26/05/2016 BBC Business Live


26/05/2016

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This is Business Live from BBC News with Aaron

:00:00.:00:07.

Japan wants G7 leaders to start shovelling the cash to boost

:00:08.:00:12.

But Germany and the UK still say austerity -

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Live from London, that's our top story on Thursday, 26th May.

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The debate over how governments can spur global economic growth -

:00:43.:00:45.

we'll be live in Japan, as leaders from the G7 get together.

:00:46.:00:49.

Shares in Alibaba fall almost 7% in New York,

:00:50.:00:55.

as the world's biggest e-commerce company says its accounting

:00:56.:00:59.

practises are being investigated by US regulators.

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And a mixed bag on the markets around the world.

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The big market news today, the price of oil back

:01:07.:01:08.

And we'll be getting the inside track on the taylor made

:01:09.:01:25.

Legendry designer and businessman Sir Paul Smith will be on the show

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to talk about his brand and why shareholders aren't

:01:30.:01:31.

And, as the head of Coca-Cola UK launches a withering attack

:01:32.:01:35.

on George Osborne's sugar tax - surprise, suprise -

:01:36.:01:37.

saying it won't work and will hit the poorest members

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of society the hardest, we want to know what you think?

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We start in Japan where leaders of the G7 group of nations

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are gathering in Ise Shima - in the mountains

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Up for discussion - terrorism , the refugee crisis,

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tensions with China over territorial waters and Britain's referendum

:02:17.:02:18.

The IMF has revised down its world growth forecasts three

:02:19.:02:36.

The economic picture is getting worse, not better.

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Should governments be splashing the cash - spending more money

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Or is austerity the way to go - cutting back and spending less?

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On one side you have the UK and Germany who believe

:03:06.:03:08.

that the only way to a sustainable economy is by spending less.

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On the other side you have Japan which has been spending billions

:03:12.:03:14.

It has been calling on its G7 partners to commit

:03:15.:03:27.

to doing the same - saying cuts lead to

:03:28.:03:29.

stagnation and recession.m> The United States, Canada,

:03:30.:03:34.

So is there any hope of a deal to boost public spending?

:03:35.:03:50.

Karishma Vaswani joins us from Ise-Shima, where

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A lot of these G leaders might be wondering to themselves is Japan

:03:53.:04:05.

really the right party to be dishing out this sort of advice, given they

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have spent some three-quarters of a trillion US dollars trying to boost

:04:11.:04:14.

spending and it hasn't exactly worked? Worked? You are right, in

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fact it hasn't worked at all. If you look at the history

:04:20.:04:21.

growth John Arne Riise and -- price environment and

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problem, being billions of dollar worth of Government money, monetary

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policy where you remember, earlier in year it cut interest rates to

:04:39.:04:41.

get consumers and companies to spend again, that didn't

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to revitalise Japan, structural reforms, now this is

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what Germany and the United Kingdom say will actually

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to make those structural reforms. It means you have to sit down, look

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at different parts of your economy and figure out

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what is working and what is not. That takes time. Japan says it come

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on guy, let us get together and throw more money at the problem.

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He needs the backing from his partners a

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say in the Finance Minister's weekend that just passed they

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we can't agree on any global cooperation, a joint action plan on

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the economy, let us just decide to go our own way and hope for the

:05:32.:05:33.

best. Steel, is, has appeared to be on the

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agenda. Say it big global issue. Yes, and certainly some comment

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coming out from the European Commission President who talked

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about the fact that Europe will not remain defenceless in what he says

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is a distorted market for the steel industry. No surprises there, all of

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the attention being place odd between one country that isn't even

:06:12.:06:16.

at the G7 summit. China. There were a number of references to China's

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overcapacity in the steel sector, what European countries

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for its part, Beijing has hit back and said this is not our problem.

:06:24.:06:33.

Although China has spent the last three decades as par of its

:06:34.:06:38.

Industrial steel factories it says it is not

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because of its problem that is causing

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weaker within European's steel sector that

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is causing the issues, so likely we will hear more about that

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over the next couple of days. Unlikely as you suggest we might see

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any grand joint action plan. We can hope.

:07:01.:07:16.

The price of oil has gone above $50 a barrel for the first time in 2016,

:07:17.:07:25.

following supply disruptions and increased global demand.

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The price of Brent crude hit $50.07 a barrel in Asian trade,

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on the back of US data showing oil inventories have fallen.

:07:33.:07:38.

Shares of Japanese airbag manufacturer Takata have

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surged by 21%, the daily limit in Tokyo trading.

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This comes after the Nikkei newspaper reported private equity

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giant KKR may look to take control of the company.

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Takata is at the centre of the biggest safety recall

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in the car industry's history because of its potentially deadly

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airbags linked to at least 11 deaths and more than 100

:07:55.:07:57.

Workers at French nuclear power stations are on strike this Thursday

:07:58.:08:11.

as industrial action escalates over controversial labour reforms.

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The CGT union said staff at 16 of France's 19 nuclear plants had

:08:21.:08:23.

On Wednesday, the government said it was dipping into strategic oil

:08:24.:08:27.

reserves after strikers blockaded refineries.

:08:28.:08:40.

Tata Steel says it's still in the process of considering bids

:08:41.:08:43.

A short list of bidders had been expected following the company's

:08:44.:08:47.

The deadline for potential buyers to make formal

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Tata has declined to say how many actual bids it has received.

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Meanwhile, the UK Government plans to allow an overhaul

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A $713 million pension deficit has been deterring potential

:08:58.:09:01.

Shares in Alibaba fell almost 7% on Wednesday after the online retail

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giant revealed that US regulators are investigating its

:09:27.:09:28.

Leisha, what more do we know at this stage?

:09:29.:09:41.

Well, what we know is that Alibaba chose to list in the US which has

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very different financial reporting as well as accounting standards so

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they are asking Alibaba for more details on how it calculates the

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numbers of one of its affiliate companies as Westminster as other

:10:00.:10:04.

general transaction, it has asked for data on somebody called singles

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day, that is a 24 hours fire sale they hold each year and that brings

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in billions of dollars each year. It is worth stressing a request for

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more information doesn't mean they have violated any laws but it raises

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a red flag for investors because there have been concerns is about

:10:25.:10:29.

the structure, as well as transparency issues

:10:30.:10:35.

Thank you for that. Staying with the markets.

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OK, quick flash of what's driving the markets around the world.

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One important note is the price of oil.

:10:41.:10:42.

As you've heard, crude oil is back up above $50 a barrel for the first

:10:43.:10:46.

That said, Asian shares struggled to gain traction.

:10:47.:10:52.

Look, let's be frank, and even the market experts

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are saying this, the markets are all a bit boring

:10:55.:10:57.

It's always the same focus, US interest rates, will we see

:10:58.:11:06.

world's biggest economy raise rates next month?

:11:07.:11:10.

And China, the impact of the China slowdown.

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So let's find out what'll be driving Wall Street today.

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Here she is, Samira, with an NY wrap.

:11:16.:11:26.

Two of the biggest US discount chains will post

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earnings on Thursday, Dollar Tree and Dollar General.

:11:31.:11:33.

We have seen some tough times recently for American retailers,

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They cater to low-income customers, compared to retailers

:11:37.:11:39.

Investors are taking that as an indication that perhaps dollar

:11:40.:11:51.

In economic news we will get durable-goods numbers on Thursday.

:11:52.:11:57.

Orders for long-lasting American-manufactured goods likely

:11:58.:12:02.

This is a closely-watched metric, it can be an indication of how much

:12:03.:12:06.

Here in the studio is the one and only Jeremy Cook. Morning, great to

:12:07.:12:22.

see you. Let us, indeed, one and only. We are excited about this oil

:12:23.:12:28.

stories as you can tell. Goldman Sachs is now predicting that crude

:12:29.:12:35.

is going to consistently stay above this $50 mark. What do you think?

:12:36.:12:43.

What is driving it? It is an unwind of the unnaturally bearish state we

:12:44.:12:46.

had at the begin of the year. Markets are oversupplied, even with

:12:47.:12:51.

the fall off in supply we saw in the fire in Canada, some militant

:12:52.:12:54.

activity in Nigeria, that has boosted the price a bit. Demand is

:12:55.:13:00.

starting to come back as well. Risks to that top side, risk to it comes

:13:01.:13:07.

back to $60-70 a barrel. The shale operators who were put off business

:13:08.:13:10.

are going to come back and say our costs are covered so we can come

:13:11.:13:14.

back in. Saudi have said they are looking to expand production, if

:13:15.:13:17.

they expand production that price is going to come lower. So discussing

:13:18.:13:22.

between Opec and Russia about freezing out, how much has that

:13:23.:13:27.

helped? It has helped a bit. Unless Iran's part of this conversation it

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won't mean anything, they are back on the markets.

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Briefly, they, US productivity, worker productivity expected to drop

:13:38.:13:41.

for the first time in 30 years. Yes. It's a big story, because it means

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that wages aren't going higher any time soon, that the average worker

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isn't producing as much. What is the problem? It seems that innovation of

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companies have gone through the global financial crisis are holding

:13:56.:13:59.

on the cash, they are not investing and the economy isn't moving

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forward. Good to talk to you. We will go through papers in a moment.

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We will go through papers in a moment.

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We hear from a man who's been tailoring his own path

:14:07.:14:10.

in the clothing business for over 40 years.

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Sir Paul Smith will be telling Business Live about what it takes

:14:13.:14:15.

to stay on top in the ever-changing world of design.

:14:16.:14:21.

You're with Business Live from BBC News.

:14:22.:14:29.

Consumers are still feeling the impact of one of banking's

:14:30.:14:32.

biggest scandals, with complaints about Payment Protection Insurance

:14:33.:14:35.

still topping the list of woes heard by the Financial Ombudsman Service.

:14:36.:14:42.

There were plenty of other complaints too, including more

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people struggling to repay a payday loan.

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Rob Young is in the Business Newsroom for us.

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I get mobile. I haven't had claim but I get phone calls and I get them

:14:51.:15:04.

together, a lot of people are fed up.

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The financial ombudsman service, which mediates between financial

:15:13.:15:18.

companies and consumers, received on average 4000 complaints about

:15:19.:15:20.

possible PPI mis-selling every single week last year, making up

:15:21.:15:27.

more than half of its caseload. Consumer organisations say it shows

:15:28.:15:33.

that the complaint procedures put in place by the banks and regulators do

:15:34.:15:37.

not work. They say they must be made much simpler, so people don't feel

:15:38.:15:41.

they have to go to the ombudsman to complain when they don't think they

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are getting the money they are owed. There are some other complaints as

:15:46.:15:50.

well, it is not just PPI. There have been all sorts of products

:15:51.:15:54.

complained about, a big increase in the number of complaints about

:15:55.:15:58.

payday loans. There is a crackdown on the industry by the regulator

:15:59.:16:02.

which capped the interest rate that people are able to pay, and the

:16:03.:16:06.

total amount it would have to repay compare to the loan that they take

:16:07.:16:11.

out. The rise suggests people are not happy with the service. There

:16:12.:16:15.

was also an increase in the number of complaints about packaged bank

:16:16.:16:19.

accounts will stop you pay a monthly fee and get travel insurance with it

:16:20.:16:24.

as well. The ombudsman has said in a lot of these cases people get a

:16:25.:16:25.

pretty good deal. Some stories that have paid our

:16:26.:16:38.

interest on the website. A nod towards this, Debenhams has a new

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Chief Executive, joining from Amazon.

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Is Debenhams going online? Exactly. Ongoing story about the pensions

:16:53.:17:01.

deficit at Kempton -- Tata, largely due to Chinese dumpling.

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Our top story, the debate over how to stimulate sluggish global

:17:05.:17:10.

growth kicks off in Japan as G7 leaders meet.

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Now, let's get the inside track on a man who has built

:17:22.:17:24.

a global business empire by cutting his cloth to suit.

:17:25.:17:30.

Paul Smith, the legendry designer, has been a force in the world

:17:31.:17:35.

of fashion and business for 40 years.

:17:36.:17:38.

He began his career in 1970 after his teenage dreams of becoming

:17:39.:17:45.

a professional racing cyclist were shattered by

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After opening his first clothing shop, he took night classes

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in tailoring which culminated in designing his first menswear

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collection which in 1976 was showing in Paris under

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Since then, the brand has expanded, now operating in 66 countries

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You might think that the biggest part of that business

:18:07.:18:10.

But in fact it's Japan where the company has really succeeded,

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with 200 shops in streets and department stores.

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Although it's never made a loss, the business has suffered recently.

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Last year the business turned over more than $280 million,

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but saw pre-tax profits almost halve during the period,

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Victoria Fritz went to meet the man himself at Chelsea Flower Show

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and began by asking him why he likes to visit the garden show.

:18:41.:18:45.

I come at 7:30am, when nobody is around, it is great.

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I love the energy, I put on four fashion shows a year,

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so I know what it is like to do things in a short space of time

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When they do these amazing gardens, I can identify with that.

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A lot of the photographs are of close-ups of flowers,

:19:08.:19:12.

which then can influence prints on a dress or a shirt or a scarf.

:19:13.:19:18.

You have been in the Japanese gardens, is that the sort

:19:19.:19:21.

of thing we will see on the catwalks in a few months?

:19:22.:19:26.

There is an artisan garden at the back.

:19:27.:19:28.

The man who does the garden is a customer anyway,

:19:29.:19:30.

The birds have already nested in his garden space.

:19:31.:19:38.

Japan is a big market for you, one of your biggest,

:19:39.:19:41.

but we have seen a slowdown in the economy and in consumer spending.

:19:42.:19:44.

A lot of people overexpanded, not necessarily in Japan,

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They thought it was a market that would grow bigger than it has.

:19:51.:20:00.

Locally, Paul Smith has been good in all of those markets,

:20:01.:20:02.

we are still seeing an increase in all of Asia.

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A tiny increase, but we have never been too greedy,

:20:07.:20:10.

In the case of Japan, we have a lot of shops,

:20:11.:20:15.

but we have been there for many years, we have a local partner.

:20:16.:20:21.

It sounds like a lot of shops, but a lot of local brands

:20:22.:20:24.

would have 400 shops, we have got just over 200.

:20:25.:20:30.

You have remained a privately-owned company, what is the benefit

:20:31.:20:37.

I have never borrowed, still independent, and when you have

:20:38.:20:42.

not got shareholders breathing down your neck,

:20:43.:20:47.

it is a big advantage, because they are always

:20:48.:20:49.

Often you do things which are not correct, so you go into an area

:20:50.:20:54.

which is not comfortable, and a lot of them, the big

:20:55.:20:59.

companies, they have borrowed a lot, so they still have repayments

:21:00.:21:03.

to take care of, the business is not there, so it is a worry

:21:04.:21:06.

What makes you think you can run the company better

:21:07.:21:12.

One of the things with my company, it is probably a bad thing,

:21:13.:21:20.

maybe I am too autocratic, but I hope I'm not,

:21:21.:21:22.

but I am very immersed in all aspects.

:21:23.:21:27.

I left school at 15, I started a business in my early 20s,

:21:28.:21:33.

so at some point I have written an invoice, ordered fabric,

:21:34.:21:38.

All of those things have given me a grounding and a down-to-earthness

:21:39.:21:45.

which a lot of other people have not had.

:21:46.:21:48.

They have only had one aspect of their world,

:21:49.:21:52.

and often that is not rounded enough, and the balance isn't there.

:21:53.:21:58.

The Chelsea Flower Show did not exist at all,

:21:59.:21:59.

this was just a field three weeks ago.

:22:00.:22:01.

Logistics and the movement of staff and product must be a huge

:22:02.:22:05.

It is important to keep a balance and to understand that you need

:22:06.:22:10.

You need fashion shows, publicity, and that is one aspect

:22:11.:22:18.

Then you need a site to your business, which is very

:22:19.:22:23.

much about understanding what most of us here wear,

:22:24.:22:27.

which is very simple clothes, we sell lots of classic

:22:28.:22:31.

suits for men and women, lots of white shirts, black dresses,

:22:32.:22:35.

as well as the things you see on the catwalk.

:22:36.:22:38.

Balance is very important, keeping your feet on the ground.

:22:39.:22:41.

Nobody cares how good you used to be.

:22:42.:22:46.

The big boss of Paul Smith, Paul Smith, the one and only! I love this

:22:47.:23:06.

story, not for the workers, but in China 60,000 workers at the company

:23:07.:23:11.

that does a lot of things, but it supplies a lot of products, some of

:23:12.:23:17.

the guts to the Apple iPhone, they have replaced 60,000 workers with

:23:18.:23:23.

robots. In one factory as well, it has gone from 110,000 to 50,000. The

:23:24.:23:31.

city is only to put 5 million, so it has boosted the unemployment figures

:23:32.:23:37.

by 4.1% overnight. If we are seeing more research and develop and from

:23:38.:23:41.

them and Apple within this sphere of influence and it is bringing people

:23:42.:23:46.

back him, that is good news, but if the next Apple phone comes out that

:23:47.:23:51.

is simply having a bigger screen and the robots can make it, this is a

:23:52.:23:54.

longer term productivity issue for China. It is part of a wider trend

:23:55.:24:01.

across China. And also, you were doing a story about the fact that

:24:02.:24:06.

outside the AGM in Chicago for McDonald's we are seeing strikes,

:24:07.:24:10.

people want a higher daily wage. It is those jobs that are in danger of

:24:11.:24:17.

being automated. Yes, these low skilled, labour-intensive jobs

:24:18.:24:27.

be simply put aside to machinery and costs can be saved.

:24:28.:24:38.

This says the sugar tax will not work and it will hurt the poorest

:24:39.:24:44.

members of society. It is a regressive tax, it takes more from

:24:45.:24:49.

poorer people than it does from rich people. If their wages are being

:24:50.:24:53.

used for fatty foods or sugary drinks or biscuits, a lot of the tax

:24:54.:25:00.

will hurt them a lot more puff -- a lot more. Mexico but in a sugar tax,

:25:01.:25:08.

sales went a bit lower, but other things increased, like fruit juices.

:25:09.:25:13.

If your plan is to reduce calorie intake, it does not actually work.

:25:14.:25:20.

There was a study done in the US. A couple of tweets. Somebody says, the

:25:21.:25:25.

sugar tax is another way to raise income. One person says, sugar is a

:25:26.:25:30.

basic commodity, why tax what the majority needs? It is not fair. Very

:25:31.:25:34.

good for the Government. There will be more business news

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throughout the day on the BBC Live webpage and on World Business

:25:41.:25:46.

Report. A lot of clout across the British

:25:47.:26:09.

Isles at

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