>> china plunges. state companies are told not to sell shares in stocks worth more than 2.5 trillion dollars are frozen as the shanghai composite sees its biggest slide since 2007. >> stock market support. china's security finance is set to seek $80 billion to help stem the route that is worth around 30% of the country's benchmark index since its peak. >> another greek deadline. european leaders give the nation until sunday to accept the rescue deal or face being forced out of the euro. angela merkel she's not especially optimistic. >> balancing the books.

the u.k. chancellors at the detailed plans to cut 12 billion pounds off of welfare spending as he delivers the first fully conservative budget in nearly 20 years. caroline: i am caroline hyde. ryan: i am ryan chilcote. it is 1:00 p.m. in hong kong. caroline: china's benchmark index has seen its biggest intraday fall in years, plunging 1.8%. that's amid a continuing route, leaving only 43% of the entire stock market frozen. this is a day after hong kong and chinese shares entered a bear market. ryan: shares on the shanghai composite have plunged by ron 30% this year since the peak about a month ago. david english is in hong kong

where the hang seng index has also plummeted. david? david: a very good morning to you guys. it was a very eventful morning session, and right now it's 1:00 p.m. in hong kong, and we are just getting underway. just to recap what has happened. about our before the chinese market opened, you had this flurry of headlines chinese companies announcing that their shares are suspended. we had a total of about 430 companies on top of the 800 or 900 that were already halted for the first few days of this week. roughly right now, you look at where the index is going. if you combine both shanghai and shenzhen -- that is the smaller exchange on the mainland -- frozen, halted. among the stocks that are

moving, most of them are still on the way down. look at this. we are 3.5% underwater. we opened 8% underwater. shortly after the market opened at about this point, the pboc came in and announced that they had to say something. they basically said they will do whatever it takes to stabilize the markets. over the past hour or so, what we had was the state backed china's security financial corporation asking the pboc, the central bank we need more than $80 billion to stabilize the market. over the lunch break -- which is why it's interesting to see what happens next -- they decided to come out with $40 billion as a credit line to the country's brokerages. there are about 21 of these brokerages. at this point, i think we have a graphic. i think we can get that up to show our viewers in europe how the morning session broke down.

about 2800 stocks. i think roughly about 40 or 50 out of 2800 shares were up. roughly half were unchanged mostly because things ground to a halt. the other half, mostly down. let's take a look at that right now. let's get that up for you here. i mentioned some of these steps. this came on top of what happened overnight. you had about 700 of these fund managers, executives at asset management firms in china, pledging to invest their own money to buy up their own funds. china, also asking state owned companies, don't sell your shares now. not that they would. one after the other. every hour, you had an announcement here or there. let's see if this works. it's been a very busy few weeks but this morning was quite hectic. caroline: we've got to remember

there are some 90 million retail investors involved. this is big. thank you very much indeed. we will bring you coverage of this fast developing story. ryan: on to the saga that is greece, greece gets another deadline. this time it appears to be firm. european creditors have told greece it has to accept their rescue or bailout by sunday, or they will propel the country out of the euro. we've got correspondents standing by. hans nichols is in brussels. guy johnson is in athens. tsipras is again in brussels. what can we expect from him? hans: he goes to strasburg, to the parliament, to give a speech. we are expecting to hear whether he has suggested the severity the seriousness of the situation. coming out of that meeting, very few of the prime minister's were optimistic. angela merkel, the german chancellor seemed to understand and underscore the severity of

the situation, hinting she was uncertain whether greece would submit proposals that would satisfy her demands. angela: you don't see me as somebody who is optimistic today. i am briefing you on the meeting of the eurozone councilmembers and heads of state and government i also tell you that we will meet on sunday. i think that this announcement in itself already shows the situation is fairly serious. hans: ryan, there is a great deal of disappointment amongst finance ministers and leaders that greece did not arrive with specific proposals, nothing that they could run through computers, put into spreadsheets to see whether they would meet any targets. there was a lot of pessimism. on the optimistic side, this new finance minister did receive recent -- decent reviews. essentially coming out of this we have a timeline. here is what the timeline looks like.

sometime today, they have to submit formally the request to the esm. in two days, greece must submit their actual proposals, what they are going to do. on the 11th, we will have a eurogroup meeting to discuss the program, and on the 12th, we will have eu leaders. first the 19 meters will lead, followed by the 28. the council president said he was concerned about what would happen on the sunday meeting if they didn't get a deal, and he was suggesting that that would mean humanitarian aid. >> the situation is really critical. unfortunately, we can't exclude the black scenario. no agreement until sunday. it means of course that we need to discuss the consequences for the whole european union, not only for the eurozone.

the netherlands was also pessimistic. in fact, most of them were. a colleague of mine standing out there watching all the prime ministers and presidents leave, he said pretty much all of them had frowns on their faces. all of them looked down, with one exception, angela merkel. she seemed to be the only one a little cheery. ryan: i want to get over to guy in athens. what does this mean for the banks? guy: mr. draghi was at the meeting, and he briefed that the greek banks have until the end of the week. after that, some action is going to be needed. we find ourselves in a difficult situation in athens. cash is piling up in certain parts of the economy. supermarkets need to make deposits. other parts of the economy are being starved of cash. we still have the 60-euro limit in place. they are running out of money quickly. mario draghi is making that clear that may be why we have

the sunday deadline. the banks are going to be front and center in this story. the economy is flat on its back. without a functioning monetary system, there is not much that can be done at this stage. it's interesting to listen to the language about the frowns and disappointment that came out of this meeting. you've got to remember that on sunday, mr. sippers felt he was on the front foot, that he was really in charge of the situation. he had a mandate from the greek people to take the brussels. that has turned out to maybe not be the case. he's not giving the impression at this stage that things are going to change. take a listen. >> the talks were held in a positive atmosphere. the procedure is going to be fast, very fast, and will start in the next few hours with the aim of concluding at the end of the week at the latest.

guy: there is nothing of substance, nothing that indicates to the greek people that mr. tsipras is going to change course. he is not preparing the greek people for that move. he fought very hard for there no vote. to turn around and except the greek creditors proposals would be difficult politically and athens. in athens, he's on the front foot. in brussels and strasburg, maybe not so. that highlights the problems that we face. the greek government feels like it is in charge of the situation. ultimately, it is going to find it difficult to deal with the creditors. back to you. ryan: guy johnson, hans nichols thank you. caroline: u.k. chancellor george osborne will put a conservative stamp on britain as he delivers the first budget by a tory majority government in almost two decades. and edwards is in westminster. the last budget, back in march, how have the public finances been faring since then?

ana: good morning. the economy hasn't been doing too badly. the imf says the u.k. is going to be the second fastest-growing g-7 economy this year and in the next year. the obra -- there is a group that keeps the account -- they might give the chancellor little bit of wiggle room. some of the tax receipts have been coming in a little bit better than the kobe are -- the obr has been forecasting. yes, the economy is doing well. expect george osborne to celebrate that. that is not going to be the whole story. here is where the greece story comes in and links back to what my colleagues have been saying. that word, greece, is going to feature as part of this u.k. budget delivery by the chancellor. we already heard over the weekend the chancellor saying that what was happening in greece was another reason why a country needs to get its fiscal house in order. we are expecting george osborne to say today that if a country needs to take control of its debt, or watch those debts start

to take control of the country. that is the underlying background message we are going to be given. in terms of where the hard decisions are being made, what money is going to be spent, what money is going to be raised remember during the election campaign, the government boxed themselves in, perhaps begin that during coalition conversations, many of these pledges they made in the manifesto would fall on the cutting room floor. one of the key questions is going to be, how much austerity and how soon is a going to come? watch out for details around welfare cuts and taxation, not just taxes that are limited in the amount that they can raise them, because of those pledges but watch for any other conversation around taxation. businesses are going to be looking at investment allowances. follow those issues are going to be making an appearance. if i were playing budget bingo, perhaps on twitter or in the pub with a pint in my hand, i would be looking out for the words

"greece" and "hard-working families." caroline: that reminds me of another politician. anna edwards, thank you much indeed. we will have special coverage of the u.k. budget here on bloomberg. we will take george osborne's speech live at 12:30 london time. from 4:00 p.m., we will have a special program giving our viewers and unique market's take on the summer budget, featuring top talent from across bloomberg's political intelligence, and business teams. ryan: coming up, we will remain all over china. britain risks creating a two-tier economy where far too much depends on you, the consumer. that is the view of john longworth. he's going to be talking to anna edwards right after the break. stay with us. ♪

ryan: it is 6:15 in london. it is 1:15 in shanghai and hong kong where the stock rout continues. caroline: here are some of the stories you need to know. china's benchmark share index has seen its biggest intraday fall since 2007, plunging as much as 8.2%. authorities announced fresh measures in an attempt to stem the rout which has seen the shanghai composite slumped about 30% since june. more than 1300 companies have halted trading coming state owned businesses have been banned from cutting stakes in their listed entities. china's security finance corp. is said to be seeking $80 billion in liquidity to help support the countries battered stock market. that is according to people familiar with the matter. the money is being sought from the people bank of china. the final amount has yet to be determined and may be far more than $80 billion. european leaders have given greece they sunday deadline to agree on a new bailout deal, or

they will take the unprecedented step of pushing the crisis-hit country out of the euro. german chancellor angela merkel said there were "only a few days left" to find a solution and conceded that she is "not especially optimistic." ryan: it is budget day. u.k. chancellor george osborne will be delivering that. the big headline is going to be the first purely conservative budget delivered in 19 years, and he's expected to announce details of his 12 billion pounds of cuts to spending he would like to see, austerity coming to the u.k. anna edwards is outside the houses of parliament. take it away. anna: thanks very much. let's bring in our guest for an interesting conversation about where the chancellor should focus. john longworth, good to see you. investment, investment, investment in the u.k. economy. that is your key theme. john: we've seen the government

spend a lot of money. they will be spending less money after this budget, but the money they spend should be focused on things that stimulate the economy and promote business. that is good for tax revenue and also for jobs in the economy as a whole. we need to focus that spending on things that are productive not things that are not. anna: when we've talked in the past about this, you've told me that one of the important things is providing incentives to people to go along with the can for structure projects, whether that is compensating people for compulsory house searches. is that a big area focus? john: we wrote to the chancellor a few weeks ago. we said the one big thing we wanted this budget was a focus on infrastructure, that the government has to deliver on the things they said they are going to deliver, not least a runway -- lease a runway. anna: we've only been talking about it for four decades. john: digital, we are not very good in this country.

digital, we need to be world-class. we need to have an energy security policy. one of the things that holds this up is nimby-ism. we are saying to the chancellor that there ought to be change in the way compensation is given so people are affected by infrastructure projects are generously compensated. if you say to someone, i will give you 150% for the value of my property, they say, please but the rail line through my house. it makes a big difference. anna: what about other concerns you might have come at the risk of a two-tier economy? that seems to be something you talk about increasingly. not seeing the recovery in manufacturing that we are seeing on the services side. talk about that. john: manufacturing has recovered reasonably well since the recovery started. our quarterly economic survey which is the biggest the business survey, published this week shows that the balances

indicate manufacturing is on the downturn again, and services are paring away. services are by far the biggest part of our economy, with only 10.5% of the economy being manufacturing, but we need to have a vibrant and growing manufacturing sector, as well especially if we are going to build exports. we need to do something about this before it gets a hold. we need to develop our manufacturing sector. anna: art manufacturers at the mercy of the global trends the trends in the pound and the weakness in the eurozone? you only have to look at our top headlines this morning to see the extent of the crisis in greece and the impact that might be having on the rest of the eurozone which is our biggest trading partner. to ask the chancellor to fix those problems is a big ask. john: it's a significant part of the issue. we think there are three things in manufacturing that are a problem. access to finance. investment is a problem that is

holding back manufacturing, the fact that they can't get access to finance. the incentives are a big problem. lack of support for exports, and also, of course, things like allowances for investment. of course, there's the strength of the pound, which you just mentioned, which is a problematic issue. europe represents 43% of our exports. the rest of the world is the balance, the 57%. actually powering exports into the rest of the world is important, particularly as europe continues to struggle. anna: if the government is looking to help businesses to export more medium-sized businesses, his misses that talk to you, what can the government to come if you are talking to a business that doesn't export much? why do they not get involved? john: crucially, i mentioned access to finance is a big issue. if people are going to export usually they get paid a lot later. they are taking more risk and they have to be able to fulfill

orders which are unexpected which is great, but if you don't have the working capital, it becomes a problem. access to finance is a structural problem in the u.k. it's been there for a very long time. we need a strong business plan in the way that canada does, the united states, and germany. need to fix access to finance. we also need to have government support for exports. there are companies particularly midsized companies, that are weak in the u.k. compared to germany. anna: the government has been talking for years during coalition years, but the infrastructure they tried to put in place around supporting business the banking, the access to finance you talked about. is it not working? anna: john: we have seen some signs that the funding for lending scheme is being directed towards businesses, as opposed to mortgages. we've got 80 billion pounds of underwriting into the banking

system, and most of that was directed towards mortgages. probably sensibly from a commercial banks point of view. after all, commercial banks are expected to take excessive risk. that is where it business bank comes in. the business bank steps in and takes the riskiest part of the lending onto its shoulders. the commercial bank says, you can't be expected to do this. it never has. it has never operated in that zone. what we are missing is the alternative to that. anna: let me ask you. you are setting out all the things you want to hear from the chancellor. what if the government turns around and asks something from you? working tax credits, part of the welfare bill. the welfare bill is under pressure. some people describe it as a subsidy for private business. why should government payout -- john: we need to have a look at that holistically in the context of the whole provision of education, welfare.

it's a very complex issue. the fact that we've got ourselves into a bind at the moment where as you say, taxpayers are subsidizing working people in business and actually having a living wage would be a better solution, so the economy is hole in the long run. we need to transition to that in a moderate fashion. otherwise, particularly in sectors like catering, leisure, and so on they will find it difficult to adjust over a short period. we've also got downward pressure on wages. we have a lot of people entering the labor market, people working until they're older, and then we've got completely porous borders in the eu. there is an endless supply of labor, so that puts a downward pressure on wages. the government needs to think carefully about how we are going to readjust the economy so people are paid the correct amount of money for work and that businesses are able to afford that and that we have the

right labor in the workforce and the right skills. anna: thank you so much for joining us, john longworth, the director general of the british chambers of commerce. plenty more to come from the green outside of westminster as we go through this morning. we look at to the budget later on today. back to you. caroline: that special program at 4:00 p.m. ryan: coming up on "countdown" we are going to continue to talk about greece china, the u.k. he spent five years on the bank of england's monetary policy and he's going to spend the next 45 minutes with us. we are going to have andrew sent with us for the better part of an hour, giving us his insights. we are going to kick it off with china. of course, we will turn our attention to the budget coming up. a lot going on in china today. we obviously saw a huge fall in the shanghai composite. caroline: down 30% in the last month. ryan: biggest fall since 2007. we have seen some gains, but

many shares remain frozen. keep it right here on "countdown ." we have and her sentence joining us right after the break. ♪

ryan: it's 630 in london, 7:30 in brussels and 1:30 in hong kong and shanghai. anna: german chancellor angela merkel said there's only a few days left to find a solution and conceded that she is not especially optimistic. u.k. chancellor george osborne is expected to announce details

of plans to cut 12 billion pounds in britain's welfare bill as he attempts to turn a budget deficit into a surplus. china's benchmark seen its biggest intraday fall since 2007, plunging as much as a .2%. authorities announce fresh measures to stem the route after the slump of almost 30% since its june peak. hundreds of companies have been halted from shading -- from trading. now for more on the ongoing stock route in china and roundup of other asian markets, give us a look at what is happening on those stock markets right now. >> as you mention, certainly not

great news here in asia. we have the shanghai composite currently down by four point 2%. as you mention, it fell by 8.2% at one point. so we've pared back about half of those earlier losses. over here in hong kong on the hang seng, this gives you an indication all 50 stocks on the hang seng index are in the red. normally on this son of the screen we start to see some of those positive movers and it is blank, absolutely nothing in positive territory in hong kong and those china mainland shares very much under pressure. we have about a half hour straight to go in japan and also in australia. the stock route has fallen an australian and japanese material stocks being heavily weighed down by falling commodity prices, particularly the iron ore price which fell below $50 u.s. per metric time. the australian material sector

at a five-month low but a lot of the focus has been on this region here. as you mentioned we did see about 50% of the market rosen. every attempt the central bank is trying to throw at it to stop this rout doesn't seem to be having the desired effect. if we look at some of the stocks were heavily watching in hong kong and china, we have seen a lot of the brokerage firms coming under significant pressure. they've all been under quite a lot of pressure and big selling coming through in tech stocks in hong kong. if you look at the big losers on the shanghai composite, one brokerage firm down by 9%. and the state run utilities under a lot of pressure as well. even companies that have been holding up white well over the last couple of sessions being sold off today. petro china is one of those

down by 2.7% currently. certainly we are seeing a lot of fear driven selling coming through in the asian region, really contributing to the $3.2 trillion equity rout. caroline: 80% of the chinese stock markets are backed by retail by individual investors. retail sales falling in china for the first time in over two years in june. clearly this is had an impact on individual investors. ryan: it indicates contagion. it's important to all the western carmakers to watch that. let's dig a little deeper into china and also greece and united kingdom. rejoined by men who spent more than five years on the monetary policy committee. andrew is going to spend the next 45 minutes with us today ahead of the budget. we have to start with china.

i guess the first question is how much does it really matter here in the u k what is the threat of contagion? andrew: the thing we need to watch in the u.k. is what is happening in the real chinese economy, to chinese consumers and businesses. and the growth of the chinese economy. we know that stock markets are volatile. the chinese stock market is still quite a way of from where was the year ago, despite the recent fall. it had a big run-up and now it is correcting. the real indicators that we need to watch our indicators of production and consumption. this is the second largest economy in the world and it obviously has a major impact on growth in the asia-pacific region and more broadly. caroline: for mentioning the fact that the stock market has been backed by individual investors.

retail investors are pulling out through this fear factor, but that will impact domestic spending within china. could that limit the amount of change were seeing in terms of trying to focus on domestic spending rather than outward exports? andrew: it will have a negative impact on consumer spending. that kept their interest rates much higher than we've seen in the west. they're in a much stronger position that in the west. the fundamentals for the economy in terms of its imbalances and where it stands are much more positive than some of the other economies were worried about. ryan: how does what is happening in greece affect the british economy? andrew: the issues in the financial system should be a worry, not directly.

the exposure of is fairly low to greet tanks, but other banks in europe we really need to see some sort of measure and controls dealing with the greek problem and i think the worry is if it starts spiraling out of control and a controlled exit from the euro. but even those types of scenarios, there are some things to bear in mind. the u.k. economy is depending more on domestic demand there in terms of growth than many other european economies. it is important to remember that there are some domestic limits on growth. the ecb and the bank of england is there some worsening of the problems in greece, i think will work quite hard to limit the impact on the european economies. ryan: if things continue to do -- deteriorate in greece everyone knows you think the interest rates should come up

but if the interest rates come up in the town get stronger then british exports get less competitive in the eurozone. is this the right time? how you reconcile that view with the fact that maybe europe is about to get a bit weaker and you would be selling into a market where they are not as receptive to goods in the first place. andrew: the prevailing interest rates are more the longer-term issue. i would be surprised to see the bank of england raising interest rates the week, even though i think it is the right strategy. maybe it's a reminder they should have made the first move or two already by now. if you keep putting off the decision, you end up in a position where it's never the right time. i think that will still be on the agenda in the second half of this year. it's not always can be the best time for the interest rates. caroline: is that your baseline

scenario and how much could it destabilize things? andrew: i would not say it is a baseline scenario. i think there's a prospect we can get a deal this week. but were getting very close to the wire. this is angela the clips sort of stuff and it's not very helpful for financial markets -- edge of the cliff sort of stuff. i think there is an -- there is an exit of greece from the euro, i think the way comes about will be important. you can envision a chaotic exit or perhaps the more controlled and measured exit. that will determine what the economic consequences are. greece actually has a small part of the euro area 1.3% of the european union as a whole, a very small export market. there will be consequences but

it's not like a very major economy. caroline: what would you be more worried about, china or greece as external forces happening to the eurozone and the u.k.? andrew: i think both those factors play into it. we've had a very good run in the u.k.. confidence has been building back the last couple of years. businesses and manufacturing services are seeing growth. if we see a time of nervousness and uncertainty that's going to hit the domestic demand that is actually pushing the economy forward. ryan: we will continue talking about this later, but i do want to ask you, when do you see the first rate hike? andrew: i'm still expecting the u.s. fed to raise interest rates later this year, perhaps in the autumn. i think that gives them more

cover internationally. the case has been there in the u.k. for quite a long time, is the fastest-growing economy in the g7 last year and could well be this year. unemployment has come down and wage increases are picking up. i think an adjustment is a bit long overdue. ryan: we will continue our conversation with andrew little bit later. caroline: coming up, we go live to westminster and today's announcement of the u.k. budget. ever countries not in control of its borrowing, the borrowing takes control of the country. we look at whether the chancellor can justify further austerity. stay tuned, we are back after this break. ♪

ryan: it's 6:45 in london and 1:45 in shanghai and hong kong. caroline: our top stories you need to keep an eye on china is said to be seeking $18 billion in liquidity to help support the countries stock market. the moneys being sought by the people's bank of china while the interbank market, the final amount is yet to be determined and maybe far more than $80 billion. european leaders have given greece a sunday deadline to agree to a new bailout deal or they will take the unprecedented step of pushing the crisis hit country out of the euro. german chancellor angela merkel said there's only a few days left to find a solution and conceded that she is not especially optimistic. u.k. chancellor george osborne

will deliver the first budget by consent of the majority government in almost two decades today. he is expected to announce details plans to cut britain's welfare bill as he attempts to turn a budget deficit of 5% of gdp into a surplus by 2018. ryan: let's get back to anna who is in westminster with the guest. anna: half an hour ago we talked to the british chamber of commerce about the economy. they say manufactory is not keeping up with services and we need to do something about that. i'm pleased to say we have a guest who knows a lot about this subject. he is vice chancellor of the university. you been doing a lot of work to try to work out why bits of the u.k. supply chain of manufacturing are missing. >> thanks for having me here. the big issue is what the

chancellor says he's going to give a plan for. he wants lowe's companies to be a will sell things and be part of the bigger supply chain. we've been looking at what of the things that can stop a company from getting a bank loan they need to try new and innovative ideas. there are a lot of great ideas to get into. what's working well at skunk works, small companies can come and try and idea, work with university colleagues improve they can make something cheaper and faster and prove it to banks and get an order -- and get a loan. anna: and this is the catapult your involved with. >> their jointly funded by industry who pays part of the fees and they're run by industrial concerns as well. they are crucial. you get a small company in yorkshire. we had a company with a

wonderful idea and they want to sell to boeing operation. they couldn't go to a place that would try the fancy machines they needed. they were given machines for free and when they show they could do it there really is a place where you can do great things and go faster. anna: there are parts of the manufacturing run you think we could do more with in the u.k. bits of the supply chain are missing, but you think you could fix that. >> you have a place where they can be part of a bigger vision. we have lots of little boats that can go across and bring that what we need but they need to have a command structure and a plan. we have lacked long-term clear plans of what we are willing to buy. that's the other part were doing with catapult.

looking at how to organize the structure of the supply chain so we can bring in big new things like modular nuclear reactors, high-speed trains, and sell them to us and also selling internationally. that's how you get a powerful set of products you can sell abroad. anna: there's something lacking in this recovery. >> the chancellor has given us the question of productivity. make things cheaper and sell them everywhere, pay your kids more. that's what we really have to have. make things better faster cleaner, and sell them. the big thing we are looking forward to, and that's why welcome it so much is the chancellor's in on productivity and how we go about it. we have some real big opportunities in manufacturing at the moment. highlighting those in showing of

people get along with it is a big deal. anna: we talked about the northern powerhouse and you are based up in sheffield. i don't know if you like this idea or have high hopes for it, but does it link in with the work that you are doing? >> it's a power thing to talk about in our nation, to knowledge we need to do things across the whole nation. that's very important. a lot of people around where i worked in sheffield like it because they can see people asking them to get up and be what they can be. places like sheffield and manchester has fantastic local talent. that's why today is so important. i want to work with a plan for how you mobilize these capabilities in the north. and not just in the north, either. there's lots of places around the country where similar things, talented people don't know how to get into big olympic style procurement schemes. anna: do you real evidence of that on the ground?

are we making a difference in allowing people who make things to make more things? >> the government has done some important things to drive productivity up. we talked about these catapult things that we have. another 2000 jobs, another 500 million plus new business. i think we are proving we can do what is needed, build a more efficient supply chain for bigger projects. the commitment is crucial. what i want to do is say, first of all, we should never give up on manufacturing, but don't give up on u.k. manufacturing just at the moment. it's very keen to get in there and will get in there with his bigger program. anna: in spending on infrastructure, they were saying we need to see an end to eight make do and mend vision in the u.k.

you've talked about an olympic style vision. >> i agree we need some big olympic style things. we need to say what were going to do what sort of loans guarantees and we need to work concerted lee with banks and commercial enterprises and treasuries will to do some solid planning. that will be critical in the big things we need like high-speed rail and new generation nuclear. we have across the united kingdom and the capability to build many aspects of the nuclear power plants we are going to need. at the moment we need to focus on that and say, are we going to do it, or are we going to buy everything from the koreans and the chinese? that's where we need olympic style things.

we're going to make the investments and power ahead. anna: thank you very much for joining us. great to hear your thoughts today, keith or net. he's very at -- very active in the any factoring sphere. caroline: much more from you throughout the day. ryan: he spent five years on the bank of england's monetary policy committee. andrew sentance is here to answer questions about interest rates, because i told you i was going to come back to it. given the fact that few people would have predicted over the last political cycle that rates would remain static or almost static where do you see rates in this country in five years time? you were talking about how the sooner we raise them, the more gradual the height can be overtime.

five now -- five years now, where are we? andrew: looking ahead he year or two is difficult. i think they will get interest rates up to about 2% or so. they've been down close to zero here in the u.k.. the inflation target is 2%. at least compensating people for inflation. and to do that in a gradual way. the worried would the if the u.k. and the u.s. central banks keep postponing this when the rises, they will be much sharper than people expect. going beyond that, it very much depends on what happens in the economy. the economy is still growing quite well and they could move up to 3% or 4% or so. i think it will be quite a while before we get back to the level of interest rates with all before the financial crisis. caroline: let's bring in p/e

norman to talk us through some of the stories online today. one of them is about central-bank forecasting. peter: the interactive story today, looking at the five key central banks and how they done when it comes to forecasting gdp and inflation. there are some good surprises but i'm not going to tell you what they are. china is still a big story. ryan: the numbers are incredible. 1300 companies $13.6 trillion we've got to remember the size of the market, 6.5 trillion second only to the u.s. caroline: and how much does expose the internal economy? we cannot forget greece. talk to us about what next in

terms of the great dilemma. peter: this is the big deadline day on sunday. bloomberg news has been able to take a good picture from at least six officials with inside the negotiations and how tense it has been, and basically -- ryan: everyone wants to see a proper decoding of the greek finance ministers notes. there was a pick your of his notes as he was carrying them around the room and everybody has been trying to decipher them. peter: there has been so much social media coverage on this with everyone trying to work it out. andrew: we have to remember that there's other things happening. were going to have to wait and see how that turns out next week. caroline: thanks for joining us.

ryan: coming up next we have china and we will continue our coverage of that story and look at greece and the u.k. lots to cover here on "countdown." ♪

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ryan: companies banned from selling stocks. the shanghai composite sees the biggest slide since 2007. caroline: market support. seeking $18 billion to stem the route. ryan: another greek deadline. leaders gave greece until sunday to accept a rescue deal or be forced out of the euro. caroline: balancing the books. the u.k. chancellor detailing 12

billion pounds of welfare spending cuts as he delivers the first conservative budget in 20 years. welcome to countdown. brian: i am ryan chilcote. it is 2:00 p.m. in shanghai. caroline: the chinese benchmark index has seen its biggest fall since 2007. more than 1300 companies have halted trading in mainline chinese co markets. ryan: shares have plunged around 30% since the june 12 p. david ingles is in hong kong.

caroline: first barclays chief executive has announced anthony is to leave. he took over the helm from bob diamond. they were the first to be culpable and raise their hands to the scandal. antony jenkins was from a retail background. ryan: spearheaded the direction of barclays in that direction. breaking news coming, he is set to leave. that news breaking at 7:00. just getting it now. barclays saying it needs to improve revenue and costs. carolyn: we will bring you much more on antony jenkins's seeming

resignation. first, let's go to china where the index has been plummeting. let's go to hong kong for an update on asia trading. david: it is getting much worse. the story, let's talk about moves in the market and then announcements from the government. i wanted to focus on these two markets. the nikkei feeling some of the pinch, down 3%. taiwan down 3%. look at hong kong down 5% as well. volatility through the roof. bonds rallying, sending equity investors to the exits.

the story in shanghai, 5%. close to half of the listed companies on the two chinese exchanges. 2800 companies. 1300 are on trading halts. everything moving is down. that is the story in the market. but the government has announced about an hour left a few things. let me go through each one. you first have the futures exchange. what they are doing, they raised -- they made a corridor to short the market. to give you an example, that margin requirement raised to 230%. the central bank has come out and said, we will do what ever it takes.

the china securities finance corporation. now deploying half of what they said they would be needing. north of 80 billion u.s. dollars. they have announced 1.5 hours back they will be using about half of that. a credit line to hopefully provide some sort of capital. a lot of the collateral was held in stocks. beijing has ordered the big state owned companies. don't add to the panic selling. equity prices down. going through the roof. bond prices rallying. every single contract, china related, hong kong, the ftse, so on and so forth, down.

let's see how this plays out. the bigger story is ist is the first time the chinese government cannot manage something to read they have thrown everything added, rate cuts. 1300 points down. let's see what happens to read one hour left in trading. back to you. caroline: thank you. they get -- david ingles. now to a fast developing story. antony jenkins is to leave office three hours. --ryan: they say it needs to be more externally focused and

results will be announced as planned. a surprising development for all of us. andrew to talk about the wider banking sector in the united kingdom. caroline: john mcfarland is going to be taking up the interim role. he is new. 2015. the board is looking to him saying he is the expert. guest: a broader story the bank looking to know what they should look like. we say less of an investment bank. we say here -- sit here three years later and say they don't know what they should look like. it is also credit suisse deutsche bank. thanks that don't know what they should look like. europe versus u.s. talking cheese permit the u.s. know what

they are. the big banks. goldman sachs. they took the hit early. in europe even in the u.k. banks struggling to know what they should do and how they should look. ryan: you just heard jon talk about where this puts barclays. your thoughts? andrew: if you think about the u.k. sector as a whole, we are a lot that are off than we were four or five years ago. but we are in a new normal world. the model for the banks, it was undermined by the financial crisis. although major banks are trying in their own way to adjust to the new normal world.

caroline: you have banks looking to move abroad because of the regulation. the retail side versus -- charges that have been levied on them. what do you think about that? should they have been focusing on their resale -- retail? andrew: it will be interesting to see if the chancellor sees anything in his budget. it is a reminder that the banking sector is very competitive at the moment. in one way that is a good thing for the consumer. the new challenger banks coming in. all the major birds or trojan for dust -- all the major banks are trying to find where they fit in. jonathan: i don't know who they want to come on board and what they want them to do. they want them to increase revenue, but the revenue

environment for inks in europe hasn't been a welcome one. challenges ahead. i spoke to andrew during the break. not a big surprise that another ceo has stepped down but a big surprise this morning. ryan: busy morning to read we have to turn to greece again. we are going to lithuania's finance minister. thank you. i want to ask you there have been so many meetings. a big summit coming up on sunday. how confident are you there is going to be a deal between greece and its creditors? >> good morning. of course, nobody is confident in that. given the more than five months of so-called negotiations where most of the time as yesterday, we waited for new proposals on

the greek side and did not get them. first of all, yesterday's dramatic movement -- moments this should stress a bit the greek authorities to prepare a really credible list of reforms that they would be able to implement. very important that they should be able to implement these reforms. in exchange, possible financial assistance from the european stability mechanism. i still believe the deal is possible. the harshest outcome of disagreement would be for the greek people . they do not agree to leave the eurozone. this is the main signal greek authorities should get.

caroline: what would you like to see in terms of reforms? ryan: it is very simple. when you come to see that the state coffers are emptying so fast, you should re-pay your debts, there are bank things you should consider. tax compliance. that could and should be improved. second, redesign public spending. this is all what is required. you should do this in the way that is politically acceptable to the parliament of the country, to the people of that country. that is why the greek authorities are best off listing the reforms. we saw the referendum that said no to some proposals. we heard many times from the greek side, no. this does not fit for us.

but we did not here yet what set of reforms, structural reforms to improve the economic situation could be acceptable for the greek side. this is what the greek side should do immediately. ryan: two quick questions. one, where do you stand on a short-term agreement just to get greece through its troubles? secondly, where do you stand on debt relief? are those non-starters? finally, lithuania is known as being a hardliner. we have heard your president talk about how greece has gone on too long at the expense of the other eurozone countries. is that a view you think is supported among the eurozone countries? >> debt relief, i think is not

today's question. it could be discussed some time in the future. there was no necessity for the debt relief. the debt should be returned by 2050. interest should be repaid in 2022. short-term assistance, without the credible program that would be discussed, there can't be any discussion about any short-term assistance plans. credibility is lost between greece and the rest of the eurozone. i am a social democrat. i represent elected government in lithuania. when the government came to power in 2012, they said fiscal discipline should be preserved. his is a prerequisite for

economic growth. our goal is economic growth and the improvement of living conditions. we believe fiscal discipline is a prerequisite for that. ryan: thank you for your time and your insight. caroline: let's go back to the breaking news. barclays chief executive antony jenkins, is to leave. john mcfarland, the executive chairman, will be taking over the role. they will be looking for a successor. they say there is need for more external focus at dark lease. they want to improve revenue, costs. capital performance overall. they feel a new set of skills is needed. new leadership is required.

ryan: what do you make of it all? where does this what does this say about where the u.k. banking sector is now post financial crisis? guest: it shows the sector is still adjusting. it shows the sector is competitive. all the banks trying to find a strategy, an approach which will make them profitable. it probably shows us the adjustment is continuing. let's get this in context. the banking sector in the u.k. has improved greatly since the financial crisis. we are on a recovery track. ryan: if this is a choice, between investment banking and retail banking championed by mr. jenkins, what is the right

strategy? andrew: it is for the boards and management to decide. it will not be the same strategy for all banks. another element of the strategy is the extent to which they focus on the u.k. market. let's not forget that the u.k. and city of london is an important importer and exporter of financial services. ryan: we are going to have to leave it there. andrew spent five years on the bank of england monetary policy committee. he will be with us more. we will also talk about the budget, greece, barclays, china. you want to continue to watch "countdown" because it is a busy morning. stay with us. ♪

ryan: welcome back. it is 7:20 in london and 2:20

and shanghai. caroline: here are some of the other top stories. shanghai's index has seen the biggest fall since 2007. authorities announced fresh measures an attempt to stem the route. more than 1300 companies have been halted from trading. locking up shares worth $2.6 trillion. china's securities finance corp. has been seeking liquidity to help the market. money is being sought from the people's bank of china. the final amount has yet to be determined and may more than $80 billion. european leaders have given a deadline or they will take the

step of pushing greece out of the euro. they say there are only a few days left to find a solution and angela merkel said she was not especially optimistic. there are details to cut 12 billion pounds of euros. he attempted to turn a budget deficit into a surplus by 2019. ryan: the budget obd focus of the next conversation. the company has 1400 employees in the u.k. thank you for being with us. andrew, i want to start with you. we are going to get this budget from the chancellor. what would you like to see? andrew: we are a manufacturer as

well as a consumer facing retailer. we are looking for some support for investments that help our efficiency. we are spending one million pounds this summer increasing our capacity. there is not much support coming our way to make that happen. it is hard being a manufacturer in the u.k.. there are things like skill shortages and the exchange rate is going against us. that is one thing the government can do. caroline: what do you expect andrew? andrew: i think the chancellor will imagine he has done quite a bit bringing the corporate tax rate down. that doesn't mean there is not

more he can do. the other area business should be looking at is the government spending plan. the chancellor has ambitious plans for the transport infrastructure and skills. those are important ingredient in what the government does to help business. the big challenge for the chancellor is to persuade business and the public he can deliver on his plan. developing skills, 3 million new apprenticeships. government in the past has talked about these things. what we need is confidence he can deliver. ryan: we had earlier the british chamber of commerce talking about the danger of a two-tier economy where services lead the way and manufacturing lags. what should the chancellor do? how big a concern is that? angus: i don't think he is

necessarily going to target one sector. he should try to help all sectors, particularly those that traded internationally. we are successful at exporting services as well. these issues help manufacturing and services. we have to remember dealing with the rest of the world, we need a decision on airport capacity. that is coming later. he is suggesting heathrow. that will be an issue that businesses are watching closely. caroline: in terms of retail is it more of the same? do we need steady as it goes when it comes to the budget? angus: i say very much. we are at the foothills of rebuilding consumer confidence.

really, we are looking for the chancellor not to do anything to mess it up. we are at a very fragile state where the consumer is beginning to feel a bit more money in their pocket. the election has been settled. the election is looking positive. it is very much nurture that and beat it. -- and feed it. brian: the chancellor has announced he wants to cut 12 billion pounds. at what point do they threaten? andrew: the key thing for growth is a consistent policy. the government has a policy of getting the deficit down. the big picture is a need for consistency in that approach. caroline: thank you.

the chief economic advisor at pwc. ♪

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ryan: it is 730 in london. it 8:30 in frankfurt. 2:30 and shanghai where the stock market will be open a little longer. caroline: barclays has announced the surprise departure of antony jenkins. they said, it became a new set of skills were required. he took over in 2012 after leaving the retail bank. european leaders have given greece a new deadline for the bailout deal, or else they will

push the country out of the euro. angela merkel said there are only a few days left to find a solution and she said she is not especially optimistic. and the chancellor will deliver a budget. he is expected to announce 12 billion pounds in savings. china's benchmark savings index has plunged 8.2%. authorities announced new measures to stem the route. more than 1300 companies have been halted from trading. state owned businesses have been banned from --

ryan: new voices out of china. here is a taste of them. >> we are starting to see an impact on the real economy. our sales down in june. we can see spending reduce. the uptick will be reversed. we are starting to see the ripples spread across the pond. it is only just beginning. more impor signal is this sending? the central bank is effectively doing qe. it is artificially setting the price of shares. we are saying this company should be priced at this level. 50, 60, 30, 20. some bureaucrat is deciding. i don't call that market reforms. the problem is, because the

market is falling so fast, it even mutual funds are facing redemption pressure from individual investors. because many of the stocks, when a mutual fund manager, they are facing redemption pressure, they have to liquidate some good companies they have any portfolio. that is creating another wave of selling pressure in the market. we believe there is a valuation bubble, especially in the smaller part of the company. small and mid company -- mid-cap committees were seeing gigantic evaluations. that is the most fundamental reason for this correction. they will have to face the reality that some of the companies are not worth the money people are paying.

there will be a price adjustment for those companies, even though they probably avoid -- ryan: let's get back to the bloodshed on chinese stock market. julia, give us the roundup. julia: we have about half an hour's trade left in hong kong and also on the shanghai composite. currently down 6%. seeing a freefall in the afternoon trade. certainly be sellers coming right back in in the afternoon session. the hang seng down 5%. interesting picture, no stocks on the hang seng that are in positive territory. a lot of the mainland shares leading the fall. down almost 10%, china like to

read bank of communications, 9%. china merchants down 8.5%. i want to show you how much of a bad picture it has been across the whole agent region. the taiwan market down almost 3%. the worst session in three years. the nikkei down 3.1. the biggest one-day fall since march for the index in japan not shown here, also had a bad date. biggest drop since february 2014. widespread selling in australia. we have seen a risk of sentiment coming through. investors selling iron ore.will prices -- oil prices falling.

the big story is china, down about 6%. a lot of the weakness coming from those stocks the retail investors have a lot of money in. stocks down in the order of 13%. companies holding up well, few and far between. really trying to stem these losses we are seeing. caroline: thank you juliet. ryan: let's go to beijing where nick is standing by. the suspensions, what does that help us about -- tell us about chinese policymaking? it is not free market if they are holding trading.

the shares were collapsing, but none the less. nick: governments have been known to intervene in the markets in times of crisis. the u.s. did so. it is not unprecedented. the question is in 2003 -- 2013, they said they would give the market a decisive role. they seem to be retrenching a bit. the retrenching is it an unwinding or more like an effort to protect retail investors bearing the brunt? a retrenchment on the path toward greater market reform? ryan: i am looking at the shanghai composite, down 6.3% what is the end game.

: the question is, how low can the market go? the shanghai composite is up on the year. the big question is, do it take faith in what the government is doing? how serious does the government see the correction as being? there are signs it is r leaching into the rest of the economy. car sales down. the question is, at what point does the government say, ok, we are going to draw a line and bring out bigger guns? ryan: thank you very much. caroline: let's see how that is playing out on the european markets. we are seeing, we could see a

bit of a rebound. the 600 has been at a significant low, trading down more than 1%. lowest for -- we could see a bit of a respite. up 0.4% for the german dax. italy and spain have been hit the hardest, related to the key story on greece. ryan: we expected to talk about greece only this morning. a lot more to talk about than just the fact that greece has been given a new deadline which is allegedly sunday. that is when leaders are saying greece has to except a bailout or it will be propelled out of the euro. let's go to guy johnson in athens. we are going to stay in athens.

are they preparing for an exit from the euro? it sounds apocalyptic. i wonder what such preparations would even look like on the ground. guy: people are talking about sunday. it has galvanized the conversation. the expectation is nothing will happen quickly. it is not like you move from one currency to another overnight. it will be part of a process. he has told the greek people the referendum they voted on a few days -- he says the situation can start to accelerate toward a deal. >> the talks were held in a positive atmosphere. the procedure is going to be

fast and will start in the next few hours with the aim of concluding at the end of the week. ryan: according to mario draghi, the banks can make it to the end of the week. after that, what happens? how do you put more liquidity back into the system? that is a big question hanging over the system. that is why this may not be a flicking of the switch. it may be that we see a way of recapitalizing the banks that does not involve -- a deal is by no means completely off the table. people are talking about alexis tsipras coming up with some sort of deal that is acceptable. the line out of germany is heartening and that is difficult for him to get around. he is not preparing the greek

people for a major climbdown, we are not hearing that. a difficult situation for greece to deal with. the magnitude of this is significant for the eurozone. that is why some are saying the greek friends in the eurozone may provide some sort of a bridge loan. it is hard to see that as anything other than a short term solution. ryan: thank you very much guy. caroline: to talk through all these big stories, greece, china, antony jenkins, none other than the market analyst michael. give us a sense of what is happening with barclays. john mcfarland is just joined as chairman in april and will now be chief executive. michael: the reasons were, a new

skill set. when mr. jenkins was appointed and 2012, they said they wanted a more retail focus. strikes me i think a little bit of disagreement about the direction the bank needs to take. the profits down. not surprising, a lot of bad publicity. the investment think is underperforming. maybe the focus on a new set of hands. ryan: what does it mean for the share price? michael: we will probably see it a bit lower. i suggest it has underperformed. overall, it will not be a positive. carolyn: what do you think about the rest of the banking sector?

michael: that is -- the foot to open up on the expectation of another deal, another can kicking. we could see share prices open higher. ryan: which is extraordinary given what is happening in china. michael houston is going to stay with us. we are going to continue the chat and talk about china, greece, barclays. going into the market open in a bit. ♪

ryan: welcome back to a busy morning here on countdown. 2:45 in shanghai where the benchmark index is down about 6%. it was down by as much as almost

8% earlier in the day. caroline: let's check in on some of the big stories you need to know. the chinese security finance corp. is expected -- looking for money. it is being sought for the market in china. the final amount has yet to be determined and may be more than $80 billion. european leaders have given a deadline. jim moran -- german chancellor merkel said there are only a few days left to find a solution and said she is vote not especially optimistic. and the first budget by a conservative government will be delivered today. he is expected to cut $12

billion from the welfare budget. brian: anna edwards is in westminster. looking at the budget. the first since march. i want to kicking it off i asking you about finances. how have they fared since then? anna: not long ago since we got the last budget. but the first conservative only budget in nearly 20 years. the imf thinks the u.k. economy will be the fastest-growing second-fastest growing in the g7. some of the tax revenue from income started to come in a little better. that is taking a little pressure

off the finances. the economy not doing too badly but that will not be the point as far as george osborne is concerned. a sturdy is what people are prepared for and was in the manifesto. not a great deal of surprise up get more, especially of what -- with what is happening in greece. greece was another reason why the you key -- uk needs to get its house in order. words around the message of debt are what george osborne is going to want to leave. how much austerity. where is the knife going to fall exactly? what is the timing going to be like. if so, the cuts in the first two years are going to be deep.

two thousand 16-17 will be twice as deep as any in the last parliament. they have already said they are not going to cut pensions. two thirds of the tax revenue is out of bounds as well. they have boxed themselves in an a lot of areas. they said they want to reduce taxes in some areas, play with the thresholds, in particular around income taxes. they were very much focused on infrastructure spending. that is a key factor for them. information about the annual investment allowance. will that incentivize businesses nervous about grexit? will it persuade them to invest?

ryan: thank you very much. let's go back to michael houston and talk about the budget. is there anything we might hear from george osborne that will affect us stocks? george: we may look at the bank levy. banks are paying too much. the debate about hsbc leaving the u.k., job losses. also the stakes, the remaining stakes free up extra cash. we could get further information about that. he might touch upon heathrow's expansion, or maybe he won't. the feeling of this budget, cameron said he is going to leave after three years. that could be mr. osborne's

pitch for the prime minister ship to replace him to the stakes are high. caroline: give us a sense of why stock market's are rebounding. he you have greece, another deadline. china, the turmoil continues that has thing going for several days to read what will be driving things this morning? michael: we are opening high. we have come off the back of significant declines this week. china is a bigger factor than greece. it has been underreported. greece is a little bit of a temple on the economy as a opposed to china which is massive. ryan: i wonder where we are going to go with that metaphor. handled that gracefully. china is a boil.

michael: the concern i have come of the fact that chinese authorities are intervening suggest there is a much bigger problem with over margin mean over borrowing of stocks. they are trying to keep the market supported. that is why we are seeing the heavy volatility. we saw last night, u.s. stocks rally off the lows. right around this time of the can kick the eurogroup. a potential bridging finance, a short-term deal to get greece over a funding hump. i think that is over optimistic, but who needs an excuse when you are coming off of 2-3 days of decline. brian: thank you for joining us. let's go over to jonathan ferro. are you watching? jonathan: three things to watch. a move in barclays. antony jenkins out as ceo.

another bank with and identity crisis. it did not want to be an investment bank under bob diamond. willis to want to be an investment -- retail bank after antony jenkins is gone? agrees, another deadline. the potential for a grexit if the deadline is missed sunday. u.k. budget as well. and china. do not miss that. caroline: that is it for us at "countdown." ♪

jonathan: good morning and welcome to "on the move." right here in the city of london. just moments away of european trading. what a morning already. but as get to your morning brief. shock move. barclays ceo anthony jenkins. losing control, china's stock market plunges. companies been trading on $2.6 trillion worth of shares. the final deadline. european leaders give the greeks until sunday to accept a rescue deal or face being forced out of the euro. angela merkel is not optimistic. coming up, we tell you everything you need to know

ahead of the conservative parties first u.k. budget since 1996. look out for that. that flight here in london. we are looking out for on the move for one stock, it is barclays. about one third of 1%. caroline: after four days. we are getting a bit of a reprieve. so many drivers today. is a china? is it the fact that $2.6 trillion worth of shares are not trading? this is the scale of the meltdown we are seeing in china or is increased? -- or is it greece? can they make it? we'll see what the market is expecting. we are