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 chinas benchmark index has seen its biggest intraday fall in years, plunging 1. 8 . Thats 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 its 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 chinas 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 its interesting to see what happens next they decided to come out with 40 billion as a credit line to the countrys 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. Lets take a look at that right now. Lets 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, dont sell your shares now. Not that they would. One after the other. Every hour, you had an announcement here or there. Lets see if this works. Its been a very busy few weeks but this morning was quite hectic. Caroline weve 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. Weve 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 Ministers 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 dont 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 didnt get a deal, and he was suggesting that that would mean humanitarian aid. The situation is really critical. Unfortunately, we cant 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 president s 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 60euro 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. Its interesting to listen to the language about the frowns and disappointment that came out of this meeting. Youve 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. Hes 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, hes 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 hasnt been doing too badly. The imf says the u. K. Is going to be the second fastestgrowing g7 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 hardworking 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 Osbornes speech live at 12 30 london time. From 4 00 p. M. , we will have a special Program Giving our viewers and unique markets take on the summer budget, featuring top talent from across bloombergs political intelligence, and business teams. Ryan coming up, we will remain all over china. Britain risks creating a twotier economy where far too much depends on you, the consumer. That is the view of john longworth. Hes 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. Chinas 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. Chinas 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 crisishit 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 hes 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. Lets 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 weve 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 weve talked in the past about this, youve 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 weve only been talking about it for four decades. John digital, we are not very good in this country. Digital, we need to be worldclass. We need to have an Energy Security policy. One of the things that holds this up is nimbyism. 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 twotier 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 its 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 cant 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, theres 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 mediumsized businesses, his misses that talk to you, what can the government to come if you are talking to a business that doesnt 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 dont have the working capital, it becomes a problem. Access to finance is a structural problem in the u. K. Its 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. Weve 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 cant 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. Its a very complex issue. The fact that weve 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. Weve also got downward pressure on wages. We have a lot of people entering