17/12/2015 BBC Business Live


17/12/2015

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Transcript


LineFromTo

Hello everybody, this is business live, good to have you with us.

:00:11.:00:18.

Markets around the world are heading higher following the most expected

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move from the Federal reserve. If you did not know, they did go up. We

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will pump out what that means for the global economy. This is live

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from London. Thursday the 17th of December. Yes, we have liftoff, the

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US has raised interest rates for the first time in almost a decade, a

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move that is likely to cause ripples around the world and could increase

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pressure on other countries to raise their rates. Also in the programme.

:00:58.:01:04.

As if Facebook was not already a big part of our lives, the tech giant is

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now teamed up with Bluebird to enter the transport business. As always we

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will show you the markets in Asia and all around the world, that is

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following the news, that the Fed has raised rates for the first time in a

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very long time, since 2006. And we will be getting the inside track on

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what it takes to make money in the music business that is increasingly

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based around streaming platforms. We will be speaking with the head of

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PRS music. And we want to know whether you back that US Fed rate

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rise or not? Is it too early? Should they have done it a long time ago,

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should they have waited until next year? Get us know. -- let us know.

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OK welcome to the programme, lots going on, we start of course with

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the big news affecting the markets and businesses and people, all of us

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around the world, the American central bank, the US Federal reserve

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has raised the cost of borrowing for the first time in almost a decade.

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The Fed increased its benchmark interest rate by a quarter of 1%. It

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is a small step but is it the first of many rises? Our US interest rates

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about to skyrocket? What has really should investors is the tone of the

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big boss, Janet Yellen who has said that the progress is likely to

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proceed gradually. They say that the cost of borrowing is likely to be

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about just under 1.4% by the end of next year. That implies for more

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rate rises next year. Traders are betting that the next move will be

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in April but that is assuming, that the US economy remains in good

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health. I am joined by Stephanie Flanders, the chief market

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strategist, for Europe JP Morgan. It has happened, it is the morning

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after, give us your thoughts? I think it is funny because there has

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been this feeling that we would have this

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great moment certainty. One of the arguments for this rate rise would

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be that it gave a sense that we were on this path to normality, of course

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we have just got more things to be uncertain about. Now a lots of the

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focus will be on what the pace of those further rate rises will be,

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how the US responds to them, what inflation looks like in the US, does

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it do what the Federal reserve is expecting? The further path is one

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thing, but also we are testing the water on how the rest of the world

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reacts, addictive illegal emerging market economies. We know that the

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end of super cheap money, has caused a lot of adjustment problems for

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them because they had a lot of benefits from money flowing into

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their economies, this could be the high watermark for their problems

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because people know what they are doing now they could say. That is

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what a lot of people in the central banks will thing, or it could be the

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start their trouble. The big focus where we are is on Mark Carney, the

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big boss of the Bank of England, but how much pressure is put on other

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central banks in developed economies because they watch very closely? The

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UK is widely considered to be next in line, probably the only country

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that you put in the same category of the US, quite far wrong with even a

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little bit of upward wage pressure. Inflation is far below the target.

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You have seen Mark Carney acts like he's completely oblivious to what

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goes on in Washington, of course, they are affected by the fact that

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the US now has made this rate rise, if that could stick and it looks

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like it will stick, that is an environment in which it is a bit

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easier for the Bank of England to go second. But with all of the question

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marks over Brexit and the EU referendum, we are not sure. It

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could be later in the year. In terms of the effect on the global economy,

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we have talked a lot about looking at various countries and the impact

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of various individuals, because the dollar is changing in value, give us

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your take on that response because many watching us in Asia, or in

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Latin America, are thinking OK this will have a real impact on me, when

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I am painful things in US dollars? The thing about markets is that they

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should be forward-looking so we should have had most of the response

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to high rates, this is the most anticipated, if there was anybody in

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the financial markets, thinking, I am going to buy dollars, you would

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think they were a bit behind the curve, so the hope would be, most of

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the adjustment of higher rates at least on a slow path, has already

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happened because it is so were anticipated, does that mean we will

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get a view more months of dollar strength? As we factor in a higher

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and faster rate rises, possibly, but I think the hope would be, that

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there wouldn't be another big leg up in the dollar and that would be good

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news for the rest of the world. Time to squeeze in some other stories.

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Facebook has entered the transportation business.

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The firm has agreed to work with Uber to allow users to hail

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Uber cabs directly from the Messenger app.

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The new service means Messenger users will be able to ask

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for an Uber vehicle without leaving the Facebook software.

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"Uber on Messenger" began in parts of the US this week,

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Argentina is to scrap foreign exchange restrictions,

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allowing individuals and companies to buy dollars freely

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The move comes six days after pro-business President

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Mauricio Macri took office promising deep economic reforms.

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The controls were set up by former president Cristina Kirchner to stop

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capital leaving the country - but critics say they have hurt

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The value of the peso is now expected to slump from less

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than 10 to the dollar - the official exchange rate -

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to as low as 15 in line with the black market.

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Hong Kong's central bank has also raised the base rate it charges

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to a seven-year high of 0.75%, tracking the decision by the US

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The Hong Kong dollar's peg to the US Dollar means the city's monetary

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Let's take a look round the world at what's business stories

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Heathrow is making headlines again. The chairman is

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stepping down. We have got some tablet problem so this is controlled

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elsewhere, he throws hugely in the spotlight in the UK, it is the

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busiest airport, the second busiest airport in the world. In terms of

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passenger numbers. A huge debate just continues over the third

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runway. I am still talking. Third runway, or will it go to Gatwick?

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Yes fine, now little talk about Ted Baker. Ted Baker is to buy property

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for ?55 million, many will say that it is not the nicest looking

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building. They have agreed to purchase the freehold for that

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amount, plus costs ?3 million. The acquisition will be financed by ?60

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million secured term loans. Costing quite a bit of money in the process,

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new headquarters for that company. Are you finished? I am. Let us look

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at some of the other business stories. We are going straight over

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to the offices, we are going to talk to the reaction, the big Fed

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decision. Winners and losers in Asia, those that export to the

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United States could benefit because it will be cheaper to export to the

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US with a higher dollar, but those sitting on dollar debt, that is more

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expensive for them? Absolutely although across Asia we saw markets

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finishing broadly higher this Thursday, despite the fact when you

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break down what the US Fed move is going to mean for them as you just

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referred to it going forward, the future rate rises is what many in

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the region will still be vulnerable to. Asia was the first to respond

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from the news. Any rate rises will be

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gradual but higher interest rates will cause problems for economies

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that are far too exposed to US dollar-denominated debt, and Asian

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central bankers are caught between a rock and a hard place. They need to

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cut rates to boost growth, many of the countries in the region of

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Basingstoke growth but if they do that, they risk sending more money

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out of their financial systems which will weaken their currencies

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further. It is a tough position to beat him. With slower growth

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expected to hit the region even further in 2016, it is becoming a

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real dilemma for policymakers. Thank you very much.

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Staying with markets - not much more to add really.

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As you can see the markets around the world embracing that FED

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decision to lift rates for the first time in donkeys years...

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The uncertainty over will they or won't they -

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now obviously gone and the markets have certainty...

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This was seen as a mark of confidence. It is also piling on the

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painful oil prices. Oil prices have fallen again -

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more supplies into the already In fact keep your eye on US

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lawmakers who could be voting tomorrow to lift a four decade US

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ban on crude oil exports. Joining us is Tom Stevenson,

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Investment Director Nice to see you. Looking at those

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numbers, France and Germany, 2%, I mean, I wouldn't expect a bounce to

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that degree given the fact that on Tuesday night they all closed up 3%,

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it has been quite a week? Markets tend to move on things they don't

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expect. Surely this was the most overran a light, over speculated

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rate ever. No surprise. But it has cleared the uncertainty, that is why

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the markets are buoyant this morning. Something we didn't get

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time to ask Steph, many are betting that April is the next move up. Your

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thoughts? That is the interesting gap between what the Fed is saying

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and what the markets are saying. The Fed is clearly saying that they

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expect full quarter point races next year, and the same in 2017, the

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market is more cautious. It is expecting a couple of quarter point

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rise is. I think that if we do get signs that the Fed is pushing for

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four rises next year, that actually will be taken badly. That is clearly

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not priced in at the moment. Briefly, I want to talk about oil,

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the Fed made the move, the oil price drops further but it is interesting

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about this move, possibly by lawmakers tomorrow? Yes, if the US

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does exporting, that is another source of oil, we have got Iran

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coming on stream. Things may be clearing up in Libya, oil coming

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from there, if the US starts exporting oil,

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the oversupply will get worse and it will keep the price is low for the

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considerable future. More stories to discuss, but we have more to do

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right now. We're going to be talking music

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and in particular how people make Later in the show we will be

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speaking to the man behind the group which makes sure songwriters,

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composers publishers all get what they are owed

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in an increasingly digital world. You're with Business

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Live from BBC News. How will the UK be affected

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by the US interest rates decision? Ben's in central London

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to tell us more. We've heard about the impact of that

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rate rise in America, around the world, but what does it mean in the

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UK and will the Bank of England follow suit in raising the cost of

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borrowing? Monica is with me, and Jeremy. Monica, what does it tell us

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here in the UK about America thinking America is on the mend?

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Will the UK follow suit? I think so. Both economies are seeming to be

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back on track, in terms of lower unemployment numbers, steeper GDP

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growth, so I think we are expecting the Bank of England to follow suit

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with an interest rate rise later next year, but I think both are

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going to be quite cautious, in the pace of the rises to make sure we

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are on firm footing. Away from these emergency measures, arranged to

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kickstart the economy, getting back to something like normality? I don't

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think anyone knows what normality still is. This was the 1st rays in

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10 years. We are starting to see... The word they use last night was

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gradual, the emphasis is on how slow these rises will be. The 1st step on

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a very long road. The last thing the federal bank or the central bank of

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England want to do is scare the horses. We are looking at the

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International picture, what does it mean for investors and business? It

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is the start of a long process of rates rising, how would you start to

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prepare? So far we have seen a positive reaction from markets.

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Tokyo and Hong Kong opened up. Investors should be feeling pretty

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positive. Different effects on other assets, but overall anything that is

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positive overall for the economy is positive for investors. Thank you

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very much. That is the view from here in London. The big question is

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if the bank of England will follow suit, what will it look at when it

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looks at the cost of borrowing in the UK? America has fired that

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starting gun. Will UK follow suit is the question?

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This is business to live. Our top story: the American central bank

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announced that rise in the interest rate. Seen as a powerful statement

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about the improving health of the US economy. Markets in Europe and Asia

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are bouncing on that news, as we have been discussing.

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The music industry hasn't exactly had the easiest time

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Illegal downloading and low cost streaming services have led

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to a steady decline in music sales, forcing artists to look at more

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One of the companies at the vanguard of that effort is 'PRS for Music'.

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Formed in 1997, they look after the usage rights of over 10

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million songs - representing everyone from blockbuster

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songwriters like Adele, to classical composers.

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Their role is to ensure songwriters, composers and music publishers

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are paid whenever their content is played, performed or reproduced.

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In total the firm collected almost a billion dollars in music rights

:18:06.:18:08.

in 2014, a 1% increase on the year before.

:18:09.:18:10.

If we break that down though we can see that only 12% of that amount

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came from online sources with half of their collected revenues coming

:18:17.:18:20.

from live performances and the broadcasting of music.

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Robert Ashcroft, is the firms Chief Executive and is with us

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Great to have you with us. I was just going to say, it all sounds so

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complicated to me. I am a Luddite, I still use CDs. I have to look to my

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kids to download things for me if I cannot get it on a CD. But it is

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huge business, and it is something developing over a very long time for

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both artists and users of the songs you are representing the lot?

:18:55.:18:58.

Absolutely. We have been in business for 101 years now. It has changed

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enormously since the advent of the Internet. We had seen recorded media

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sales going down. We've seen downloads replacing sales of CDs.

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Now we are into the streaming era. Last year our streaming revenues

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were higher than our download revenues. For the first time? Yes,

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we cross the threshold in 2014. That makes sense because it seems to be

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the way... People don't want to own that necessarily, but just to stream

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it. I wonder, I guess it is easy to keeps track of streamers and

:19:35.:19:42.

downloads, but how do you do it in all quarters of the world of people

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using one of the songs and somebody not realising they have to pay for

:19:48.:19:51.

it. There is a network of societies around the world. We have reciprocal

:19:52.:19:56.

arrangements with 150 countries. We represent their musicians in the UK.

:19:57.:20:00.

If you are running a pub and you get a license, you automatically have

:20:01.:20:04.

that license with us to play Argentinian music, Filipino music,

:20:05.:20:08.

music from all around the world. We have the same arrangements. Funnily

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enough, in parts of our business we are monopoly in the UK. I thought

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when I joined it was the end of my travel. I used to work for Sony and

:20:19.:20:22.

travelled all around the world, suddenly I found myself travelling

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to Argentina, Japan, Hong Kong, China, all around the world,

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developing relationships and understanding how they work, to

:20:30.:20:33.

track that usage. For the artist, how does it work, in terms of what

:20:34.:20:38.

he or she actually gets paid? If you find somebody is using a Dell's new

:20:39.:20:46.

hit single Hello in the backwaters of Shanghai and they have not had

:20:47.:20:51.

proper authority or paid, talk us through the logistics? There is the

:20:52.:20:57.

music copyright Society of China and they copyright all the hotels and

:20:58.:21:01.

businesses. They are not as well penetrated in their market as we

:21:02.:21:05.

are. It is a developing market for copyright, so we cannot be sure

:21:06.:21:08.

everything is captured, but we are in dialogue with them. We see who

:21:09.:21:13.

they have licensed, how they license them and check how they collect the

:21:14.:21:16.

money. We are going through business dialogue to make sure we are being

:21:17.:21:21.

paid for our members. And then you pay Adele? Yes. We have spoken on

:21:22.:21:28.

other programmes, you and I, about the difference in what the artist

:21:29.:21:33.

would receive from a download, to streaming. There were a lot of

:21:34.:21:36.

artist two were not happy about what they were receiving, what they were

:21:37.:21:41.

getting back? Absolutely so. In the old days you could say I have a song

:21:42.:21:46.

and a CD, CD sales are ?10 and I get my share. But it doesn't really

:21:47.:21:51.

matter if your song is really popular song... If somebody bought

:21:52.:21:55.

the CD for a particular song, then you get into the download era, you

:21:56.:22:03.

are getting about 5p per download. Then you get into the streaming era,

:22:04.:22:06.

where it gets very compensated because you have the free streaming

:22:07.:22:11.

services, advert supported ones, you Tube, sound cloud, Facebook, all

:22:12.:22:15.

these places where you can listen to music. We can take the example of

:22:16.:22:22.

Spotify. The leading subscription service, it works out on premium

:22:23.:22:27.

about 50 streams, the equivalent of a download. As we talked about last

:22:28.:22:30.

time, you can see that working over the long-term. The challenge now is

:22:31.:22:35.

that most people are listening to their music on the YouTube and sound

:22:36.:22:44.

cloud. We are trying to get it onto a level playing field, to make sure

:22:45.:22:48.

songwriters can make their money, regardless of where their music is

:22:49.:22:51.

played on the Internet. We have to leave it there. It is fascinating to

:22:52.:22:56.

stop Robert Ashcroft, thank you for coming in. Chief Executive of PRS

:22:57.:22:57.

for Music. Let's now take a quick look at some

:22:58.:22:59.

of the best business news out A story is dominating... Do we have

:23:00.:23:09.

to do it again? The front page of the Financial Times, about the Fed

:23:10.:23:15.

impact, what it means, the of cheap money, by raising the cost of

:23:16.:23:22.

borrowing by 0.25%. The Japan Times is reporting in

:23:23.:23:27.

spite of that big deal on climate struck in Paris last weekend, Japan

:23:28.:23:31.

and South Korea are both still planning an opening 60 new coal

:23:32.:23:35.

fired plants in the next ten years. And if you like using Uber

:23:36.:23:41.

and Facebook this story in the UK Apparently the two companies

:23:42.:23:44.

are teaming up to allow you to book taxi's via the social networks

:23:45.:23:48.

messaging app. Tom Stephenson is with us again in

:23:49.:23:59.

the studio. Let's start with Facebook and Uber. What does it

:24:00.:24:03.

mean, then teaming up together? Others out there will be thinking

:24:04.:24:09.

two big disrupters. You could see why Uber would want to get into

:24:10.:24:12.

Facebook messenger, it has 700 million monthly users. Uber gets

:24:13.:24:19.

access to them. If you live in that I environment you want to be able to

:24:20.:24:23.

order your taxi whilst you are in that environment. The Facebook it is

:24:24.:24:27.

good news as well. They will get the payment details from Uber, which

:24:28.:24:30.

they will be able to use for other things. Is quite a scary thought.

:24:31.:24:36.

It is scary, I have no more to add on that. LAUGHTER

:24:37.:24:41.

OK! Can we move on... We talked about

:24:42.:24:47.

and talked about it, that two week Hague climate summit, finally got a

:24:48.:24:50.

deal after many, many years. The world got this deal and now we hear

:24:51.:24:54.

Japan and South Korea are going to build these coal powered plants. We

:24:55.:25:00.

didn't focus on Japan and South Korea, there was a lot of pressure

:25:01.:25:07.

on China. Japan? That is where the attention was on, the big emerging

:25:08.:25:10.

markets and how to get them into the fold so we could get this landmark

:25:11.:25:13.

deal announced. But there was or is going to be a gap between the

:25:14.:25:16.

aspiration and the reality of pushing it through. This story

:25:17.:25:22.

really underlines that. That between them, Japan and South Korea are

:25:23.:25:26.

going to build 60 new coal fire plants in the next ten years.

:25:27.:25:34.

Japan's aspirations for cutting CO2 emissions over the next 40 years,

:25:35.:25:39.

very modest. The reality is we may be looking at a 2% degree cap but

:25:40.:25:44.

the reality is the measures already signed up to not going to deliver

:25:45.:25:48.

it. Thank you for coming in. You got it in! That is it from us

:25:49.:25:54.

today, see you soon. See you tomorrow. The by. -- goodbye.

:25:55.:26:05.

Hello. It has been a fairly cloudy and breezy start the day for most

:26:06.:26:11.

places. A bit of sunshine on the cards, but equally some rain. This

:26:12.:26:15.

was the view yesterday across Inverness. You can see some blue

:26:16.:26:18.

sky. There will be more in

:26:19.:26:19.

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