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Lowe's We Help You Save Loyalty programs subject to terms and conditions Details at Lowe's .com slash terms Subject to Change Free standard shipping not available in Alaska and Hawaii Exclusions and more terms apply Hello and welcome to World Business Report on the BBC World Service.
I'm Will Bay and thanks for being back with us.
In just a moment we'll be looking at an historic decision in Germany to rip up its government rules about borrowing and debt to try and boost spending in areas like defence and infrastructure.
We'll be hearing from the chair of Germany's influential Council of Economic Advisers, amongst others, in just a moment on the programme.
Also, today, why the Chinese electric car -maker BYD's latest development could put it miles ahead of its competitors.
It's a big deal for a company that is the largest seller of cars in China.
It's present in 81 or 80 plus markets around the world.
It's honestly quite impressive.
And why Pepsi has spent $2 billion on a soft drinks company promising to improve your gut health.
The question is always, is it really healthy?
And what I always say is, well, it's certainly healthier than a regular soda, which is not a high bar to clear.
More on Poppy, the now latest billion -dollar brand in the world of wellness.
We'll try to explain why it's worth all that money a little bit later here on World Business Report.
We're going to start in Germany though, because in the last half hour, and as you may have heard in the news headlines, the parliament there has approved plans to inject up to a trillion euros into the country's military and infrastructure amongst other areas.
It's hoped boosts the EU's rearmament efforts.
In an historic vote, which passed in the last hour in the Bundestag, the German parliament, the members there voted to loosen Germany's strict borrowing limit.
This was the German leader -in -waiting, the soon -to -be likely next chancellor, Friedrich Mertz, in the run -up to Tuesday's vote.
For at least a decade, possibly much longer, our society felt a false sense of security.
now we need to rebuild our defence capability from scratch with automated systems with independent European satellite surveillance, with armed drones and with many modern defence systems and, most importantly, with reliable and predictable orders that should go to European manufacturers wherever possible.
Ladies and gentlemen, this is the paradigm shift in defence policy which we are now facing.
Huge implications and potentially at home and abroad.
We'll come to some of the more domestic factors shortly but first of all Professor Monica Schnitzer is with us, German economist, and chair of comparative economic research at the Ludwig Maximilian University in Munich, she's also the chairwoman of the German Council of Economic Experts, influential independent body of leading economists who provide non -partisan economic advice to governments, politicians, whatever, their colours.
Joins us live from Munich. Now, Professor Schnitza, thanks so much for being with us.
Hello from Munich. Before we go forward and perhaps get your assessment of whether this meets the challenge, I suppose, the scale of all of this, which seems an incredible thing to say, doesn't know about trillion euro spending deal.
Just tell us why this was seen as such a, such a break, I suppose such a shift in policy, such a seismic economic moment as we said.
That break has really been extremely influential over the last decade or so because people thought that this was the way to ensure that Germany is not borrowing too much and it has been successful.
So we see that the current debt ratio is just over 60%.
So it's exactly what it should be like.
And in particular the conservatives have been really looking into that and thought that this is the thing to do, so they have been very much in favour of it.
And actually the last coalition collapsed because there was such a strong controversy about it, so the liberals said, no way are we going to change it, and the social democrats said that we simply cannot afford to reboost the economy without a change there, and so this is how they collapsed.
And so today's vote allows basically the defence spending element right to be taken out of any of the calculations when it comes to the amount of debt the German national government may or may not have on the books?
Yeah, that's basically the idea.
It says expenses that are above 1 % of GDP for defense, that will be exempt from the debt break, which actually is a rather low threshold, because so far we spend something like 1 .5 % from the budget.
So that gives a bit of leeway now for the government to spend on other stuff.
but we can discuss that later.
So yes, it means, actually, the amount can be infinite, so you're not restricted in any way, other than the capital markets, of course, so you need to get of course the money from the capital markets.
But yes, it gives the government really a leeway.
And that also means it's a really strong signal.
And that's why it's also good to do that.
Because it gives a strong signal to Trump, to Putin, to the Ukraine, to our European partners.
So, Germany is back, is committed to invest in its defence.
Is that how you see it?
Because I know you and the rest of your colleagues on the Council of Economic Experts were calling for really quite serious investment sort of across the board for a range of areas saying this was vital, does it?
As you're saying, Do you think Germany is back as a result of this?
do you think that it as we were saying before meets the moment if you like I very much think so I think it's the right signal of course now you can discuss the details and as I was just on suggesting perhaps the threshold above 1 % is a bit low 1 .5 or even 2 % might have been better and the second part of this reform now is that there's a special fund that supposed to cover infrastructure investment and climate change investment so that's another 500 for the next 10 years.
That's a lot of money.
And here again, the question is, will it be spent wisely?
I was going to ask, I ask you exactly that because politicians all around the world when they get lots more spending always say, right, this is it.
This is the answer.
But the key now is a, spending it well isn't it?
And who's going to keep track of that?
who's going to measure that?
who's going to sort of hold feet to the fire to make sure that it is going into areas that do genuinely transform some of those sectors.
I guess that's a really difficult bit now.
Absolutely, so here actually what was so important is in order to change this law it's embedded in the constitution so you had to change the constitution to achieve that.
You need a two -thirds majority and this the new, expected new coalition partners don't have themself, so they needed the queen party to join their vote.
And they were actually very influential in the sense that they impose, okay, you have to make sure that this is additional investment.
So, to make sure that it's not simply that you transfer all the investments that are usually covered by the budget and now spend money from the special funds on this investment, but then have large maneuver room in your budget to spend it for all kinds of gifts to the electorate that are not necessarily invested.
Professor, thanks so much for your time as always.
Professor Monica Schnitzer the German economist at the Ludwig Maximilian University in Munich also chair of the German Council of Economic Advisors.
Well let's turn to that more domestic picture that Professor Schnitzer was just talking about and that spending in particular around infrastructure because Tim Muller is also with us.
Tim is the chief executive of the German Construction Industry Association, known as Bao Industries.
He's joining us live from Stuttgart.
Tim, and thanks so much for being with us again on World Business Report now.
You've had a very busy day, so thanks for answering the phone right off, kicking off a plane.
I'll ask you the same one I asked Professor Schnitz, first of all.
From your perspective, does it sort of meet the moment, the volume of money, and the amount, and what you know so far of the plans?
Well, first of all, this political decision achieved by three major parties in Germany is a huge sign, not only for us as a construction industry, but also for our society.
And of course, economic development in Germany because infrastructure is one of the key factors that Germany is attractive for industries, attractive for investments and if you have a huge investment backlog like we have in Germany, I mean we had a bridge collapsing just a couple of weeks ago in Dresden and luckily nobody died and now we are actually close before closing another major bridge in Berlin in the capital then you see how huge this investment backlog is and this This is why this extra fund is a huge sign for Germany.
Right, is that where it needs to go then?
The kind of nuts and bolts infrastructure, all the things that people think about when they think of infrastructure, roads, bridges, that kind of stuff, rather than perhaps the green energy, energy transition stuff that Professor Schnitzer was talking about in the short to medium term at least. Well, I think we have an investment backlog in multiple sectors.
Well, first of all, of course we have to look on the traffic infrastructure.
as you said, Street.
We have the road infrastructure.
We have to look on the railways.
But also in the energy sector, we have a huge need and a new power plants.
We have a huge need in nutrient transition between power plants and connecting especially renewable energies from offshore windpox to land sites.
And so we have a huge investment deficit in multiple sectors.
And we have to see on what priorities are now being set from the government.
And these These priorities are not done with now the old Bundestag, but with the new government in a couple of weeks, and we will see what the federal law will name and how these priorities are set.
In terms of your members, are they ready to step up or is there going to need to be massive recruitment drives and things like that in terms of having the sheer number of employees to take on some of this work?
Well, as we are coming from a recession, I mean, the last five years, we had a decreasing order intake, decreasing order backlog, our capacity utilization is among 50, 60%.
So, we could start right away to build even more and it would be necessary also to hold all the personnel that we need and which we don't want to leave the sector.
But of course, you need also structures on the on the public contracting authority side.
We have to talk about procurement law, we have to talk about speeding up, applying procedures And, of course, we have to talk about what governance structure do the authorities need that this investment is not only an increase in prices, but an increase in infrastructure.
You sound a bit more cautiously optimistic, rather optimistic like the professor prams. Well, I'm just realistic on this side, because we know how our public authorities worked with us the last couple of years.
They worked of always in a situation where they didn't have enough funds, where we had a lot of problems with planning procedures.
I mean, planning the bridge in Germany took over 10, 15 years, and this is nothing what one of the major or the main countries in the middle of Europe as one of the transit countries for networks should have. Thanks so much for your time, Tim.
Really grateful. I know you had a really busy day, so thanks so much for fitting us in as well.
Tim Muller there, the chief executive of the German Construction Industry Association, BOW Industry there, joining us from Stuttgart.
Emma Wall also with us from Hargreeves Lansdowne, the investment platform here in the UK.
She is Head of Platform Investments there.
Emma, great to have you back on the program.
Quick take on all of this then.
Stock markets have been going mad in Europe and the sort of build -up to all of this.
What's been the kind of immediate reaction?
Yeah. So the German markets are slightly up, but bonds are flat.
And part of this is because, as you say, although this wasn't a done deal, it was expected.
So over the last week, we have seen significant rally in Europe.
The DACs, in particular, in months to date, has done incredibly well.
So, a lot of optimism has already in the markets, but we have seen slight uplift today.
Yes, really interesting.
We'll keep an eye on that throughout the programme and have a little bit more of Emma on what else is moving financial markets as we move through the programme today.
Chairs in Asia had been moving yesterday or Monday.
The Chinese Electric Car Maker, BUID, being one of the big movers because it hit record highs again on Tuesday investors reacting to news that the company says it has developed a battery that can charge in five minutes about the time it takes to fill up a petrol car.
And we strive for speed, more speed, extreme speed, we're racing with technology, giving chase, running at speed never achieved before… certainly seems to be the case, as Mark Raimford of inside China altos told us.
Honestly, this was a bit of a shock.
It was a very big announcement.
The scale of the achievement here is quite astounding for the industry, even for somebody who's deeply embedded in it.
Like myself, they've essentially doubled the maximum charging speed that's currently available on the market with this single announcement.
So it's a big deal for a company that is the largest seller of cars in China, is present in 81 or 80 plus markets around the world.
It's honestly quite impressive, yeah.
I asked this with trepidation not being a scientist myself, but can you explain what it is makes this battery such a development, as you're saying?
It's actually not just the battery.
So if I can simplify the terms, the speed at which an electric car is charged is measured in kilowatts and you can equate that to the speed of fuel through a petrol pump into a petrol tank.
So you need both the pump or the charger itself and then the vehicle to be able to receive charge all the fuel at the same speed and this BYD essentially the platform which is all the components in it including the battery and other things that need to be able to charge at a certain speed it can charge at 1000 kilowatts.
Now the maximum peak charging speed currently available on the market is in the Limega which is another Chinese car and that's 520 kilowatts, so a thousand kilowatts or one mega watt is another name of calling it is basically double the speed of the fastest charging electric car on the market today.
And so does that how quickly can it charge an average kind of one of its models up then total to sort of full charge?
So they have said that they can charge from essentially add 400 kilometers of range in just five minutes so that's about 250 miles in five minutes.
I mean that's a game -changer if they really can do this on a mass level isn't it?
It is. I mean the best at the moment are basically charging at about half of that speed so that the really good ones can do about ten to eighty percent of a battery in about ten half to twelve minutes, of course with the right charger.
So you do need to have the chargers as well as the vehicle capable of doing it.
BYD are currently only rolling out this platform to the two flagship models called the Han and the Tang so not every car within the BYD range will get this platform.
It's really for the high -end ones to begin with, but the fact that they have now the battery capable of receiving this power as well means that future models will also be able to charge faster than they can today.
Presumably, something with this kind of performance is going to in the initial period anyway, be more expensive, right?
And for EVs, full stop around the world being made by anybody, the kind of price of the battery is still one of the big drags on making them more cost competitive, getting more people to switch over to them, right as well?
Sure. Yeah. I mean, batteries are still probably the most expensive component in the car, though the prices have come down considerably.
I don't actually expect that this is going to increase the prices.
First of all, it's not really BYD's policy, let's say, or their tendency to increase prices that, if anything, they've been bringing prices down more aggressively than any other car manufacturer out there.
We're still in what I call the Wild West era of the electric car period.
So, technology developments are coming on really big and strong, like they did in the age of the petrol car at the very beginning.
And then kind of thing slowed down as the gains became more incremental, we're still in a period where big gains can come in a very short period of time.
So I think it's really just within the development span of electric cars that they're coming.
And therefore, I don't expect that it will push the prices up considerably, actually, and I suppose then the only remaining question is it's sort of battery life, whether it degrades or not, and I guess the, the proof will be in the in the driving.
Sure, yeah, that is a question.
Obviously, they can't answer that yet, because they don't any cars on the road with this battery but presumably it's been through a considerable amount of testing.
I mean, their first blade battery came out about four or five years ago.
So they've been working on it for the last five years.
They have over 110 ,000 R &D people within BYD.
It's a massive company.
So, they're putting a lot of power into this, a lot of energy.
They're certainly very capable company.
And I expect that it shouldn't have massive detriment on the battery life.
We will see over time, but again, only time will tell.
You're soaked in this stuff, Mark, compared to most of us.
listening today. But does it still shock you how quick...
I mean, it feels to me that this section, this industry is just moving at break neck, break neck speed at the moment.
It is, yeah. And it's driven by the hyper competitiveness of it.
Obviously, I'm based in China, which is why you've come to me about BYD.
Here we have over 60 brands all working on the automotive space.
They're not all full EV manufacturers.
Some do a bit of EV, some do others.
But the competitiveness of it.
They're just absolutely slugging it out.
Completely fighting against each other the development within the product, the innovations in the cockpit, and the car, and the technology, they change almost monthly, and yet for something like this to come out to almost double the current maximum charging speed, it's a shock me, actually makes it quite shocking out in itself I would say, it's a huge industry, it's changing rapidly.
I do suspect at some point it will eventually slow down and become a bit more normal, but right now it does feel like a bit of a whirlwind and it hasn't done for the last three years, it is just it gets better and better.
Mark Reinford, the founder of Inside China, auto there.
Well, success for electric vehicles on four wheels, less so for those on two, the Indian electric two wheel manufacturer Ola Electric.
So it shares heading in the opposite direction, heading for a record low.
In fact, before recovering a tiny bit on Tuesday, it's a company that has dominated the market for those sort of motorbikes and scooters, attracted big investment from the likes of Japan's SoftBank.
So what's gone wrong recently, Our reporter, Chana Shukla, in Mumbai told us more.
It kind of reflects both, one, a waning investor hype because this was part of the initial startup success story, and we've seen a lot of these startups actually losing out in the market now that they come to an established space.
And secondly, it is also an internal struggle from this unsustainable growth path that they have been on.
In fact, they listed last year and they've already lost 70 percent of the value from the highs of the stock.
Some of the troubles are really deep rooted.
They were the top seller once, but they're facing tough competition in the market from the new entrants also because they've been trying to sell these vehicles directly to consumers by passing the dealership.
But more than that, there have been numerous consumer complaints on quality and service of its vehicles and the latest where the stock went to record lows on Monday was after one its key creditor took one of the subsidies to court over payment defaults asking for it to be liquidated.
While the company has denied that claim they say they are seeking legal advice.
Asking the right questions can greatly impact your future, especially when it comes to your finances.
So if you're looking for a financial advisor you can trust, certified financial planner professionals are committed to acting in your best interest. That's why it's gotta be a CFP.
Find your CFP professional at let'smakeaplan .org.
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We're with World Business Report on the BBC World Service.
Let's head back to Emma Wall, Head of Platform Investment at the UK investment firm Hargreaves, Lansdowne now, because Emma in stock market terms as well, it really interesting warning, significant warning perhaps from Bank of America today.
just talk us through what they're predicting projecting, I guess?
Yeah. So they undertake a monthly fund manager survey.
And normally month to month, you don't see much movement in this, but this month you've seen for the month of March, the most significant drop in allocations towards the US equities.
So put that in layman's terms, basically people are thinking that they do not want to be investing in US equities at the moment.
Absolutely. That's all trade war related, right?
Absolutely. It's related a lot to the I mean, there's a lot of uncertainty globally.
The US is not the only place to have macroeconomic headwinds.
When you're trying to allocate client capital in this environment, waking up on a Monday and having a completely different market backdrop to when you wake up on a Tuesday around tariffs, around allies, around macroeconomic and geopolitical initiatives, it's very difficult.
So actually taking some of that risk off the table.
And don't forget, although the S &P 500 has actually had not a very strong 2025, actually it's down around three and a half percent year to date.
The previous five years, indeed, 10 years were extremely strong.
So actually taking some gains and reallocating those to areas like perhaps Europe, which have stronger momentum behind them, is where people are thinking.
Yeah, and we've been trying to stress this on the programme in the last few weeks as well.
It doesn't matter that it's the US stock market that's moving up and down.
These are companies often that you will use.
Perhaps you're employed by them.
perhaps you work with them, so what happens to their share prices can affect you way beyond the borders of the United States, something I'm sure we'll keep watching.
Emma, thanks as always for your insight on the programme today.
Emma Wall of Hargreeves lands down there.
Now, when you hear this sound, what comes to mind?
Perhaps a nice cold beer, maybe if you're in the right part of the world at the moment or a cold can of a fizzy drink, a soft drink perhaps, or maybe even a gut health probiotic?
If you thought the last one, you who were perhaps in the minority, not so much now, not according to PepsiCo anyway.
They've just acquired Poppy, a probiotic soda brand, for nearly $2 billion.
Why? Dina Shankar, a food reporter at Bloomberg, tried to explain.
Poppy is one of the leaders in an emerging category of healthier sodas, sometimes called modern sodas, sometimes called functional sodas.
Basically what the idea is that it's soda, except it's healthier than your standard Coke or Pepsi.
It has a lot less sugar.
And in the category, it could have anything from prebiotics to probiotics to fiber.
It just depends on your particular brand.
And Poppy uses prebiotics, fruit juice, and apple cider vinegar and has 5 grams of sugar or less per serving.
So this is a soft drink you can buy from what?
Supermarket, corner shop, all that kind of stuff.
But again, it's in that space, that wellness space then as well.
Yes, well, that's what it's going for.
It's for the consumer looking for a better for you option.
And as you say, the reason PepsiCo has decided this thing's worth $2 billion, is because there's quite a few people going in that direction too.
Yes. A lot of people in both beverages and in food are making a decision over and over again throughout the day.
They're making decisions to choose what they see as healthier products.
So we're seeing this in everything from people choosing to spend more money at lunchtime on a fancy salad, that they're just going to eat at their desk, or a bag of chips that doesn't have artificial dyes in it, which obviously I know in the UK is not such an issue there, but here in the US, we have all sorts of bad things in our food that you guys no longer do or never did in the first place.
And people are paying more money for these products.
A can of poppy will cost more than a can of Pepsi, but people will pay for it.
And here in Europe too, there's been lots of question marks, and they are ongoing question marks about really how much science is behind all of this.
I'm thinking in particular of kind of yogurt drinks that people have for breakfast here that a lot of the big, the big brands have been rolling out in the past few years too?
Is that debate kind of ranging around some of these products too in the U .S.?
Yes, definitely. I mean the question is always is it really healthy?
And what I always say is, well, it's certainly healthier than a regular soda, which is not a high bar to clear.
And they've got an interesting backstory, this company too, right?
Because they came through a reality TV show in the States.
That's right. So, this company, they actually got a lot of attention after appearing on Shark Tank in 2018.
They really, you know, they're not the only company that has used Shark Tank as a launch pad.
And this is a nice big exit for a company that just a few years ago nobody had heard of.
Yeah, quite. And do we know what happens to their team?
Is there any details around the deal, are they going to stay on, is it going to be a direct subsidiary, or is it going to be swallowed up completely by PepsiCo and they're going to do everything from now on?
I think we're going to have to wait and see exactly how it integrates into the Pepsi operation.
I think Poppy has a really strong consumer loyalty.
Well, Dina Shankar there, of Bloomberg speaking to us from New York City.
Emma, this is an area where everything is exploding, isn't it, sort of wellness brands?
It is, indeed, yeah.
And it's a huge growth area, actually.
And if you look at some of the more traditional, what we might call thin -stock companies, this diversification to take on more healthy brands as an alternative revenue stream is a theme we're seeing across consumer staples.
Yeah, and a theme we saw.
The UK statistics agency sort of gets our inflation basket, yoga mats in there.
So wellness across the board. Yeah.
I mean, this is a really speaking to the sort of changing consumer trends.
I'm a bit sad about the demise of the printed newspaper, no longer being considered a staple.
And that began my career many years ago on printed newspapers, but VR headsets in, yoga mats in, printed newspaper...
And PullPawKin as well.
More on that one on our website, bbz .com forward slash business.
Emma, thanks so much. And thanks to you for listening to World Business Report.
Asking the right questions can greatly impact your future, especially when it comes to your finances.
So, if you're looking for a financial advisor you can trust, certified financial planner professionals are committed to acting in your best interest. That's why it's got to be a CFP.
Find your CFP professional at let'smakeaplan .org.
