>> tesco home bowls. the managing director -- tesco tumbles. -- the managing director talks about inaccuracies. siemens. labour gets to work. opposition leaders are set. stick around for the election of agenda. we will be live with the shadow business secretary.

good morning. welcome. you are watching "the pulse." i am guy johnson. the big story of of the morning is tesco shares down. down hard. more bad news for britain's biggest. accounting investigation overstating its profits by a quarter of a billion pounds. here with the details. caroline hyde. they are saying that first of all, they have overstated to a tune of a quarter of a billion pounds. the reasons are they have accounted for some money too early and some too late. it is delaying when they will come out with their first half numbers. involved inting

terms of digging through and doing an independent investigation. what is unraveling through the investigation, uncertain executives to set aside. most noticeably.uk h -- most notably is the u.k. head. he may have to step aside. 4 in total will be asked to stand down. rifling into what is behind the overestimation. , less than the back a month ago, tesco came out saying -- the profit we estimated war not to be as much as you analysts think. -- will not to be as much as you analysts think. and cutting the dividend. it is amounting and amounting bad news for dave lewis who just came on board. >> it is interesting. how much bad news can you get out early on is a key indicator

of how you would do further down the road as an executive. talking about shopping. let's talk about a lehman's. are we going to see more deals coming through? a massive deal. what happens next? are being left out. the share prices are shown with it. they has said we want to shed $7 billion in cash. it is all about making the best of oil and gas exploration. compressors, the turbines. clearly, we saw stocks. siemens, the german juggernaut, has decided that can go higher. brand.ion worth for the the american companies. they want to join together and make a powerhouse. also paying siemens, trend lower.

.hey will have to pay out the wish list of quite a while. over a year. ts not done enough. -- she has not a done enough. good news for siemens. -- he has not done enough. >> thank you very much. caroline hyde. let's go to hans nichols for more on the story. cool loses out on this? -- who loses out on this? >> also ge. some reports that ge was also and are set in dresser-rand. they also could have maybe bid up the price. would you look at the ge, when ns gots gotahead -- sieme in, they paid a premium.

take a look of was siemens is plane for dresser-rand. this time $7.6 billion. -- take a look at what siemens is paying for dresser-rand. it has gone up 30%-30 5%. the interest to bid up the price it is clears. they want a piece of american boom. his theory is a simple one. if you help a company extract, get them into the turbine, you have the service contract. the servers contracts keeps spinning off cash. >> where the assets are being disposed of. out ofens is getting their household appliances division. it is a joint tie up. it is a joint group. they will be getting out. we saw something similar with ge when they sold off one of their household.

on both siemens and alston and ge, is since i everyone is squaring off at once to have a big fight on the future of energy. -- it seems like everyone is squaring off at once to have a big fight on the future of energy. both sides are marshaling. >> thank you very much. is getting torty work. they are having their annual conference. the last one before the years in general election. that happened in may. we are joined by anna edwards. all ties of things happening. types of things happening. the push by the party to give england more authority. this is on their backs. to help business. -- business on their backs. let's start with constitutional. >> why it is such an elephant in

the room. two days ago, it was on the agenda. david cameron promising an aggressive timeline. it matter so much because 40 seats.hey won they rely on the scottish labour messageget their through. they cannot go back on what they promise to the scots. wrathalmond sent in the would include my down. people are asking questions. what about english? over the weekend, ed miliband was talking and he was asked do we needed english parliament. >> i am not in favor of a new parliament. i do not think it is the answer. i am in favor of one house of commons with 600 mps. yearsght over the last 2

to avoid our parliament being split up. i want to be sure it does not happen. >> and miliband talking about allowing english lawmakers to scrutinize english loss. it might be how we will get something. ed balls was saying the different levels of devolution and we should not rush. it is one big headache for labor. billing act top a of the labour party conference, what would they talk about? >> the cost of living, wages. and in fact to during the interview on at the bbc, and miliband trying to link the scottish referendum to the agenda. he was saying it was about people who felt they did not have enough to lose to take such a big risk to separate their country from the u.k.

kish trying to link of the two -- he is trying to link the two. up with ang to come new minimum wage, eight pounds per hour. later withll be up the possibility of introducing a 50% rate of and, and cutting down mp's pay. >> thank you and we will talk about it later. now, coming up on the show a totle bit later, going back manchester and labour party conference. we will speak to the shadow business secretary a little later. what else is on our radar? g-20. warning of a potential increase in market risk as major economies rely on stimulus. low interest rates. after the g-20 meeting,

christine lagarde said it can reduce the danger. >> we believe central banks do have the tools and macro tools for the potential of valuation in the market. and potentially use of them if it necessary. we believe there are equipped to deal with some of the potential risk. shares under pressure. but the airliners in the second week of strikes. hila striking about expanding low-cost that pays less than their regular carrier. ends thision week week. we caught with the director of "vogue italiana." >> the strength of italy is [indiscernible]

and [indiscernible] i hope it will never miss. up, drawn parallels. the economies of england and france seem to be going a different directions but they have striking similarities. the challenges as we watch what happens with the labour party conference. ♪

>> welcome back. you are watching "the pulse ." let's talk about the economy on either side of the english channel. andeems like the u.k. france are going and different directions but there are similar parallels. joining us is a senior european economy -- economists. good morning. as we watch what is happening with the labour party conference, we are aware that has been concern that the party is very similar to the ones in france. we'll see the economic effect they have had. are we being unfair? >> we have quite some way to go. there are some similarities. they are very different political systems.

we are talking about minimum wage for example this weekend. the level of the minimum wage is very different. may be one country is very low and one a bit too high. , not exactly the same, i think even though you are talking about labor or social lives. where we struggle a lot in france is on what are we talking about when we talk about policies? you pretty much have to open the newspapers to see what is the government planning to do today or next week or so. we are lacking of the longer-term plan. when i say longer-term, about a couple of quarters is that we just do not know. in france, that hurts the confidence. while in the u.k., depression and that confidence is much higher. impacted, ity is is been much more positive over the last couple of years.

on the government side, monetary policy side. the confidence is sky high. >> is exact fare? you look at policy. ?- >> is that fair the way it is communicated. again, is it a fair comparison? are we being unfair on the french? they have a consistency, the british. here asnsistent over you would suggest. comparing, itart is more consistent over here. the situation is easier. the risk to the union. it is still a one a single entity. and a continental europe, it is much more complex. we are seeing discussions on .olicy ordination when you do fiscal policy, your to do tightening in one country and how do you handle in the other?

for france to meet its target and germany to relax a little bit. discussions and take a lot, lot longer on the continent because it you have much more countries around the table to discuss at those matters. chris the economic advice of the labour party is we go with the policies which is a concern to business. they flip-flop. they changed. have a clear policy review. this is his can figure out what it is at work with it or around it were through it. >> exactly. a very important part of it. having consistency in the policy does not mean you can change them all of the time. the thing with the minimum wage, always a question of where do you set it. you can set it too high. then have the political curtilage to say it is too high and take it down a bit. that is just and just in the policy along the way. certainty is really the fact you

do not know. -- there is a just and the policy -- adjusting the policy along the way. you do not know what of the policy will be next year. that is uncertainty. consistency is about policymaking and giving assurance to the countries. advice too make one any political party, it would be in is about time consistency and given a game plan. what are the endpoint might be? about the message to see business figures, entrepreneurs? much has been made in the those inress about paris establishing themselves here. because of the tax rates and was seems to be a business message from parliament. again, the labour party and in the u.k. talking about raising the income tax.

what message needs to be sent to business? and the duration, does it matter? >> the message for businesses i implementingt -- business friendly policies, whatever they are. be unfairant to against the french. what they put on the table, tax rates are pretty high. what you get in return may be much more than in other countries in terms of infrastructure, incentives. the french takes a lot and distributes a lot. whether it is optimal is now a the question. you may not redistribute in the optimal way. at the wrong system, just in efficient. the question has to be on the table and edge rest as such. addressesressed as --

as such was does some are moving and they perceive as not optimal. the question has to be on the ssed as such. are moving and they perceive it as not optimal. it's a lost a lot of market share. france what is fair in is they have to restore competitiveness and companies to export more. it is true here when it comes to manufacturing and production and exports. here, i think there is room in the u.k. to build up a message that is more competitiveness friendly. maybe it does not go through the tax rates or through the wages but may be more through education or infrastructure. but, the outcome is and both

countries, over the last years, lots of market share. big losses for step >> good to see you. joining us from barclays. a bloomberg exclusive with the world's youngest central-bank governor. head oflk live to the the national bank of georgia. that is later on. ♪

>> good morning. you are watching "the pulse." we are on bloomberg.com. the final labour party conference before next year's general election is underway. theiliband kicked off conference. he said that if labor wins, minimum wage goes up to eight pounds per hour. for more, the shuttle secretary. good morning to you. , theessage to business message to business, we will raise the minimum wage? >> well, actually, i do not agree with your characterization. growth -- john- critical and -- crittland, head that we needsaid

to see an increase in minimum wage. we believe you can get to eight pounds per hour fairly comfortably over a five-year period by seeing productivity measures. bottom line is, we want to work in partnership with the business to grow our economy. but also to ensure we can pay our way into the world. we are in our 31st year of a trade deficit. in percentage terms, it is higher than greece and spain and portugal. we have to tackle that. we have to work in partnership with the business. >> why don't we leave it up to be paid commission? set up study national minimum wage institution of and the late 1990's, what we were seeking to do then is tackle

exploitation and very low wages. people were earning as little as one pound per hour. we still have in the innovation of the minimum wage, a very large number of people in our country do not own a wage and they can live on. over 5 million people who cannot feed to their families. what we want to do is to give a much more active role so rather than setting a minimum wage, it becomes a lope watch a dog challenging government and to looking at different sectors and how wages can be raised. working and consulting with the business. businessesng to about the process. i should say where business -- i they were real by the politicization of the process. i think the toy plays where will perform the wages -- i think we

can get to a place where we perform the wages. and i believe will do find a way through that. i miss been to the cbi about it and i'm having a consultation with different organizations including the cbi in coming weeks. >> do you think the labour party is still perceived as being anti-business? it has been the criticism that does will level at a the party for the past couple of years. the language of, the formulation has been perceived as antibusiness. how do you change that? >> i do not agree with that. you will get politicians and businesspeople leveling of the accusations against us. that is politics. the biggest uncertainty is to many of yourcially viewers and market makers. the prospect of the exit which would be catastrophic for our

businesses, your viewers who have investments in the country. we are resolute about the importance of the continued partnership. today, whether chief executive officer of airbus. it is a success story who will be speaking on the platform of the conference today on europe and its importance. think -- ifou you're talking about -- it is great he is taking an interest. business --ut small right. what did you think the business, the smaller end of the spectrum wants? what promises can you make for someone running a smaller a medium-size business on broadband availability and all of the things that make a deficit on a day to day sort of level?

, you are right to highlighted those issues. the number one issue for many of us a medium-size businesses is a hike in business rates they find themselves having to cope with. we are committed to cutting rates in 2015 and 2016 and freezing them and a year after that. that is a commitment we made a last year and we believe of them go further. a 1% cut in the rates and we announce at the conference. you talked about broadband. i've been businesses have to wait far too long to get a broadband connection. that elected, we will talk to see if we could require a telecom business to provide a connection within a week. with broadband connection, you can run a multinational from your bedroom. ,bove and beyond said that macatee will problem for our businesses is gaining finances

it isve and beyond that, still a problem for our businesses in gaining finances. all of the g7 economies by specific medium-size businesses and as while will committed to setting of a british investment bank along the lines of ksw and regional saws to ensure our businesses can get access to the finances they need. it is not a commitment matched by any others as a the moment. >> back to business rates, the business rate, the way there are levied a many people's minds, some of the craziest fiscal talks. why don't you reform it? policy't we put a decent into place that is understandable by those who haven't levied on of them? and investors have them have more clarity? forget cutting, why not tear it

up? we know we need to look at the business rate system. looking at a wholesale reform is something you got only do if you get into government. we recognize it is a problem. we come forward to freeze. and look at the way the system works. you tell generally about tax. one of the things was talked about is we are committed to maintaining the lowest rate of corporation tax in the g7 if elected next year. >> you are saying if you get into power, you will look a wholesale reform of business rates? >> what i am saying if we get to power, we will be looking at the way the system works. >> ok.

great to hear. i expect a lot will be happy to hear you do that and even happier if you see it through. bit aboutyou a little the last few days. the political temperature has risen. you will be keenly aware of it. do you think one of the lessons that has been learned over the past few days, the past week or is a data the labour party and conservative party can actually work together? it strikes me one of the lessons is that the grand coalitions and more across party bipartisan policymaking may actually be in a the interest of english business. what the british in business or once is consistency and maybe politicians to think about how they deliver. this is music to my ears. i completely agree.

we are too adversarial and the way we do politics. i will like to see it be less adversarial and work together in a consensus when we can. you are right. the referendum campaign in scotland was a good example. we are trying to institutionalize more consensus in business decision-making. it is one of the reasons why we took off the recommendations of the former head of the authority at the network rails, who wrote saidndependent report and having an infrastructure commission that will make recommendation to governments on big infrastructure projects. we believe it will help build consensus and will be very difficult for any political party to set against. we absolutely recognize. i am not into opposition for opposition stake. where the government has done good things i a great -- a green

ee, is stored with the automotive sector. one example of activism. it will continue. that and what to eat wherever possible and change where necessary. -- and that is wherever possible change where necessary. important issue. >> do think that u.k. will end with a democratic deficit if they carry on [indiscernible] is that really a democratic story? >> what we now need to do is following further devolution is give our cities and regions greater autonomy. i would like for us to move toward that model. we are too london centric.

i would like to see our citizen regions get for more economy. it is way you resolve some of these conundrums we have going on. we do not resolve by saying to the scottish people just after they voted to stay in the union and solidarity with the rest of the nations, we're going to excluding you from different things. i think the solution to this is to get people in england more voice. let's give them more autonomy along wales and other entities.. we can learn from other countries here. armany, france, they have much more devolution than us. they are less centralized. that helps them build dynamically countries and that is important for us. >> we will leave that alone for the moment. businessna, the shadow

minister. as a skyscraper and london has opened. is it unique shape. ofis a feast -- feat engineering. caroline hyde had a personal tour. >> in the city of london. grater.he cheese i have a guided tour. >> hello, caroline, welcome. -- >>cole developed by is not like, it other skyscrapers. it was prefabricated and assembled by a tiny crew on a tiny lot. it's like a giant [indiscernible] >> how are you getting the building materials?

>> it is very challenging. has beene building off-site. a lot in the north of england. city.driven into the >> more than half of the office space is rented out with the tenants due to move in early next year. and testing space. much of be charging a pretty big premium? >> prime of accommodations. 60 pound a square foot. we have achieved a 70 pounds on a lower floors. >> london's skyline is changing faster now than it ever has. seven are scheduled to be finished in the next 2 years. 130 are in the pipeline for the next for years. stretched foring

a demand for residential and retail space. >> you have to look at a place where you can compete and has a long-term ability to generate the returns. andon, when you go down check the boxes, london really is the obvious first place for us. off for developers who took of the risk historic construction despite the financial prices. -- paying off or develop its own took the risk and construction despite the financial prices. london has needed this new wave of power. last 12 months, the availability of office space soar driven by companies taking more space as an they become confident by their companies. >> we believe is the center of europe. and at the center over the

world. >> caroline hyde. >> building it in. let's move on. how the markets are trading. >> here in london and across the u.k., the first patient dominate about politics. but the markets, a five letter word -- china. commodities in the market. copper is down. year to date, down 39%. ore gettingon crushed. about happy talk about more stimulus from the chinese authority. it might be overstated. %.x down by 0.3 some of the -- dax down by 0.3%. some of the biggest drops are mining.

we overstated our results. the problem for tesco is at the top end of the overstatement. barclays coming up and say they want to revise profit. the problem is will not gotten the details about how much they will revise system it may not just be 250 million pounds. it is down by 8%. i believe it for you. [laughter] >> yeah. i will leave it alone. that is probably the least of the jokes that could be made. thank you very much. let's step process the pond. the first official visit. the g 20. resolve political differences and improving the economy. hans nichols joins us. angela merkel will meet. i guess it is a bit of a staring

match. french want more spending. the germans want a less spending the by the french. >> and you are right. the same story, a different city. today, it is in berlin. manuelhe came over here, said he would not change the third four hours a week and will not give on having more austerity. the print -- the french government wants to have their autonomy before they undertake some of the deficits. it a seems i every couple of days on the weekend, we have a repeat of the story. is germany holding back the global economy? germans themselves do not seem too much a mind. they are standing their ground. >> in terms of the language being used, we heard strong language from the u.s.

it seems like the americans -- they are agreeing with the french? >> [laughter] that is one way to put it. a great deal of frustration within the u.s. that and they budget more lax on the deficit rules across the eurozone. here is a quote from jack a little. he said -- -- here's a quote from jack lew. -- he said -- germany, they to need to spend more. >> thank you. protesters defy putin. the biggest demonstrations in years. that will be right here on "the pulse."

>> 45 minutes past the hour. russia's opposition, the biggest demonstration any years. protesters defy president colton with antiwar -- putin with antiwar marches. at the the him of the opposition, it got them in trouble in the past. new and familiar face.

yes. that is exactly right. he was in prison in 2003 because he was financing opposition parties. in, after his release december, he initially said he will not be taking on a political role. here he is making a series of interviews over the weekend in which he said he will try to rally opposition to vladimir putin and he even said he did not rule out taking a leadership role if there was a crisis situation. an interesting moment in russia for this to happen. putin is vulnerable. the economy is heading into difficult territory because of sanctions. there's an opportunity. of this is a surprise is the question i will ask. given the fact, it has been

trouble in at the past. the implication of getting in trouble for a long time. how much trouble is khodorkovsky in stepping into the political fray? looked at the type of person years, the ambition and he has scores to settle. he was in prison for 10 years and his oil company was dismantled. certainly, putin must be thinking did i make a mistake in letting him go. >> that is the political calculation i would be working through. thank you. a story we would be looking into. khodorkovsky's political return. from russia to ukraine. the government in kiev and rebels are trading accusations even though they agreed to have

a buffers on. ryan chilcote now reports from ukraine's new front line. ♪ >> you could forgive the soldiers outside of this town and ukraine for failing to be friendly. the last time strangers are made an appearance, locals said they came with 100 tanks. this city was saved by the cease-fire. industrial's heartland and this is steel country. it is owned by the richest man. toil around the

clock at 2 of the plants. this one plant can produce a quarter of all steel exports. but production has nearly halved thanks to shortages of coal that el-heldom reb territories. the appeal to the work or's not to join the rebels is credited with it not [indiscernible] month pay for a worker is good money here. many of the factories on the other side have shut.

factory workers also take part in police controls to maintain order. during our short visit, one checkpoint was shelled and three ukrainian soldiers were wounded. another three separatists arrested. ise than anywhere, this city keeping as i owned the truce. what happens in this town matters far beyond the borders. ryan chilcote, bloomberg. >> if you want to see more of his reporting from the frontlines, visit bloomberg.com. we will be back in a couple of minutes. ♪

>> good morning. welcome back. new energy. solarg about a solar -- panel maker. it is making it look nice. the latest development is a high-performance tiles. they are designed to resemble what you probably have on your roof, a standard roof tile. they're everywhere. will the design be a hit for the mainstream audience?

we needed to find out. look at the solar market, looked at a lot of houses where the big, blue things are stuck on the roof and they look ugly as sin and would -- and say we could do a better job? >> absolutely. when we saw the panels going up, we thought it is a really bad application of great technology. with aout to come up something that did not change the way people's houses looked. ast everything as normal possible. these are, what are they? 10 inches? of they are much smaller. we have pictures. does it make it more flexible as well? >> yes, indeed.

anywhere you get a full tile, you can produce power. even on the smallest of roofs that have different shapes, you can get, maximize the power. >> and the cost comparison with the big, standard ones? >> we do not want to have a rolls-royce type. this product has to be competitive with the standard over the roof now. at the where we are minute. we are hoping as production increases, we will drive the cost of down even faster. >> fixing them. roofers work pretty quickly. how complicated is it to fix them? >> is the same as putting ordinary roof tile. just a male and female. it is very similar.

teeth much sucking your did you get when you start talking about the industry? builders, the big house builders in the country have an adverse and to new technology. anything that costs slightly more, they are sort of [indiscernible] what we have found is individual builders were looking for that little bit of extra something in a the house. they are really into this. terms of where you see the business going, what type of scale? >> we are looking at the global. we already have a contract is signed with an american company. they wanted to start a marketing this in canada and the u.s. the first houses are being done in october of this year.

to seeing forward more about it. we will take a break. word" is up next. the second hour is next. see you in a moment. ♪

>> tesco tumbles. four executives have been asked to step down. siemens go shopping in the united states. the u.k.'s labour party gets to work. hear from the shadow chancellor of the exchequer. good mog