good morning. welcome to "the pulse." we are live from bloomberg's european headquarters. francine: to our top story, the ecb turns the screws on greece. the european central bank announced that it will restrict loans to the nation. guy: that announcement came just hours after the greek finance minister met with the ecb president, mario draghi. varoufakis meets with wolfgang scheibe today. joining us now is hans nichols in berlin. this could be the meeting that everybody has been waiting to hear about. we thought draghi was going to be interesting. scheibe is going to be fascinating. hans: he is going into this meeting and they appear to have consensus from their european partners. that is that greece should potentially stay in the bailout program. and if they leave, they will be consequences. they are not going to be able to use greek debt as collateral with the ecb. that is going to drive up there borrowing cost. they may face a liquidity crunch. what is greece's plan? even if they get through these next couple weeks, what is their plan for renegotiating, for having something on? mr. varoufakis has to sell that to mr. choi blood today. i don't expect it is going to be an easy sell. we are going to be watching the press conference very closely. one other note greece appears to be doubling down. they are saying they think they have the liquidity, and they say they have a mandate from their people to go ahead and start spending again and reverse what they say is some pretty harsh social measures. francine: at the same time greek banks still have access to some ecb lingo's. what is available and for how long? hans: they have ela access. they relied on it extensively in 2012. even if they continue that and it is reviewed every two weeks the borrowing cost is still 1.55%. the overnight window was 0.05%. one other note on this, greece is looking for some sort of bridge loan, some extension so they can sell more short-term debt above the 15 billion limit. they will run out according to a person familiar with the matter february 25. before, we thought they might make it all to way to the summer. guy: a big night last night for greece. hans nichols, thank you very much. francine: it certainly was a big night. let's go to athens now for the greek reaction. jim, when you look at everywhere, there seems to be some confidence in athens that they will renegotiate and the ecb was behind them. what is the mood this morning? reporter: surprise. surprise and further determination. every word of the thanks confidence in its political position that there will be some kind of deal is the order of the day. nobody here has blinked yet. guy: can you run us through the details of the funding story? and the dates that are now becoming increasingly critical? there was some great reporting out of athens that laid out the story and just how quickly this problem is going to become a much bigger problem. reporter: the key date is the end of february, which is when the bailout runs out, when the lifeline runs out and varoufakis has said and pretty much stuck by initial comments that they are not going to take the last 7 billion euro trench of that package. they are done with conditions. he has called himself the finance minister of a bankrupt country. after that, it gets trickier. we've heard threats and concerns before throughout the crisis, that greece is going to come out -- run out of money. they inevitably find quarters and euros behind the couch cushions to keep going. in that case, there's probably a few weeks worth of money in social security funds and other government accounts. but if there is no money coming in, we are talking about probably no more than five weeks after the end of february when they are going to be scraping the bottom of the barrel. francine: thank you so much. james hurdling in athens. guy: let's get more on this story now. we are joined by the director of the political think tank redefine. christian schultz, good morning to you. why did the ecb do what he did last night? >> actually, let's get this clear. there's this idea that what the ecb did was completely unexpected. guy: you are saying it was coming. >> exactly. it is just a matter of bringing it forward by a couple weeks. to put pressure not just on greece, but to put the ball back in the court of the politicians. this is, at the end of the day, a political decision. whether greece stays in the eurozone or not is a political decision. it is not a decision the ecb is comfortable making. frankly, i wouldn't be surprised if this were something that yanis and draghi already spoke about and in a way, it ratchets up the pressure on greece and even more so on germany. francine: how much does this have to do with the political decision and how much does it have to do with the ecb looking after its own back? if you have three months, you could counter effect the good mood or the good feeling. >> from a risk control perspective if the ecb was a normal bank and the situation is at it is, there is a risk that major debt might default soon. you would cut the lines. obviously, the ecb is not a normal bank. it is a bureaucracy, but also has a huge political role with sufficient political cover. the germans and greeks could have extended this to buy more time. they haven't, so they don't see enough medical cover. -- enough political cover. that's why this ball is now in the court of the greeks and germans. however, i think the germans' position is much stronger than the greeks position. the contagion we are seeing which would be a risk for germany, not really happening yet. guy: so the ball is back in the politicians' court. let's look at the meeting today between varoufakis and schaeuble. what cards do they have to play? christian thinks the german hand is much stronger. how bad is the greek hand? >> i think it is one of those situations where weakness is potentially a strength, where greece has nothing really to lose beyond what it has already lost in terms of the years of austerity, the 25% unemployment rate. guy: so we are playing the equity card? >> i think so. so result has done an excellent job convincing people that it is not a radical leftist party that many accused it of being. it has made conciliatory gestures. it has portrayed itself as a centrist party. francine: what they are playing is a background. this is crippling for the economy. this is not austerity. this is a full breakdown. >> that is true, but if you look at this, the last time the exit was on the cards, the bank run that everybody was scared about what was surprising was how sticky they were. this time, the evidence is not pointing to a bank run at all. it is, despite being a single payment area actually taking your money out of greece and opening a bank account in germany is not as simple as any of us know. i think they have time. and the emergency liquidity assistance as your correspondent pointed out is something that has been used successfully, is being used again. and it is only 1.5% interest rate. it is not got jokingly expensive. >> i agree on the practicalities. however, for greek bank customers, a bank which is now on lending of last resort from the greek taxpayer with their permission every two weeks from the ecb is a different proposition than a bank which has funding from the ecb and the european taxpayers. in terms of the funding costs, it goes a little bit beyond that increase. i think much more important is the big political gain. i think mr. shyla will say things like, we had some growth last year. look at countries like spain, like portugal. they stuck to the letter of the reform process and they are growing nicely. he is going to show him that carrots. at the same time, he's going to say, if you need another bailout , germany needs a parliamentary vote. i'm not going to be able to say, i propose to extend this program even though we've had a reversal of the conditions under which you approved going to greece. they failed the last review. guy: [indiscernible] >> he wouldn't even propose it. francine: how did we get in a position where this was a surprise? mr. varoufakis me in good at playing the optimism in europe. does it mean that he doesn't have that much support? >> i guess he gave some -- after a disastrous first week especially on friday, the signs were improving when he was in london paris, and rome. ultimately, i would agree with sony. the ecb's move brings forward something that would have happened at the end of the month anyway. it raises the pressure, but it is not really a game changer just yet. it is just a strong signal from the ecb to get your act together. guy: ok, we've still got a few minutes. we are going to take a break. we will come back very shortly. stay with us. plenty more on greece coming up. francine: today's top corporate stories. we will be speaking to the daimler ceo in a bloomberg first interview. the company reports a 10% profit increase. guy: we will also be discussing the oil market and the volatility in it with the scottish energy minister. ♪ guy: good morning. welcome back. you are watching "the pulse." we are live on bloomberg tv on the radio, streaming on bloomberg.com. francine: let's continue our coverage of our top story on greece. the meeting between greece's finance minister and his german counterpart, wolfgang schaeuble. we welcome back sony kapoor and christian schultz. thank you for sticking around. we talked about the ecb, the dangers of this. we came to a consensus that it is all about political will at the moment. how much of a turning point is russia? we heard last week that the russian sanctions, greece was against that. that's sure to roil the germans. >> historically, one must not forget that greece partly because of the orthodox link, has always been close to russia. much closer than many other european countries. this is supposedly the former communist and radical leftist parties who had links. there was a legitimate issue. it is not clear what exactly happened. there was a legitimate issue that when the new foreign minister came in the first he claimed he heard of this news on sanctions was on international media. the commissioner claims that is not the case. it is possible that there was some official in the ministry. this is a new government that has no previous experience. given that they are under unprecedented scrutiny. it hasn't been a bad first week. i think that after the initial -- guy: you are in minority in that view. >> i'm always in the minority. guy: pretty chaotic for a transition in government. francine: and the markets. guy: everything bounced around. that wasn't a normal transfer of power. >> no other party that i can think of has come into power under such unprecedented scrutiny with so little experience and so much pressure. a lot of the stuff that the market was slinging around was driven by rumors, not really by facts. i think, so far, the record is that i was probably right to say, don't panic. sigh result is nowhere -- syriza is nowhere near as radical left as people were saying it was. francine: chris is shaking his head. >> on the disaster, yes of course, there were rumors. if you win an election with that kind of background, you are pumped up. you enter new office. you say things that you want to say to your supporters and so on. that was predictable. i think the big take was on friday's press conference between diesselbloem and varoufakis. that led to some rolling back over the weekend. i agree with mr. varoufakis. he seems to be an extremely winning person, somebody who i think will have the support of some of his counterparts. in the end, we have to state that he didn't have much success with mr. draghi. i suspect that mr. schaeuble will be very friendly with him and we won't get the press conference we had last friday. i think when it comes to the matter of things, the positions are clear. greece, any kind of aid will come with strings attached. if greece rejects the strings, we are going to look at some sort of abyss. guy: what do you think is in the germans' heads right now? if we give greece any wiggle room, if we allow them some advantage, how does that play with the rest of the peripheral countries? if they are praying -- playing the russia card, you are thinking, do i like some of this? do i like some of these bonds? this sounds like a good idea. is this something that germany is prepared to roll out across the rest of the eurozone? >> there is an election in hamburg on the 15th of february. any conciliatory signal that schaeuble or merkel sends will lead to a higher vote share for alternative for deutschland. don't expect much conciliatory noise from germany in the public domain. behind the scenes, i think they are reasonable people. it helps that the coalition there are historical links, and i think that common sense will prevail as it did last time. last time short low was ready to pull the trigger, but merkel vetoed that. guy: will they give portugal the same concessions? is this item now added to the menu? say they allow nominal gdp bonds -- is that on the menu? >> that is a mainstream idea, that the imf, the bank of england, and everybody who is sensible champions. there is a clear distinction and everybody recognizes that greece is different. the idea of greece as a contagion to others has been discredited. this would potentially help spain. it would potentially help anti-austerity parties in ireland. this is why countries don't want to give greece concession. the alternative, to continue down the path we are, is even worse. i'm thankful to greece whether they succeed or not. at least they are forcing a debate on the failure of the troika. they are forcing a debate on the failure of the austerity policies. they may go down fighting, but it will be an honorable end. francine: we are getting some live pictures from athens. quick comment from you christian? is that how you view it? >> the key for me is the policies raising the minimum wage. hiring all these public-sector workers, giving the unions more power. this is not the recipe to get greece going sustainably. austerity is over anyway. they don't need to tighten further anyway. even before, there were ideas to cut the debt and maybe for other countries as well. the key point that is what many people in athens miss completely, is the structural reforms. the one that makes greece better to invest in in the future. what syriza is proposing is completely contradictory to that. francine: thank you so much. very interesting conversation. christian scholz, and sony kapoor. guy: we are looking at live pictures from athens. that is the greek parliament convening for the first time post-election. you've got a presidential vote coming. you have to have a confidence vote as well. we will continue to show those pictures. bt has agreed to buy ee for more than 12.5 billion pounds. we will talk about that when we come back. ♪ francine: welcome back to "the pulse." we are live on bloomberg tv and radio, also streaming. guy: let's get to our top stories today. more scrutiny for tesco. the groceries code adjudicator has launched an investigation into the supermarket saying there is a suspicion that tesco breached the grocery supply code of practice. the investigation will take six to nine months. francine: we are also getting some breaking -- not great, but it is a nice bloomberg scoop. siemens cut 7400 jobs globally. this just coming out. 3300 of those jobs are in germany. we will have a look at the seaman's share price. pretty much unchanged. plenty more coming up. ♪ guy: good morning. you are watching "the pulse." breaking news coming from siemens. let's wait for the official announcement, but siemens is said to have cut 7400 jobs globally, 3300 of those in germany. i guess we are pretty much smack in the middle of the number. francine: we understand that the cuts could be announced as early as this week. this is as the ceo is trying to reduce costs. something we are looking out for of course. the share price is now down 0.4%. here are some of our other top headlines. guy: greece has lost a critical funding artery after the european central bank restricted loans to the financial system. this increases pressure on greece to yield to demand man's to maintain its austerity drive. greece should run out of money in weeks if its creditors don't raise short-term borrowing limits. greek finance minister yanis varoufakis will meet his german counterpart this morning. francine: after months of speculation, bt has agreed to buy ee for 12.5 billion pounds. bt said the deal will be completed by march of 2016 pending antitrust approval. if the deal goes through, bt will control the u.k.'s largest wireless operator. guy: a surge in mercedes sales has resulted in a 10% increase in fourth-quarter profits for daimler. operating profit of the world's third-largest luxury carmaker rose from 2.5 6 billion year ago. ceo dieter zetsche i has vow to overtake bmw and audi by bolstering the lineup with 11 new brand models. francine: we will hear more from the dialer ceo for a nice bloomberg interview later on this hour. guy: now, supporters of scottish independence argue that the country could support itself with oil from the north sea. the recent collapse of the price of oil has called into question that claim. bps ceo told bloomberg that the outlook for the north sea oil industry is serious. >> i think this will put a lot of stress on the u.k. and the north sea. there are fields where the economic life and limits are now moving. we've had to impair some of our assets. i think this is quite serious. guy: let's get an outlook for scottish oil. let's talk to scotland's energy minister. good to talk to a ewing about the oil industry. he joins us now. good morning. bob dudley talking about the situation in the north sea being serious. would you ask of that claim? what is going to be done about it? guest: well, the oil and gas industry all over the world faces serious challenges especially in the u.k. sector. costs are too high and efficiency is too low. these concerns are being addressed as we speak. the real challenge for the u.k. government, is that the tax take on oil and gas is far too high. it has been used as a giant cash machine for government for far too long. what we need to do to re-instill investor confidence all over the globe with operators who are making decisions about life prolongation of fields is to give the tax deal that provides certainty and predictability. we set out three components that we believe the u.k. government should implement in their budget. first, a reduction in the headline rate of tax. secondly, an expiration tax credit along the lines of norway. thirdly, an investment allowance. if you have the right tax environment, then i believe that in the medium to long term there are excellent prospects still in the waters of scotland's shores. francine: just give us a sense if scotland were independent right now, how would it have coped with the swing in oil prices? guest: our proposals were that independence day was to have been next year. oil is a bonus, but not the basis of the scottish economy. we have a great many sectors such as finance, chemicals, digital i.t. engineering, defense aerospace. oil and gas is a very important part of our economy and also of course we make about half of our gda 10 billion pounds, from international activity. aberdeen is not only the capital of exploration of the u.k. but it is also an international hub serving oil and gas exploration and extraction production all over the world. that work, of course, is still continuing. therefore, it is extremely successful. but it is very important we get the right tax breaks from the u.k. government. that is what the scottish government has been arguing very consistently. there is a consonance of objectives. we want to maximize economic recovery. both ourselves and the u.k. government. to do that in a basin which is aging, where there are smaller fields where high temperature, high pressure oil are features, we do need to have the tax breaks, the tax environment that lets investors see that they can make a long-term internationally competitive rate of return. that is the key factor. that is what must be done by the u.k. government. for example -- guy: minister, you talk about u.k. tax cuts. on scottish oil. let's talk about scottish oil. you base your numbers on independence at 110. we are at 50. what an independent scotland be viable at 50? you would have to make the tax cuts yourself? what an independent scotland be viable at 50? guest: as i've said, we have strength in the economy of scotland. we contribute more in taxation then we receive. therefore oil is a bonus, not the basis of the economy. you are right, of course, the oil price has fallen. i'm not aware of any government that is able accurately to forecast the barrel price of oil. if there is one, maybe you could let me know and we will get in touch with them. we play the cards as they fall. all over the world, governments are grappling with the consequences. the u.k. as well. they have a about half of the 4500 people employed in the oil and gas industry. we believe the medium-long-term prospects are good. provided the right tax deal is there -- and your viewers who are based in places such as calgary and houston where i visited many of the leading operators in the world, should know that the scottish government is supportive of the oil and gas industry. francine: all right, minister -- actually we weren't at all questioning the fact that you didn't predict the drop in oil price. what we were questioning is your budget. let's move on to renewables. how does that affect scottish renewables? how does the price of oil affect your renewable strategy? guest: well, we are making considerable progress with renewables. there was more electricity generated from renewable sources in scotland than from any other type of electricity generation. we've encouraged investment. we've stimulated the wind sector , biomass, hydro, and we have great prospects. when the oil price is low, it also has an impact on investments on renewables. therefore, that is making our ambitions for offshore wind more challenging. but we have made great strides with renewables. as your viewers will know, we have some strong winds and angry seas around scotland. we are perhaps one of the best places in the world for renewable investors. we have attracted large-scale investment. we are open to companies from other countries working in scotland. guy: minister, one final question. we're coming up on the may election. i'm wondering, what kind of conversations are you having with all parties in westminster about the tax changes you would like? are you getting any positive noises? do you get a sense that you will see what you hope will be delivered? guest: well, scotland gave the world the age of enlightenment which is founded on using rational arguments as the basis for policymaking. if that approach is followed then to secure investor confidence that we need, there must be substantial tax reductions in march. if not, there will not be investor confidence and the enormous opportunities of oil and gas extraction will be made much more challenging. but i'm an optimist and we are making progress. i think all the major parties in the u.k. recognize that the tax environment has not been good for encouraging investment. that is the key challenge which on march 18 george osborne must not flinch. guy: we look forward to the budget. thank you so much for your time. the scottish energy minister joining us from edinburgh. francine: coming up, the rate debate. no action expected from the bank of england. but when is it appropriate for mark carney to make a move? ♪ francine: welcome back to "the pulse." guy: the bank of england's monetary policy committee releases its interest rate decision today. it is expected to leave rates unchanged. for what is next, we are joined by jennifer ryan and george buckley. let's start with you. if we didn't have an election, would the story be different for the boe? i guess we do have an election and they have to deal with it. >> they do have to deal with it. with the two major political parties pulling so closely and the prospect that neither will have a majority you don't know what the landscape will look like after the election. there are serious economic implications. looking at that roadblock there's an argument for waiting to see how the chips fall. francine: you have a great story on bloomberg.com saying if carney faces scotland redux what is he looking at? it is impossible to predict the election. >> you always have uncertainty before elections. now with the vote so close, it does feel a bit like scotland. we saw that the polling was too close to call before the election and there was a substantial economic impact were scotland to vote for independence. you might as well just wait. guy: george, let's bring you in. when do you expect the first rate hike to come through? how long are they going to leave it? what are the critical variables? >> we've been forced to push back the call for a rate hike to may next year. we were in august of this year. i don't completely agree with jennifer that the election is very important. add the bank of england been seriously contemplating a rate hike in may, the election would have stopped them doing it. but they are not, simply because the data has been a lot weaker. inflation looks like it could go below zero. banks are concerned about the implications from rising sterling against the euro. all these are probably more important. nonetheless, had they been thinking about it, they probably wouldn't be doing it. francine: may 2016 is a long time away. what are we going to hear from carney until then? will he give us an indication? >> they don't give us indications about anything. they don't always give accurate indications. it is a long time away, as you see. it could be the case that the cycle has already turned by that point. so we don't even get a rate hike at that point. it may be that the economic cycle has weakened again and it is difficult to provide stimulus at that point. we can't provide fiscal stimulus when three major parties have been trying to reduce the deficit. that means you can't really add a great deal to -- you can do much monetary either. i suspect future rounds of qualitative easing give a lot less. therefore i'm not sure we can prevent a recession from happening. >> but there is some stimulus coming down the pipe. the ecb is pumping a lot of money into britain's biggest trading partner. the stimulus from oil is making the boe weight. they want to see how that impacts the pay round. if there's no reaction in the pay round, then that gives even more ground to wait. guy: draghi is watching the way drowned as well. is there any evidence circumstantial whatever, that the oil price is going to have a meaningful impact on the way drowned? this is the critical the line. you look for that effect. what kind of effect, george, do you anticipate and what effect are you seeing? >> low-inflation often translates into lower pay increases. you also have to think about this in real terms. for any great of roast with nominal pay, lower inflation means your real pay is going up. if you look at what houses pay on petrol bills, it comes to around 60 billion a year. this is very inelastcic spending. it acts like a tax cut. that is a huge benefit to consumers. guy: do you think this will -- if i may boss, i could give my guys a 3% wage increase, a 2% wage increase. or i could give them nothing at all. do you think that's how ceo's will think? >> the labor market is getting tighter. the labor rate is falling below 6%. this is encouraging. i think it will encourage firms to push up wages. francine: this is going to be one of the main battlegrounds for the election. labor have taken upon them to talk about this inequality. >> there was a real labor push to focus on the cost of living. the cost of living looks like it has turned around. we are looking at five years of it being tight. the cost of living looks like it might have ended. you've got growth ticking back up. this hasn't translated into a huge push in the polls. it is not so clear to me that you can say an improvement is necessarily going to translate into the polling. guy: can we talk about what instability after the election might look like? say we end up with a minority government. what will history tell us about what external investors are going to see in the u.k.? >> it depends on the type of government you get. if you've got a conservative majority then what you've got is the likelihood of a referendum on the european union. what is that going to do to business confidence? that is going to be something you consider in your economic outlook. francine: george? >> as jennifer says, it depends on what we get after the election. i think we've had a relatively stable coalition over the last five years which has performed reasonably well. it hasn't been all smooth but it has performed relatively well. i'm not sure that is going to happen again. it could be the case that the labor and the smp don't have enough to get a majority. who knows what happens when you get a coalition of more than two parties? it could be a lot more unstable. guy: how do you think that translates? how does it translate into real money? i'm just curious to know what the flows are going to look like in that kind of scenario. >> the u.k. is the biggest economy outside of the u.s. in terms of inward investment. that makes it worrying if you think there is anything going to cause a fall. that is all business investment as well. we were talking about the consumer doing particularly well. there's very little else which is supporting the economy at the moment. i'm not sure where investment would go if there was the threat of an eu referendum under a conservative government. i suspect that over two years, we would see weaker business. francine: two years is a long time to wait. that may have to move forward. >> well, he's promised the end of 2017 but we might be back on talking about how it is like the scottish referendum again. you don't know how the polls will turn out. guy: cameron might be thinking, coalition, great. take the coalition off the table. he loves sticking it to his back benches. he doesn't have a great relationship with them at the moment. you talk about the fact that it looks less likely that we will get a coalition government again. but is there an upside? say you were to end up with another coalition. say you end up with the same coalition that you got now. what is the upside for the british economy? >> you will have some stability of programs. cameron has indicated what he wants to do, leaving aside what happens with the eu referendum. if you look at what the differences are, on a spectrum of what kind of austerity you get, it is better the devil you know, perhaps. you know what kind of austerity program you are going to get, so markets know what to expect. >> a great deal will depend upon if we had a repeat of the current coalition. how much bargaining power will the dems feel they have and how many ministers will they have in government? i suspect if they get as many seats as bowls are predicting -- francine: thank you so much for a great conversation, jennifer ryan and george buckley. guy: let's move on. we're going to take a break. plenty more still to come. we will be speaking to dieter zetsche. we will be talking about your solutions. francine: the internet of things. guy: the world's biggest lock maker. we will talk about that in a moment. ♪ guy: welcome back. you are watching "the pulse." francine: we will be talking cars, talking to the ceo of daimler, and of course we have plenty more interviews. we will be talking about locks with the assa abloy ceo. guy: all of that is next right here on "the pulse." ♪ francine: draghi draws a line. the ecb puts greece on emergency funding. guy: the british carrier buys another company in a deal set to shake up the telecoms industry. francine: daimler reports a profit increase as it races to overtake bmw. we speak to the daimler ceo dieter zetsche in half an hour. guy: good morning to our viewers in europe, good evening those in asia and a very warm welcome to those just waking up in the u.s. i'm guy johnson. francine: i'm francine lacqua. this is "the pulse." just getting breaking news in terms of costs from the eu. raising 2015 euro area gdp forecast to 1.3%. we were expecting a 1.1% increase. but consumer prices will fall 0.1% in 2015. guy: we are getting a sense the commission believes we are going to see growth in all countries. francine: including greece. guy: that probably is an open question. francine: especially with cash crash in greece. the eu commission saying greek gdp should grow 2.5%. they are saying there is more uncertainty surrounding these forecasts. guy: the best growth forecasts since 2007. francine: great growth prospects but very uncertain. this winter, economic forecasts. let's get straight to our bloomberg view columnist to go through the projections. there is a caveat. the world is better, growth is better, 1.3%. not that bad. there is so much more uncertainty. mark: that's got to be the understatement of the year. given the situation the years and find it in 1.3% versus 1.1%, that is good. they are forecasting deflation. why did it take the central bank so long to drag itself into quantitative easing? this is an incredible outcome. the forecasts now show deflation. that is a terrifying scenario. you have to ask is this a time when you want to be pushing greece into a corner? given the uncertainty? the greek growth forecast is from a very low base. you do not have to do much. if they leave the euro these forecasts are meaningless. francine: why would you not place them in a corner now? why would you take all the burden if you are the ecb? mark: you need middle ground. the greek people have expressed a strong view about what they think their economic prospects are and how they want to go forward. they've said no to austerity. it is going to be hard for the new government to ignore that mandate. the european union should be respecting those wishes as expressed in the election. spain is going to be looking at this very nervously. they face an election this year. you have an anti-austerity party doing very well in the polls. there is a democratic element to this that is very dangerous. we saw in the european elections last year a closer union was not what people were voting for. there needs to be stopped taking. you cannot have a union if you do not have the citizens on board psychologically, economically. unemployment is still forecast to stay in double-digit figures. that is a terrible place to be. if you are an unemployed greek and you have the european central bank telling your government to stick with austerity it is not a good place. guy: gdp growth still sluggish amid, i am quoting, sputtering investment. good use of language. is that something the commission can do anything about? they are talking about sluggish investment growth. this is the silver bullet. you start to get investments losing again and you will start seeing better economic prospects. how do they deal with that? mark: so you have some schizophrenia. francine: that is unusual. mark: greece is saying we need to invest for growth in the future. jean-claude juncker has a leveraged infrastructure plan. he is recognizing maybe we need to do more on the girls side. you cannot tell greece there's no need for investment for growth. at the same time jean-claude juncker is insisting we have not done enough. the problem is german fiscal intransigence. guy: you just laid out the argument beautifully. on one side you have a greek belief that you do not want to spend for growth. on the other side you have a group that says you have to spend for growth. where's the middle ground if the investment growth is sputtering? mark: yesterday, merkel said there are no divisions among the european union members about how we are going to deal with this problem. within an hour the french budget minister says actually, greece has a good point there. the greek finance minister has said you can't interpret the ecb move today -- you can interpret the ecb move today as trying to push the eu towards the negotiating table. that is a good spin it would be nice to think it was trip. francine: one thing -- guy: at least get the germans moving. francine: on austerity, i understand there isand that has ever wanted austerity. this is democracy. no one would say i am for austerity. no one wants austerity when you are not going. privatization does not touch austerity that much. anti-privatization keeps people in public places. how can you argue that that makes sense? mark: you can argue that syriza recognizes that is something they can get away without betraying the mandate they happen given. it could be a bargaining tool. but you cannot. is cuts. -- what you cannot fold on is cute. -- what you cannot fold on is cuts. the european central bank, here's another difficulty. the european central bank should not be carrying the burden of whether greece gets concessions are not. francine: especially when they are carrying qe. mark: this is for politicians. the central bank is looking at the rulebook, not sure why they have moved so soon. they had changed the confidence about what rates they will and will not allow as collateral. they have slammed the door shut. i hope the greek finance minister is right and this is mario draghi saying we cannot keep taking the can down the road. guy: you've got to hope it is true. otherwise it is a move. mark: they brinksmanship is incredible. guy: draghi is kind of good with that. they person in the chair where you are yesterday said we are getting close to a resolution. that was before all this. would your if you be we are getting closer to -- when your view be we are getting closer to a resolution? mark: this cannot continue indefinitely. merkel said these guys have only been in power for a couple days. let's give them some time. this seems to be rushing things. the greek three a yield is close to 20%. i saw a note talking about a cyprus style situation. they might have to steal part of people's bank accounts. no wonder the banking system is losing money and people are hiding it behind bathroom tiles. the risk of an accident is the thing that worries me. things go badly unexpectedly surprisingly and pushing greece into a corner seems like the wrong tactic. francine: very interesting analysis. a lot of people would disagree with you. guy: but it is a view. francine: i am sure the germans would disagree. thank you so much. guy: talking of germans. later we will speak to the daimler ceo, dieter zetsche's first interview of the day on "the pulse." looking forward to him discussing cars. i am fascinated to know what he is going to pay his workers. any sign of a wage increase? francine: we talked about the future of digital locks with the world's largest lock maker. how long will it be before we lock our front doors with mobile phones? our twitter question of the day. would you link your friend door to the internet? tweet us at@flacqua and @guyjohnsontv. guy: some pictures coming out of a paris press conference. francois hollande holding his press conference. the incidents in paris recently dominating that event. ♪ francine: welcome to "the pulse." live from london. guy: let's talk about our top headlines. tesco's adjudicator has launched an investigation saying there is a suspicion tesco has breached the code of practice. francine: the mastermind behind online crime market silk road has been convicted. found guilty of using bitcoin to trade drugs on the black market. he will be sentenced on may 15 and could face life imprisonment. guy: sony is moving past last year's cyber attack. it posted its best quarterly profit in seven years and shares rose 18% in tokyo. coming from demand for front facing cameras. sony supplies the image sensor for apple iphones. francine: breaking news from francois hollande. giving his biannual news conference to the press. he is saying he will meet with angela merkel and vladimir putin of russia friday and they will discuss ukraine. that is a development we need to watch. guy: as the u.s. secretary of state lands in kiev. what will the u.s. be offering the ukrainians? francine: would you trust an app with your keys? assa abloy is aiming to make unlocking your door digital. we talked to the ceo about earnings after the break. ♪ guy: welcome back. you are watching "the pulse." we are live on bloomberg television and bloomberg.com. francine: opening the door with your smartphone. that is what assa abloy aims to bring to a sector that is becoming electronic or the company released results highlighting weak growth in china but strong sales in north america. joining us on the phone is johan molin, ceo of assa abloy. we are, we had a lot of talk about the internet of things. in terms of your sales, digital door locks represent about 1/50th of your revenue. how much is this going to pick up in the next couple years? >> we've seen a healthy demand in north america. we also see it in a number of markets in europe and china. also in southeast asia. it is going to become more important. before it becomes a major item it will take a few years. guy: johan, you have been a big acquirer. it has been a big part of your leadership of assa abloy. when you look at acquisitions are you competing with tech companies for this acquisitions? is the m&a theme changing? >> we do more on the biometric side and on the identity side. because we see more in convergence between the door and the i.t. systems. people authenticate in the same way. in that field we are seeing tech companies. on the lock side, we see no one. francine: we had a reporting from sony yesterday about the hacking scandal. are people concerned? how can you secure how much spending and r&d do you have to do to make sure hacking does not happen? as soon as there is the first hack on a front door it would be a game changer. >> i don't think so. we've had hacks in the past. we have algorithms that we can change immediately. for us a door might get open it is not easy to crack the code. we have triple encryption layers and algorithms that can change. we are prepared. you will always have people that crack the code. what you need to be as a company, you need to be prepared and know what to do. guy: just a broad question. europe beginning to bottom out the united states looking solid, china slowing down. as you look to the year ahead what are you seeing in terms of the expectations for the housing market, for the lock market, what is your best case and worst-case scenario? >> i am guessing, it looks similar to 2014. europe is divided, north america is doing well not in asia but china, it is not all that strong. china. is weakening in the construction sector. altogether for assa abloy, we are probably going towards another good year. francine: great to have you, johan molin ceo of assa abloy. guy: let's get back to our top story. the greek finance minister yannis stournaras will sit down with his german counterpart wolfgang schaeuble in berlin after the ecb decided to restrict greece's financial systems access to liquidity operations. it is going to have to access the ela. let's bring in a guest to talk about this. the chairman of the german parliament's foreign affairs committee. good morning. can i start by talking about what is happening with the greek situation. we have a meeting taking place. what is your sense talking to the government about how germany is going to play this? is there a situation in which germany is going to offer greece a way out of this? germany offering greece a way of restructuring loans? >> i think germany and the european union and the eurozone want to keep the eurozone together. we are ready for solidarity, as we have been in the past five years. it has to be clear. everybody accepts the result of a national election. it must be clear that solidarity is the one thing reforms have to be undertaken within greece are the other thing. the new greek government cost some trust in their readiness to pursue reform. they are requiring a lot. there was a provocative tuned towards europe. they ended, unilaterally, the troikea cooperation. there is a need to make sure from the greek side that they want to stay the course of reforms, which is necessary for the economic recovery. francine: is germany ready to be a little bit more lenient? if you are hearing the right things would germany accept less tough conditions? >> there has been done what is possible. there has been debt relief for about 100 billion euros. there has been a lapse of debt repayment, debts have to be repaid in the course of 20 years or 30 years. very long maturity of loans. and very low rates of sovereign bonds in greece. the economic financial conditions for an over debted country are very convenient and comfortable. there is no real economic pressure coming from the situation of over debtedness because of european solidarity. there has been done as much as a haircut would not really contribute to economic recovery. it would instead create distrust and uncertainty because it would involve portugal and spain. this would not be a good path for the future. guy: can i ask about the trip angela merkel and francois hollande are about to take to ukraine and to moscow? a new peace initiative is how it is being written up, what these two leaders are carrying on the trip. can you give us any details on what the proposals are that are going to be generated by the europeans? >> i think we are facing a very serious military situation in ukraine which with permanent military weapons support for the rebels by the russian army and by russia. the military situation on the ground is getting more and more serious. i think this triggers this new initiative by the french president and the german chancellor to come to terms of a cease-fire in order to de-escalate the situation. and i very much appreciate this initiative. we hope it will bring mr. putin to a kind of reliable cease-fire on which one could build up a political negotiation situation. francine: all right. norbert roettgen thank you. chairman of the german parliament foreign affairs committee. stay with us, we will speak to daimler's ceo dieter zetsche. guy: follow us on twitter. @guyjohnsontv and@flacqua . see you in a moment. ♪ francine: welcome back to "the pulse." live from bloomberg's european headquarters in london. i'm francine lacqua. guy: i'm guy johnson. francine: greece has lost a funding artery after the ecb restricted loans to its financial system increasing pressure to yield to german demands to maintain austerity. greece could run out of money within weeks and its creditors do not raise its short-term borrowing limit. yannis stournaras will meet his german counterpart from berlin this morning. guy: bc will buy a british mobile carrier. if the deal goes through, bt will control the u.k.'s biggest high-speed broadband network. letting its tell packages of mobile, tv, home phone and internet services bundled. francine: a surge in mercedes s class sales have resulted in a sales increase for daimler. up from 2.56 billion euros. the ceo dieter zetsche has vowed to overtake audi and bmw with 11 new models. . guy: the ceo of daimler dieter zetsche is about to join us for his first interview of the day. francine: let's check in on the markets with jonathan ferro. jonathan: so much corporate news . it is a red map if you are bullish. dax down by .1%. the ftse down numeral 1%. the ftse in london down by a third of 1%. the euros eat raises their gdp forecast. the ecb moves, talking about the financing for greek banks. they pushed up funding costs to show them who is boss. i go straight to the athens stock exchange, a little lower down by 5%. banks getting hit hard. these banks are penny stocks. which means they're going to jump around and be very volatile on anything. that news really pushing them lower. elsewhere in the bond market what does the bond market think? a look at the 10 year up by 60 basis points to 10.29%. the shorter data debt three-year note, the yield on that was up 300 basis points. pretty ugly. if europe wants a little encouragement, look at italy. italian yields near one basis point. every day that goes by that you get a contained selloff in greek assets and it does not spillover, that strengthens europe as they go into negotiations with greece. what does it mean for the euro? europe, 1.1341. back through 1.14, stronger era this morning by .6%. yannis stournaras greek finance minister, met with mario draghi yesterday. hours later the ecb moved. today, all eyes on berlin as the greek finance minister meets with wolfgang schaeuble. the greeks are hoping that meeting goes somewhat differently. francine: let's hope it goes better than the one with the ecb and the one on thursday. in 25 minutes from now it is "surveillance" with tom keene. what are we looking at? blackrock cofounder, right? tom: the headline float out of europe forces us to rip up bloomberg "surveillance." we focus on secretary kerry landing in kiev and the challenges ukraine has with their devaluation. a panic mood as one official put it. as john knows the ukrainian hryvnia has depreciated as much as 25%. many people to talk to. gilles will join us from bank of america-merrill lynch. we will talk about ukraine greece. ukraine more immediate. pete peterson across both hours of bloomberg "surveillance." and then thorsten from deutsche bank on the u.s. economy as we go to tomorrow's jobs report. francine: the ukraine conversation is going to be fascinating. we found out francois hollande and angela merkel are going to kiev then moscow. tom: the headlines are just stunning. when you see the president of the republic of france saying ukraine is at war, that is a strong headline. francine: i know you will have full analysis. thank you. tom keene with adequate surveillance. guy: one of the questions we will be putting to dieter zetsche. he's coming up on bloomberg in a few minutes' time. the boss of daimler. ♪ guy: welcome back. you are watching "the pulse." germany's top luxury carmaker daimler has reported full-year results. sales of the mercedes s class boosting profits. joining us now first on bloomberg's ceo dieter zetsche. so nice to see you today. you said earlier today that you see significant growth in unit sales. is that significant growth going to be enough to close the gap on bmw and audi? can you give us a sense of whether the gap is closing or not? >> we clearly stated that we want to catch up and pass our direct competitors at the latest by 2020. we see strong momentum. we were the fastest growing premium brand last year and we intend to maintain that momentum through this year and perhaps even accelerate. yes, the gap is closing. francine: give us a sense of what is left in your arsenal. are you going to unveil new cars? give us a glimpse of how you are going to be number one. >> yes. we have on the car site 8 new products through 2015. a very strong product offensive is continuing with at least the same momentum. we've seen in recent years that our new products were enthusiastically received by the customers and we expect the same to be true for this year and the coming year. this year is the year of the suv for us. 4 new suvs. it is the perfect timing. guy: what is next? you have delivered a compact car, the s class doing well, the c class doing well, the suv's coming. where is the point of attack that you see working for daimler at the moment? >> we have seen tremendous growth based on our compact car offensive. there's a fifth one coming to complement what is there. pc class -- the c class has been seen as a new level of value and quality. this is the first year of full availability of this vehicle around the globe. this is another strong driver of growth. the suv's, on top of that on the technology side, we are leading in steps towards autonomous driving with assistant systems. we will introduce 10 hybrids through 2017. there are many additional arguments for consumers to shift to our brand. francine: you mentioned self driving cars. we had a great story this week that google was trying to compete with uber in having some kind of app. when is it going to be widely available? difficult to see how regulation is going to move in that direction. >> the first steps, it is already available in the showroom with our s, e, and c class in the sense of autonomous driving up to 18 miles per hour. that is what we are allowed to do. we see regulations moving in the right direction. technically we definitely will see the next substantial steps within two years. we expect that we will continue to lead this development towards the fully autonomous car, which will be the beginning of the next decade. guy: can i ask you a question not about cars but about the people that build them. we had the third round of wage negotiations. the central bankers of europe are watching carefully what big companies like you do on wages. do you have a sense that wages are going to be suppressed can you give us a sense of whether lower oil prices and lower oil, you are going to be paying your people not quite as much going for? what is the story? >> generally in germany we do not have union negotiations. typically industries negotiate, which is the strength of our system. there are a number of influential factors -- inflation, productivity gains have an impact. competitiveness on a global basis. all of these impact which negotiations. i expect to have a reasonable result of these negotiations which will give our employees additional purchasing power. at the same time will not destroy our competitiveness in the global markets. guy: additional purchasing power? you expect to see about inflation wage rounds of this year? >> that is what i would expect. that is relatively easy to forecast based on almost no inflation existing. guy: that is kind of where i was going to go. inflation is flat at the moment. so no real second-round effects, no desire to hold down wages because your employees are getting a wage increase as a result of lower oil prices, etc. >> of course there are always two sides of the table with different objectives in these negotiations. it is our role to contain this increase to the extent possible. the great results we have accomplished due to the contribution of our employees as well, they should share in the success as well. francine: going back to your strategy and growth forecasts, the emerging markets seem to be patchy. china is slowing down. where do you see the next opportunity of growth to sell your cars? >> with gdp close to 7% in growth car markets close are above 2-digit growth rates, even though it is slowing down, china is still the number one opportunity going forward. at the same time we see demographic growth in north america different from europe. this combined with the resurgence of the u.s. economy, definitely provides for good opportunities in the u.s. as well. we have many asian markets which give us good opportunities indonesia, south korea or other markets there. two days ago i was in india. i think prospects are improving even though the absolute numbers are considerably smaller compared to china. guy: one final question. we are waiting for march for the geneva motor show to see what the s class is going to look like. can you give us any tidbits or hints at features the cars going to come with? >> one important aspect compared to the predecessor is there will be easier access and more comfortable situations for the passengers in this vehicle. first, it will contain world leading technology of the s class, the great styling. this will be absolutely outstanding. guy: looking forward to seeing that. congratulations on the numbers, start doing very well, up by 1.5%. the ceo of daimler, dieter zetsche. francine: from cars to pharmaceuticals. fourth quarter earnings were asked her zeneca 33% and revenue fell for two of its biggest selling drugs. should we care about asters and a cup -- astrazeneca's miss? sam: the fourth quarter number was pretty ugly. they missed on sales by 2% and coure eps. big numbers. you start worrying is this going to carry on into 2015. they had given some guidance for 2015. their guidance is above what estimates seem to have. it is difficult. nobody likes to see a miss with. astrazeneca it is not just a matter of the drug selling. their diabetes product and symbicort. maybe 2015, the thorn will be in the side of astrazeneca. the interesting thing is where is this miss coming from. everyone knew astrazeneca was going to be ramping up costs, particularly on r&d. it is the only way you can get the pipeline going. guy: there was a time when they were doing the opposite. sam: they were managing numbers. guy: you've got to become a productive business. sam: they have announced the acquisition of act thomas -- ac tavis. last year they bought the other half of it. there was a deal with actavis to sell some of their products. these are good products they are acquiring. francine: we had some figures from sanofi. a high quality beat? sam: not really. it is good to see a beat. it didn't really disappoint, something a lot of us were worried about. they beat estimates, that is what pressured the stock in october. they beat everyone -- everyone is looking for a ceo serge weinberg is talking about a first-quarter announcement. lily does not agree. there is an opportunity for lilley to launch a generic version of the drug in 2015. how that plays into the forecast i do not know. guy: 2015 looks like an interesting time in the drug sector. so many moving parts. sam for selling -- sam sfazeli from brenda intelligence. francine: the greek and german finance ministers meet shortly. will they strike a debt deal? ♪ francine: welcome back to "the pulse." live on bloomberg tv and bloomberg.com. guy: some pictures of francois hollande. holding his six monthly press conference. talking about russia and greece. in the last seconds he said there is no separate path for greece. he has been talking about the meeting taking place later. he will be having later on with angela merkel in kiev. two big themes, greece and ukraine. francine: we also have pierre moscovici, who used to be a french finance minister. he is saying everybody wants to work constructively with greece. there is a news conference with francois hollande and then mosco vici in brussels speaking about greece. guy: a normal day in the office. jonathan ferro joins us to discuss. jonathan: it starts in 30 minutes. what the ecb did last night was pushed funding costs up. the timing was surprising. guy: i think he has a point. jonathan: do you think this is to put pressure? guy: there is an element of that . you guys need to get a deal done. francine: which seems fair enough. jonathan: greek equities down there is no pressure. it sets a precedent but this is the end game. it will be fascinating to see of this meeting between yanis varoufakis and wolfgang schaeuble will go better. francine: francois hollande and angela merkel will meet vladimir putin in moscow. guy: i think that will be fantastic. francine: maybe they will skype. this is the one thing to watch. it is also bargaining power. jon ferro. that is it for "the pulse." keep it here on bloomberg tv. guy: "surveillance" is next. the conversation will continue. a focus on kiev. kerry is already there and the europeans are about to show up. @guyjohnsontv and @flacqua on twitter. see you tomorrow. ♪ . . >> this is "bloomberg surveillance." tom: ukraine devalues their currency as "panic mood" sets in. john kerry visits from america. merkel and hollande announced they will go to kiev. forget nonfarm payrolls, tepid payrolls is front and center. and the changing of the grandchildren guard. time marches on for the royal family. good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarters in new york. it is thursday, february 5. i am tom keene. joining me olivia sterns and brendan greeley, an amazing morning in europe. oliva: we begin this morning in ukraine where intense discussions are about to begin. german chancellor angela merkel and french president francois hollande are heading to kiev. john kerry is heading over there. the main topic -- whether nato and the u.s. should provide lethal weapons to fight pro-russian separatists rebels. ukraine central-bank raised its key discount

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