16/03/2016 BBC Business Live


16/03/2016

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Hello this is business live from the BBC. The world's top central bank

:00:09.:00:15.

and the world's biggest economy, the US Fed takes centre stage again as

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it wraps up its interest rate meeting. Live from London, it is our

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top story on Wednesday the 16th of March.

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It is the big one, the US Federal reserve meeting wraps up, with

:00:40.:00:45.

insight into the health of the biggest economy and global growth.

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Also in the programme, balancing the books, it is budget day in the UK

:00:50.:00:55.

cuts and tax rises over worrying cuts and tax rises over worrying

:00:56.:01:02.

over the global economy. This is the London stock exchange, and Deutsche

:01:03.:01:08.

Post, agreeing to a merger, we will look at what they call a merger of

:01:09.:01:13.

equals. And it has got a cult following, so we will look at the

:01:14.:01:18.

man behind the Brompton foldable bike, but will the man behind the

:01:19.:01:23.

expansion plan reap the rewards? We will talk to him very soon. Also do

:01:24.:01:29.

get in touch with us, use the hashtag.

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Hello to you, a warm welcome. We are starting the day in America where

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the world's largest central bank, the US Federal reserve NZ stay

:01:49.:01:52.

meeting. Investors will be looking at that very closely for insights

:01:53.:01:55.

into the health of the world's biggest economy and for grow ball

:01:56.:02:00.

growth. He, we will scrutinise every word used by Janet Yellen, for the

:02:01.:02:05.

path of interest rates, known as a. Plot. And for the American economy.

:02:06.:02:12.

The Fed raised the cost of borrowing in December for the first time in a

:02:13.:02:16.

decade. For the first time it hinted that rates could go up four more

:02:17.:02:21.

times this year but many economists are now predicting, that two or

:02:22.:02:26.

three in 2016. Recent data has shown that the US economy is in pretty

:02:27.:02:30.

good health with inflation and jobs figures continuing to get stronger.

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I am joined by Professor Richard Portis who is an economist at the

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London business School. Welcome to the programme. You are with the vast

:02:42.:02:45.

majority who believes in no interest rate change today, what will Janet

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Yellen say? I'm with the consensus on that, I think that she will say

:02:52.:02:55.

that there is probably no balance of risk statement which they omitted in

:02:56.:03:00.

January which was quite significant. And that suggests that there is a

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real disagreement within the Federal open market committee. I will

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elaborate on that in the moment. She will also communicate, they will

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communicate what their plot is, their projections by the market

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community members of where they think interest rates will be in

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three months, in six months, in nine months and so forth. It is not the

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same as the market but it gives us an insight into how they are

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evaluating the risks. What is the disagreement? The disagreement is

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really about substantively, it is about inflation expectations, and

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the state of the labour market and there are disagreements partly

:03:46.:03:53.

arising from the date. There is real confusion on the data about

:03:54.:03:56.

inflation expectations, and different measures and so forth. But

:03:57.:04:03.

the labour market, again we don't know how much slack there is in the

:04:04.:04:08.

US labour market. You can say goodness, unemployment is very low,

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but then there is still a lot of people out of the labour force who

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were there, before the crisis. So it is quite hard to read how healthy

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the US economy is, so for that reason patients will be the message

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that we will get today? Not just for that reason, it is hard to read and

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there is substantive disagreement among members of the committee. On

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the one side you might say is Stanley Fischer and several others

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who I can name if you wish, and on the other side, is Lionel braid, who

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will be making the case for great caution, because she is concerned

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about the inflation expectations. And the state of the global economy.

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You might member that if you weeks ago, the IMF just before the G20's

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summit, the IMF warned about the risks, the major risks in the global

:05:02.:05:06.

economy. The T20 did nothing. Team might still think there is cause for

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concern. Thank you so much for sharing your

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thoughts on that. As soon as we do get any news, from the federal

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reserve we will bring it to you. Deutsche Boerse says it has

:05:18.:05:26.

reached a merger agreement It says it sees additional potential

:05:27.:05:28.

cost savings of almost 500-million dollars a year

:05:29.:05:32.

for the combined company. The german exchange said its saw

:05:33.:05:34.

potential cost savings of 450 million euros

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($499 million) per year Unemployment in South Korea hit

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a five-year high in February It was higher than economist

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expected, due to shrinking manufacturing and construction

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sectors. Apple has said the Founding Fathers

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of the US would 'be appalled' by the ongoing battle

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between the technology giant and the US government over access

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to an encrypted mobile phone. The FBI wants Apple to develop

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software so it can unlock the iPhone which belonged to one of the gunmen

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involved in the San Bernadino Plenty more stories on the business

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line website, it is dominated by the UK budget as you can see, that is

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our Chancellor or finance minister if you prefer Chancellor George

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Osborne of course. You can see plenty more about that. Other

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stories feature China backing a new five-year economic plan, we will

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have more details about that. Also, Amazon is investigated for alleged

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tax evasion in Italy, and Spain. Amazon responding to a statement

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saying that it pays all applicable taxes in every juror sticks and were

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it operates including Italy. Once again, Amazon hitting the headlines

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for all of the wrong reasons. In Asia, China's annual

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National People's Congress has ended, with the country's leader

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pledging to keep the country's What else did we learn? We have

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heard the sort of statements before and they have pledged some ambitious

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targets, flesh this out, what did we hear? Guillem act you can probably

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see the dreadful smog behind me, that is one issue on the minds of

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China's leader. As they close the session. But it is the economy that

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has dominated proceedings, and it dominated the closing press

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conference of the Premier, he spoke about the challenges and

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opportunities. He insisted that it was possible for China to both carry

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out difficult reforms, reduce overcapacity, reformed those

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inefficient state-owned enterprises and at the same time as all of that,

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keep hitting that growth target of 6.5% every year for the next five

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years. That is an extraordinary ambitious plan, there are many

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people who have their doubts and their is one thing that you are left

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with at the end of the session, that is the lack of scrutiny. Those in

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the parliament but also in the press conference, in which all questions

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were vetted in advance. So we heard him arguing in that very same event,

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for more media scrutiny. John, thank you for the details of what we have

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heard in what is always an interesting statement, the question

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is whether the market will believe what they have heard. You can see

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the nick a ending down on the day, and a similar picture in Hong Kong.

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But there are only one or two stories in town, it is the US

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Federal reserve, that investors will be keeping an eye on. In the UK,

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there is budget day, so it will have big imprecations for the equity

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markets, particularly the FTSE, in terms of spending and taxation. We

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will talk about that in a bit more detail but let us head to Wall

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Street, and speak to Michele Ferrari who will be talking about what is

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happening ahead. All eyes are on the Federal reserve, at least on Wall

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Street, they are on autopilot until the result of the US central bank

:09:18.:09:23.

lost a policy meeting are out, cute expect any changes in the rates,

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they will be scaring Janet Yellen's comments for clues, about how likely

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a move in June is. Rising prices would lay a foundation for that and

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an uptake in one measure of inflation is expected this

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Wednesday. But a second report on industrial production may paint a

:09:43.:09:46.

gloomy picture of the economy. In terms. To keep an eye on, watch out

:09:47.:09:52.

for Valiant shares, the embattled maker plunged more than 20% after it

:09:53.:09:57.

said that it might default on its debt, and cut its revenue forecast.

:09:58.:10:02.

That prompted an activist investor to say that his hedge fund would

:10:03.:10:07.

take a much more proactive role to try and protect its loss-making

:10:08.:10:14.

investment that is Michele in New York, Amy is with us, he is a

:10:15.:10:24.

manager at PIMCO. Guillem act two things that are focusing investor's

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mind, one, which will have more of an impact on weight UK market will

:10:29.:10:32.

go, which is the Fed that we were talking about earlier. For us, as

:10:33.:10:38.

individuals the budget is key. So on the one hand, you have got the Fed

:10:39.:10:43.

who will try and talk up the US economy and hopefully the global

:10:44.:10:46.

economy and will say that hopefully things are still OK and they look to

:10:47.:10:51.

raise rates in the months ahead ideally, an George Osborne will say,

:10:52.:10:55.

that things are a bit trickier from my seat so I will worry about the

:10:56.:11:00.

global outlook. A little bit of a balancing act. Our senses that

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things are generally OK but a bit of both. Budget day in the UK, clearly

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we will be live to gnat that pretty closely, it is about the direct

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coronation that will have on the stock markets because there are

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certain firms that will benefit on it very well. Spending on

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infrastructure, others can suffer if there is a rise on tax, things like

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petrol in the spotlight, cigarettes, syntaxes as they are called.

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Different parts of industry like insurance could be hit? That is

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right, you have really hit the nail right, you have really hit the nail

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on the head with the budget, the budget will know the broad brush

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approach, to try and keep spending down and to try and keep the deficit

:11:41.:11:45.

down so it will be about individual sectors, and I suspect, things like

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petrol duty, it does look like quite a popular one. OK, you will return

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in five-minute time to talk about some other stories in business. In

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the meantime, a folding fortune, we meet the man behind the cult folding

:12:01.:12:05.

bike, the Brompton. We will try and do that live. The firm has big plans

:12:06.:12:11.

overseas so the question is, can it keep the wheels turning? First more

:12:12.:12:21.

on the budget and down unusual look ahead from Steph McGovern.

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Come rain or shine, every spring the chance presents Britain with a

:12:25.:12:30.

budget, a plan for the country's future which involves a fair bit of

:12:31.:12:34.

forecasting. This time last year, the outlook was pretty sunny for our

:12:35.:12:39.

economy, but it seems that the forecasts were off the mark and in

:12:40.:12:44.

the Chancellor 's own words, there are storm clouds gathering. Growth

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this year, is cooling, with a 2.5% predicted, more likely to be 2.2%.

:12:51.:12:57.

One of the pressure is bringing in those storm clouds is coming from

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the East. China is like the sun, it has been relied on for its warmth to

:13:04.:13:07.

warm up the world, it has not been as hot as it would have been like so

:13:08.:13:13.

we have not grown as much, it has also caused turmoil in the financial

:13:14.:13:18.

markets, so we have not sold off our stake in Lloyds because we didn't

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think we would have a good enough price. If the economy is not growing

:13:22.:13:26.

as fast, the economy will be taking as much money as it hoped from tax,

:13:27.:13:31.

making it tougher for the Chancellor to balance the books by 2020. The

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calls of this we are expecting to hear today about more spending cuts,

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it is not all gloom though, and there are some warm fronts. One ray

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of sunshine has come from changes to the interest that the government

:13:47.:13:51.

pays on its debts, giving us an extra ?27 billion. Also there are

:13:52.:13:58.

more people on work than ever before, 31 million and fewer people

:13:59.:14:03.

claiming benefits. But critics argue that the employment statistics are

:14:04.:14:06.

not as sunny as they look with some of the growth coming from part-time

:14:07.:14:09.

work and wages are not growing as fast as expected. It is likely to

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mean that we will see some tax rises to make up that shortfalls such as

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some possible rises in fuel duty, and more so-called syntaxes. But

:14:22.:14:25.

like a lot of forecast it is a mixed picture. Either way the Chancellor

:14:26.:14:30.

has said that there will be more austerity, so unprotected government

:14:31.:14:36.

departments are likely to have to make more savings. That brings you

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up to date with the weather on budget day. What is this? And Q.

:14:40.:14:46.

And you can keep abreast of the budget as it happens

:14:47.:14:49.

in our special programme with Huw Edwards at 11:30 on this

:14:50.:14:51.

channel and BBC2 and of course BBC online.

:14:52.:14:53.

Our top story: The world's top central bank and the world biggest

:14:54.:14:58.

economy - no wonder the US Fed takes centre stage today as it wraps

:14:59.:15:01.

And we'll see what Fed boss Janet Yellen has to say

:15:02.:15:07.

about the path of interest rates, the health of the US economy

:15:08.:15:10.

And now let's get the inside track on a British company that's cornered

:15:11.:15:26.

the market for upscale commuter bikes.

:15:27.:15:34.

Brompton's folding bike has a bit of a cult following,

:15:35.:15:38.

its a familiar sight in the capital's streets and tucked

:15:39.:15:40.

It was designed and built by Andrew Ritchie in 1975

:15:41.:15:51.

The bikes are British made - Brompton is the UK's largest bike

:15:52.:16:02.

manufacturer, churning out more than 45,000 per year.

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With a headcount of 240, the firm sells its bikes all over

:16:09.:16:11.

Now, more than three-quarters of sales are overseas.

:16:12.:16:18.

Here with us in the studio is Will Butler-Adams,

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Chief Executive of Brompton Bicycle.

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Now, you started out, your career, you are an engineer and you were

:16:26.:16:34.

working in the chemicals industry, how did you become the boss of

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Brompton? I was looking after chemical plants in Middlesbrough and

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I thought I was going go and be trendy and do an M BA and go to

:16:47.:16:52.

consultancy and in the midst of that I sat on a bus when I was visiting

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London and it turned out that the man I sat next door to was the best

:16:58.:17:04.

friend at university of the inventor of the Brompton. I got chatted and I

:17:05.:17:11.

sounded interesting. I wept to the factory and saw a very cool product

:17:12.:17:18.

and I whizzed around on and I saw the factory that was like something

:17:19.:17:25.

stuck in the 50s and I thought this looks loads more fun and I got stuck

:17:26.:17:33.

into making bikes. It is the design that is iconic and one that people

:17:34.:17:38.

who don't have the space to store it and you can carry it around with

:17:39.:17:42.

you. There is a hefty price tag, but it is the fact you can carry it

:17:43.:17:48.

around and I'm going to try and assemble this bike. That is the bit

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that people struggle with. Ben will try and unfold the bike. It is not

:17:54.:18:01.

cheap. You're looking at ?750 to ?1,000. Yes The unique selling point

:18:02.:18:09.

is you can carry it around. Yes, what is happening, we are moving

:18:10.:18:12.

into cities and people are moving into cities and we are not that

:18:13.:18:17.

happy. We are getting shoved down a little hole and going on tube and

:18:18.:18:22.

not doing enough exercise and once you start getting on a bike, and

:18:23.:18:27.

exploring your city, you find there is wonderful things to do and you

:18:28.:18:33.

get fitter, but you need a bike that is flexible. Oh, my Lord, here he

:18:34.:18:38.

goes. Not looking bad. I have got the handlebars. It is meant to be

:18:39.:18:44.

less than 10 seconds. This is the kind of bike we see. He is six foot

:18:45.:18:56.

7! Here we go. Nearly! Very good. That is it. Yes. There is a hinge

:18:57.:19:03.

that you have forgotten to clamp, so you will probably fall off. But now

:19:04.:19:08.

you're ready to go. How much research and development went into

:19:09.:19:12.

this? A lot of work is involved to get it to this stage and once you

:19:13.:19:17.

have that design you can replicate it around the world. To a point, the

:19:18.:19:26.

bike is different to what Andrew built, but the design has changed.

:19:27.:19:31.

If you look at great iconic design, the design doesn't change, but

:19:32.:19:38.

material, science, engineering allows us to optimise it. It is

:19:39.:19:46.

lighter and more efficient. The original design is still there. Yes.

:19:47.:19:51.

That is what makes it so poop you already. -- popular. But the last

:19:52.:19:58.

year, you didn't sell as many and your profits fell yet, you're

:19:59.:20:04.

investing in a massive way on further expansion and new ideas for

:20:05.:20:09.

the bike becoming an electric version. Just talk us through that.

:20:10.:20:14.

There is a worry that you're investing a lot, spending a lot when

:20:15.:20:22.

you're getting less in. We have grown for the last three to five

:20:23.:20:27.

years, but we are investing for the future. There are two main strands.

:20:28.:20:32.

One is that in northern Europe in particular there is a movement in

:20:33.:20:39.

the urban area to electric. They're not motor cycles, most of the time

:20:40.:20:46.

it does nothing and it you hit Notting Hill as it gives you help.

:20:47.:20:53.

You don't sweat. Now the image, you mentioned Notting Hill. It is a

:20:54.:20:57.

feeling that it is a very London bike. BBC manager bike! It featured

:20:58.:21:04.

in that spoof doctmentry. -- documentary. How do you deal with

:21:05.:21:13.

that image, it is expensive and used in cities. We want to make a product

:21:14.:21:19.

that works. Doesn't work just the day you buy it, by five, ten, 15

:21:20.:21:25.

years later. We are not spending millions nurturing our image. We

:21:26.:21:29.

just make a flipping good product. If it works it will be useful for

:21:30.:21:36.

this, that and the other person. In most major cities, it is very

:21:37.:21:42.

dangerous to get on a bicycle. Well it isn't. Well it is, I know people

:21:43.:21:46.

who have been knocked off. But we know people who have had accidents

:21:47.:21:50.

in their cars. The perception is worse than the reality. If you talk

:21:51.:21:55.

to people about burglaries and all sorts of things, they think it is

:21:56.:21:59.

worse than it is, BP it is getting better. In London safety is going

:22:00.:22:04.

up, because more people are cycling. It has been a pleasure to have you

:22:05.:22:07.

on the programme. Is that your bike? Yes. And my aim is not to break it.

:22:08.:22:15.

I'm feeling smug I did that, people say it is difficult to put up and

:22:16.:22:21.

you see people struggling with them. Less than #10shgs maybe 15 seconds,

:22:22.:22:26.

I think there is a market here. Do I get a badge? Ben got that job not

:22:27.:22:32.

me. It would have taking me half an hour. We have more comment on the

:22:33.:22:37.

elections in the United States this morning. It is the morning after

:22:38.:22:49.

super Tuesday two. Trump and Hillary Clinton boosted their chances in the

:22:50.:22:51.

White House race. It's early days yet,

:22:52.:22:56.

so we've not heard much yet on the economic plans

:22:57.:22:58.

from the presidential hopefuls. But there has been some debate

:22:59.:23:00.

about the vast powers That was a question I put

:23:01.:23:02.

to Ted Roosevelt Malloch, Fellow in Management Practice

:23:03.:23:06.

at the Said Business School. There is animosity on some extreme

:23:07.:23:14.

sides of Republican Party and the Democratic Party about the Fed and

:23:15.:23:17.

its power and control over the economy. I don't think that it is

:23:18.:23:22.

very likely that one would challenge that independence. But they do

:23:23.:23:27.

operate in a politicised environment and it is an election year I would

:23:28.:23:38.

think there would be caution on part of FMOC, they won't be moving

:23:39.:23:47.

quickly. Sorry we were still chatting between ousts. Mike is

:23:48.:23:52.

back. To talk through some of the paper storieses. We were going to

:23:53.:24:00.

talk about the budget but we have talked about it a lot. Now Forex.

:24:01.:24:08.

The big inquiry that has been going on with the Serious Fraud Office no

:24:09.:24:14.

longer happening. No, the challenge here and they have dropped the case

:24:15.:24:19.

if they think, in the article they say, they think there is wrong-doing

:24:20.:24:24.

that has been done, but they can't get enough evidence to pursue the

:24:25.:24:30.

case. That is bad news. The good news is that there have been some

:24:31.:24:34.

significant fines for the banking industry on that. If wrong-doing was

:24:35.:24:40.

done, it is not like the banks have off got free. It will be a

:24:41.:24:46.

perception issue. There is that debate among the public about

:24:47.:24:53.

whether banks got off Scott free during the banking crisis. I

:24:54.:24:58.

wouldn't underestimate the discussion in the city, you have the

:24:59.:25:01.

Bank of England and the Government, with a massive review of market

:25:02.:25:06.

behaviour led by one of deputy governors. The city is aware of it,

:25:07.:25:13.

but the perception is not good. Businesses insider is looking at

:25:14.:25:18.

that investors in Iran are looking to London property to add to their

:25:19.:25:24.

assets. Yes as the sanctions come down, Iranian investors will want to

:25:25.:25:27.

diversify and there is speculation they will put money into London.

:25:28.:25:32.

That I suspect is good news if you look along the London skyline. There

:25:33.:25:38.

not a shortage of property for sale. Thank you. We appreciate you coming

:25:39.:25:47.

in on such a busy day. We will be following the budget. Full coverage

:25:48.:25:51.

across the BBC today. We will see you soon. Goodbye.

:25:52.:26:10.

For some a day of gloomy skies, but for many after a grey start, more

:26:11.:26:18.

sunshine than yesterday. That sunshine comes in the wake of this

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cold front that has

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