Pile, we will discuss the uks strengthening recovery with daniel alexander, the chief secretary to the treasury. Flying cars have always been the stuff of Science Fiction until now. We will test out this real life Chitty Chitty bang bang. Italy and frances new Prime Ministers are hoping to leave the lead the charge for europes economic recovery. They have Just Announced tax and spending cuts to kickstart their economies. Or more, lets bring on jonathan ferro. Basically, they are trying to get more leeway from europe to try to grow. These guys are doing exactly what they have been brought in to do. For the socialist party in france. Matteo renzi has cut the Growth Outlook for this year. His message to the people is that politicians are going to take the pain as well. Will try to get you some tax cuts in the process. When he auctioned off those shofardriven cars, that is not going to raise much money, but it is symbolic of the direction italy is trying to go in. France, under their Prime Minister, has announced another 11 billion euros in extra tax cuts, which may help some people. It is the budget deficit that is coming after a lot of scrutiny in france. Where are we now . 4. 3 budget deficit. They need to get down to 3 . They got an extension last may to get there by may of 2016. It looks like they are behind. Are they going to hit that target . One of the radio stations said that 3 is still the target. Guys, we have given you a couple of extensions. Get it together. The other thing you have got to look at, eurodollar. Making tots we are cut our deficits must not be swept aside by a euro rate that is too high. How far into the crisis are we . We still have this classic playoff between the ecb and the southern reality. The ecb has tried to give these countries an incentive to reform. Right now, they need you are putting france squarely in the periphery. [laughter] that is where they are. They might not come under pressure from the likes of france is even more dangerous because they have this it has the same problems, people seem to ignore it and france is much bigger. This is no italy or spain. This is france. If you do not push the euro problem down, you could have deflation down the road. What does that do to these targets . It could be well out of their hands. If we fall into deflation, what happens it is still very exciting to leaders,airly young the new Prime Minister of france and matteo renzi, trying to get the act together for these countries. Renzi is the youngest Prime Minister, fairly young, 38. 38 is fairly young. Very diplomatic, jon ferro. Going back to the bond market, this crisis is not over. It is not about the bond market anymore. The markets think it is over. 25yearold, young, in any of these countries and you have been unemployed for a long time, that is the story. Jamie dimon gave an interview and he is very worried about france. He says it is the young entrepreneurs. This is the potential to move from an economic crisis to a social crisis and that could potentially be more dangerous for years to come. As we have just been mentioning, greece may return to the bond market today. And absurd this after absence of more than four years. David tweed is in berlin with the story. So what is the plan . We are still waiting to see this. Yet. Not in the market i am surprised about that. The people that we have been speaking to, they were planning to go ahead with the bond sale today. Notes. Ar i have just seen a note from commerzbank saying they might be able to yield below 5 , which would be interesting. Getother thing is, if they good demand, they could potentially increase beyond 2 billion euros. It is interesting what is going on though. Reece is cached up it has that bailout money. This would be a loss like putting this would be almost like putting something up there and saying, this is what we would do. The Prime Minister wants to tell the people of greece, look what we have managed to do. We have Foreign Investors buying our debt again. Vote for the coalition in the year in in the european elections. Angela merkel has just been speaking. She says that the euro crisis is not yet resolved. It is interesting. What guy was saying is what Angela Merkel was talking about. If you look at the terms of unemployment and youth unemployment, the European Crisis is not resolved and will not be resolved until we see those rates coming down. She did have a few words to say about the need to complete a Banking Union. Wasalso mentioned that she impressed that a Banking Union has gotten so far, so fast since its inception. She had a few words to say about the situation in the ukraine. She is very concerned about. The eu needs to remain firm with its sanctions should russia violate the ukraine. She does not go much more into it than that. Thank you so much. David mentioned the situation in ukraine. Is meeting with his government to talk about the situation there. They may discuss potentially halting gas supplies to the , a serious development. Ryan chilcote joins us for the latest. The ukrainians are not going to buy gas, at least in the month of april. That is according to ukraines Energy Minister, who made those comments about 20 minutes ago. Very interesting. He says ukraine does not agree with the price that gazprom is offering. That price has gone up 80 for the month of april. They did not pay for march anyway and they do not agree with the price. They will get their gas from the europeans. The funny thing is, the russians were just about to meet in about three hours from now. One of the contingencies on the table was to turn off the cap. The tap. Is this the ukrainians getting ahead of the russians here . Before there are any supply disruptions, we do not want that gas anyway. We do not need it. It can turn nasty very quickly. This is not the first time we have seen a dispute with russia and the ukraine over gas. How likely is it that they will go with europe . In 2006 and 2009, the socalled gas wars were important, not just because you had a disruption of supply between russia and ukraine, but a disruption of supply to western europe. Is that going to happen this time . There is no reason ukraine would want to take any of the gas that is transiting from their country down for western europe. A think that there is enough that they can get reverse flow from places like slovakia if the slovakians are invited if the slovakians provide it to them. There is less gas coming out of that pipe from russia, you have got to be a little concerned. We will wrap it up there. Thank you very much. The latest from ukraine. Apparently one of things behind the chelsea goal last night. Just putting it out there. Toyota is recalling more than 6. 5 million cars globally, adding to nearly 2 million prius models recalled in february. Lets get to craig to break it down for us. This sounds like a big number. It is an awfully big number. Is alsof it comprised of five different campaigns that have been lumped together. Within those campaigns, there are some big numbers. More than one million each, in some cases. This is the second biggest recall for terry at a four toyota for toyota. In 2012, they had more than 7 million that they recalled, including camry and corolla, which happened to be some of the models they are recalling today. To add some context to another recall situation that is very much top of mind in the Automotive Industry, gm is under a lot of heat for its ignition switch recall. That is a little over 2. 5 million. This is more than twice that size, obviously. Does toyota have a problem with the quality of its vehicles or is it Something Else . Well, it is never good to have to fix an issue and bring a car back. Definitely, not all recalls are created equally. Some of these recalls are for things like seeds seats, the lever for pushing the seat back and forth is maybe worn down a little bit. This is not a level of gms recall, where they have an eight nation switch that is linked to 13 deaths. For is certainly worrisome the president of the company. It is also may be reflective of a change at the company, which is to get out in front of issues that could blow up in their face rather than sweeping them under the rug and getting into the trouble that they did when they had all of those recalls related to sudden, unintended acceleration of their cars in 2009 and 2010. Thank you so much. Up, top of the pile. The imf says the u. K. Will outpace the rest of the developed world in the year ahead. We will discuss britains economic bounce with the chief secretary to the treasury. The focus of europes debt problems is moving from the periphery to the core. Pledging spending cuts to revive their economy. This the day greece is returning to the bond market. Angela merkel this morning said that the euro crisis is far from over. Would you agree with her . Certainly. Ahead. Re still risks france is one of the big risks. The lack of competitiveness for the french economy. Countries like italy and spain in france, they are not. We have the low growth issue which is abundant. Will that change with the new Prime Minister . He is a lot more centrist. He will unveil the new budget in the summer. He seems to be on top of the reforms that france needs. That is right. The land is still out of the story too. Hollande is still out of the story too. Markets will give him the benefit of the doubt. They seem to have the view that if there is a real problem, thewill fix it in market thinks this is all over. That is because draghi has convinced them that he will do whatever it takes. Some magic dust that he has. Government bond yields, junk rated. Obviously, the inflation story is different. Something that needs to be addressed. Think the issue is you have like 70 Million People now living in deflation. Tax is that material in that materially impact things. Mario draghi will do whatever it takes. That is right. Look at what he has done in two years. What did that look like . What do you have to deliver . He needs to deliver a quantitative easing scheme. Be back to theot assetbacked market until later this year. I would love to see him do it, buying offshore bonds. Oneou are not the only saying it. Dimension thats they agreed not to do. I am excited about italy because i am anatolian citizen and it is excited seeing a 38yearold trying to shake things up. Is he going to make it . Is he going to be able to deliver the reforms that finally put italy on a real growth path . I do not know the answer to that. At least they are trying. They did not have the markets attack them like they attacked countries in spain and italy. It is going to make it tough. Ot said that their most efficient plant is now in spain. When they are saying things like that, it is not good. Talking about the fed, if we might, i was just looking through this morning, u. S. , inflationreakevens expectations. Belief that the u. S. Economy is gaining traction and the fed will be changing doing, why are breakevens what they are doing . That could be the reason why, inappropriate policy. Our view is that the recovery is not really gaining traction. Lines thating bottom look good, but corporate are not investing. Books,e tweaking the costcutting and so on. They cannot do that forever. Is going to be an issue Going Forward. At the same time the fed is unwinding qe. U. S. Stocks, i could see them spilling over the cliff and that will hit capital wealth and spending. That will be a new hit for the u. S. Economy. You are worried about the recent data that we have in housing and manufacturing in the u. S. . Yes, i think. Payrolls is that not the weather . The weather was very supportive of payrolls late last year. November numbers were very strong. I think we are getting some payback for that now. The economy never really accelerated much at the end of last year. Based the beginning of tapering on that. In five years, are we going to have an inflation rate that in the United States . I would think so, yes. That is a nogrowth environment that we are talking about. It is falling. Me trajectory is not telling that we are looking for stellar growth. Spending,the core housing, energy, there is inflation there. Very low price gains or even negative prices are we going to see any wage growth . Since 2007, if you take out what people spend on necessities, there is no growth at all in discretionary, disposable income. Previous levels were running at 3 per year. When does the focus shift to the supply side of the economy . Orders. At durable goods defense and aircraft down 2 annualized. Annualized the previous six months. Businesses are not investing. It was the point i was making before. It is just costcutting. Thank you so much for that. Senior economist at west bank. , the u. K. Wille outpace much of the developed road. We will discuss it with danny alexander. He is speaking down stairs as we speak. He will be up shortly. Good morning, everybody. Welcome back. You are watching the pulse. Forecastas raised its for the u. K. Economy for the second time this year. Recovery andng the is it sustainable . Lets talk to danny alexander, the u. K. Chief secretary to the treasury. Good morning. Aboutlk this morning seeing the first ray of sunshine when it comes to the british economy. Ae imf has had confrontational relationship with the u. K. Over the last few years. You guys have got to be happy right now. Please tell me there are guys doing little victory laps around the auditorium of the treasury. [laughter] i do not think diana has been confrontational. They have made their points along the way and been very supportive. Of course, i am very pleased about the forecast that we saw yesterday. Raising their growth forecast for the current year to 2. 9 , doubling compared to the forecast that they had a year ago. That is in line with other forecasts and reflects that we are now seeing a strong recovery underway in the u. K. But i would be the first to say that we still have a long way to go as a country. We have got to continue to stick to the plan that got us this far. We have got to take steps to encourage Business Investment, improve productivity in our economy. Like havingchanges, a more advantageous Corporate Tax system for businesses to invest in the u. K. , longterm plans for investing in infrastructure and skills, these are things that have to be sustained for long periods of time to change the game of our economy. I am encouraged. When wewe were right say that our huge financial problems require strong action and difficult decisions. Frankly, we still have a long ways to go. A half this year compared to 2010. We are seeing unemployment growth, but we require further steps in the years to come to make sure that we continue to become a country that can live within our means and balance our budgets. After that, that we get our debt down as a share of gdp. The sustainability question is critical. Thatense at the moment is the u. K. Recovery is being led by the demand side of the story. Need to fix the supply side as well, raise productive Growth Potential of this economy. You have put certain measures in place. Is that broad analysis true, that it has been demand driven . Recovery overry the years has been initially driven by expense. , forwe have been doing example, in the budget a few weeks ago, is to say that we have that Business Investment. I think a lot of investors we have been taking have been designed to do that. Getting our Corporate Tax rate the, the most attractive in g7, that is an important tool for investment into this country. Want to invest in plant and machinery over the next few years, we are bringing Forward Investment and have plans just for the oil and gas sector, the renewable sector, to get our infrastructure going. These are always we have invested into our economy. Recent figures have been more positive. There is a long way to go. As have the recent figures on productivity. We need to see sustained improvement. When do you think the balance shifts from one to the other . How much more demand are we going to need to sustain the recovery before that starts to kick in . It is starting to kick in now. If you look at the forecast published by the office of fiscal responsibility, they see inonger Growth Investment this year and the years to come. Exports are also important. When he new markets. Inning new markets. How much more of a demand push are we going to have to see before that happens . Forecast is that we will see stronger elements of Business Investment driving our recovery forward this year, next year, and beyond. What i am saying to you is, as a government, we are not risk resting on our laurels. Theyre making decisions to make the u. K. More attractive to investment. The u. K. Is now one of the most attractive places to invest in the whole world. Air has never been a better time to invest in the u. K. Than right now. We are continuing to do whatever we can to make it more attractive. Do you think a growth of the toprated tax would make it more attractive . I do not. From 50p tong down 45p, we put ourselves in the middle of the pack in terms of higher also have to make sure tt our tech system is fair. We have to make sure that as we are going through this, that the burden of that is shared across society. In particular, the wealthiest are making the largest contribution. I dont support that. I wouldnt support it in this parliament. I think it is better for us to focus on further tax cuts for working people. Really working to make sure the tax environment for businesses to invest is as attractive as possible. One quick question before i let you go. Doe supporting those you think that will deter investment into the u. K. . If you regard u. K. Housing as an asset, people are investing into britain. Maybe the mansion tax would discourage that. I dont think it would discourage proper investment into the u. K. Many other jurisdictions in new york, hong kong, frankfurt and paris have property taxes that apply to higher valued properties. What im suggesting is there should be additional bans on the system. At the moment a house worth 700,000 pounds pay the same tax as a house worth 70 Million Pounds. That is an anomal