and cashing in on trump's china tariff threats — india's tech businesses look to pick up the slack. welcome to business today. we start in the uk where there's a been a sigh of relief as the inflation rate unexpectedly dipped in decemberfor the first time in three months. the consumer prices index rose by 2.5% in the 12 months to december last year, according to the office for national statistics — that's down from 2.6% the previous month. restaurants and hotels helped keep the rate down, with transport pushing prices higher. despite a slight fall, the rate is still above the bank of england's target of 2%. the base rate of interest in the uk currently stands at 4.75%, but expectations for a rate cut next month have

grown following today's unexpected fall in inflation. the latest figures come after pressure has increased on the public finances in recent days due to government borrowing costs hitting their highest level for several years. let's speak now to ellie henderson, uk economist at investec. talk to me about this number today. it isjust talk to me about this number today. it is just one number, talk to me about this number today. it isjust one number, a snapshot of what has gone on in the past, but what does it tell us about the state of the economy right now? today's data was certainly _ economy right now? today's data was certainly encouraging. - economy right now? today's data was certainly encouraging. as - was certainly encouraging. as you said, it came down to 2.5%, which crucially was not lower than lower than what economists expected, lower than the bank of england expected, a key signal that they will continue cutting interest rates. it is cutting interest rates. it is 'ust a cutting interest rates. it is just a temporary _ cutting interest rates. it is just a temporary blip, - cutting interest rates. it is just a temporary blip, all i just a temporary blip, all forecasts suggest it will be a bounce back again later in the

year. bounce back again later in the ear. bounce back again later in the ear, ., , ., bounce back again later in the ear. ., , ., , ., year. our forecast do envision inflation to — year. our forecast do envision inflation to get _ year. our forecast do envision inflation to get higher - year. our forecast do envision inflation to get higher from i inflation to get higher from here related to budget impacts, but broadly we think inflation is still on that sustainable trajectory to 2% over the medium term, which is what the bank of england looks at an decides policy on. we do think the bank of england can continue passing interest rates, but only at a gradual pace. rates, but only at a gradual ace. . ~' rates, but only at a gradual ace. . ~ ., ., rates, but only at a gradual ace, ., " ., ., ., �* pace. talk to me about that. a lot of peeple _ pace. talk to me about that. a lot of people will _ pace. talk to me about that. a lot of people will focus - pace. talk to me about that. a lot of people will focus on - lot of people will focus on that number and you might need to make that connection again for us between inflation and interest rates. what are the options that the bank of england has right now when it looks at that inflation number and why might it consider cutting rates?— and why might it consider cuttin: rates? ., ., , cutting rates? yeah, of course, what is important _ cutting rates? yeah, of course, what is important to _ cutting rates? yeah, of course, what is important to know - cutting rates? yeah, of course, what is important to know is i what is important to know is that prices are still rising, they are just rising at a slower pace. but that this is a pace that the bank of england accepted and it can cut interest rates if it thinks that inflation is converging on its 2% target. but it won't want to act too quickly or too aggressively on interest rate cuts because there is still the

very real risk that inflation will re—accelerate again in a more sustainable manner. that is the trick, _ more sustainable manner. that is the trick, trying _ more sustainable manner. that is the trick, trying to _ more sustainable manner. that is the trick, trying to keep everything in check and balance and the bank is looking at what has already happened and trying to predict what will happen in the future. when we talk about the future. when we talk about the future, there are some big things on the horizon, not least what a trumpet presidency could do for the worlds biggest economy and the ricochet effect around the world.— around the world. yes, certainly- _ around the world. yes, certainly. we _ around the world. yes, certainly. we have - around the world. yes, | certainly. we have some around the world. yes, - certainly. we have some us inflation figures out later today, but as you say, this is backward —looking and what the us central bank will be looking at will be how inflation trends develop in the future and the policy landscape is going to change in five days' time, we have trump's inauguration and we among others will think his policy will be inflationary for the us economy. how inflationary is for the rest of the world and how countries retaliate to this threat of tariffs and whether they also put paris back on the us. we will keep _ put paris back on the us. we will keep a — put paris back on the us. we

will keep a close eye on that. for now, thank you. now to germany, where the economy shrank last year for the second year in a row. initial calculations show gdp in europe's biggest economy fell by 0.2%. analysts blamed factors including german exports facing increasing competition in key markets and high energy costs. the news comes less than six weeks before general elections. the main governing party, chancellor olaf scholz�*s social democrats, is currently lagging in third place in opinion polls. let's go live to dr salomon fiedler, economist at berenberg. talk about that number for us, because it is an interesting one. it confirms the economy has shrunk for two years in what was the powerhouse economy of the european union, what has gone wrong?— of the european union, what has gone wrong? ok, so, the number itself was not _ gone wrong? ok, so, the number itself was not unexpected - gone wrong? ok, so, the number itself was not unexpected at - itself was not unexpected at this point, and if you look at

quarterly data you will find that inflation has now continued for three years even, so not looking that great for germany at the moment and we have to say it is not only a cyclical problem but rather a structural one. this number underlines really the need for large—scale reforms that the economy needs if we want to see more growth going forward. this is bein: more growth going forward. this is being described as the longest phase of stagnation in post—war history. what can anyone do? what can germany do right now? take politics out of it, what are the structural problems the country needs to deal with?— dealwith? so, the problem is it is a large — dealwith? so, the problem is it is a large amount _ dealwith? so, the problem is it is a large amount of - it is a large amount of structural problems affecting all factors at the moment. we have democratic efforts which mean the amount of labour will be lower going forward than in

the past. we have an irrational energy policy that made production much more expensive thanit production much more expensive than it needs to be. we have excessive regulation which slows everything down. very high tax rates which sap the incentives to go for growth opportunities. so a lot of sites where we would need structural reforms. of course, it is a target rich environment then as well. a lot of potential issues that could be addressed by the next government.- addressed by the next government. addressed by the next covernment. , , government. yes, let me put that to you- _ government. yes, let me put that to you- i— government. yes, let me put that to you. i said _ government. yes, let me put that to you. i said is - government. yes, let me put that to you. i said is strip - that to you. i said is strip out the politics in that last answer, but put it back in now. what could change in the election in six weeks' time? 0k, election in six weeks' time? ok, so, i mean, at this point it looks like the next chancellor will be conservative, and has apparently at least heard the message a little bit to go for

some reforms, including producing corporate and personal income taxes and some modest regulation. these reforms they propose at the moment is not going to be anywhere near enough to bring growth back to what we have seenin growth back to what we have seen in the decades before the pandemic, but they should help at least a bit. of course, they will not be able to govern alone, they need a coalition partner, probably from the centre left, most likely social democrats again. they seem a bit more reticent when it comes to these reforms. we will need to these reforms. we will need to see how much we get in the end, but our baseline would be that we see at least some reforms going forward. let me add one thing. we have so far talked about structural growth which is extremely limited at this point under these conditions, but there is a

chance that we can see a cyclical recovery starting this year. inflation has come down, so we have seen central bank rate cuts which should go through to the real economy. we have household income is growing rather nicely for about two years now, so there is room for additional spending and we could also see some of the very subdued sentiment pick up once the new government comes into office. but this cyclical optic should not be confused by policy makers for a sign that reforms are any less pressing. —— cyclical uptick. reforms are any less pressing. -- cyclical uptick.— -- cyclical uptick. thank you for your— -- cyclical uptick. thank you for your time. _ the social media giant meta has announced its cutting 5% of its workforce. the company behind facebook, instagram and whatsapp says it expects 2025 to be an intense year. from new york, michelle fleury has more. in a memo to staff, meta ceo

mark zuckerberg said that 2025 will be an intense year for the company, as it works on building what he describes as some of the most important technologies in the world. mr zuckerberg went on to say that in order to raise the performance of meta staff, the company would take steps to move out low—performing employees faster than originally planned. currently, meta employs some 72,000 people. cutting 5% of its payroll would be its first major staff reduction since it shed a quarter of its workforce in 2022 and 2023. meanwhile, microsoft has also given a signal thatjobs may be becoming harder to come by in the us technology sector. it told its workers on tuesday that it plans to pause hiring in its consulting arm in america. this comes only a week after it announced a round of lay—offs. to india now, where businesses are focussed on the incoming trump presidency and the impact

of its tariff policies that might follow. he will be inaugurated on monday, but already the president—elect�*s tariff threats have been making global traders nervous. but in india, manufacturers are more optimistic, hoping to benefit from companies seeking to find new factories located outside of china, the us's main trade adversary. archana shukla reports. humming with renewed energy, india's factories are hoping donald trump's threat of a tariff war with china brings in new business from global clients. these are motherboards, the computer hardware that power your laptops, desktops, remotes, even your appliances. until five years ago, india was completely reliant on imports for such it hardware but today, factories like these manufacture almost 50% of it locally.

this is one segment where india is trying to push its manufacturing muscle. bengaluru—based zetwerk feels this makes india well—placed to fill the gap if and when us imposes high tariffs on chinese imports and it forces global firms to look for alternatives. now that we are posed for the second term of president trump, i think global supply chain planners hopefully are ready with a solution. i personally feel india is a great choice. we have reached out to us potential customers and so they know about our offering, our capabilities in india. the us is one of india's largest trading partners and its biggest export market, with a two—way trade of $190 billion last year. and it is notjust goods, india exports services of specialised talent that fuels the us tech industry.

they tax us, we tax them. the word reciprocal is important because if somebody charges us, india, if india charges us 100%, do we charge them nothing for the same? economists say india will need to relook its own much more on those stories and we will have full coverage of that inauguration here on the bbc on monday, stay with us for that. that is it from business today.

hello from the bbc sport centre. at the australian open tennis, zheng qinwen admitted it was not her day as she was beaten in the second round in the biggest shock of the tournament so far. china's zheng was runner—up to aryna sabalenka last year

and is the olympic singles gold medallist, but lost to german veteran laura siegemund. the fifth seed is the highest ranked playerfrom either singles draw to lose so far at melbourne. i have a lot of chance to break her in the first set, but in that moment may be my concentration is not there. i was making easy mistakes in that moment plus a bit tricky for me in the first set, a tricky way to lose, because i didn't feel my performance was good enough but at the same time i felt that she was playing very good today. i wanted to come out courageous, i wanted to come out courageous, i wanted _ wanted to come out courageous, i wanted to show the variety of my game, _ i wanted to show the variety of my game, be very aggressive and that is_ my game, be very aggressive and that is what i did and i am particularly happy about howl maintain _ particularly happy about howl maintain that throughout the match — defending champion aryna sabalenka dropped her serve three times and faced 11 break points before overcoming spain'sjessica bouzas maneiro 6—3, 7—5, rattling off the last

five games in a row.