22/12/2015 BBC Business Live


22/12/2015

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This is Business Live from BBC News,

:00:00.:00:00.

with Sally Bundock and Ben Thompson.

:00:07.:00:10.

Oil hovers near 11 year lows as the slump in global

:00:11.:00:12.

Live from London, that's our top story

:00:13.:00:16.

An end of year rally looks like a distant hope as supply

:00:17.:00:36.

outstrips demand across the commodities world.

:00:37.:00:40.

Space X launches and lands the Falcon-9 rocket for the first

:00:41.:00:46.

for the future of the space industry.

:00:47.:00:54.

And why everything isn't rosy in the flower business -

:00:55.:01:02.

the florist to the stars,

:01:03.:01:05.

Paul Thomas, will join us later in the programme

:01:06.:01:07.

to give us the inside track on his latest creations.

:01:08.:01:14.

And as one influential advisor calls on the US government to tax

:01:15.:01:15.

greenhouse gas emissions from big business,

:01:16.:01:17.

we want to know, what's the best incentive to go green?

:01:18.:01:21.

Fines, charges, punishments or persuasion?

:01:22.:01:24.

Let us know - use the hashtag, #BBCBizLive.

:01:25.:01:37.

We start with the continuing pressure on commodity prices.

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It is good news if you're having to pay for commodities,

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but bad news if your economy or company

:01:49.:01:50.

Oil is still hovering around 11 year lows.

:01:51.:02:00.

In fact, it's fallen by around a third since the start of the year.

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Oil production is running close to record highs,

:02:06.:02:07.

and there's just not enough demand to mop it all up.

:02:08.:02:14.

Slower growth in China - the world's second

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is now using less copper, and that's helped to push down

:02:17.:02:23.

weaker industrial production in China has helped

:02:24.:02:33.

depress the price - which has fallen

:02:34.:02:35.

Gold hasn't escaped either - its price is down by around 10%

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This time, it's the strong US dollar to blame.

:02:46.:02:49.

Gold is priced in dollars - so the stronger the greenback,

:02:50.:02:57.

And with interest rates rising in the US,

:02:58.:02:58.

investors may be drawn to investments on the other side

:02:59.:03:02.

of the Atlantic, where returns are more attractive.

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Amrita Sen, Chief Oil Analyst at Energy Aspects is with me.

:03:05.:03:14.

If you look at Brent, down 42% lower than this time last year. It is hard

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to judge who this is good and bad for all stop initially, drivers are

:03:26.:03:28.

doing well out of this, of course, but less so for the oil firms

:03:29.:03:32.

themselves. Their response has been to lay off staff and cut investment.

:03:33.:03:35.

That is going to continue, isn't it? Pressure. We have seen oil companies

:03:36.:03:46.

cut huge amount of workforce. And capital expenditure is down around

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$110 billion this year and another 100 billion next year. If these

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prices persist for another few months, that could go up another

:03:56.:03:59.

20%. We have talked about US shale producers and whether this is just

:04:00.:04:03.

the Opec members tried to put them out of business, but they

:04:04.:04:08.

managed to withstand the storm better than many expected. The

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question is how long this can go on before someone has to blink. That is

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exactly the question. The industry of $30 oil is not sustainable, but

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it is a survival game at the moment. The amount of assets you have seen

:04:21.:04:27.

in the US, it is at record levels. Moody 's has pledged another 29

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companies on review for further downgrades. These are big

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some of the biggest in the shale business in the US. They are

:04:36.:04:38.

literally selling every asset possible to survive, in the hope

:04:39.:04:45.

that prices will go up. So looking in your crystal ball, what are we

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talking about in 2016? First, it will be a struggle. The warm winter

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is not helping. It has been very warm here, and also in the US, Japan

:04:57.:05:00.

and Korea. And because of the cutbacks, they should start feeding

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through to lower production. Probably not until the fourth

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quarter of 2016. There has also been the shale and BG merger. That is in

:05:13.:05:18.

the spotlight, because it was predicated on a price of about $70

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per barrel. It is fed to say that prices will go back up. If anything,

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the lower the prices stay today, the higher they will be in a couple of

:05:30.:05:33.

years. The question is how long we stay in this low price environment,

:05:34.:05:41.

which is adding to the jitters of a lot of investors.

:05:42.:05:44.

Apple has raised concerns about the UK Government's proposals

:05:45.:05:49.

The proposed law aims to overhaul rules governing the way

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the authorities can access people's communications.

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Apple says the bill would give police and security services access

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to the records of every UK citizen's internet use,

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without the need for authorisation from a judge.

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Martin Shkreli - known to many as the man who raised the price

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of a lifesaving HIV drug by 5,000% - has been fired as chief executive

:06:07.:06:13.

It comes just days after his arrest by the FBI for securities fraud.

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In a short statement, the company said he had also stepped

:06:18.:06:20.

The mood among German consumers is improving as the year

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Despite an increase in terrorism threat levels, the latest survey

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of sentiment by GfK showed a slight improvement,

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ending four months of decline. Consumers' expectations

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for the German economy and their own levels of income have

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both improved according to GfK, while their propensity to splash out

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and buy goods is at an "extremely high level".

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Music to the ears of German retailers. Speaking of Christmas,

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how to complain is a story from BBC 5 Live this morning. If you are

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still waiting for gifts to arrive in the post or you have had bad

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service, the way to do it is to personalise the complaint. You

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are a person waiting for this package, not an address or a

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reference number. That is the advice from BBC 5 Live this morning. Let me

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take you through some of the other stories. Fred Thompson, chief

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executive of Chapel down English wines, spoke to us previously. He

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has some competition on his doorstep, because the champagne

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group have moved in. They are buying next door

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spent 14 years being called a lunatic for growing English grapes

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and making English wine. But apparently, the champagne lot have

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arrived and suddenly, everything is fantastic. Though he says he was

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their first, and therefore, it is good news, competition for sparkling

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English wine. It will not be called champagne, though. We need to be

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clear about that. and look at what else

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is making business headlines. Those forest fires in

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Indonesia are costing When this was going on, even that

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view behind you, we could see the haze. That's right. It has been

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particularly bad this year, so the view behind this wasn't even

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visible. You could just see a thick, white smoke behind us. This happens

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almost every year. This year was particularly bad, but each year,

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farmers in Indonesia deliberately clear land, mostly on palm oil

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plantations, and that causes this thick haze that covers most of

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south-east Asia. More than 50 companies are being punished for

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their role either by starting the fire is all

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for not stopping the fires when it happens on their land. This has been

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done by the Indonesian government, which is revoking or freezing the

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licenses of the companies found responsible. This is significant,

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because after all these years, it is the first time people are being held

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to account. But they have not released the names of the firms,

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only the general locations of the companies, so we had to do some

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detective work. This costs billions of dollars to the Indonesian economy

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each year and that is something they are looking to stop. A very

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interesting development. Markets were pretty mixed today. A few

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elements are affecting trade in Asia.

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Toshiba shares are down today another 7%. They closed nearly 10%

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lower on Monday. Let's look at Europe we flee before we move on. --

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briefly. Let's talk through what is expected in the United States.

:10:42.:10:42.

Michelle Fleury is there for us. The Jordan Brand is the perennial

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favourite, as long Strong sales of women's archive and the online

:10:59.:11:02.

business will generally. Nike has set a target of boosting annual

:11:03.:11:09.

revenues by more than half to $50 billion by 2020. Also on Tuesday,

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investors will be looking out for the latest revision to US growth

:11:14.:11:16.

stats. Data from the commerce department are likely to show that

:11:17.:11:21.

US GDP expanded at an annual rate of 1.9% in the third quarter.

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That is two tenths of a percent slower than was previously

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estimated. Joining us is Mike Amey,

:11:29.:11:29.

managing director and portfolio Let's start with the UK. Borrowing

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figures are out later today. November is not a particularly good

:11:44.:11:49.

month anywhere, but where are we? At the moment, we are obviously a long

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way down from where we were a few years ago. The deficit for this year

:11:53.:12:00.

is projected to be around ?75 billion, unfortunately still a very

:12:01.:12:05.

large number, about 4% of our annual output. So there is still a way to

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go. The challenge is revenues, which are coming in a bit lower than

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expected. As we know, wage growth is pretty low, and if wage growth is

:12:18.:12:22.

low, the government offers do not get replenished as quickly as we

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hope. And with falling oil prices, I suppose VAT revenue from petrol will

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be lower, That's right. We hope people spend

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some of that windfall in other areas. If they do, hopefully you get

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the money back somewhere else. But at the moment, a bit of a challenge

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on the revenues. As the year draws to a close, today we have the

:12:46.:12:51.

Chinese leadership saying they will do more to stimulate growth in China

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which is what we want to hear. Then which is what we want to hear. Then

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you have the interest rate situation in Europe and the US, and oil, we

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have mentioned. Lots of moving parts. When we look forward to the

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next 12 months, we are relatively optimistic that in aggregate, things

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will be OK. China is probably through the worst, and if that is

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the case, it should give us hope for 2016. But there is an interesting

:13:17.:13:20.

divergence between the Federal the European Central Bank try to

:13:21.:13:28.

keep pumping cash into the system. 2016 should be OK, but a lot of

:13:29.:13:33.

moving parts. If you look at where we were this time last year, on the

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one hand, a very different picture, but still always the same issues.

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But they have moved ever so slightly. That's right. The last 12

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months have told us, as you have seen with the

:13:50.:13:54.

numbers, consumer spending in a lot of Western countries is holding up

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well, including here. That is what gives us cause for to miss. That has

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been the story for this year. We have had these bouts of volatility,

:14:01.:14:05.

but overall both has been OK. We will get more bumps in 2016, but we

:14:06.:14:12.

think consumer spending will hold. From my point of view, I feel like I

:14:13.:14:15.

have been watching central banks all over the place - Japan, the European

:14:16.:14:22.

Central Bank, the Fed, the UK to a degree, and China. Six interest rate

:14:23.:14:29.

cuts this year. It has been about what central banks have been doing

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that has led the way in terms of how we are reacting. And the central

:14:33.:14:37.

banks start to do different things, which affects currency markets a

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lot. So you go volatility through currency markets.

:14:42.:14:49.

renminbi voting has created some uncertainty. Everybody wants to see

:14:50.:14:56.

a slightly higher inflation number, believe it or not. We have spent a

:14:57.:15:02.

lot of time worrying about deflation. The focus for all central

:15:03.:15:05.

banks will be a hope to see inflation numbers edged up a bit. We

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will be back, but thanks for now, Mike.

:15:11.:15:11.

- about winning the royal seal florist to the stars and to royalty

:15:12.:15:21.

You're with Business Live from BBC News.

:15:22.:15:35.

More people are expected to work Christmas Day this year. Research

:15:36.:15:42.

suggests the number is at its highest level in three years, with

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nurses, doctors and chefs and police officers among those who will be on

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duty as normal. As will some of our colleagues here at the BBC. Steph

:15:50.:16:00.

McGovern is at a Christmas market in York.

:16:01.:16:06.

The New York Brass Band will be playing for us. But we are here to

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talk about how important it is to the economy. Give us a tune.

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tell you, but there is over 100 tell you, but there is over 100

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stalls here dotted around this city. They are selling all kinds of dimp

:16:21.:16:23.

things. It is important for small business. ?250 million to the

:16:24.:16:27.

economy. Here it added something like ?50 million extra to York's

:16:28.:16:32.

money that they're making. We can talk to Rupert, one of the

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for you? We sell woolly hats and for you? We sell woolly hats and

:16:36.:16:40.

jackets and gloves and we're having a ball at the moment.

:16:41.:16:50.

It is still mild and you'd like to see it colder... We need some frost.

:16:51.:16:55.

Please, can we have some frost? There is people who would like snow

:16:56.:17:00.

full-time on this business, don't full-time on this business, don't

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business. Where are you when you're business. Where are you when you're

:17:06.:17:08.

not here? We're in York Market normally four days a week. Is this a

:17:09.:17:13.

big part of your business? It is a hugely important time of year for

:17:14.:17:23.

us. If we didn't have them, we us. If we didn't have them, we

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wouldn't be in business, I don't think. That was Steph McGovern

:17:30.:17:35.

setting a sense of how the people feel about the festive season ahead.

:17:36.:17:42.

We are talking about interest rates again when they will rise. We talked

:17:43.:17:48.

the Bank of England has signalled the Bank of England has signalled

:17:49.:17:53.

that a rate rise in the UK could be further away than we expect. He says

:17:54.:17:58.

it is downward pressure on inflation that could push back a rate rise

:17:59.:18:04.

below the record level of 0.5% which it has been at since March 2009.

:18:05.:18:16.

Our top story, global commodities fail to gain ground as the year

:18:17.:18:21.

draws to a close as supply outstrips demand around the world.

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We will be following that story for you.

:18:29.:18:34.

Whether it's Christmas, Valentine's Day or Mothers day,

:18:35.:18:35.

there's a chance flowers will feature somewhere

:18:36.:18:37.

Buying and selling flowers is big business.

:18:38.:18:46.

In the UK alone the florist industry is worth ?1 billion a year -

:18:47.:18:52.

But the future is not so rosy for the traditional florist,

:18:53.:19:00.

its goods are perceived as a luxury when compared to what's

:19:01.:19:02.

However, the industry of events and party flowers has ballooned.

:19:03.:19:07.

For the rich and famous - they're actually buying more

:19:08.:19:08.

and more flowers for sophisticated creations and elaborate looks.

:19:09.:19:10.

He arranged the flowers for Prince Charles' wedding in 2005

:19:11.:19:14.

and the flowers for the wedding of his niece, Zara Philips.

:19:15.:19:17.

He has also just completed the Christmas Transformation

:19:18.:19:19.

at the Ritz Hotel in London, a job he's done for ten years.

:19:20.:19:22.

Paul Thomas is the founder of Paul Thomas Flowers.

:19:23.:19:28.

You have brought some. It is a shame you can't smell that we can smell.

:19:29.:19:36.

They smell incredible. It smells Christmassy here today. Paul welcome

:19:37.:19:40.

to the programme. Let's start with how you got into this. You have been

:19:41.:19:45.

doing this 25 years or longer? Over 30 years, yes. How did you begin?

:19:46.:19:50.

What was the initial impetus to start doing this, to become a

:19:51.:19:53.

florist? I wanted to be a florist since I was ten years old. I saw

:19:54.:20:01.

episode of Upstairs Downstairs and episode of Upstairs

:20:02.:20:02.

saw the table decorated in an saw the table decorated in an

:20:03.:20:03.

elaborate way and just loved it and that's, "That's what I want to do. I

:20:04.:20:09.

want to create wonderful tables and transform rooms and make magic."

:20:10.:20:12.

What was your path? You're a ten-year-old boy at school and you

:20:13.:20:15.

want to be a florist, how do you get there? I'm fortunate. I felt very

:20:16.:20:20.

clear vocation of what I wanted to do. You follow that course. I went

:20:21.:20:27.

the best florist in London. I went the best florist in London. I went

:20:28.:20:30.

to them for advice. They directed me to a man called Kennet Turner who

:20:31.:20:35.

was transforming the flower industry, a genius. And I was so

:20:36.:20:40.

fortunate to work for him for a few years and that just unlocked what

:20:41.:20:44.

was within me. He is still your mentor, isn't he? He is. Even now?

:20:45.:20:46.

Very much so. Zblurp telling me some Very much so. Zblurp telling me some

:20:47.:20:52.

fascinating stories -- you were telling me some fascinating stories

:20:53.:20:56.

when you were a young man and you had Jacqui Onassis ringing in and

:20:57.:21:00.

you cut her off the phone by accident. Yes. Tell us what that was

:21:01.:21:07.

like. I imagine tantrums the stars coming in and wanting something, it

:21:08.:21:12.

is not what they desire, how do you manage those emotions? It was a

:21:13.:21:20.

baptism of fire. I came from a nice family in Reigate and suddenly it is

:21:21.:21:24.

into London and this remarkable man I worked with and it was quite

:21:25.:21:28.

traumatic. But I remained focussed on what I was doing and I think we

:21:29.:21:32.

all shared the love of flowers together and I think that's what

:21:33.:21:36.

gets you through it and you just continue on that path really. How do

:21:37.:21:41.

you divide your time? What you love doing is clearly the creative part

:21:42.:21:44.

you have got to make money, it is a you have got to make money, it is a

:21:45.:21:49.

business? So you're going to have to business? So you're going to have to

:21:50.:21:49.

spend your time on the accounting and the admin and the hiring and the

:21:50.:21:54.

firing and all the boring stuff, but you'd rather spend your time on the

:21:55.:21:59.

creative stuff. How do you divide your time? These days it is too much

:22:00.:22:03.

on the administration side of things and meetings and I never when I

:22:04.:22:05.

started thought I'd ever spend time started thought I'd ever spend time

:22:06.:22:11.

at a computer, you know, now you at a computer, you know, now you

:22:12.:22:12.

spend so much time doing your buying lists and ordering and designing and

:22:13.:22:15.

of course, just generally running a business. I'm fortunate, I have an

:22:16.:22:21.

amazing team that support me a great deal which does give me the

:22:22.:22:25.

it is very, very important to me to it is very, very important to me to

:22:26.:22:32.

be present and take part and be part of it. That's why I got into the

:22:33.:22:37.

industry and I don't want to stop making things, you know, and it

:22:38.:22:44.

lucky. You are Paul Thomas, thank lucky. You are Paul Thomas, thank

:22:45.:22:51.

you very much for coming in and your florist is in Mayfair.

:22:52.:23:05.

New ideas being launched in the New Year.

:23:06.:23:10.

You can leave those because they smell amazing!

:23:11.:23:11.

No problem. The American firm, Space X,

:23:12.:23:15.

has successfully landed a Falcon-Nine booster rocket back

:23:16.:23:21.

in an upright position at Cape Canaveral

:23:22.:23:26.

after it successfully The firm which was founded

:23:27.:23:27.

by Elon Musk has a $1.6 billion contract with NASA to send supplies

:23:28.:23:31.

to the International Space Station. It's a major step forward

:23:32.:23:34.

in the company's effort to develop reusable rockets and reduce the cost

:23:35.:23:37.

of private space operations. A huge breakthrough for them as you

:23:38.:23:42.

say and this is the company, Space X. It was founded in 2002. Space X

:23:43.:23:52.

is based in California. According to is based in California.

:23:53.:23:57.

their website they employ over 3,000 their website they employ over 3,000

:23:58.:23:59.

people. What they did was with this unmanned rocket, launch it from

:24:00.:24:03.

Florida. When it got to 200 kilometres up, the booster part then

:24:04.:24:07.

took 11 satellites up into orbit into space and the tall white bit of

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the rocket, which they call the first stage, then came back safely

:24:13.:24:16.

down-to-earthment they landed it on a giant X, in Cape Canaveral, ten

:24:17.:24:23.

minutes after it had taken off. They minutes after it had taken off.

:24:24.:24:23.

have tried three similar missions have tried three similar missions

:24:24.:24:25.

before, in those ones they tried to land it on a platform in the ocean

:24:26.:24:29.

and they failed. This time, it was the first time they aimed for dry

:24:30.:24:35.

land and it worked. They have got ?1.6 billion contract with Nasa to

:24:36.:24:38.

take supplies up to the International Space Station and just

:24:39.:24:43.

six months ago they had a failed mission which destroyed millions of

:24:44.:24:47.

dollars worth of cargo so there was a lot riding on this one.

:24:48.:24:49.

That was Ben Bland. Mike Amey is joining

:24:50.:24:55.

us again to discuss. How to get investors to save the

:24:56.:25:04.

planet? We have seen the discussions in Paris theically mate change

:25:05.:25:10.

talks. One way is to tax companies. It seems controversial? There is a

:25:11.:25:15.

controversy in there and the point of the commentary which is fair is

:25:16.:25:20.

there is much more uncertainty with green energy and the price you

:25:21.:25:23.

receive for it. There is two-ways you can approach that, you can

:25:24.:25:33.

the green output or you can tax the the green output or you can tax the

:25:34.:25:34.

so-called cheaper, but more polluting route in the meantime.

:25:35.:25:37.

This is one route. It is one of the more controversial ways of doing it,

:25:38.:25:40.

but we are going to have to do something along those lines. It is

:25:41.:25:49.

the carrot and the stick argument. It is persuasion or penalty.

:25:50.:25:54.

There will be more business news throughout the day on the BBC Live

:25:55.:25:59.

webpage and on World Business Report.

:26:00.:26:01.

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