this is bbc news. we'll have the headlines and all the main news stories for you at the top of the hour, straight after this programme. hello, everybody. welcome to talking business weekly, with me, aaron heslehurst. let's take a look at what's on the show. rates are rising around the world, so why aren't more savers getting a better deal from their banks? bumper profits are expected from the world's biggest financial institutions this year, as they charge more to borrow. but those with savings haven't seen the same consistent increase in what they get paid for putting money in the bank. so, why not?

i'm going to be discussing it with these three, there they are, matthew plosser from the new york federal reserve, liz lumley from the banker magazine, and frederic malherbe from university college london, who thinks central banks should consider more radical steps to get the banks to pass on better deals for savers. plus, the boss behind the trains of tomorrow. my interview with the global ceo of one of the world's biggest train and tram makers, on the future of transport across the world. wherever you arejoining me from around the world, once again a big hello, and warm welcome to the show. you know, across the world's most powerful countries, the cost of borrowing money has been going up. central banks, they've been raising the interest rates

to tackle inflation. and while banks have been lightning fast in passing on those rising rates to those who borrow from them, those who save with their banks, well, they've not been seeing the same immediate reaction. if they want higher rates, they often have to shop around and move their money. in the united states, the world's biggest economy, you can see the difference. the average interest rate for someone wanting to take out a 30—year mortgage is around 7%. but the average rate for savers? it's a lot less. just 0.35% a year. so, if you put $1,000 into the bank, you would earn just $3.50 in interest. in europe, it's a similar story. the average interest rate you have to pay if you want to borrow money to buy a house is around 3%. however, for savers, you're still only getting an average of a tiny one—tenth of a percent in an instant access savings account. and here in the uk, the average mortgage for a variable rate,

in other words, one that tracks the market, isjust over 7%. but the average rate that savers get is around just one quarter of 1%. it's important to say that those average rates are just that — an average. the banks say they offer much better saving rates on some products, but finding them and getting them means that savers have to be active in moving money and looking for better deals. we asked the american bankers association, the international banking federation, and uk finance, which represents uk banks, to talk to us today. they all declined our invitation. but some bank chiefs have been called to answer questions about this issue to lawmakers. here's what the boss of britain's lloyds banking group said to members of parliament. typically, people with money to invest and save, they aren't struggling with the cost of living, with the day—to—day living expenses, and they typically don't have a mortgage. the average mortgage customer has £75,000 of income. and for savers, it's the same story.

80% of customers in the uk have less than £5,000. so, they are the ones we really worry about, from a mortgage and from a cost—of—living perspective. there's a relatively smaller percentage that are looking for returns. and we really believe in transparency and fairness, and we've got products similar to alison and ian that can provide 4%, 5% returns for those customers. and it's all about transparency and choice and access that we really focus on for them. so, is this anything new? let's find out from someone who's been running the numbers on how interest rates are passed on to savers in the united states over the last 30 years. matthew plosser from the federal reserve bank of new york, a real pleasure having you on the show. matthew, you've been looking at how banks pass rate rises or falls onto their customers over the last, what, three decades? is this anything new, that when rates go up, borrowers have to pay more, but savers really don't benefit? well, the pattern of having saving rates trail interest rates has been true for quite some time. mm. what's been kind of interesting is, since the financial crisis, it's been even slower

than we had seen prior to that. and so one thing we've been looking at is trying to understand perhaps why that was the case and whether or not we would expect the traditional relationship to return to normal. so, matthew, why, what did you find? so, we explored several different possible reasons. regulations have changed quite a bit, both in the us and globally. we've seen an extended period of really low interest rates. and during that period of really low interest rates, banks accumulated a lot of savings deposits, a lot of deposits in general. and so, banks have had more funding than they really need, in order to finance the investment opportunities that they see in the marketplace. and that's made them more reticent to raise deposit rates and saving rates when they go up. because they already have more funding than they really know what to do with.

and we talk about the banks being awash with cash. has a big part of that come off the back of the pandemic? when people were putting money away, basically? they weren't going on holidays, they weren't going out? this was certainly true, post—financial crisis, and the pandemic brought it back in spades. things were starting to normalise, and then, of course, during the pandemic, banks became again awash in deposits. and only once deposit rates started rising did we see that pattern reverse. consumer spending went up, but so did opportunities to invest your cash in more competitive vehicles. when rates were really low, during covid or after the financial crisis, we didn't see a lot of opportunities for depositors to find better deals. all rates were low. and, matthew, let me end on this. i'm just wondering, should central banks be doing more? can they do more, perhaps, to force banks to increase the rates for savers? i'm not going to make a policy application here,

but here's what i would say — is that savers have lots of opportunities besides the bank that they currently store their deposits with. so, if you look at the marketplace for transaction—like deposit products, money market mutual funds, cds, certain high yield savings accounts, they are offering very competitive rates. one of the reasons banks are able to keep their rates low is because consumers are slow to re—optimise, they are slow to find these opportunities. but they are certainly out there. and so i think the first step is for consumers to make sure that they're doing what they want to do with their money and that they're aware of the opportunity costs that they are paying by staying in the account that they're currently in. matthew plosser from the federal reserve bank of new york, a real pleasure having you on the show, thank you forjoining me and i'll check in with you soon. thanks for having me. because banks are charging more for lending but paying less to savers, they could be in for a record year, in terms of the profits they make. so, let's find out who's

going to benefit and why. liz lumley from the banker magazine, a real pleasure having you with us. liz, let me start with this, this does seem to be a global issue. i'm just wondering — are banks just so awash with cash that they simply don't need to offer better rates? yeah, you basically got it in one, it's the end of the interview! that is the issue. i mean, there's so many people that put money into savings during covid that there's really no commercial reason for banks to offer. now, they don't need to attract new customers, they don't need to attract new money, because they have so much capital that they're holding, that there's no commercial incentive for them to do that right at the moment. and, liz, we saw a windfall tax here in the uk on energy companies, and there are now some voices calling for a windfall tax on the banks because of this situation. i mean, is that something banks are concerned about? banks move for two reasons — they are either making money, or a regulator tells them to do something.

so, there's a lot of people who are making comments that a tax, a windfall tax, which is only really being talked about in the uk, really wouldn't achieve the goals that it's meant to achieve, which is basically to offer the consumer public a higher savings rate, which is the end goal. liz, i'm also just wondering, this situation, is this anything new — where the cost of borrowing goes up but the rates for savers doesn't? saving rates are always going to be lower than the lending rate. because that's how traditional banks cover their costs. because there has been such an influx of cash, and banks have, you know, recorded record profits, so, i mean, for example, deutsche bank had just recorded a 15—year high profit of 5.6 billion. so, this is all, of course, we know what happened in 2020, the era of covid, this hasjust absolutely taken off.

sorry to interrupt, liz, just for the uninitiated, can you explain why the banks from 2020 onwards have been making these record profits? a bank is a regulated entity that takes deposits and makes loans. but what banks do is hold money. and move it around. like, that is... that is the basic bank business. so, with all this cash in the system, there is a lot more cash than they have in their reserves, that's part of their business. not every investment bank, but a lot of investment banks also profited from the stock market volatility that we've been going through over the past three years because of covid. there are some good deals out there, aren't there? particularly from newer banks, who need to attract the cash. yeah, i mean, in the uk, there's rates of 3% or 4% but newer banks are offering better rates, like, around 3% or 4%, and they are offering better products to attract new customers. also newer banks, like

in the uk, starling, monzo, raisin in germany, n26, they don't have the infrastructure and legacy costs that incumbent banks do. i'm just wondering how do you see this developing over let's just say the next couple of years? is this current situation here to stay? well, one of the things... i think there probably will be a bit. i know the eu is talking a little bit about regulation and the uk is. the us, maybe a bit less. some new regulation might come in to require banks to offer higher rates of savings to customers. but also, at the end of the day, there's a possibility that central banks will lower some of these interest rates. we are getting to a point with the cost—of—living crisis, and with inflation, and i hate to put it this way, but you're going to get to the point where sections of the population that aren't normally in financially vulnerable positions are going to find themselves in those positions. when the middle class starts defaulting on their mortgages,

that's when things change, and that change is either through the government, you know, putting in regulation, or the central banks saying, "we just can't raise interest rates any more" and they will drop them. so, the banks are kind of playing a waiting game, they're not going to raise interest rates for saving products until they see exactly where the interest rates are going to go. because if they fall, they don't have to do anything at all. just briefly, though, do you see that coming around the corner, the middle class in society slipping? i mean, during covid, the banks had a brief period where they were the good guys, you know, with the bounce—back loans and, you know, and dealing with that service and very well. but they're they're going to enter a pr minefield coming up very soon, and if you get into a period where a section of the population that doesn't normally default on their loans start defaulting on their loans, and an actual major recession happens, and banks post huge

profits, it's...it'sjust not a good look. and i think that they're looking a little wary that something like that might happen. but we'll see. 0k. well, on that point, liz lumley from the banker magazine, a real pleasure having you on the show. thanks for your time, and i'll talk to you soon. thank you. well, my next guest from university college london says that central banks should be looking at taking radical steps to change this situation, if banks don't pass on interest rates to savers. frederic malherbe, a real pleasure having you on the show. i know you like to go by, fred, so we'll start with this, fred — what action do you think central banks should take to, well, to make sure that banks pass on higher rates to savers? that's an excellent question. so here's — here's the situation at the moment. for instance, in the uk, banks can get your money. you save their money with your money with them and they park it at the central bank,

and they earn they earn 4% and they typically only give you i%. so, for every £100 that you save with them, they earn annually £4, they give you £1, and keep £3 for the bank. and in the context of the cost—of—living crisis in particular, i don't think this is good. i think this is a problem. and what the central bank could do is actually to make those interest payments to the bank conditional on those rates to be passed on to savers, so in practice, they could impose a maximum margin. what does that mean? well, they would tell the banks, "we will give "you 4%, but only if you give at least 3%, for instance, "to the savers". it's quite a radical suggestion, fred. i'm just wondering, do you think it's — this is likely? it is desirable. whether the central banks will want to do that? i don't know. but, fred, you know, the critics will say,

look, banks aren't charities. you know, they're in it to make money. isn't this just the way the markets work? well, this is at, the moment, the way the markets work but this is not a well—functioning market. banks serve all sorts of very important purposes and they face costs, so they they should makea margin. i am not saying that the banks should pass on the full 4% to the savers, but i doubt that keeping a 3% margin is really necessary. people don't really move their money around. they should, but they don't. and this is what lets the banks take advantage of. but, fred, i'mjust thinking here — if the banks already are sitting on a pile of money, they don't need new deposits, there's no competition, none of this is going to work. i think it could still work. it is true that the banks are sitting on a huge pile of cash which they hold in reserves at the — at the central bank. and so, in a sense, they don't need that money to make extra loans.

but itjust means that there is extra liquidity in the system, and the central bank is paying 4% for that in the — in the uk, other rates elsewhere in the world. but then the question is to whom should those interest payments go? should it be to the savers or to the bank? and so, in my point of view, it should be a bit of both, but probably much more — a much, much biggerfraction should go to the savers and for the service they provide, a small fraction should go to — to the bank. well, on that note, frederic malherbe, a real pleasure having you on the show. thanks for your input and i'll check in with you soon. thank you very much. my pleasure. you know, the global transport system has had a time of, well, unparalleled disruption. but with the pandemic seemingly over and the supply chain problems largely resolving themselves, what's the future of the train?

well, i caught up with the boss of one of the world's biggest players to find outjust how the world is letting the train take the strain. henri poupart—lafarge, a real pleasure having you on my show. thanks for your time. henri, let's start with this. you're one of the world's biggest rolling stock manufacturers, producing and shipping trains all across the globe, but let me ask you this — with governments everywhere today short of cash because of covid and the war in ukraine, are they still buying trains? yes. thank you. good afternoon, and thank you for your question. actually, i mean, there is a greater challenge than only the immediate cash impact of some of the crisis. the greater challenge is the climate change and all the governments in the world are absolutely aware of the need to tackle this climate change challenge and, therefore, are investing heavily in rail — whether it's for cities, urban transportation, or between cities for the main lines. henri, we know you operate in 70 countries, you employ

around 75,000 people. i've got to ask you — who are your biggest buyers right now? and what — what are people buying? we have all, to be fair — all the markets are quite positive nowadays, but they have different type of drivers. when you look in europe, it's mostly climate change challenges, regional trains, some very large investment, various speed, as you know, in the uk, for example, for hs2. but today, what we seeing in emerging markets so, in particular, in india is one of the fastest—growing market is in india, where we see a number of cities acquiring metros for just tackling the basic need of mobility within the cities, so we have a large market. but, to be fair, driven on one hand by the urbanisation, on the other hand, on the need to favour transportation over the other modes of transportation.

you've been present in china for almost 60 years — in fact, you were one of the first western companies to start business in that country — and i'm wondering how important is china for your business today? or have chinese companies become your competitors? and i say that because china's crrc corporation is by far the world's biggest train manufacturer today. we are present, as you said, in china for a long time now. we are operating through a number ofjoint ventures on rolling stock like metros or various—speed trains, as well. we have also joint ventures in signalling, so we are quite present on the chinese market. if you account for all our employees within the joint ventures, we are close to 8,000 employees in china — so, quite remarkable. and, indeed crrc, our chinese competitor, is present not only in china, of course, but also in a number of emerging countries — in particular, in latin

america, in middle east and south africa. but we are competing with them where we are heading against them and sometimes, we are partnering with them — it depends on the market. talking of regions — you're expanding in africa. i mean, how difficult is that to expand on that continent when, well, the chinese have got a — they've got a big presence in africa. well, our strategy is really to localise our production in the main market and i think this is extremely well appreciated by all our customers worldwide. we have a fantastic success in south africa. we are providing trains, but we are not only providing trains, we have also a factory manufacturing all the trains, all the equipments, subsystems of the trains. i think that's our global strategy, which is to be close to our customers, close to the operators, close to the people who are benefiting from the trains. it's proven to be a success in africa, as well.

henri, i want to bring in the united states because we had another train derailment recently — in fact, according to the numbers, there's more than 1,000 derailments every year in that country. what's gone wrong with america's train system and that infrastructure needed? because i'm just wondering, is it simply a lack of investment over the years? 0r i'm wondering if it's also just a lack of love for train travel, certainly compared to our european friends? there is a huge investment plan in the us, as you know, and we have the infrastructure and job act — which, of course, aims at upgrading, significantly, all the infrastructure in the us. there was, in the past, as well, a lot of investment on what they call ptc, which is a signalling system in the us to ensure the safety of the trains. so maybe, the us would be seen as lagging behind in the past in terms of infrastructure but i think a lot of money is being invested to catch up, both in terms of freight and in terms of mainline. and also, i have to say, in terms of urban — urban systems, as well. so, yes, there is a need of investment, but this need

is very well recognised by the current administration, which is investing a lot in infrastructure. now, you say — you say they're all heading in that direction but if i look here at the uk — and i'm in london right now — and you look at transport for london, which operates the famous london tube, they've got a pretty mighty union that does not want to automate the london underground. well, as you know, we're extremely present in the london underground and we are extremely proud of having delivered the trains for elizabeth line — for example, which is a very brand new line — working perfectly, perfectly well. and, yes, we are working on these automated automation of some of the lines but it takes, as you said, it takes a lot of time for that. between you and me, do you think the london tube or the london underground would work more efficiently if — if they used autonomous trains? in general, autonomous trains bring a better regularity of the traffic. so actually, the headway is between two metros. if you go to very short

headways, only automated trains can achieve these kind of headways. but now to automate the line, it's a huge investment, to be fair, so you cannot do that. 0n the new lines, a lot of metros are now requiring automated lines. but for existing lines, it's a huge investment, which is, of course perturbation when you have to move from a non—automated to an automated line. so, it takes a lot of time to do that, so, it's a long, long process. and henri, are you operating in russia and ukraine right now? in ukraine, we have some staff in ukraine — a limited number, a little bit more than 30 people. but, of course, we think about them every day and they are continuing to work under the very complex situation in which they are. we are not operating in russia. we have ceased our operations in russia. so, we have some plan in ukraine. we were penetrating the ukrainian market. of course, we are very committed to — to ukraine, but very committed in the first place to our people in ukraine. and henri, let me end on this.

greener mobility solutions — that's your bread and butter. but with governments and businesses like alstom feeling the impact of these these high prices, consumers facing this global cost of living crisis, is sustainable travel more of a priority today than it has been in the past? well, we need, and the world, as you said, is already facing this challenge on one hand, to have this inflation and the economic crisis that we are facing and on the other hand, day by day, we see the impact of the climate change, so we need to find a way to combine the two. and it's fair to recognise that trains is much more efficient from an energy standpoint, from a cost standpoint, than to have your individual cars or individual mode of transportation. so, we need to find a good environment, regulatory environment, in order to boost the usage of trains in the world. but it's true that the situation today is quite

challenging and all the states have prioritised for this rail investment, as opposed to other type of investment. but it's true that it's a complex situation to be in. well, on that point, henri poupart—lafarge, the big boss of alstom, a real pleasure, my friend, having you on the show. thanks for your time and i'll talk to you soon. my pleasure. thanks a lot. thank you. 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 our global economy on the bbc website or the smartphone app. you can also follow me on twitter. tweet me — i'll tweet you back. you can get me @bbcaaron. thanks for watching. i'll see you soon. bye— bye.

hello. there's a weather battle going on this week, a battle between mild air and cold air. the mild air clung on for many on monday. in fact, parts of eastern england got all the way up to 16 degrees. compare that with just 1 degree in parts of northern scotland. and for tuesday, the cold air wins out for now. those parts of eastern england, just eight degrees on tuesday afternoon, and some spots in the highlands will struggle to get above freezing. with that, it will be breezy, not quite as windy as it was on monday. and there will be some wintry showers around as well, some ice to start the day. the cold air working in behind this band of rain and some hill snow pushing across southern england first thing. behind that, yes, some spells of sunshine, but some showers. and many of these showers will be wintry. the showers tending to clump together, actually, through the afternoon across parts of northern ireland, southern scotland, getting down into northern england, north wales and the north

midlands. these showers will be a mixture of rain, sleet, hail and snow. some of the showers could be pretty heavy. there could even be some flashes of lightning, some rumbles of thunder mixing in. temperatures, well, they are set to struggle. just three degrees there in aberdeen, perhaps nine for london and for plymouth, so a chilly day wherever you're spending it. as we go through tuesday night, some wintry showers pushed across the south. we'll keep a feed of wintry showers into northern scotland, where it will stay quite windy, but for many, a slice of clear sky and some really cold weather for tuesday night, wednesday morning. those are the temperatures in the towns and cities. some places in the countryside will be colder than that. so a frosty start to wednesday. however, we start to see things changing from the west. we'll see cloud rolling in, some outbreaks of rain, briefly some snow over high ground, perhaps very briefly to low levels. but it will tend to turn back to rain because it is going to start to turn milder. and for the end of the week,

it looks like mild air is going to start to win the battle for most of us. maybe that cold air clinging on in the north of scotland. but for thursday and friday, some much milder weather on the way, temperatures of 1a, maybe 15 degrees. but with that, some wet and windy weather at times.

welcome to bbc news. i'm lisa—marie misztak. our top stories: the us, britain and australia reveal details of a security pact to counter china's increasing military strength in the pacific. the us government approves a controversial oil project in alaska. activists respond on social media. bidenjust approved biden just approved the willow project with 90% of what conocophillips originally wanted. millions of young people, millions, asked him not to do this. more than 100 people have been killed as storm freddy returns t0 mozambique and malawi. and dick fosbury — the man who made the highjump with the fosbury flop — has died at the age of 76.