this is bbc news. we'll have the headlines for you at the top of the hour, which is straight after this programme. hello, everybody. a very warm welcome to talking business weekly with me, aaron heslehurst. let's go and take a look at what's on the show. getting germany growing again. europe's biggest economy continues to shrink. so what's it going to take to get it firing on all cylinders? when we go to the supermarket, but also in the restaurant, that used to be a cheap city. it's not the case anymore. there's growing discontent on the streets as germany continues to grapple with the switch away from cheap russian energy, and it struggles with the investment it needs for long—term success. i'm going to be discussing

all of that with these two — there they are. one of germany's leading business groups tells me it's important that consumers start splashing the cash again and how problems abroad are hurting his members. also, the chairwoman of the german startup association, herself a successful entrepreneur, tells me why a different way of thinking is needed. and it's the younger generation that are going to deliver it. also, i catch up with the big boss of germany's most valuable company, the software giant sap, about why he's worried the rise of the far right could harm his country's economy, but he's still confident about the year ahead. wherever you'rejoining me from around the world, once again, a big hello and a warm welcome to the show. you know, this week we're taking a look at germany. the world's fourth biggest economy is europe's number one and probably its most influential. but last year, even though it avoided a technical recession, it was the worst performing of the g7 group of major economies. and boy, those struggles, they have many layers, but they include the move away

from cheap russian energy, reduced demand from china for all that high—quality stuff the germans make and the long term problems at home that critics say the government needs to do more to tackle. for most of last year, germany's economy, it flatlined and overall it shrank 0.3%, as higher prices held back consumer spending and its all—important exports also fell. one reason is higher prices, with energy and food certainly leading the way. now, as you can see here, the rate at which prices rose, they fell over the course of last year, but were still 3.7% in december — although that's not as high as some other major european economies. but it's why the ecb, the european central bank, has been steadily increasing the cost of borrowing, because although it hits consumers and businesses�* ability to spend, it should get inflation nearer to that 2% target. so to find out how people are feeling about the impact on their daily lives,

we sent our very own damien mcguinness out on the streets of berlin. traditionally, germany has relatively low cost of living and quite high wages compared to other similar countries. but there's a feeling here that things are changing, so people are feeling increasingly the squeeze. train drivers have been on strike and farmers have been taking the streets. and when you talk to people here in germany, many have the horrible feeling that prices are rising faster than wages. we notice it everywhere. i mean, the rent, of course, the charges for the apartment that we pay, the electricity for the gas, and of course, when we go to the supermarket, but also in the restaurant, berlin used to be a cheap city. it's not the case anymore. translation: at the supermarket, it used to be that for a five-person. family, i could do the weekly shop for well under 100 euros. now i spend well over that, so it's very obvious that everything's got more expensive. translation: for me, - i personally am doing well.

i have a good job and a good wage, so it's okay. - but i think in general, - things are going to get worse. transdlation: i think we've reached a tipping point. - translation: i think we've reached a tipping point. - people are incredibly dissatisfied. i'll be very interested to see what happens in next year's elections. but as ever, politics are at play. a recent court ruling judge that olaf schulz�*s governing coalition was breaking the law by infringing the country's tough debt rules. that means the government has to cut spending, but money has to be spent on renewing infrastructure, and the shift to green energy is certainly expensive. now, overall, germany has done a good job of weathering the economic crises, given how many crises are facing germany right now. but there is nervousness. the governing coalition is seen as argumentative, and as a result the poll ratings for the government are at a record low. damien mcguinness there on the streets of berlin. well, the imf, the international monetary fund, thinks there's going to be a modest improvement this year. we also asked the german government for an interview, but they declined. so here's some of what the finance minister said at the world economic

forum in davos, where he rejected the idea that germany's economic troubles make it the so—called sick man of europe. germany is not the sick man. germany is, after a very successful period since 2012 and these years of crisis, germany is a tired man after a short night, and the low growth expectations are partly a wake—up call. and now we have a good cup of coffee, which means structural reforms, and then we will be continuing to succeed economically. ok, so what needs to change for the world's fourth biggest economy to be more successful? well, private business has a big influence. so i turn to the chief economist at the federation of german industries. it represents 39 industry associations, more than 100,000

companies with around eight million employees. dr klaus gunther deutsche, really good to have you on the show. and klaus, let me start with this. when it comes to how businesses are feeling, klaus, there is this closely—watched survey from the institute for economic research, known as ifo, and it paints a rather negative picture of shrinking order books and shrinking confidence. so i've got to ask you, how much do you think that that is because of what's happening in germany versus what's happening in the rest of the world? unfortunately, it's a mix of both. for the corporate sector, of course, foreign demand. orders are the key factor to watch. and this has been declining for many, many months now. and the perspective that it will improve shortly is not really there because the resumption of demand globally will probably be slow and sluggish and take a while to occur. that's the reason why domestic factors play such a large role politically. and of course, in particular,

the energy—intensive companies were expecting a larger package of support on the pricing of energy in germany, part of which is being legislated now. but in essence, it will keep things sideways. and so the pressure on the energy intensive sector will continue and actually manufacturing investment, for example, but also investment in digital technologies and electronics recorded positive growth. and so the overall numbers are somewhat shaded by the effects of high interest rates on construction and on services and consumption. and klaus, the latest survey of consumer sentiment doesn't look good. it shows that people are still very much worried about the cost of living. and last year we saw german consumer spending fall. so i have to ask you, how much of a concern is there amongst businesses that the pessimism amongst consumers is just a huge drag on europe's biggest economy? why, pessimism amongst consumers in germany is a bit worse than in most parts of

the world right now. this will improve. and of course, by the middle of this year, most people will have recovered on the purchasing power side of things. but their tendency to buy durable consumer goods, cars or new furniture is still very limited. well, let's talk about exports. i mean, exports traditionally been a strength for germany. and let's be frank. i mean, you germans, you make great top quality stuff like well, like machinery and cars which lead the way. and yes, the numbers still show germany exports more than it imports, but those exports, they have been falling. so does that suggest, klaus, that german products arejust becoming, well, too expensive to compete on the global market? most likely not. if you look at global import volumes in the run up until october last year, they declined by roughly 3% and exports were very sluggish as well.

so it shows that we are so globally connected that we cannot escape from global trends that are shaping in particular manufacturing. so for the medium term outlook, the question greatest importance is will the us economy avoid a recession, get its soft landing done and do perform pretty well over the coming one or two years? and will china recover at some point in time from its structural problems on the property market and in manufacturing as well. this will benefit the german economy as well and will lead to a recovery of that sector as well. and klaus, let me end on this. how much concern is there that if germany doesn't improve both confidence and growth in the economy, that it could drag down other parts of europe and the eurozone in particular? we are clearly right now a small drag on growth for our neighbours because we

have this serious hit by the double crisis or the twin shocks of the recent past that we still have to fully absorb. but i think going forward we will improve in cyclical terms again and we have to work very hard on the structural and supply side conditions. well, on that point, dr klaus gunter deutsche, a real pleasure having you on the show. thanks for your time and we'll talk to you soon. you're welcome. as with so many countries, the future of germany's economy is increasingly reliant on new businesses, often founded by young entrepreneurs coming along and doing well. so i caught up with the chairwoman of the german startup association, who has herself started several businesses, including fox and sheep, which is one of germany's most popular kids app companies. verena pasdar, a real pleasure having you on the show. and verena, let me start with this because when you took over at the start up association

back in december, you said germany is, and i quote, "groaning on all levels. we need new impetus." so, verena, i've got to ask you, just explain what you meant. and importantly, what are the changes you want to see in the economy? i think we are like world champion in putting ourselves down. we're the first ones to complain about our country. so i think we're really good at kind of listing all the negative stuff and where we're not good at. and i think what we're forgetting is what we actually get done. and i think what i meant with this change, also the change in mindset is to have a mindset of, "yes we can," and to get the changes in place where we've now, for years and years talked about them. it's just time to implement them now. but varena, how do you do that? i'm just wondering, does it does it take a new generation to to get that mindset? i think you need two things. you need role models or people that show you it's possible. and you need to to look for the evidence that we're actually really good at the

things we're doing. if you look at that, we founded 2,500 startu ps last year. despite these difficult times that one of our big companies, olive alpha, raised 500 million from german investors. i think if you look for the evidence that we're actually not doing too bad, then that's how you might change mindset because people will start to believe in this country again. well, you've started several companies yourself, including fox and sheep, which is one of germany's most popular apps for kids. and you've also invested in another a0 or so. so, varena, i have to ask you, do you think new companies can be successful right now given the state of the economy? absolutely. i think crisis times are times for entrepreneurs, because in times where capital flows like it was in 2020 and 2021, everyone theoretically can found. but you don't have to be that smart. you kind of like go with the flow. and i think it's a great time now to really think despite an economic downturn, what are the big trends and topics that won't

go away anymore? ai, deep tech, education, tech, clean tech, green tech. so if you know that these are the big markets of the future, today is the best point in time varena, we know that germany has in recent years it's seen some startups really take off like the bus company flix and the food delivery firm gorillas. but how concerned are you that these startups, they tend to look abroad for funding, such as the covid vaccine developer biontech? does that damage, verena? does that damage germany and its and its place in the financial world ? absolutely. i would even say that's like the biggest the biggest threat to innovation for germany, but also for europe, that we fund the early rounds of startups, up to 50 million with european money, and then when the rounds get bigger, so for example, flix or deep elle or marvel fusion, you name them, need more capital than often. that capital comes from non european investors

and they then have a strong interest that those companies ipo at the nasdaq and not at the german or in european stock exchange. and then we have a brain drain, we have an ip drain and in the end an innovation drain because those things which were funded here at high risk in the early stage kind of get sold off once they're proven champions. here's a question, varena, i want to ask you. do you think the german government pays too much attention to the demands of traditional big industries such as the big car and pharmaceutical companies? and by doing that, the government in some ways is stopping the change that's needed to reset the economy for the rest of this century. i mean, some will suggest it's an old—fashioned approach compared to, well, what some other countries are doing and embracing. yeah, i would strongly agree because, i mean, if you look to france and see how macron has made this like his topic number one, that if a startup kind of reaches a certain threshold

in revenue, then he kind of celebrates it on a national level and how he has been able to attract private capital to that sector because it is such a state topic, i think that plays a big role and germany especially is very much in love with the old economy. and i get it. i come from a family—run business. we just turned 300 years. so i know like what tradition means and how difficult it is also to bring companies over the years and the decades. so it's not like... that it's easy, but we are generally too hardware focused in this country. and the other thing is just we're used to these big brands of the past and we want to do everything to have them in the future. and sometimes we put too much energy into kind of like conserving that what we have than to investing into the new things. verena, can germany really afford to adapt to the future?

because we've seen the likes of tsmc and intel, the huge chip makers, they're going to build massive computer chip factories in germany. but the budget crisis that you're having. that's threatening the government subsidies that have made this pivot possible and allowed germany to compete with other countries for these facilities. so, yeah, can germany afford all of this? in the past you would have never, when talking about innovation or startups or new companies, have gone to the state and said, can have gone to the state and said, "can you please give me money?" you would have just started your own business with private capital and then at a certain stage maybe they would have come in because they would have said this is of national interest. now, i sometimes feel it's the other way around, and i think that's wrong because if we look at the private money reserves that we have in germany, we're not a poor country. and so i'm very optimistic that we can afford to be part of the future. i think we have to want to afford it. verena, i have to ask you, are there many people in germany that think like you do?

i mean, is it the younger generation that thinks like you do? i definitely think that the younger generation knows that what is at stake and that it's not a question of if we just continue the way we have been doing, it will all turn out great. we just know the problems have become more complex, the challenges have become bigger. so i would say that there is a big group of people who says, come on, let's just try more things. let's dare to be more risky and not at the to the point that we kind let's dare to be more risky and not at the, to the point that we kind of risk our future. but that's not at all what i'm afraid of. i'm afraid of that we will actually miss out on the future because we're taking too little risks. verena, as we know, there's a growing number of german business leaders who are warning about the threat of right wing extremism. how worried are you that rise could threaten germany's economy and why? i'm super worried. i mean, if people don't feel welcome to germany, if that's the image we send to the world, like if you're not from germany, you better think twice if you want to come. i mean, that's the worst

for a nation that needs the inflow of talent. and on a society level, i mean, with our history, i want to be the last country in the world that has 20% or more of the people saying that they're fine with a party like the afd. that just doesn't reflect how germany is. well, on that point, verena pauser, chairwoman of the german startup association, a real pleasure having you on the show. good luck with everything and we'll check in with you soon. thank you so much, aaron. 0k. computer systems, they are at the heart of everything we do these days and of course, a crucial to the innovations which are changing and growing economies. it's why the german software giant sap pulled in more than $33 billion last year as its more than 100,000 staff. they help companies switch to the cloud and work out how to benefit from artificial intelligence, and all of that is good news for germany's economy.

so i decided to catch up with its big boss, christian klein. fabulous to have you on the show. and christian, let me start with this, because in terms of market value, sap is the largest german company. you're the flagship of the german digital economy. so given all of that, justjust explain how important just explain how important is the economic recovery in germany to your business? many companies are actually turning to sap, especially in macroeconomic challenging times, because you have to overcome supply chain challenges like right now, you have to build resilient supply chains with tech, you have to become more sustainable. and here our technology can help to match our carbon footprint, or you actually have to face productivity challenges now with the high inflation and are also, of course, automation. and the big topic these days ai can help.

so actually sap is resilient. but of course, also a well going economy helps. well, hang on, christian, in some ways, are you saying or suggesting that the german economic decline is actually benefiting sap? i mean, look at for example. indeed, but look at also at the brexit. when the brexit is happening, you need new technology to do logistics. you need you have new tax regulations. so actually this is something where sap and our systems can help. and now in germany, i don't see a decline in it budgets. what i actually see is that ceos, business leaders, they want to invest because they see tech as an opportunity to overcome those challenges. and christian, as you know, the german finance minister recently said that germany's not a sick man, but more like a tired man in need of a cup of coffee. and after the structural reforms, he says economic growth will return. christian, do you agree with that? i mean, just how do you see the german economy moving forward in 202a?

growth in germany. but also i remain optimistic. yeah, because what i have seen with sap, look at us, we started our transformation three years ago. we shifted everything we have to the cloud and now we have a much more resilient business model. customers are embracing our technology to innovate. and i guess the same is now happening with the german economy, even the german mittelstand. i mean, they are now using the technology and to transform their business models. the german economy was also last year pretty resilient when we talk about the energy crisis. you know, a lot of people said we go right away into recession and at the end, the german economy was more resilient as predicted. so i remain confident for this year and even more so for the years to come. after a disastrous court ruling, we know that the german government, it's found itself short of cash, should do all the things it wants. to do all the things it wants. and it's already said that it'll

also be the case next year. how concerned are you, christian, that they're going to try to increase corporate taxes to plug the gaps and then one would imagine that would damage the economy further? no, absolutely not. that would be not good. and i also, but i also don't see any indication that they will go on to waste taxes for companies, for the economy here in germany. actually, what we now need to do is actually to stimulate the economy. i actually welcome all the financial help. you know, companies got, who are pretty energy intensive. and when i now look at the german economy, i guess we are now also seeing that the export to asia and to the us is super important. so also there we need to really build this purchase with technology but also on the political sector. so and i see a lot of positive measures here so that we can also strengthen our exports to the rest of the world. and christian, we know you're amongst a growing number of german business leaders that have broken their silence on politics and warned about

the threat of right wing extremism and the size of recent protests — they certainly show how much public support there is for that position. but just what are your concerns about the rise of the far right that could threaten germany's economy? yeah, look, i mean, sap is doing business in over 180 countries in the world. we are a truly global company and we live from diversity. our customers are diverse. we are diverse. and when you're walking around here on the campus, actually, you see a lot of people from the uk, but as well from asia, from the united states. and we need that. we need these people also coming to germany. so we are completely against any kind of extremism because we need to have those talents coming to us to innovate, to boost the economy. and that's why it was time indeed to speak up not only for myself, but for the german economy on its own. we know al was a big talking

point this year at davos. there was talk of regulation, but also about harnessing the technology and how that will boost businesses if used correctly. so, christian, how important is it for europe to to lead the way in al or is it already falling behind other places such as the united states? aaron, ai is super important for europe because when you look at the challenges, what business leaders and businesses have these days, it's around high inflation. so how can i still report on earnings, you know, and upbeat on productivity, a higher profit or actually when you are searching for quotes, i can help in making your offerings, for quotes, ai can help in making your offerings, your products more attractive. and also we are fighting the climate change. so what we also can do with technology is to make to to turn so what we also can do with technology is to make to turn companies into more sustainable enterprises. so ai is a big opportunity to overcome those challenges. and what i see also, especially

with business leaders in europe, that they want to embrace this technology. now, in europe, where we have to be careful is that we are not overregulating these technologies. i'm all in for regulation, but let's not regulate the technology. let's regulate that all of these use cases, what we are developing are good for our society, a good for our businesses. there a framework is needed, but we cannot be too aggressive on regulating the technology firsthand. well, christian, let me end on this, because the us, one of your biggest markets, how confident are you in that market and which regional regions are you looking to expand further in the year ahead, further in the year ahead? do you ask? the economy is doing well. we see, of course, we have always seen huge investments into it in digitisation and we actually

remain confident that this will also happen throughout 2020 for the highest growth region. what we have in the world is southeast asia. there are a lot of countries who are starting right now to invest. invest into technology to actually globalise their business. and so this is for us the hottest market in the world right now. well, on that point, christian klein, the big boss of sap, a real pleasure having you on the show. good luck with everything and i'll talk to you soon. thanks a lot, aaron. i should just say that the far right afd, they've rejected the idea that they're bad for business. they say companies biggest problem is higher energy costs, which have been caused by bad government policy. well, that's it for this week's show. i hope you enjoyed it. don't forget, you can keep up with the latest on the global economy on the bbc news website and of course, the smartphone app. you can also follow me on x. thanks for watching. i'll see you soon. bye bye. hello. cloudy, windy and mild pretty much covers sunday's weather forecast

in most parts of the uk. we do have this wriggling weather front which will bring rain forsome, particularly in the western side of scotland. but with that front edging a little bit further northwards, it will introduce milder air for more of us. but with that extensive cloud cover, it will be quite misty and murky for some coasts and hills. a bit of rain across north—west england, parts of northern ireland, but more especially, this western side of scotland, the rain becoming heavy and persistent. eastern scotland with a bit of shelter from the winds, while here, we mayjust see a little bit of sunshine. but it is going to be a windy day for many of us. very windy in the far north. gusts of 60 miles per hour, for example, in shetland, where temperatures will only climb to four degrees. but elsewhere, further south, highs of 13 or 1a degrees — well above the average for early—february. and then during sunday night, the rain keeps on coming in western scotland, hence this met office yellow weather warning. the wettest locations over higher ground could see 170 millimetres of rain. some snow mixing into the north of our weather front, where it engages some cold air.

very mild, though, further south, as we start monday morning. through monday, we'll continue to see these outbreaks of heavy rain just waxing and waning across the north—west of scotland, with some snow across the far north. but to the south of that, it stays mild, it stays quite windy, it stays very cloudy, with some mist and murk and some spots of drizzle. temperatures up to around 13, maybe 1a degrees once again, but always colder to the north of our weather front. just two degrees there, in lerwick. and by tuesday, well, that frontal system looks set to push a little bit further southwards. so rain for northern ireland, northern england, perhaps into north wales. to the south of that, still cloudy, a bit murky, very mild. to the north of our weather front, well, some sunny spells, a few wintry showers in the far north and something just a little bit chillier. now, this weather front just wriggles around through the middle part of the week. it will bring further outbreaks of rain. later in the week, it does look like these various frontal systems will eventually push southwards and that will allow some colder air to dig its way across more parts of the uk.

it is going to take a while for that colder air to spread southwards, but it does look like, as we get through the end of the week and into the weekend, it will turn colder for all of us. yes, there'll be some rain, but for some, there may also be some snow.

live from washington. this is bbc news the us and uk lead coalition airstrikes on iran—backed houthi targets in yemen — in the latest response to attacks on red sea ships. it comes a day after the us hit targets in iraq and syria — in retaliation for last weekend's deadly drone strike on us troops injordan. and — we take a closer look at the issue of concussions and other severe injuries in impact sports, like american football and rugby. hello.