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Hello and welcome to World Business Report on the BBC World Service.
Will Bain with you again today.
Thanks for being back with us.
Coming up on the programme, the battle to boost defence spending in Europe in the face of Russia's aggression in Ukraine.
We hear exclusively from one European Union Defence Minister and why he feels it's imperative European countries continue to spend more on defence.
This was the decision we made together, and that means that, you know, one for all, all for one principle is valid.
Also today, we get a perspective on why China's response to US tariffs seems perhaps more muted than during the first Trump presidency.
And we look at why Germany has one of the most generous sick pay policies in the world.
I think I needed two weeks sick last year, but it was no big deal.
And finally today, can you speak sim -lish?
Yeah, we're going to mark 25 years of one of the best -selling video games of all time, the Sims.
I know it's a big favourite in the studio today, big favourite in our house at home.
Was it a big favourite for you growing up as well?
If you had any of the additions over the previous 25 years, you can get in touch with us about that or anything else you hear over the next half hour here on World Business Report by getting in touch on our WhatsApp number.
It's plus 44 330 678 3033.
Well, that's come, as I say, before we leave you here today on WBR.
But let's start, though, in Europe.
And ever since Russia's full -scale invasion of Ukraine in 2014, it was only at 2 % and most nations didn't pay until I came along.
I insisted that they pay and they did.
At a summit in the Belgian capital Brussels this week, the home of NATO headquarters of course, European leaders have been meeting to discuss just this.
Here's the president of the European Commission, Ursula von der Leyen, speaking after the talks on Monday.
For extraordinary times it is possible to have extraordinary measures, so we will look as a commission deeper into using much more flexibilities for defence investment and defence expenditures.
Well, one country that says it plans to meet the pledge is the Eastern European nation of Estonia.
It shares its eastern border with Russia and recently announced that along with Lithuania, it would spend 5 % of its GDP on defence.
We asked the country's defence minister, Hanno Pevka, how they plan to meet that commitment and over what kind of time scale.
We agreed together with all the allies that we have new regional plans for the defence of the alliance.
and at the moment we are in the discussions to approve also the new capability targets and when we take these capability targets and look at what the countries have to do then the reality is that 2 percent is not enough when you talk about defense spendings now depending the country it may vary but the reality
is that most of the countries have to invest more maybe some 3 .5 maybe some four, maybe some five.
But the reality is that in most of the countries, it has to grow significantly.
And it's a commitment right now.
What is the timescale for that commitment?
When will you reach spending of 5 % of your GDP on defence?
I also looked into the history and then when I take the time Estonia spent in NATO as a full member of NATO since 2004, then since 2004 to 2024, in 21 years, our defence spendings by average has been actually two percent so starting from 22 we started to increase our defense spending after the full
-scale war started and last year we had around 3 .4 this year around the same next year we will go to 3 .7 but as was mentioned we are discussing at the moment that we maybe can speed up this process and definitely the five percent target is not something which goes beyond five years or to ten years it's
rather quick will it be in a couple of years will it be in three four years we have to negotiate that on the governmental and parliament in the coming months.
Yeah and presumably those negotiations are about choices right what choices have you already because as you say it's been quite a ratcheting up already in the past few years of of what you're spending committing to defence.
We are discussing at the moment that we maybe can speed up this process and definitely the five percent target is not something which goes beyond five years or to ten years it's rather quick will it be in a couple of years will it be in three four years we have to negotiate that on the governmental
and parliament in the upcoming months yeah and presumably those negotiations are about choices right what choices have you already because as you say it's been quite a ratcheting up already in the past few years of of what you're spending committing to defence what choices has that meant in terms of where you're
shifting public spending away from and how difficult have some of those choices been we all understand that you know the choices are hard but the reality is that even spending five percent for defence is less than what we see today in ukraine ukraine is spending approximately 30 of their gdp annually
to defend the country so we all understand that keeping and preserving the peace with five percent is still less than to have the full scale war so of course we understand that it is a burden for society and for in Estonian case we had to increase taxes so basically we introduced the security tax which consists
from three three components one is two percent additional income tax one is two percent additional vat and one is two percent of the profits of for the companies so this is the what we had to do of course also we had to shift some understandings in the budget but nevertheless the point is that in last three
years we've doubled in digits our defense spending presumably there's a limit on that though how much tax people are going to be willing to pay going forward?
Well, there is always a limit, but one is to preserve the peace and to live in peace.
And the other is to fight for your own country during the war.
And we all understand that there are limits, and it's not easy.
But we try to be very open to our society.
And we try to explain why do we need to increase the defence spending, and what all the allies also have to do in order to preserve the peace.
Well, I wanted to ask you exactly that, When you're doing that explanation to Estonians paying more tax or businesses in Estonia paying more tax, what do you say to them when partners, allies, in theory, in the European Union, Italy, Spain, Slovenia, Portugal, all paying nowhere near 2 % in terms of their
GDP on defence? Well, of course, when we take the numbers, then closer you are to Russia, the higher are the spendings.
But we also do believe that, you know, our allies will have more and more information rather than me.
Because, you know, when you take 40 years back, then during the Cold War, defense spendings in European countries were close to 4%.
So when we were able to invest into defense during the Cold War without any war in Europe, around 3 to 4%.
So why can't we do it again?
And, you know, the understanding that since the collapse of the Soviet Union, the european countries stopped investing into defense this time is over and then there is a need to invest more than you know my simple question is that when we were able to do that in 80s without any war then why can't we
do it again because we see that russia is hostile towards its neighbors and a lot of neighbors of russia are also the members of the alliance Can Europeans do that, though, step up, ramp up that spending in the way you have in Estonia or your colleagues in Lithuania have, at the same time that a supposed
ally is ratcheting up basically economic warfare on the other side in terms of tariffs?
Well, I believe that, you know, nobody would like to see tariffs.
And personally, I also, I am a strong believer of the free economy and the economical trade.
And I truly believe that US and Europe need each other.
And the free economy between us is something which gives the economical growth, gives the richness and gives the better life for our people.
this is what should drive us the free trade free movement of people and all what binds us more together helps us more than things what divide us that's estonia's defense minister hano pevke they're on on tariffs a response uh in the last half an hour or so from the european union's trade chief maros
sefkovic speaking in warsaw to the bbc sarah rainford about those potential u .s tariffs on eu goods saying uh we'll be constructive but if we feel we are hit unfairly in an arbitrary manner by tariffs then we will react firmly.
Similarly on tariffs, news coming down on the news wires as well that Presidents Trump and Xi look like they're going to speak at some point on Tuesday on the phone.
A lot then for the markets to digest and Fiona Sincotta is going to try and do that for us here on the programme.
Fiona, of course, the senior market analyst at Sissi Index here in London.
Fiona, great to have you on the programme as always.
Thank you. Looks like a calmer kind of day on financial markets.
Is that because of the pause on those Mexican and Canadian tariffs for a month that we heard about overnight with the team on business matters or is that because they've remembered how to do this with President Trump?
Yeah, that's a very good point.
No, but you know, I think we are, you're right, we are seeing a bit of a recovery after really steep losses yesterday and a lot of volatility.
And I think the fact that we have seen those pauses on Canada and Mexico just sort of serves as a...
I think Cotts is going to try and do that for us here on the program Fiona of course the senior market analyst at City Debt Index here in London Fiona great to have you on the program as always.
Thank you. Looks like a calmer kind of day on financial markets is that because of the pause on those Mexican and Canadian tariffs for a month that we heard about overnight with the team on business matters or is that because they've remembered how to do this with President Trump?
Yeah that's a very good point no but you You know, I think we are seeing a bit of a recovery after really steep losses yesterday and a lot of volatility.
And I think the fact that we have seen those pauses on Canada and Mexico just sort of serves as perhaps a notice to the markets that maybe this is a negotiation tactic as well, not just sort of going straight in with hard tariffs and nothing else.
That's given a bit of optimism to the market.
I mean, we've seen a recovery, but we are seeing gold, which is a safe haven asset trading at record highs.
So I think that just reflects the level of uncertainty and unpredictability that there is in the market.
And we've seen again today, we talked about car companies yesterday.
Today, big booze maker Diageo, owner of Guinness and Johnny Walker Whiskey, it had some warnings about its sales gardens.
We're still hearing from individual companies too impacted in all of this.
That's right. So we heard from Diageo they're trading lower today.
Again, they've scrapped basically their longstanding growth target and have blamed the uncertainty over U .S.
tariffs for it. The CFO actually warned of a potential $200 million hit to operating profits if the tariffs on Canada and Mexico go through.
So there are certain companies that really are in the firing line.
More from Fiona to come.
But country, sorry, that we've not mentioned yet, there is China and they've announced retaliatory tariffs for the ones that are still going ahead from President Trump.
10 % on all Chinese imports to the US.
The countermeasure, 15 % tax on things like coal, liquefied natural gas, some agricultural machinery, pickup trucks, large engine cars, all set to face 10 % tariffs coming into force from next Monday.
China's also put a complaint to the World Trade Organization.
A little earlier, we tried to work out a bit more about what we learned from the Chinese response from Dr.
Zhe Ye of the Chatham House International Affairs think tank here in the UK.
China's response seems to be less panic compared with the first round of trade war, firstly, as Chinese anticipate this quite a while ago.
And secondly, I think China's content management is quite targeted, the critical minerals which China does enjoy independently and want to hit very hard on the American high -tech sector.
These are the two things we've known so far.
Now, secondly, really judging from the words from Donald Trump that we also realise that might be a possible phone call between President Trump and President Xi, and we might expect...
In terms of the moves towards Google, thought that was interesting too.
This is more to do with the Android operating system rather than the company selling services, right?
That is an interesting change of direction rather than a sort of physical tariff on a product, a sort of range of investigations against a big flagship US company.
So I think Beijing want to signal regarding the investigation with Google is this really to persuade the big tech companies in the United States and try to advocate on behalf of Beijing that persuade Donald Trump to not imposing further tariffs towards China.
So I think that's the reason and rationale behind investigating towards Google.
President Xi has been in the run -up to kind of a second Trump presidency, been keenly stressing, hasn't he, repeatedly over and over again and other senior Chinese officials, that there's room for both in the world, that it doesn't have to be one or the other, that they should show more respect for each other,
give each other that space.
Do you think they can find a working relationship like that in those discussions that you were mentioning, rather than the tit for tat, you sanction, we sanction, you sanction, we sanction that we saw during the first Trump presidency?
Well, I think this also largely depends on how China's domestic economic situation evolves.
I mean, so far, really compared with the first round of the trade war, that China's economic condition is not as conducive that China is able to utilize all kind of retaliatory measures against the United States.
So in that sense, NF2 box for this time is limited compared with the past round of the trade war.
So even if the two sides will throw war and wars against each other, I think both sides would know how much damage that trade war would do to each other.
Hence, we'll hear a lot of word on words, but perhaps less regarding the actual and very heavy -handed measures.
Our thanks to Dr. Jiu there.
You're with World Business Report on the BBC World Service.
Now, Germany has one of the most generous sick leave policies in the world.
The average employee, as a result, takes 20 days off sick each year and it could be having an impact on the German economy, so says economists at the German Association of Pharmaceutical Companies.
They believe the country wouldn't be in recession, in fact, if its workers had taken fewer days off.
Hannah Mullane has been trying to find out what's going on.
It's 8 a .m. in Berlin, Germany's capital city.
Commuters busily making their way to the office.
But how would these workers feel if they needed to take time off sick?
My name is Mariana.
I work as a production designer.
It was actually always quite easy to take a sick leave, and I think people were kind of just doing it quite a lot.
Our next play before we even make it.
We've got to tighten up off the court, too.
Businesses track and sell our personal information.
They dunk on us all the time with that data.
Wait, what do you mean?
You have to exercise your privacy rights.
If you don't opt out of the sale and sharing of your information, businesses will always have the upper hand.
The ball is in your court.
Get your digital privacy game plan at privacy .ca .gov.
you're with world business report on the bbc world service and our germany has one of the most generous sick leave policies in the world the average employee as a result takes 20 days off sick each year and it could be having an impact on the german economy so says economists at the german association of pharmaceutical
companies they believe the country wouldn't be in recession in fact if its workers had taken fewer days off hannah MLA has been trying to find out what's going on.
It's 8 a .m. in Berlin, Germany's capital city.
Commuters busily making their way to the office.
But how would these workers feel if they needed to take time off sick?
My name is Mariana.
I work as a production designer.
It was actually always quite easy to take a sick leave.
And I think people were kind of just doing it quite a lot.
Burnout was quite a common thing.
My name is Dennis and I'm a copywriter in the agency.
I think we have a quite fair policy for the employees.
I don't have to feel bad if I feel sick.
I don't have to feel bad if my kids are sick.
My name is Julia and I'm a trainee for a company that works for the German pensions.
I think I needed two weeks sick last year, but it was no big deal.
Where I worked before, I think it was an issue.
But at this kind of company now, we have so many employees.
Germany's generous sick leave policy means you can take six weeks off at full pay, paid for by your employer.
After that, your health insurance will pay 70 % of your salary for the next 18 months.
But what does such a generous policy mean for the economy?
Nicola Sibath is Professor of Economics at the University of Mannheim and the Center for European Economic Research.
There's no doubt that the sick pay system is a burden on the economy, especially in crisis times like now we have a huge shortage of workers already and you can imagine if in addition to let's say 30 days of vacation we have a very generous parental leave system now people take more than 20 days of particular
year that is a huge burden not just in companies on their labor costs but also consumers and people not getting services delivered when they need it And it's a burden that's very much on the employer, having to pay workers for up to six weeks whilst they're not working.
So how do they manage?
Yes, I could see it as something that could change.
I do think that while it could change, it is also a deep part of the work culture right now.
It wouldn't just be a policy change, it would be a cultural change.
Making any changes to the country's sick leave policy would certainly be unpopular with workers.
But Germany is soon to hold a general election.
And will the new government, with a struggling economy, feel the pressure to make some changes?
We'll have to wait and see.
Hannah Mullane reporting there.
If you want to hear a bit more about that, the Biz Daily podcast is the place to head to.
Just search for Business Daily.
Oh, well, you know where to get a podcast from at this point, don't you?
Let's return to the markets and Fiona Sincotta, Senior Market Analyst at City Index, still with us.
And Fiona, sort of good news, bad news stories on the markets today.
you can pick which order you want to do them in Spotify extraordinarily strong numbers on the good side and Nintendo looks like it needs a successor to its switch consoles and pretty poor numbers from it today yes that's right so just kicking off on the downside with Nintendo really as you mentioned
they revised annual earnings and switch console sales lower after reporting week results.
And they basically posted a 42 % fall in net profits and revenues down 31%.
And basically this comes back to the switch, which launched in 2017 and sales have slowed and declined quite considerably because 2017 in technology terms, that's quite a long time ago.
So, you really need an update there.
And then Spotify, great news, up around 8 % after it's posted its first fully profitable year.
It's seen really strong subscriber growth, low churn rates despite seeing price rises.
So that's really good news.
Monthly active users rose by 35 million, well above expectations, topping it at 675 million.
Yeah, it seems to be in a really competitive space.
Lots of people questioned whether it had the kind of financial firepower to meet some of the really deep pockets of an Apple or an Amazon in that space, certainly proving that It's been resilient there, hasn't it, as well.
In terms of the world of video games, Fiona, were you ever a Sims player or were there Sims players in the Sincotta household?
No, I just missed that one, I think.
I know Amy, our studio director today, was an expert, and if you're very lucky, before we squeeze it in before the end, she had a good cheat that maybe we will or won't tell you about having maximum amounts of money to spend to build your house and keep your virtual Sims happy.
Yeah, because the hit game, 25, on Tuesday, it turned amazingly.
extraordinarily, certainly ageing me and many of the rest of you, I'm sure, listening.
Since its release in 2000 on this day, it's sold nearly 200 million copies, making it one of the best -selling video game series of all time.
The BBC's Laura Kress has been taking a look at why it's stood the test of time.
That's Hello in Simlish, the made -up language of the hugely popular video game series The Sims.
this february marks the 25th anniversary of the life simulation game where players design their own characters give them personalities and keep them happy well try to at least since its original 2000 release the series has become a genuine cultural phenomenon with barbie star margot robbie set to produce
a movie inspired by the universe and pop stars including katie Perry recording songs in Simlish.
Whilst creators Maxis and publishers EA are based in the US, it has a global fan base.
The latest game, The Sims 4, has been translated into 18 different languages, including Russian, Chinese and Danish.
So why is the series still going strong after all these years.
Hi, everyone. It's the English Simmer here and welcome back to another...
Molly, a British content creator, is known as the English Simmer Online.
A Simmer is a super fan of the game.
Think like Taylor Swift's Swifties, but for the Sims.
She says the series success springs from its open -ended gameplay and the willingness of developers to let players mod or modify its code to create whatever they want.
We have these amazing storytellers and just so much talent within the community to drive this game to be as open -ended as you really want it to be and wherever your imagination will take you.
Even at its launch The Sims was a little different to other games at the time where choices around sexuality or identity were rare.
Players could pursue same -sex relationships.
Later options around gender and race opened up too.
Amira is an American content creator who plays The Sims for a living.
She created a darker skin tone pack for characters in the game.
One common issue in a lot of video games is that the skin tone options don't get as dark as they should.
But the difference between a lot of games and The Sims is I can do something about it.
The games also come under some criticism for its lack of accessibility options for disabled people.
But for the most part, The Sims' depth of customization is what continues to attract a diverse crowd of gamers.
That's a big part of why I play the game for so long.
I can do what I want.
I can make a Sim with any body type, complexion, hair, whatever I want to do.
It's like one of the most customizable games that I have.
Divert created a darker skin tone pack for characters in the game.
One common issue in a lot of video games is that the skin tone options don't get as dark as they should, but the difference between a lot of games and The Sims is I can do something about it.
The games also come under some criticism for its lack of accessibility options for disabled people but for the most part The Sims depth of customisation is what continues to attract a diverse crowd of gamers.
That's a big part of why I play the game for so long.
I can do what I want.
I can make a Sim with any body type, complexion, hair, whatever I want to do.
It's like one of the most customisable games that I have.
Diversity in and outside of video games is currently under some scrutiny in America's political landscape.
Companies such as Amazon and Meta, which owns social media apps, Facebook and Instagram, have scaled back on their diversity programmes as Donald Trump, who's long campaigned against such policies, has returned as president.
What does this mean for the inclusive spaces in gaming?
Zoe Delahunty -Lite is a video producer for the British gaming website Eurogamer.
While it's unlikely The Sims publisher, EA, will follow Meta and suddenly change its inclusive options in The Sims, the bigger concern is that Meta changing its DEI principles will galvanize certain toxic groups of gamers to become more open about their own hateful views.
25 years on from its release, it's clear that for some players, The Sims has become that space.
For these players, it's more than just a game.
It's now a place for community, a place for simmers.
the bbc's laura cress reporting their professional sims player i think um my sims always used to spend a lot of time getting wet i could never put the roof on in time before it rained again um if you're in the same bag as me doubt we're going to become simmers amy our studio director today definitely is our simmer on the team big thanks to her big thanks to
craig who's been producing the program and to james as well and of course to all of you for listening to world Business Report.
Remember, the podcast is always available.
Just search for it wherever you get yours from.
