new territory for the e.u. in its budget dispute with rome as brussels warns it could begin disciplinary procedures against italy for its overspending. and germany is trying to get dirty diesels off the road so i guess where they end up not very far away at all i'll give you the details. i'm stephen beardsley in berlin thanks for joining us brussels says it's ready to pursue disciplinary procedures against italy as long as the country refuses to change its draft budget for twenty nineteen now at issue is italy's towering debt and the political goals of its government at stake avoiding the next financial crisis. only reflects co-exist peacefully here everything else is subject to dispute never before has a member states budget been rejected but the european commission is determined to prevent italy from increasing its debt burden let me stress that the situation in italy is of concern euro area countries are in the same team and should be playing

by the same rules cecil's are fewer to protect us to provide certainty stability and mutual trust if the threat of an excess deficit procedure was meant as a warning shot it missed its target in rome by a mile the populist governing coalition remains defiant it was in. a letter from brussels has arrived i was expecting one from santa claus as well anyway. the deputy prime minister mathias salvini says there will be no backtracking on social welfare spending increases. but italians are used to drama in politics should things go all the way to a confrontation with brussels it depends on who you ask. and some of the creditors of this government and i like them the young and they give us hope that at the. very worried because it's a problem the public debt keeps growing. and we'll be paying for it you know. very

good question financial markets are already demanding risk premiums for italian government bonds the national debt has surged above one hundred thirty percent of gross domestic product from the outlooks not very rosy either both the organization for economic cooperation and development deal the cd and italy's own statistics office have done great at their growth forecasts for the country but italy is too big to fail it's the eurozone third largest economy its debt is already so high no rescue fund could be big enough to save it. borrowing costs projected growth let's try and understand this a little bit more i'm joined now by alessio tared see he's an economist at the brueghel institute a brussels based think tank let's you know there's this idea that the markets will punish italy before the e.u. can we actually seeing signs that this is getting painful for rome. yes yes indeed we are already seeing signs going beyond the volatility of one day of financial

markets if you look at the past six months the interest rate that they tell your government pays on its bonds has increased substantially several points percentage points and this obviously is very relevant in a country that has a huge debt by like italy so even small fluctuations have a big impact on the economy. you know italy of course is projecting the budget the budget will spur growth but the e.u. saying it has yet to really see where that growth is coming from who's right in this case. i mean the government argues that because it is an expansionary fiscal policy basically it is injecting cash in the economy so we should see some sort of short term boost in growth now what they are not mentioning is that because they are losing financial markets along the way and interest rates are increasing this is having ripple down effects into the economy

and we are already seeing borrowing costs for households for firms go up and indeed to italy is resenting recession growth has already been slowing and the budget is not even approved yet. we often talk about this crisis in the context of the greek crisis that started in two thousand and nine but this is different right this seems so political it is it is indeed you're right it is conversely from greece greece was an economic crisis but with a lot of political will on both sides the greek government and the euro zone to find a solution to it whereas in the italian case the economics has remained broadly the same as it is true that italy has a low growth and a high debt but this has been true for several years now what is that different this time is that the talent government is actively seeking confrontation with brussels and what we received today so this negative opinion on the budget is

exactly what the government wanted which is peculiar in a way within the euro zone setting and shared fiscal rules let your tears in brussels thank you very much thank you. now over to the u.s. where the trump administration has invited the heads of germany's three largest car makers to the white house the meeting with the chief executives of volkswagen b.m.w. and di miller could take place as soon as next week president donald trump has repeatedly threatened to increase tariffs on car imports and he's criticized germany's huge trade plus with the u.s. volkswagen produces cars in tennessee mercedes in alabama and b. w. has an s.u.v. factory in south carolina. let's turn to our financial correspondent in new york to help us understand this better younes quarter standing by as i just said trump has threatened these carmakers with higher tariffs in the past what are we supposed to make of this imitation well on one side washington might try to

convince the german car industry to all still manufactor more components in the united states and then washington also probably will try to put some pressure on the most important industry of the biggest economy in europe being germany to also get straight talk so with the european union going washington has repeatedly said that those talks in negotiations are moving far too slowly and was putting pressure on the car industry maybe they're hoping to get some leverage here as far as i know the talks are not confirmed yet but already there is a lot of talk about that it could happen was in the next couple of days. now let's turn to the markets themselves thursday is the thanksgiving holiday in the u.s. followed by black friday and of course that's the traditional start of the holiday purchasing season the big shopping season surely that has wall street in

a good mood. well it should have wall street in a good mood because with unemployment rate being at the lowest level in almost fifty years we will probably see a pretty good holiday season but the stock market so far as to not reacting at all especially was the huge losses that we saw monday and tuesday the we had the weakest start in two things giving week here on wall street in about forty five fifty years we did try and come back on wednesday blue chips were up at some points by foot by two hundred points but in the very last second actually we even dived into or dove into negative territory at least take stock did a bit better but the mood is pretty nervous over here mostly not because of what's going to happen the next couple of weeks but what might happen next year and there's a lot of talk that economic growth in the u.s. might cool so even she even shopping season really struggling to pull the u.s.

markets out of a rut he has courted in new york thank you very much. the market for diesel cars in germany has hit the walls with emissions scandals and growing air pollution concerns more and more cities in the country are now banning all the diesels from their centers but the unwanted vehicles are finding a new home just east of here. diesels are highly popular in ukraine this fox has just arrived from germany it meets euro five emission standards some mechanics take a close look at it they know it will need adapting to ukrainian standards within a few months at the latest that's when they'll have to remove its catalytic converter. at the catalytic converters in the particle filters often cause problems to get clogged up very quickly and stop working the diesel quality is too low here. without emissions control systems the diesels pump unfiltered toxic gases and particles straight into the air and because regular inspections for cars are

not legally required in ukraine exhaust systems can be manipulated without fear of detection experienced mechanics can easily remove emissions control units and replace them with a section of straight pipe this one comes from a rhino diesel if a converter is clogged up the vehicle won't start. we hook it up with a diagnostic computer the problem is very often a clogged up catalytic converter sometimes we cut the converter out sometimes we can repair it more and these are the. ukrainian city of lots has a population of two hundred forty thousand the year is foul and eighty two percent of the pollution comes from cars and trucks. there's an autumn arcades here twice a week trading mostly diesels private operators import the cars mostly from germany . diesels meeting older emission standards which are registered in poland or lithuania are treated as transit vehicles for up to

a year only the later euro five standard cars are actually allowed to be imported. you know germany worries about the environment and that's why the price of diesel is falling but germany understands its people and spends a lot of money on environmental protection can be in theaters for work or use vertically. throughout the city a number of stations are constantly measuring air quality. the results show that only two of the ukrainian cities have filthy air than here and now let's just filling up with substandard german diesels. this is shannon wood it is a little bit in the the air will most certainly become jersey or diesel is a fuel that was so bad for the environment. diesels have become hard to sell in germany and now they're flooding into eastern european markets the germans have

simply outsourced that diesel emissions problem. that's it for us in business i'm stephen beard thanks for joining us. touch.

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