Business confidence at lowest level in three


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11-12-2012 12:33 PM


Radio National

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Radio National


11-12-2012 12:33 PM



11-12-2012 01:35 PM

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2012-12-11 12:33:48

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HALL, Eleanor


RYAN, Peter, (journalist)


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Business confidence at lowest level in three -

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ELEANOR HALL: Peter has now joined me in The World Today studio with more on the economic outlook.

So Peter, while there is increasing uncertainty for the global economy, a survey released this lunchtime shows the situation in Australia is also looking fragile. Tell us about this survey.

PETER RYAN: Well that's right. Australia is of course in a different situation to Italy and Spain, but of course politics and economics are local and today we're looking at a closely watched business survey from the National Australia Bank.

It shows that in the month of November that confidence here fell to its weakest level in three and a half years, and this is despite 150 basis points having been cut from the official interest rate in the year leading up to the time of the survey.

And of course since then there's been another interest rate cut, down to 3 per cent.

Business conditions are at multiyear lows according to the survey, and importantly forward orders from businesses have fallen back.

The National Australia Bank economist Rob Brooker says that even though the US elections provided some certainty with the re-election of president Obama, Australians remain very worried about the US economy.

ROB BROOKER: Certainly the US elections were over but that kind of led to an increased concern about the fiscal cliff I think, certainly in the mainstream press, and I think too we saw some retracing of commodity prices in the last couple of weeks of November.

So I think it may be a combination of the atmospherics and the news that was coming out. The declining confidence was pretty broadly based across quite a few different industries.

ELEANOR HALL: And that's NAB economist Rob Brooker on the survey on the Australian economy looking weaker.

Peter, looking at the United States, the global banking giant HSBC has been hit with some very heavy fines over its activities with clients that the United States government doesn't like. How significant is this?

PETER RYAN: Well it's pretty significant and it has been reported this morning in the United States that HSBC, which is the biggest British bank in the world, has been fined $US1.9 billion as part of a settlement for breaking US anti-terror laws when it did deals with Iran and also Mexican drug cartels.

This fine would be the biggest ever in such a case. It's a pretty big dent in HSBC's reputation, perhaps the start as US authorities start cracking down on the laundering of money.

And also earlier today another British bank, the Standard and Chartered, was fined $327 million for similar activities. There's no word yet on whether HSBC will be hit with an even bigger penalty, which could see it lose its banking licence in the state of New York. We'll have to keep an eye on that.

ELEANOR HALL: Yes, serious one to watch. Thanks Peter.

That's Peter Ryan, our business editor.