US Senate postpones currency vote

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7 October 2011 Last updated at 04:02 GMT President Obama has said that any action by the US has to be consistent with international treaties The US senate has postponed its vote on the much-debated currency bill until next week amid differences between the Republicans and Democrats.

The bill would make it easier to impose penalties on goods from countries seen as keeping their currencies artificially low.

Politicians and some business groups have accused China of using its policy of limiting the yuan's value to boost exports.

Leaders differed on certain amendments.

"I think China needs to carefully think about and process the substance of what people are saying here on the floor of the United States Senate." said John Kerry, chairman of the Democratic Senate Foreign Relations Committee.

'Very aggressive'

The debate on China's currency policy has become the centre of attention amid a slowdown in the US economy.

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Whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations”

End Quote Barack Obama US President President Barack Obama said "China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States."

"It is indisputable that they [China] intervene heavily in the currency markets and that the RMB [yuan], their currency, is lower than it probably would be if they weren't making all those purchases in the currency markets."

Politicians and policy makers have said that undervalued yuan has not only given an unfair advantage to Chinese exporters, it has also contributed to the unemployment situation in the US.

"We cannot continue to let China flaunt the rules," said Democratic Senator Chuck Schumer.

Mr Schumer added that if no action was taken against China's policies the US "may never recover as a country. This is serious stuff".

Cautious approach

However, President Obama warned that the US needed to take a cautious approach while handling the matter.

"My main concern and I've expressed this to Senator Schumer, is whatever tools we put in place, let's make sure that these are tools that can actually work, that they're consistent with our international treaties and obligations." he said.

President Obama's comments come as China has accused the US of using the currency dispute to take protectionist measures.

At the same time, some politicians and trade groups have said that such a bill may do more harm than good to the US economy.

They have warned that any such action by the US may start a trade war with China.

"Unilateral action by the United States will only serve to increase trade tensions and negatively impact the US economic recovery during this fragile period in the global economy," Bruce Josten of the US Chamber of Commerce wrote to the Senators earlier this week.

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Group buying hits the Middle East

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20 September 2011 Last updated at 06:14 GMT By Simon Atkinson Business reporter, BBC News, Dubai WATCH: Can group buy tempt these Emiratis out of the shopping mall to buy online?

The sun is barely up over Dubai's Jumeirah beach, but already a group of about 30 fitness fanatics are sweating furiously as they grimace through another set of squat thrusts.

In sand-covered royal blue vests, they are here to get fit and enjoy fresh air before the Gulf's late summer humidity kicks in for the day.

But some have also been lured to this exercise boot camp by an online marketing trend that is only just gathering momentum in the Middle East.

Group buying - sometimes called social buying - has become a multi-billion-dollar business from the US and Europe, to Australia and China.

It has made companies like Groupon household names through their daily emails offering hefty discounts on everything from meals to mobile phones, hotel rooms to horse riding, and beauty spas to brand new cars.

The people taking part in this boot camp got a substantial discount by group-buying online

While each firm operates in slightly different ways - they essentially deliver customers to retailers in return for a cut of the total revenue.

'Big shift'

But despite retail making up a substantial chunk of the Middle East economy - and credit card usage being widespread - it has taken longer to establish the trend in the region because e-commerce is still in its infancy.

"The history of online buying in this part of the world can be measured in days and weeks, not years," says Dan Stuart, chief executive of GoNabit, which was the first firm to open in this region.

"When we started, people could buy flowers, gift baskets and flights through the internet, but not much else. They had to buy from sites based outside the region but we've seen a big shift in that."

Such is the apparent potential that Groupon opened offices in Dubai this year, while Mr Stuart's GoNabit is preparing to rebrand after being bought out by another US firm, Living Social.

Group-buy sites like this one are still a novelty in the Middle East

UAE-owned Cobone.com launched a year ago, and to meet local needs and reticence about internet shopping, about 80% of sales in the first few months were done through cash on delivery.

Customers bought online but then had a voucher physically delivered to them and handed over the cash.

"That might sound strange to someone in another part of the developed world," says chief executive Paul Kenny, whose firm now has more than half the Middle East market share by revenue, according to data from research firm Kongregator.

"But until very recently, that's the way it was,"

'Cost-effective'

For Original Fitness Co, which runs the beach boot camps, the trend has offered a new marketing technique.

Tighter economic times and more competition means the firm's regular prices are already about half the 900 dirhams ($245; ￡160) per month it could charge in the boom years.

Original Fitness's Corey Oliver says this is a cost-effective means of marketing

And through a social buying site, it recently charged just 270 dirhams ($70; ￡45) for a month of sessions.

"We don't make much money from the deals at all, but the idea is to get people in and then we try to keep them," says managing director Corey Oliver.

"Marketing can be expensive, but this is quite a cost effective way of doing it.

"And once people try it, we hope they enjoy it and want to come back, even if it'll cost them a bit more."

Regional complexities

Both Cobone and GoNabit have expanded from their UAE roots, with Egypt, Jordan and Lebanon seen as key markets.

And the Arab uprising, which has dominated the region this year, does not appear to have hampered expansion.

GoNabit was recently bought by US firm Livingsocial

GoNabit delayed its Egypt launch after President Hosni Mubarak was ousted in February, but went online in March, with the encouragement of staff in Cairo.

"They convinced us that even when all anyone was talking about was revolution and change, that people still want to do the things that our offers have," Mr Stuart says.

"They still want to go to restaurants, to have a spa, to go paintballing. Life goes on."

All the region's key players have their sites in both English and Arabic, with Egypt now the region's biggest growth market for group buying - helped by the opening up of the internet, and the increasing popularity of social media.

But Cobone's Paul Kenny says each country needs a different approach - from the tone of language to the deals offered.

"From Jeddah to Riyadh to Cairo to Dubai they all have different complexities," he says.

"In Dubai there are still plenty of people with a lot of disposable income. We sell a lot of trips on luxury yachts, and recently sold four $28,000 cars in one day.

"Compare that with Cairo and it's food and spas - they're the things more commonly consumed ... [there's] less disposable income, so we make sure we tailor it to the local market."

'Denigrate brand'

While the group buying trend allows retailers to create demand for things which customers may otherwise not have wanted - and therefore offer growth opportunities - there are also potential pitfalls says Hermann Behrens, chief executive of The Brand Union Middle East.

He warns that a hangover from the boom years of pre-2008 means places such as Dubai and Abu Dhabi suffer an over-supply of things like restaurants and spas - and that the new retail trend might further drive firms only to compete on price.

Go! Yachts Rob Appleyard says group buy sites bring in revenue during quiet periods

"The biggest danger is that if you're generating trial for a brand and people are actually going to a restaurant or a spa or buying a product, and it doesn't fulfil a value that's higher than they have paid for it, that could dilute or denigrate the value of the brand," he says.

"That's especially true if it's not an established brand with an established value."

It is an issue which faces Go! Yacht Charters - a firm hiring luxury boats in the UAE.

While there remains demand for its VIP services - from footballers and presidents to visiting oil tycoons - the economic downturn and slow recovery has hurt business, especially corporate bookings.

Now the firm is using a group buying site to sell time on its vessels - from $30 short trips out to sea to a $3,700 (￡2,400) package to this November's Formula One Grand Prix in Abu Dhabi.

It is one way to get some revenue from boats that may otherwise be standing idle, says managing partner Rob Appleyard.

But sitting on the plush purple seating on the 120ft yacht Sheleila, Mr Appleyard denies that allowing people onto multi-million-dollar boats for a few dollars a time cheapens his brand.

"It gets people on board to have a look and they're wowed by it. It's showing people that these boats are affordable, that they're not just for billionaires

"Hopefully, someone will buy one of these deals, they'll be impressed and they'll tell their boss - if they're not a boss themselves - and we'll get some corporate business off the back of it."

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'More help' on childcare costs

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7 October 2011 Last updated at 00:13 GMT Parents eligible for tax credits can get help with up to 70% of their childcare costs Parents on low incomes who are working less than 16 hours a week will be eligible for childcare support from 2013, under new government plans.

Some ￡300m has been allocated for the move, worth up to ￡175 a week for one child and ￡300 for two or more.

Ministers say it will benefit 80,000 families receiving universal credit.

Charities had been calling on them to increase the amount they planned to spend on childcare support as part of sweeping welfare reforms.

Under the universal credit system, a single payment will replace child tax credit and working tax credit, as well as income-related jobseeker's allowance, housing benefit, income support and income-related employment support allowance.

The switchover will begin in 2013 and continue into the next parliament.

'First steps'

The universal credit budget had been set at ￡2bn, but ministers say an additional ￡300 million has been found to extend childcare tax credits.

At present, families can get credits to cover up to 70% of their weekly childcare costs, but only if they work more than 16 hours a week. The exact amount given depends on income level, but couples with an income up to ￡41,000 can qualify.

Work and Pensions Secretary Iain Duncan Smith said: "We are determined to help more parents take their first steps into work, but under the current minimum hours rule parents are trapped in state dependency without the childcare support they badly need - providing yet another barrier to work."

Deputy Prime Minister Nick Clegg said: "Childcare support is vitally important. It's a lifeline for families up and down the country, particularly for mums who want to get back into work, maybe for just a few hours a week after they've had children.

"This will help an extra 80,000 families who have previously had no help at all with childcare costs."

Childcare costs vary widely, but the government says the benefit would help low income families pay for an average of about 40 hours a week.

Labour said the government had already reduced support from 80% to 70% of weekly costs.

Liam Byrne, shadow work and pensions secretary, said: "Today's announcement is frankly smoke and mirrors. It won't mean a penny more help for parents already struggling on childcare tax credits.

"Universal credit is now set to lock in a 'parents' penalty' that cuts back childcare payments so hard that many parents will be forced to give up work.

"With parents struggling to make ends meet, it beggars belief that the Tories are stopping parents working the hours and shifts they need by taking away their childcare."

In a recent survey of 4,359 parents by the Daycare Trust and Save the Children, nearly a quarter said the cost of childcare had put them in debt.

A quarter of those on the lowest incomes said they had given up work and a third had turned down work because of childcare costs.

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VIDEO: Citigroup under pressure from Asian regulators

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6 October 2011 Last updated at 04:12 GMT Help

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India unveils $35 tablet computer

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5 October 2011 Last updated at 13:06 GMT Millions of students will have access to the tablets, officials hope India has launched what it says is the world's cheapest touch-screen tablet computer, priced at just $35 (￡23).

Costing a fraction of Apple's iPad, the subsidised Aakash is aimed at students.

It supports web browsing and video conferencing, has a three-hour battery life and two USB ports, but questions remain over how it will perform.

Officials hope the computer will give digital access to students in small towns and villages across India, which lags behind its rivals in connectivity.

At the launch in the Indian capital, Delhi, Human Resource Development Minister Kapil Sibal handed out 500 Aakash (meaning sky) tablets to students who will test them.

He said the government planned to buy 100,000 of the tablets. It hopes to distribute 10 million of the devices to students over the next few years.

"The rich have access to the digital world, the poor and ordinary have been excluded. Aakash will end that digital divide," Mr Sibal said.

The Aakash has been developed by UK-based company DataWind and Indian Institute of Technology (Rajasthan).

It is due to be assembled in India, at DataWind's new production centre in the southern city of Hyderabad.

"Our goal was to break the price barrier for computing and internet access," DataWind CEO Suneet Singh Tuli said.

"We've created a product that will finally bring affordable computing and internet access to the masses."

The company says it will also offer a commercial version of the tablet, called UbiSlate. It is expected to hit the shelves later this year, retailing for about $60.

Usability questions

Mr Sibal says the device will enhance learning in India.

Experts say it does have the potential to make a huge difference to the country's education, particularly in rural areas where schools and students do not have access to libraries and up-to-date information.

Mr Sibal (right) hopes the tablet will end the 'digital divide'

But critics say it is too early to say how the Aakash will be received as most cheap tablets in the past have turned out to be painfully slow.

"The thing with cheap tablets is most of them turn out to be unusable," Rajat Agrawal of technology reviewers BGR India told Reuters news agency.

"They don't have a very good touch screen, and they are usually very slow."

Critics also point out that an earlier cheap laptop plan by the same ministry came to nothing.

In 2009, it announced plans for a laptop priced as low as $10, raising eyebrows and triggering worldwide media interest.

But there was disappointment after the "Sakshat" turned out to be a prototype of a hand-held device, with an unspecified price tag, that never materialised.

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Bank injects £75bn into economy

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6 October 2011 Last updated at 11:26 GMT The UK's economic recovery has been weaker than hoped The Bank of England has said it will inject a further ￡75bn into the economy through quantitative easing (QE).

The Bank has already pumped ￡200bn into the economy by buying assets such as government bonds, in an attempt to boost lending by commercial banks.

But this is the first time it has added to its QE programme since 2009. There have been recent calls for it to step in again to aid the fragile recovery.

The Bank also held interest rates at the record low of 0.5%.

On Wednesday, data showed the UK economy grew by 0.1% between April and June, which was less than previously thought.

"In the United Kingdom, the path of output has been affected by a number of temporary factors, but the available indicators suggest that the underlying rate of growth has also moderated," the Bank said in a statement.

"The deterioration in the outlook has made it more likely that inflation will undershoot the 2% target in the medium term.

"In the light of that shift in the balance of risks, and in order to keep inflation on track to meet the target over the medium term, the committee judged that it was necessary to inject further monetary stimulus into the economy."

'Warranted'

The CBI and the British Chambers of Commerce (BCC) business groups welcomed the Bank's move to expand the QE programme to ￡275bn, but said that on its own, its impact would be limited.

"This measure will help support confidence, but we need to recognise that its impact on near term growth prospects is likely to be relatively modest," said Ian McCafferty, the CBI's chief economic adviser.

"Only once the turmoil in the eurozone is resolved will confidence be fully restored."

David Kern, chief economist at the BCC, said: "Higher QE on its own is not enough and we urge the MPC to look at other radical methods.

"There is a strong case for the MPC to help boost bank lending to businesses by immediately raising its purchases of private sector assets."

The manufacturers' organisation, the EEF, said that the Bank's decision to act now, before the third-quarter estimates of GDP and its latest inflation forecast were released, "would indicate that members believed immediate action was warranted in order to head off a deteriorating growth outlook".

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Bernanke: US economy 'faltering'

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4 October 2011 Last updated at 20:35 GMT The Fed chairman also lent support to critics of China's exchange rate policies US Federal Reserve Chairman Ben Bernanke has told Congress that the US economy is "close to faltering" and more action may be needed.

Giving testimony to the US legislature, he said the Fed was "prepared to take further action as appropriate" to bolster the recovery.

His comments come after the Fed already decided to shift $400bn of investments into longer-term government debt.

Stock markets responded positively, with the Dow Jones rallying over 1%.

But US markets fell back again somewhat in afternoon trading, until a strong late rally just before the close, which left the Dow Jones Industrial Average uip 1.4% for the day.

China 'blocking'

He said the switch into longer-term government debt announced last month - dubbed Operation Twist - was the equivalent of a half-percentage-point cut in interest rates, and gave a "meaningful, but not an enormous support to the economy".

But he warned that the eurozone debt crisis, as well as overly hasty spending cuts by the federal government, risked undermining the US recovery.

When asked what additional action the Fed might take if the economy continued to weaken, he reiterated policy options he has laid out in past speeches:

giving clearer guidance as to how long interest rates will be held close to zero, and in what circumstances they would rise;increasing "quantitative easing" - the Fed's purchase of US government bonds and other debts;cutting the interest rate paid on excess cash that the banks hold at the Fed.

But he added that the US central bank's monetary policies were "no panacea".

Continue reading the main story The Fed chairman also appeared to lend support to those seeking to take action against China's policy of buying up US debts - which has the effect of holding down the value of the yuan at a more competitive exchange rate.

"Chinese policy is blocking what might be a more normal recovery process in the global economy," said Mr Bernanke, who said China was shifting demand away from the struggling US and European economies.

The US Senate has just begun a week-long debate on a bill that would threaten China, and other countries accused of keeping their currencies unfairly cheap, with trade sanctions.

On the subject of the eurozone debt crisis, Mr Bernanke said there was little help the US could offer.

"The problems are not really economic, they're political," he said. "Because what they are trying to do is find solutions that are acceptable to 17 different countries, which you can imagine is very difficult."

He said that the US was an "innocent bystander" to the crisis, and while the country's direct exposure to any debt default by Greece was limited, the real risk was that a disorderly default could trigger a run on other eurozone governments and a banking crisis, which would hit the US badly.

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