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Welcome to World Business Report from the BBC World Service.
I'm Roger Herring, and on this edition, the problems of dealing with a mix of civil and military aircraft, along with drones, in busy airspace.
Also, the US economy has been growing in the first month of the Trump presidency, but it's still weak.
So what are its prospects in the coming year?
Why Spain's economy is booming?
I thought that maybe the tourism will be never like it used to be before.
Things became little by little much better.
And I thought this year is going to be also a good year like it was maybe 2023 and 2024.
And shoplifting reportedly out of control in the UK, but said to be well managed now in the US.
So what's the secret?
But first, the news has been dominated, of course, by the air crash in Washington.
Accident investigators say they're looking at multiple factors in an effort to discover the cause of the fatal crash involving a passenger plane and a military helicopter that left 67 people dead.
President Trump said an investigation would be carried out.
We do not know what led to this crash, but we have some very strong opinions and ideas, and I think we'll probably state those opinions now.
because over the years they've watched as things like this happen and they say, well, we're always investigating and then the investigation three years later, they announce it.
We think we have some pretty good ideas.
But we'll find out how this disaster occurred and we'll ensure that nothing like this ever happens again.
President Trumbull, the incident happened near D .C.'s Ronald Reagan Airport and air traffic is normally extremely busy in the area, both civilian and military.
Last year, the Biden administration legislated to allow five new daily long -haul flights from that airport.
And some are flying in very well -regulated airspace with aircraft which are very well -equipped.
But it's the actual merger.
It's where these different aviation systems connect.
That's often where the problems are.
So you have low airspace, helicopters, military personnel, not quite equipped for the same systems on the same frequencies as you have commercial airlines flying fixed -wing aircraft in and out of busy airports.
So this clearly is a problem in and around DC.
Is it a particularly difficult area because I suppose you do have a lot of military as well as civil aviation there?
It shouldn't be. I mean, we have the tools now.
We have the understanding of separation criteria.
One of the questions that's going to be asked is why was that helicopter at that particular height, which was the height of an aircraft descending into and out of an airport?
The issues come, of course, is when you get a sudden change, when a controller, for example, asks for an aircraft to be in an area where a helicopter pilot might not expect it.
But again, we have the tools, we have all the procedures in place for this not to be a problem.
And normally with an aircraft accident like this, it's not just one thing that's gone wrong.
It's a whole series, two, three, four things that have happened which have caused the catastrophe.
And is it a problem in other busy airports around the world, this same mixing as you were talking about of different systems, different areas, different, I suppose, administrations perhaps?
So you have a commercial airport, but you do also have other things operating.
Yeah, so the issue is complexity.
It's not the numbers that's the issue.
It's the climbing and descending different types of traffic.
And remember that in lower airspace, we're about to get a lot more crowded.
We're going to get a lot more drones coming in.
Very soon we'll have electric air taxis coming in.
Some of this is going to be separated via a completely digital system where you don't have controllers at all.
other parts you will have controllers some of it will be integrated some of it will be separated so you know we're entering a new digital age of complexity where man or humans and machines will have to learn to to work together much more efficiently than they do at the moment now there are certain airports
we think of around the world as being particularly busy and perhaps more complex i'm thinking perhaps skip hold within europe uh london heathrow airport for example but also singapore drones coming in very soon we'll have electric air taxis coming in some of this is going to be separated via a completely
digital system where you don't have controllers at all other parts you will have um controllers some of it will be integrated some of it will be separated so you know we're entering a new digital age of complexity where man or humans and machines will have to learn to to work together much more efficiently
than they do at the moment now there are certain airports we think of around the world as being particularly busy and and perhaps more complex I'm thinking perhaps Schiphol within Europe London Heathrow airport for example but also Singapore Changi airport I mean are these the kind of places we need
to be careful in no I don't think so because you're dealing with conventional traffic so you're dealing with aircraft that are coming in going out on well -formed routes A lot of transparency, the air traffic, all working on the same frequency, all working with the same equipment.
You'll have the aircraft safety systems like TCAS available, as well as the air traffic control system.
So we have very layered safety.
The issue is when you have other types of aircraft in the lower airspace to deal with, which is the helicopters, for example, or light aircraft.
A lot of the problems come as when you have military, civil, light aircraft, general aviation aircraft mixing with and they all have different performance characteristics and they all have different kind of ways of seeing a void.
So that's where it becomes complicated.
And which sort of airports, which areas are we talking about?
We know obviously D .C.
is a problem, but where else?
So anywhere where you have very, very busy, low -altitude helicopter operations, ad hoc, see and avoid, where sometimes the visibility might not be great, mixed in with commercial traffic.
I mean, I don't want to say these are problem areas, but if you go to places like Sao Paulo, for example, where you have, which is the busiest helicopter urban low -level traffic in the world.
then, you know, you do need extremely good separation criteria from the commercial aircraft side.
So, you know, it's those where you get that mixture of different types of traffic.
I'm not saying they're dangerous, but you have to be particularly vigilant.
Phil Butterworth -Hayes, their aviation expert here in the UK.
Now, economic growth in the US slowed at the end of last year as trade and investment declined and the country was hit by hurricanes and strikes.
The economy expanded an annual rate of two -point professor of economics at the University of Michigan.
She's a former economic advisor to President Obama.
Welcome both. Judy let me kick off with you and say what do you expect in terms of these tariffs?
We don't know for certain that they're coming in but they're certainly threatened.
What do you think that impact is going to be on the US economy?
I think the impact of tariffs will be substantially less important than the positive impact of a supply side agenda under the Trump administration that will serve to re -empower the private sector with lower taxes, less regulation.
I think energy prices will be coming down through increased supply and all of that should help bring inflation down.
And I think to some extent that justifies what President Trump is talking about in terms of lower interest rates as well as lower inflation.
So I see good prospects.
Yeah, but Judy, just to pick you up on that, I mean, the US economy operates within an international system.
And that's really where the potential lies, perhaps for increasing inflation, doesn't it?
Well, for the United States, we're fairly self -sufficient.
And imports are about 15 to 20 % of our economy.
And what I think is important to realise is, for example, Mexico is the strongest U .S.
trade partner. In the last year, in 2024, the exchange rate between Mexico's currency, the peso, and the U .S.
dollar shows a devaluation of Mexico's currency of 23 percent.
A tariff of 25 percent just barely brings that up to compensate for the unfair trade advantage that Mexico enjoyed through competitive currencies.
And I think President Trump has always said that currency manipulation is an unfair trade practice that really hurts U .S.
manufacturers. And I think he intends to use tariffs to correct for that, as well as for other negotiating objectives.
Okay, let me bring Betsy in.
Betsy, what's your thoughts on all that, particularly this issue of tariffs?
Well, you know, tariffs mean a price increase for American consumers.
And we actually saw that American consumers are worried about that price increase and American businesses are as well.
Because one of the things that drove some of the GDP growth in the fourth quarter was the really large jump in the consumption of durable goods, which was likely driven at least in Mexico's currency, the peso and the US dollar shows a devaluation of Mexico's currency of 23%.
A tariff of 25 % just barely brings that up to compensate for the unfair trade advantage that Mexico enjoyed through competitive currencies.
And I think President Trump has always said that currency manipulation is an unfair trade practice that really hurts U .S.
manufacturers. And I think he intends to use tariffs to correct for that, as well as for other negotiating objectives.
OK, let me bring Betsy in.
Betsy, what's your thoughts on all that, particularly this issue of tariffs?
Well, you know, tariffs mean a price increase for American consumers.
And we actually saw that American consumers are worried about that price increase in American businesses are as well, because one of the things that drove some of the GDP growth in the fourth quarter was the really large jump in the consumption of durable goods, which was you know likely driven at least
in part of people pulling purchases forward because they're thinking they're going to become more expensive in the future because of tariffs so big purchases like cars people wanted to get ahead of their potentially being big price increases and we also hear stories of businesses that were you know
where they really rely on the things that they're importing, they wanted to get ahead.
I think we also want to remember that this isn't just a story about imports when tariffs come, because when we put tariffs on the stuff we're importing, we're usually hit with retaliatory tariffs.
That affects our business's ability to sell abroad.
So what we're doing is talking about being a more closed economy where we sell fewer things to the rest of the world and buy fewer things from the rest of the world.
And that doesn't usually grow the economy.
Yeah, but Betsy, the point that Judy was making on that is that most things America needs, America has.
It doesn't, in that sense, need to depend so much on the outside world.
And I think that you'd find a lot of American businesses that would disagree with that idea that they only, you know, that they should be perfectly satisfied only with their American customer base.
And, you know, many of them turn to countries like China, not just to manufacture things that are sold in the U .S., but for a source of customers.
You know, whenever we reflect government spending and government hiring of workers.
And I believe that what President Trump will attempt to accomplish is to transform the economy toward a more productive one based on real output and and to use private market forces.
supply and demand, whereas our Federal Reserve tends to try to use high interest rates to cut off demand, and that's how it fights inflation, the supply side approach says, no, the goal is to increase output.
And if you lower taxes, reduce regulations, and provide access to capital so small and medium -sized businesses can expand plant and equipment and hire people, that additional output is what will bring prices down.
And then now you have an economy that's really functioning in a productive way and not just dependent on deficit financing and artificial stimulus from the government.
Yeah. And Betsy, I mean, that is a reasonable point about, you know, that certainly the Biden administration put an awful lot of money into rebuilding infrastructure, moving towards lots of government based jobs.
And America needs something a bit more than that, doesn't it um so absolutely american needs private sector jobs but actually it's the private sector that's been driving this economic recovery okay let's be clear since the pandemic began the u .s u .s gdp has expanded uh 12 .1 percent that's more than twice
the growth rate of any other g7 country that's not because the government was doing a bunch of stuff we actually had the fastest rate rate of new business formation that we've had in the 21st century over the last two or three years.
So we have private sector businesses have been forming new businesses at a faster rate than we had ever seen before.
I've been to so many economic conferences over the last 20 years where we've said, what can we do to incentivize new business formation?
And we've really struggled.
And we finally saw that happen coming out of the pandemic, as people felt like they needed to reinvent themselves, we saw this huge surge of new business growth.
To put it in perspective on government hiring, it was the end of 2023 before we even had as many employees in government as Trump had had during his time in office.
So it's not like the Biden administration was really growing employment in government.
In fact, I would say that it's growing, grew slower than you would have predicted in, say, 2019 before the pandemic.
You would have predicted even more government employees today.
So I think that that's a ruse.
It is the case there was a lot of government spending.
What was that spending trying to do?
Invest in American industry, set up things like infrastructure that makes it easier for those private sector companies to start new businesses.
and that's in fact what we saw.
Now Judy, I mean that government spending point is an interesting one because there is a huge, huge government deficit and if Donald Trump brings down taxes in the way he's saying, that's just going to grow isn't it?
Well as it turns out, when you have lower taxes, you end up with higher federal revenues.
We've seen tremendous increases in the fiscal deficit and I think we're really talking about a matter of political philosophy, maybe coming more from the left there's an emphasis on government intervention government management of investments and government knowing best whereas i would say if you're
more toward the republican side as i am you are not quite so um confident in the wisdom of fiscal stimulus and government management of the economy and you would rather have less government and have it stay out of the way because that's the way to have more innovation, more entrepreneurial energy.
And I think you get real productive growth that actually improves standards of living and increases prosperity for the whole society, whereas the government involvement tends to reward certain large companies, certain individuals, and I would prefer the more organic, private property -oriented approach.
I don't think we're going to find much consensus here.
Judy, thanks to you.
Thanks also to Betsy.
We will see what happens with the US economy at this very interesting moment and whether growth does come in, and I'm sure we'll be speaking to the both of you again.
But my thanks to Judy Shelton and Betsy Stevenson there.
You're with World Business Report from the BBC World Service.
Well, let's have a look at what's going on in the economy today, i .e.
the markets. Let's talk to Kerry Leahy, the economist at Columbia University.
Kerry, thanks for being with us there.
I mean, I suppose the headline really today, I mean, carrying on with all we've been talking about, mainly tech, of course, is Apple's earnings, pretty much a beat on quarterly profit estimates, but a bit of a doubt over iPhone sales and China revenue.
Well, that's exactly it.
I mean, this is a huge tech company, one of the magnificent seven that had a pretty good quarter, might not have been that much better than expectations.
But the good news on earnings was offset by the fact that they're struggling with the situation in China.
So the China sales are falling short.
And that used to be perhaps their biggest.
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You're with World Business Report from the BBC World Service.
Well, let's have a look at what's going on in the economy today, i .e.
the markets. Let's talk to Kerry Leahy, the economist at Columbia University.
Kerry, thanks for being with us there.
I mean, I suppose the headline really today, I mean, carrying on with all we've been talking about, mainly tech, of course, is Apple's earnings.
Pretty much a beat on quarterly profit estimates, but a bit of a doubt over iPhone sales and China revenue.
Well, that's exactly it.
I mean, this is a huge tech company, one of the Magnificent Seven that had a pretty good quarter.
Might not have been that much better than expectations, but the good news on earnings was offset by the fact that they're struggling with the situation in China.
So the China sales are falling short.
And that used to be perhaps their biggest market outside of that in the U .S.
But someone was saying to me that Apple could be perhaps the one most to benefit from this new Chinese deep seek AI app, because actually the cheapness of it means a lot of their things are going to work much better and much easier and much cheaper.
Oh, absolutely. One of the problems they're running into is that they're the high -priced product.
And now that there are opportunities with AI that would be much cheaper than that and less consuming of energy and chips would all be very useful going forward for Apple.
So Apple have reason to be happy.
Intel's first quarter, not particularly good.
Almost the old economy in a way now, Intel.
That's right. I mean, they were the kings of the chips 5, 10 years ago.
And in some sense, they've gotten run over, which is one of the hallmarks of the U .S.
economy that you were top 10 10 years ago and now you're in the bottom 100.
Yeah, always the way it goes.
Kerry, thanks so much for being with us.
Kerry Leahy there. Now, interest rates have been a big focus globally right now.
The European Central Bank, the ECB, has just cut its rates by 25 basis points to 2 .75 % to give a boost to the eurozone's sluggish economy.
But one country in that zone is already surging ahead.
I'm talking about Spain.
New data shows Spain's economy grew 3 .2 % last year, outpacing France, Germany, Italy and the UK.
And that's a pretty big turnaround for a country hit hard by Covid.
In fact, The Economist just ranked Spain the strongest -performing economy in the world.
So what's driving this comeback?
The BBC's Guy Hedgeco reports.
In 2024, Spain received a record 94 million visitors, helping drive GDP growth of over 3%.
That's four times the Eurozone average.
I'm in the historic city of Segovia, which is just north of Madrid, and I'm looking up at the city's vast, famous Roman aqueduct.
And this is a place which has become a very popular tourist destination, even though it's not associated with the beaches and the coastal resorts which have made Spain so popular over the years.
Elena Miron is a tour guide in Segovia.
There was a moment in which when we were around the COVID, I thought that maybe the tourism will be never, ever like it used to be before.
Things became little by little much better.
Now things are very good and I thought this year is going to be also a good year like it was maybe 2023 or 2024.
There are other reasons for Spain to be cheerful too.
After a cost of living crisis, inflation is now under control.
And although unemployment is higher than in many neighbouring countries, it's currently at a 17 -year low.
The socialist -led government says labour reform has helped create quality jobs and that targeted subsidies offset the cost of living crisis.
Carlos Cuerpo is the economy minister.
Spain is proving to be more resilient to successive shocks, including the inflation shock that came with the war in Ukraine.
We are getting out of the COVID without scars and we are getting out of that by modernising our economy and therefore lifting our potential GDP growth up.
Along with Italy, Spain is the biggest recipient of EU pandemic recovery funds.
And it's using them to create a greener economy.
I'm in a car production factory in Martorell, just outside Barcelona.
And this factory belongs to the Spanish car company, Seat.
And it's one of the reasons why Spain is the second biggest car producer in Europe.
Wayne Griffiths, CEO of the company, believes there's room for further growth.
So it is one of the key industries...
..an affordable home.
But in the meantime, the country is enjoying its moment in the sun.
And that was Guy Hedgecoe reporting.
Now, shoplifting, shrinkage, the five -figure discount, whatever you call it, stealing from shops is on the rise.
Here in the UK, the British retail consortium told the BBC retail crime is out of control.
Oh, shoplifters, they say, are carrying out increasingly brazen and violent acts of theft because they don't fear any consequences.
Now, the same was true in the US until about two years ago when retailers say things went back to normal, as I heard from Michael Baker, a retail analyst at DA Davidson in Boston.
It is definitely something that has increased over time and has impacted retailers' margins in particular.
It feels like in the US, though, it really came to a forefront in 2023.
And it feels like it's peaked a little bit.
And in fact, through some mitigation efforts and some other factors, it seems to have at least leveled off.
Well, take us through those mitigation efforts, because that's what's really interesting.
A number of countries are suffering from this, but obviously the way to deal with it, well, the Americans seem to have got a handle on it.
Yeah. And there's really three different ways I think about that.
First is they did implement some loss prevention measures in store.
What that means is having to put some things under lock and key, usually not great for sales.
Although interestingly, there have been some examples where it's actually been pretty good for sales.
For instance, Ulta Beauty put their fragrance under lock and key, and it actually helps sales because then there's an associate there in that part of the store to unlock it.
But then that associate can sort of act as a salesperson and drive some incremental sales.
But generally, you know, some loss prevention measures within the store.
Second factor is there's just been a lot of emphasizing the issue to regulators and to policymakers and trying to get some policymakers to put in some, you know, new laws and rules that really help mitigate shrink and theft.
And that's actually worked.
So things like making it harder to resell online on eBay or something along those lines.
Also, just increasing penalties for shoplifting.
And so getting the authorities, if you will, to understand the issue has really helped.
And by the way, one of the ways retailers have done that is by closing stores in high shrink areas where they said they're unable to make a profit because of all the theft.
And that really got the attention of the people who put the rules in place.
That's really interesting.
