Lets begin with europes deflation by lemma. Consumer prices for the eurozone are at the top of the next hour. Our International Correspondent hans nichols, joins us now with more from berlin. It looks like draghis case for quantitative easing will be bolstered. Thats what we expect. If inflation does come in at 0. 1 draghi is going to have another argument for why he needs to start purchasing government bonds. On friday, we get consumer confidence. This is more the german case, the german theory of economy that most of inflation in decrease is largely due to the price of oil, which dropped over 50 in the last year. When we combine those two, the germans are saying you have a stimulative effect. This is Jens Weidmanns view of the world. He wants to see how Lower Oil Prices are affecting consumer confidence. Then he can say, im finally comfortable with quantitative easing. How long can the european economy weight . It doesnt look like the ecb is willing to wait. Even if we look at the core inflation, the number Jens Weidmann would prefer, it is still at 0. 7 . Still far below that 2 goal. Does he have what he needs to convince the germans that now is the time for qe . You know, until negative numbers come in on just what the economy is doing in germany we just saw unemployment cross much better than expected until the German Economy release hours, i expect you have not a split decision but a decision at the ecb that isnt unanimous. That is to say, the germans vote against quantitative easing. You have quantitative easing go forward and it becomes the question, how long can you go if you dont have a unanimous decision . The Federal Reserve in the u. S. They were buying 85 billion in assets a month and their Balance Sheet grew to 4 trillion. The big question on quantitative easing, not just the when question, but how big . When we get to that point unanimity and the cohesiveness of the ecb does matter a little more. All right, thank you so much. Now that january 22 date that is when the greeks go to the vote. That has whole other implications for mario draghi. The consensus seems to be that they announce it but dont give the details. That allows them not to buy greek bonds. Lets put out our twitter question of the day. Are you scared of deflation . Data out in the next hour provides me with an answer to this question. German unemployment at a record low, italian unemployment at a record high. If you are a italian, you probably are scared of deflation. If you are german, probably not. Let us know what you think. The german chancellor, Angela Merkel, is in london today. She will meet with british Prime MinisterDavid Cameron this afternoon. Ryan chilcote is outside number 10. Immigration likely to be one of the big discussion points. Absolutely. Members of the german delegation that weve been talking to in the lead up to todays meeting have said that the german chancellor is prepared to offer a compromise. She wont budge on the idea of a number of movement within the European Union, but shes prepared to offer support for the idea of curtailing migrant access to Welfare Benefits when outside of their home country within the European Union. The question is, is it enough to satisfy the british Prime Minister . Hes under a lot of pressure. Conservatives would like to see migrants be disallowed from getting benefits for their first four years outside of their home country. Is the german chancellor prepared to go that far . We dont know. What we do know is, theyve been very clear that they dont want anything that would allow would require major changes to European Union treaties, particularly the kind of changes that would require ratification or referendum in the Member States. One of the members of the german delegation was telling us, weve laid out our red lines for the British Government. Now we would like the British Government to do just that. The best way to think of this is, the beginning of a dance. It is quite clear that these negotiations are going to be extended. It may be the case that the german chancellor and the british Prime Minister cant indicate how far they get down the road today. Ryan, thank you so much. Lets bring in Alan Crawford the head of european government for bloomberg news. He is also the author of the book Angela Merkel, a chancellorship forged in crisis. She is coming here, not ostensibly as the head of the German Government, but as the head of the g7. But european politics is going to play a big part in this discussion. What message will she delivered to David Cameron . She is consistent and clear that she really wants the u. K. To stay in the eu. She appreciates the british mercantile tradition. She is very much in favor of this global outlook. Thats why there is a Statement Released last night that they both want to push the conclusion of negotiations. At the same time, europe is never far away. She also understands that cameron is in a difficult position. Shes reaching out to him. She wants to try and help him. To accept that hand of help is another matter. Some things maybe you can renegotiate, but there are red lines that she wont go any further. Will that be enough for negotiations to keep the u. K. In the block . That is the ultimate question. At the moment, i get the impression that the germans and the british dont quite understand each others arguments. Merkel is prepared to give cameron some aspect of immigration but i dont think they quite appreciate how toxic the eu debate is in the u. K. I get the impression that nothing would be enough for cameron. He has to be able to tell his party and the country that he has managed to change the eu. Merkel wont give him that. Does that revelation, that realization come at some point for the germans . At that point, does the game change . Is it unacceptable . Is it unacceptable that the u. K. Leaves the eu or is it acceptable at a certain level . If it is unacceptable, the cards the germans are playing are quite weak and they will probably buckle at some point. I think the germans have all the cards. I think that merkel has made it very clear that freedom of movement is a redline. What we understand is that if he chooses to ignore that he doesnt seem to be doing much so far, she cant help him any further. That doesnt mean the u. K. Exits the eu, but beyond that, i dont think she can do much. At the same time, germany needs the u. K. In the block. Thats fair, isnt it . I think the u. K. Needs germanys help more. It depends on your outlook on the eu. The debate in the u. K. Is entirely alien to germany as a whole. Everybody is trying to figure out whether the germans are bluffing on greece. It seems that they are and the germans are going to figure out a way of making that work. You wonder whether you can extrapolate that into the u. K. Story as well. If it really comes down to it theres this realization that we are going to end up with a more unbalanced europe because france plays a much greater role and everybody starts getting concerned about that, then merkel and her coalition start saying, we need these guys. Do you think there is that element being played here . I think greece is one thing and the u. K. Is another. Greece, i certainly think you could we havent heard the final word from the germans yes. They are not going to interfere as long as there is an election going. That would be a massive gamble on behalf of the u. K. , to expect the germans to give more. Alan thank you so much. Alan crawford there. Coming up, more on merkel as shes set to meet David Cameron today. We are going to talk to a key advisor to Angela Merkel. Welcome back to the pulse. We are live on bloomberg tv and radio. Germanys Angela Merkel is meeting with the british Prime Minister today. Topping the agenda, the eu immigration. And of course the state of the eurozone, economic recovery. Lets now talk to Michael Fuchs. He joins us from berlin. He is deputy chairman of merkels party. Good morning to you. Thank you very much indeed for taking the time to be with us today. We have two p. M. Elections coming up in the near future michael. One is in greece, and one is in the u. K. If you are concerned about either of those, which one would it be . It is a difficult question. First of all, i want my friends in the u. K. To stay in the eu. It is very necessary that they are in. I cant imagine europe without the u. K. Im afraid this could happen with ukip but i do hope that mr. Cameron is capable to convince the voters to stay in the eu. Number two greece is the next one to come on the 25th of january f im right. Im a little bit afraid that the socialist party is going to be the winner. What he said prior to the election is not what i like to hear. Weve had reports over the last couple days that the German Government is preparing for a greek exit. Is that true . Is it because one cannot have a plan b, or is the German Government contemplating to let greece go . First of all we dont want to influence the election. One thing is very clear, all the credit we have given with the troika to greece are under certain conditions. If the new government doesnt want to follow the rules which we have agreed with the old one then it will be difficult for us to maintain our promises to greece. It is just depending on what they want to do. It is not on us, it is on greece, the new government which is coming up after the election. If they fulfill what we have agreed with the troika with the measures we have taken, then there will be no change. It is the compact we have made with them to be fulfilled. There is no question. If they are not fulfilled are you prepared to see greece go . You said recently that greece is not systemically relevant anymore. Is that correct . First of all, we want greece to maintain its contracts and to maintain its new systems. It was successful for greece. They are more competitive than they have been in the past years. They had a primary surplus in 2014. Im positive as far as development in greece is concerned. If the new government is pushing back to the old system, it is a different game. It is all up to greece, not up to us. Nobody can throw them out of the eu. We want them to maintain what they have promised to do. If they do so there will be no problem. If they dont, then it is going to be difficult for them. It is the greek government which has to make the decisions. It will be so difficult for us. You think that greece is not systemically important for the euro and we are in a different position than a couple years ago. But this could be a disaster. If they decide to leave the euro, what does it mean for other countries that might vote for extreme parties . First of all, the situation in europe has changed very much. We have esm in power, more than one billion euros available, and we have the Banking Union which is in power. Im not afraid for any other country. But everybody has to know, only with reforms the eu can be successful. It has been shown in ireland, in portugal, in spain, and at his and it has been shown in greece. Im positive for greece if they maintain the reforms. Without reforms, no way. Do you think the troika has done enough for greece . There was a promise, maybe a promise is buzzing it too far but there was a tacit agreement that if greece generated a surplus, there would be more ground given when it comes to debt restructuring. That never happened. Do you think the other side of the table has given enough . First of all, i think the troika has done a lot and we have given them another two months prior to the next part of the loan which has to be paid out. We have given them another two months to do these reforms. It was agreed with mr. Samaras that hes going to make these reforms. Now, everything is on hold. The troika put everything on hold until after the election. We have to see what is going to happen. If somebodys going to cut back on reforms, then we will not pay out any more money to the greek government. Answer me this, how conceivable is it that we have a greek exit . What it be the end of the European Union the eurozone project . I just had some garbling. Can you repeat your question . How likely is it that greece leaves the eurozone and does that mean the end of the project . It depends on the greek government. He has to see how he is going to handle the election. If hes cutting back on reforms and not paying anything as far as interest is concerned i remember very well and i know very well from history that what has been said prior to the election is not always what has been made in politics after the election. Lets wait and see. It is very difficult to predict at the moment. Should mario draghi buy greek debt . We dont want to have qe without condition. Omt might be possible, but not without any condition. That would lower all pressure to do reforms. To my understanding, it is important that we have reforms and all the eurozone. The world is not waiting for europe. We have to be competitive as europe. That is one thing which is very important. We should not lower the pressure to do reforms with qe. But if we dont get qe and we have deflation, we are stuck. First of all, deflation, why . Maybe deflation becomes because of the low oil prices, which is positive for the eurozone as a whole. It gives a lot of room to people. More money in customers hands because of low oil prices. The situation is pretty positive for the people in the countries. Michael, thank you very much for now. Stay with us. Sorry, finish your sentence. I keep cutting you off. Particularly for the u. K. You are selling oil. But for all the countries which are depending on oil imports, it is very positive. Michael, thank you so much for now. The chairman of the Democratic Union comes back after a short break. We will be talking about a possible u. K. Exit. Ok, we are also talking about the finishing touches on an suv that could roll off the Assembly Line sooner than expected. We will talk to the ceo of this business. Welcome back to the pulse live on bloomberg tv and radio. Lacks busy day today. Busy start to the year. Lets look at where we stand. Equities generally a little bit betterbid. It is interesting to look at what is happening with the bond markets. We have seen the german 10 year as you can see, we continue to see yields dropping. This morning, weve had some very interesting data. We get even more in half an hour. Ask i find it incredible that we had that data really encapsulating the problem in europe in general. Intel you and unemployment at a record high, german unemployment at a record low. That probably answers the next question we are going to ask you. Are you scared of deflation . I wonder if the response is different if you are in berlin or rome. Let us know what you think. Join the conversation. Michael fuchs will be back with us in a couple minutes. Welcome back to the pulse live from bloombergs European Headquarters in london. Lets get back to our exclusive interview with Michael Fuchs, deputy leader of germanys christian Democratic Union. Thanks for your patience. Thanks for waiting for us to pay a few bills. Lets talk about the u. K. Angela merkel is here today. We are looking forward to her arrival. Shes visiting the british museum, which looks like it could be an interesting visit. Everybody wants to know about the germans view of what is happening with immigration. Is your sense that David Cameron is listening to uki[p far too much at the moment . I dont think so. David cameron has to make sure that u. K. Is staying in the eu, and this is important for all of us. I cannot imagine u. K. Being out of the eu. It is very important that hes doing that. Listening to ukip is not a good lesson. Angela merkel mentioned that we are not going to listen to those guys in germany which are demonstrating more or less every week on the streets against immigration. We need it. If you look into the democratic situation of germany, we are very much in need of integration into our workforce. Michael, the approach of Angela Merkel and David Cameron has been very different. Angela merkel slamming publicly the antiislamist movement. Do you see David Camerons approach as wrong, that he is pandering to extreme movements . Im not the one to criticize your Prime Minister, because that is not my job if i may say so. We think it is necessary to have immigration, and to have a positive flow of people in europe which is one of the conditions of the European Union. Michael, we were talking to Alan Crawford who is the head of our Politics Team here at bloomberg. He wrote a book on Angela Merkel. He said Something Interesting just before we spoke to you. He said there is a gap, and that gap surrounds the understanding of british politics. The germans are looking at british politics and they dont really understand the depth of the antieu feeling within the u. K. Do you feel that german politics in berlin has a grip on what is happening here . Do you think brussels has an understanding on what is happening here . That is one of the reasons that Angela Merkel is visiting mr. Cameron today. As a matter of fact, im sure she wants to convince him