner to rent children's clothing, instead of buying that government for growing baby or child and having to buy
something new a few months down the line, being able to rent it, return it and have something new, freeze up wardrobe space, and also you have that higher satisfaction because when we think about garments, we only have that satisfaction for about two months, and then we start to not be as unloved with that garment anymore. we still have thatjoy garment anymore. we still have that joy enterprise with rental, which is very attractive from a consumer point of view. i attractive from a consumer point of view.— point of view. i hear what ou're point of view. i hear what you're saying _ point of view. i hear what you're saying and - point of view. i hear what you're saying and you - point of view. i hear what you're saying and you are point of view. i hear what - you're saying and you are into yourfashion and you you're saying and you are into your fashion and you do you're saying and you are into yourfashion and you do it you're saying and you are into your fashion and you do it for a living, i asked people on twitter, not a very scientific goal, whether they would go for this and do this. for your everyday clothes, t—shirts and jeans. 91 said no and only 9% said yes. purpose is the case and this is a straw poll, we do think this might do well, as this model market for cost conscious parents and children's close. i think
that's a _ children's close. i think that's a huge _ children's close. i think i that's a huge opportunity children's close. i think - that's a huge opportunity but people are desperate to have some more self expression, when we think about our instagram and social media coal, it's about presenting something new, your identity in the rental market is expected to be worth 7.5 billion x 2026. i’m market is expected to be worth 7.5 billion x 2026.— 7.5 billion x 2026. i'm trying to impress _ 7.5 billion x 2026. i'm trying to impress people _ 7.5 billion x 2026. i'm trying to impress people on - 7.5 billion x 2026. i'm trying to impress people on my - 7.5 billion x 2026. i'm trying i to impress people on my social media, probably not doing it in my tracksuit but a high—end garment. is there a market for lower value items given the higher cost to business of delivery and ordering them? excellent point but when we think about the market for children, in particular about growing bodies, different needs, being able to spend £20 a month, and have an endless access to a wardrobe, then a few pieces, and having to rely on them, and them sitting in your wardrobe.
on them, and them sitting in yourwardrobe. i on them, and them sitting in your wardrobe. i think currently there is a market for pieces that are a bit more flamboyant. i pieces that are a bit more flamboyant.— pieces that are a bit more flamboyant. i hope you are riuht. flamboyant. i hope you are right. nina. _ flamboyant. i hope you are right. nina, thank- flamboyant. i hope you are right. nina, thank you - flamboyant. i hope you are right. nina, thank you so l flamboyant. i hope you are - right. nina, thank you so much for your time. that is the end of our programme. hello there. the week has started with plenty of heavy showers. the big question mark is around how many of those heavy showers will remain by the end of week for the platinumjubilee. we will talk more about that in a moment, but we start with a look back at the recent satellite picture. shower clouds rotating on top of the uk, underneath an area of low pressure, which stays with us through tuesday, so there will be further showers — this frontal system being the risk of more persistent rain in northern ireland. quite a chilly start of the morning and there will be some spells and sunshine around, but some showers from the word go. and those will develop quite widely into the afternoon and some will be heavy, some will be thundery. parts of wales in the south—west could dry out a little bit towards the end of the day. sunshine — 17 degrees
for cardiff and plymouth. cooler for the north and 12 in newcastle. 11 for aberdeen. and this band of cloud will bring some rain across northern ireland through the evening. that then moving to the irish sea, across the isle of man, and south—west scotland, as well north—west england and parts of wales, as we head into wednesday morning. elsewhere, some clear spells and one or two showers on wednesday, again, getting off to a relatively chilly start in some places. no prizes for guessing — wednesday is another sunshine and showers day, but the showers increasingly will become focused across central and eastern parts of the uk. 0ut towards the west, not as many showers, more in the way of sunshine. and with more sunshine, generally, temperatures will be a little bit higher — 17, 18, maybe 19 degrees. then, getting into the start of the long weekend, for thursday on the face of it, things don't look too bad, plenty of sunshine, one or two rogue showers. this cloud in the frontal system does threaten to introduce some rain into northern ireland to the afternoon. where we do get sunshine, it will be warmer.
temperatures between 18—21 degrees. some headaches then on the forecast for the weekend. this frontal system pushing up to the north—west. this broad low to the south could throw some into southern england by the world as we had to saturday and into sunday. the big question mark is about how many showers we will see. the chance is certainly there. that said, it should often be dry and where we see some sunshine, it will feel fairly warm.
good morning, welcome to breakfast withjon kay and sally nugent. 0ur headlines today. the cost of living crisis in the classroom. teachers call for more children in england to be given free school meals to stop them going hungry. european football's governing body announces an independent investigation into the chaos that marred the champions league final in paris. half term holiday nightmare. more than 30,000 people have faced cancelled flights as airport disruptions continue. why's it happening? and what are your rights when things go wrong? andy murray, who survived the dunblane attack, tells us about his shock at the latest school shooting in america.