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And this is Andrew Peach with World Business Report from the BBC.
Good to have you with us.
Today, the economic challenge is facing Japan, which led to a harsh verdict from voters.
A business leader in Germany tells us how he wants the government to boost business and reset relations with the US and pay -as -you -go systems for when the power goes off in South Africa.
care. What was happening is that we're having power cuts and my mum is on an oxygen concentrator.
It was going off for sometimes six hours.
First though, Japan's Prime Minister, Shigeru Ueshiba, says he's going nowhere despite his governing coalition losing its majority in the upper house of parliament.
He said the electorate had delivered a harsh judgment but there were too many pressing economic issues for him to deal with to resign, including including the threat of extra US tariffs and high inflation.
Tarek Kono is a member of parliament for Mr. Ishiba's ruling party and former Japanese foreign and defence minister.
We have had the wrong policy tackling the inflation.
We should have asked the Bank of Japan to raise the interest rate so yen would be stronger.
Right now, yen is very weak.
So weak yen resulted in higher price for whatever we import.
We should have stood firm and talked to the Bank of Japan, but we didn't do that.
So that was the wrong policy.
Dio Sahasi is a professor of international politics at the Institute for Advanced Studies on Asia at the University of Tokyo.
Actually, this time, the Sansei Party, which calls Japan's first approach, is a very typical populism party.
They really got a big victory in this upper house election.
That is because, first of all, people are frustrated by the ruling party coalition because the economy is not good and they are not tough against the United States.
But I think more important reason is the Sunset Party, the populism party, really made use of xenophobic sentiment in Japan, in Japanese society now.
and they call Japan's first approach and they pick up the example, foreigners, especially the people from China, start to purchase many apartments and land in Japan.
And so many tourists also overwhelmed many parts of Japan in this moment.
So it's a kind of Zen -phobia.
Are these real issues or are they issues that have just been effectively mobilised in order to do well in the elections, would you say?
It's an excellent question, because in June, one month ago, we thought the main agenda for this election is rice price.
I mean, food pricing was really crazy now in Japan.
Actually, when the election started two weeks ago, the main agenda has changed.
And, you know, Zenobira rise, you know, very suddenly and it started to be a main agenda.
So we, you know, simply surprised by this.
So people have been motivated by xenophobia is your word. Immigration is one aspect, but also, as you say, people from other countries buying up property, too many tourists, those kind of things.
What about the underlying economic problems in Japan?
High inflation, low productivity, ageing population, the list is long.
Yeah, of course, you know, like many other advanced economies, Japan has suffered from the inflation of food pricing.
But I think the most important issue for Japan now is food pricing.
And somehow, you know, rice price has decreased last few weeks because, you know, ruling parties thought this is the main agenda.
So they tried and made every effort to decrease the price.
So now food pricing is fine, but inflation and also weak end is still there.
So people are still frustrated by this weak economy.
Shigeru Ishiba, the prime minister, has been punished by the electorate and yet he can reach for these exact same issues and say these are the reasons I need to stay.
I can't be standing down.
We've got all these economic issues to deal with.
I think the reason why Ishiba is stay here, even after this big loss of the upper house election, is nobody can do better at this moment by ruling party coalition.
So he will stay maybe for a few months or a few years.
But the real issue is he cannot do many things because he's now a minority leader in lower house and upper house, both house.
house so this is now very tough situation for japanese politics and the most pressing thing that uh shigeru ishiba has to deal with now is the threat of these additional u .s tariffs which could be just weeks away donald trump likes dealing with winners he's no makes no secret about it and that's going to make the relationship with japan all the more difficult i would say if he perceives the prime minister to have been weakened yeah you are really right i mean president trump might not have confidence of the negotiation power of shigeru ishiba and shigeru ishiba in reality cannot make big appeasement to
the president trump right because he doesn't have power to satisfy what he promised to the united states so i really don't think the negotiation with President Trump might go success at this moment.
President Trump may not want to make a deal with the Prime Minister who just lost the election.
Dio Hissasi from the University of Tokyo.
Live to you, Bill Blaine, who's with me today, principal and founder of Winship Capital.
Bill, thanks for being with us.
No actual market action in Japan.
There's a holiday in Japan, so the markets are closed today.
But give me your sense of reaction to this damning verdict on the the japanese government and economy yeah well that was a great interview with the chap from university of tokyo really with everything there but the real thing that the globe is paying attention to is going to be the japanese domestic bond market japan government bonds or jgbs as we we call them, there's a great fear that Japan, which has a debt ratio to GDP of around about 240 odd percent, could be the canary in the coal mine that triggers the kind of crisis we've all been expecting in G7 government bond markets.
However, I'm more hopeful, because if you you actually look at the structure of the japanese bond market it's largely domestically held and it is very tightly controlled by the bank of japan plus japan let's not be coy about it is a very wealthy nation it's got some very large and successful countries that are well invested throughout the globe but you have this some doubts or at least there are some doubts around around that people will be less enthusiastic about buying up Japanese debt?
Well, that's certainly true, that they are going to be concerned that how a nation where interest rates are starting to rise will be able to continue to service the size of that debt without triggering other consequences, such as further weakness in yen, which contributes to domestic inflation, and without seeing all the other problems that the previous professor was just mentioning, making the situation worse.
Certainly, the market has a habit of emphasizing the bad news.
But I suspect that this is not the beginning of the crisis, because the debt problems, although they look to be very large, are probably not as fundamental as the ones that are going to to be facing the USA and perhaps the UK.
Okay, off to Germany next, where more than 30 of the largest companies have committed around €300 billion or $350 billion of investment to Germany in a bid to boost investor confidence from elsewhere.
Now, to get more of a sense of the challenges facing Europe's largest economy and how its new chancellor is trying to tackle them, I've been talking to Antonin Filkenberg, Director General of the Federation of German Wholesale, Foreign Trade and Services.
Well, we are in the third year of a recession.
So most companies are in dire straits and especially the smaller and mid -sized companies.
Investment has been leaving the country for years now and we are sorely lacking in private investments.
So today's news are good news for the German economy in general.
And what's needed to try and turn this around?
Because it might come as a surprise to many many people listening that Germany is in this situation, because historically, we think of it as being the economic powerhouse of the continent.
The difficulty is that the regulatory framework of Germany has been needed an overall for years now.
And German politics has wasted many, many years and just going along with the current state of the economy instead of investing and reforming to make the future economy more competitive.
We are high in taxes, high in energy prices and very high in bureaucracy and these are all factors that lead to a difficult economic position at the moment.
And just run through the sort of changes that you want to see, some of which are now being introduced.
I think the major changes from the wholesale and foreign trades community community are actually bureaucracy more even so than taxes.
The high taxes that are a problem, but every SME company is currently feeling like they're in a straitjacket.
The second issue is the high energy costs.
And now the whole trade war with the United States, the tariffs are an additional burden on the German economy and the smaller companies, especially.
What about labour relations?
That's an issue certainly for car manufacturers, as businesses of that sort?
I think labour relations are actually relatively stable.
It's the labour costs, especially the social benefit costs that are too high and need to be reformed, but those reforms are traditionally very difficult to achieve in Germany.
I suppose, because you're talking about undermining the terms and conditions under which people go to work.
Well, we are having a discussion about expanding the hours a person can work per week.
We have also a minimum wage discussion and both of these factors, of course, influence the competitiveness of companies whose workforce is located in Germany.
Germany obviously has a new chancellor.
How much of a difference is he making?
I think he makes much of a difference, actually.
He seems to really understand the difficulties that companies are facing and he's willing to turn the wheel and make changes.
But he's steering an oil tanker and changing course for an oil tanker takes time and a lot of effort.
There's hundreds of billions of euros of investment being talked about today.
How much of a difference will that make to the situation you're describing?
I think it's a positive sign in regards to the expected competitiveness of the country.
It shows the business community that there are many larger companies believing in the German economy in general.
And much of the economic climate is also a psychological issue.
So psychologically, good news are always welcome.
What sort of relationship do you want the German government to have with the United States?
Because that's going to be under the microscope in the next few weeks particularly.
The United States are our biggest trading partner, together with China, they're neck and neck.
And we need to have good, stable relations with the United States.
It's a strategic partnership with the military, with the economy.
So this whole trade war, for us, is pretty much nonsense, because it's hurting both economies, both employees, the society itself, driving inflation, it makes to us little sense.
But we as Europeans, as Germans need to hold the line and make sure that we are not willing to negotiate at any price.
We need an agreement, but it needs to be a fair one on both sides.
What concessions would you like to see Germany make to have the good relations that you're talking about?
Well, we can certainly talk about lowering tariffs on the European side.
However, if it's a one -sided discussion where all the American tech companies are excluded, for example, then I think it's difficult to find common ground for a fair assessment of the fair negotiation process.
That's Antonin Funkenberg with me.
Bill Blaine is still here on the programme as well.
Everyone wants the EU and the US to come to some arrangement, but even listening to Antonin there, it doesn't feel like they're going to.
No, it doesn't. And again, what another excellent interview there I think he hit all the key components of the current situation but when we're looking at where Europe's going to go next now this is where it gets really interesting because it's very difficult to maintain the kind of relationship that the whole of Europe and especially Germany because it's basically Germany what what we're talking about when we talk about European US trade.
But if that is no longer reliable, and we've got this bureaucratic regulatory mindset that the chap was referencing, which has basically created this flatline European economy per decade now, then how do you solve that, especially when the global trading axis is going to shift away from dealing with America towards dealing with Southeast Asia I deliberately say Southeast Asia because it's not just China, but that areas where the bulk of the world's expanding and wealthy middle classes now reside.
And these are the people that future trade have to be done with.
And if Europe's going to compete with them, they have to get more competitive.
The problem is you cannot regulate for entrepreneurship.
All you can do is encourage it.
Let's talk about an idea that's out there today, that stock markets, stocks and shares should be traded 24 -7.
The particular stories about that happening in London, but I suppose the principle could apply anywhere.
Yeah, this is the story that the stock exchange wants to, the London Stock Exchange wants to do 24 -hour trading.
Great idea and concept, but to be a successful stock exchange, you have to have things that people want to trade.
And the reality is that the UK lacks the scale of companies now that would make it worthwhile doing.
We're basically a small stock exchange now.
And yes, perhaps there are people who want to trade it through the night and the way that Bitcoin and things like that are traded.
But the reality is that the stock exchange going 24 -7 is no substitute for the UK having global scale companies that are listed and traded out of London.
So I've got to say, I think this is a bit of a story for a story's sake.
All right, Bill. Thank you very much indeed for being with us.
Bill Blaine from Windshift Capital.
This is World Business Report with Andrew Peach. You're listening to the BBC.
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We're off to New York next, which is where some business people are concerned about the mayoral election.
Why? Well, Zoran Mamdani won the Democratic nomination.
He's the clear frontrunner to get the job as the city's next mayor.
Our North America business correspondent, Michelle Fleury, has been looking into this.
Michelle, why are people worried?
Look, I think you're talking about a young, charismatic individual who's kind of really really leapt to the fore in politics here in New York City.
And it's caught Democrats off guard and it's caught Wall Street off guard. And the reason is because he is a self -described socialist. He has sweeping plans to tax the rich, to freeze rents, to take on corporate power, to sort of open grocery stores that will sell goods for free.
And this has unsettled people here in the capital of capitalism.
They don't like this.
And if you look at some of the responses the morning after he won the Democratic primary, you saw comments, for example, like this one from hedge fund billionaire Dan Loeb, who called it officially hot commie summer.
There was also a comment from investment strategist Jim Bianco, who dubbed it suicide by mayor.
and there was an owner of a local grocery chain in the city who threatened to pack up and leave. There is a lot of anxiety.
They don't like the sound of this.
You've got the sort of real estate groups here who are a powerful force in the city.
They are also very concerned.
And so there was a meeting last week in which 130 CEOs and senior executives met with Zoran Mamdani to sort of see whether or not they could find common ground with the sort of, you know, young Muslim from Queens, who, as I say, describes himself as a socialist. There were a lot of questions about his relationship with the Jewish community.
I understand that the CEO of Pfizer had some rather sharp questions for him.
He apparently walked back an idea of a comment that he had been accused of saying in the past about globalising the Antifada.
He said he would discourage the use of the term, But he didn't walk away.
He didn't disavow the comment.
And so it seems that this meeting has perhaps calmed tension slightly, but it doesn't sound like there was a meeting of minds.
And it's worth pointing out that the meeting itself was convened by a group called the New York Partnership for New York City.
It's a business advocacy group.
And I got a chance to speak to Catherine Wild, the group's CEO, to sort of understand exactly why Wall Street is so worried.
Zoran has run as a democratic socialist, which really the business community, to them that sounds like anti -capitalist and tax the rich and all the things that are sort of one -liners that are a threat to the financial capital, the commercial capital of the U .S. But isn't the reality that Mamdani is quite limited by what he can do given that a lot of power rests at the state level?
Many of the proposals that Mamdani has put forward as a candidate for mayor are things that he cannot achieve.
They're the province of the state government or some combination of federal and state government.
And so he cannot raise taxes on corporations.
That's a state job.
He can't raise taxes on individuals.
That's a state job.
You have helped arrange a meeting between Mamdani and the New York business community.
Can you tell us who attended, how did it go?
So we invited him in and he was very gracious and most willing to come and talk to the business community and listen to their concerns.
And that was heartening because he didn't resist, he didn't demonize, he hasn't said I won't work with business.
Quite the contrary.
He said, I want to be the mayor of the whole city and I realize the value of the business community.
Do you get a sense from the business community, from the people you were speaking to, that they're thinking, OK, we can work with this person.
We may not like him, but we can work with him.
Or do you get a sense of, no, we're going to fight this right up until the last bridge is counted?
The business community is totally split.
It is not unilateral.
I think for those who met him, the young tech entrepreneurs were very excited to work with this person.
He's a digital native.
He's somebody that they related to.
For the mature global business leaders, I think much less so that they really are concerned about his lack of management skills and whether or not, as some have said, whether or not he's really able to relate to them and consider their issues on an individual basis, or is he the representative of a movement that is not going to change?
A conversation we'll hear much more of from New York, thanks to Michelle Flurry.
South Africa has been battling power insecurity for 15 years or more.
Wealthier South Africans go off -grid and kit out their homes with solar systems. Now companies are introducing pay -as -you -go power systems to allow people in less well -off neighbourhoods to do the same.
Pomsa Feglani has been to see a shopkeeper east of Johannesburg.
In South Africa, electricity has become a privilege.
For nearly 15 years, people here have lived through load shedding, which has scheduled rolling blackouts designed to protect a fragile and crumbling national grid.
Once a short -term solution, it's now a daily reality, stalling economic growth and pushing millions further into hardship.
The National Power Utility, ESCOM, has been brought to its knees by decades of corruption and mismanagement, as well as an aging infrastructure.
structure. We're in Krugerstorp, west of Johannesburg.
Power cuts have badly affected small businesses.
Many of the shops in this area have shut down.
I counted three on the drive into this township.
We're here to meet with Julius Kwebetseng who runs a small grocery shop known locally as a spazzer shop.
There are children playing near his store and a steady stream of people coming and going as we approach. Julius is one of a number of growing South Africans turning to affordable solar energy, as the national power utility continues to buckle under pressure.
It was affecting us directly to our pocket because you need to make an alternative.
We need a lot of electricity.
The fridges need to run every day.
If you don't have electricity, you can't even sell the frozen maybe will be rot it's costing also you the money for that damages with stage six load shedding announced South Africa's power crisis grew so severe that in 2023 President Cyril Ramaphosa appointed the country's first electricity minister to try and end the blackouts and while some progress has been made poor communities still face what ESCOM now calls Load Reduction.
It's essentially the same cuts with a different name.
Julius' solar system is from Wirtility, a local startup offering pay -as -you -go plans and solar systems built specifically for township businesses and also accessible to lower income households.
households. Vincent Maposa, a former energy analyst, is one of the founders of this six -year -old business.
We had to look at the market across the different segments and start to curate products that are fit for purpose and are affordable for that part of the market.
Because part of our mission is to make sure that as many as many homeowners and small businesses have access to power, but not all of them on the affordability scale can afford the same standardized product.
Back in Julius Gilbert Zeng's spasa shop, the fridge hums steadily now.
Customers drop by for sweets, cold drinks, and even to charge their phones when the power is out.
In another part of town, east of Johannesburg, we visit Benoni to meet Mark Moodley.
He made the switch to solar not to save a business, but to save a life.
His 81 -year -old mother, Sarjorini, relies on an oxygen machine to breathe.
Mark explains. What was happening is that we're having power cuts and my mum is on an oxygen concentrator and we couldn't do anything else because it was going off for sometimes six hours.
And in those moments where your mum's oxygen tank, would there be no power for six hours, you mentioned, What was happening in the house?
I was getting a portable converter and running it off the car battery.
And it doesn't last too long.
And then she'll end up coughing.
You end up sitting up with her, lifting her arms on the bed so oxygen gets into her lungs.
Last year, Sajarini spent three weeks in intensive care.
Back then, doctors said she might not survive the year.
But the steady power supply has given them more time together.
Mark again. It's been a lifesaver and even now with the solar, it adds its value because I don't have to go around, oxygen doesn't get depleted and I don't have to rush into emergency when there's no electricity.
As South Africa's energy crisis drags on, in a country drenched with sunshine, people like Julius and Mark and many others like them who were left out of the solar boom are finding the more affordable pay as you go has been about taking back control of their daily lives and their future.
And from me, Andrew Peach, and the team on World Business Report, thanks for listening to the programme.
