27/06/2016 BBC Business Live

This is Business Live from BBC News with Sally Bundock and Ben Thompson.

As the UK assesses its options after last week's surprise decision

to quit the European Union, we'll weigh up the economic impact

Live from London, that's our top story

The UK's Finance Minister, George Osborne, has been

speaking in the last hour, in an attempt to ease

We'll be live in London's financial district to find out.

We'll take you live to Frankfurt and Sinagpore, as global investors

assess what the vote could mean for them.

Gold prices are up sharply as the pound sinks.

And this is how it's looking in the first half hour of trade.

And what difference will the vote mean for businesses day to day?

We'll speak to one British exporter who voted to stay in,

and ask what it means now the country is heading out.

Send us your questions about the impact on travellers,

Welcome to a special edition of Business Live.

We're assessing the impact of Friday's historic vote -

the UK's decision to leave the European Union.

And after a weekend of political upset and economic fall-out -

today begins the real work of negotiating an exit and finding

the politicians to lead the UK through the uncertainty.

This morning, UK Chancellor, the Finance Minister George Osborne,

sought to calm financial markets in the wake of heavy

He said the economy was in good shape to withstand the volatility

ahead and to confront the challenge the country now faces.

He did resist calls for an emergency budget. He says he wants to play an

active role in the debate over Britain's relationship with the EU.

We'll cross live to the city in just a moment, but first here's

It will not be plain sailing in the days ahead. But let me be clear, you

should not underestimate our resolve. We were prepared for the

unexpected and we are equipped for whatever happens. We are determined

that unlike eight years ago, Britain's financial system will help

our country deal with any shocks and dampen them, not contribute to those

shocks, or make them worse. Stephanie McGovern is

at the financial heart What did traders make of what Mr

Osborne had to say? Good morning. You could have heard a pin drop in

the Chancellor was speaking. These guys reacting. Stuart, what has been

happening? When we came in, everything felt very weak again. Mr

Osborne coming out has been more supportive in terms of staying on.

We don't know how long he's going to stay on for. Sterling has rallied on

that. Original indications on the FTSE, we're down to three, 4%. We

are now only down half a percent. They are down but not as much as you

expected? Exactly that. We still look at European markets. You look

at the euro stocks, a broad base of European shares, and that is up a

third 1%. These Spanish elections have taken quite well. So much going

on in the world, you have to keep your eyes everywhere. Thank you.

Fairly calm. Of course, as we know in this game, things go up and down

pretty easily at the moment. It will keep us all in a job for now!

It would seem the pound is rising a little. There is a little bit of a

feeling of calm in European markets. The mood where you are? A bit more

of a stable tone. The same thing on the Frankfort stock exchange. You

can see the financial district behind me. Some of the words that

emanated from the Chancellor of Germany over the weekend, they had a

much more stabilising effect. Negotiations with Britney to be

carefully handled, they must not be rushed handled in a constructive

manner. I'm joined by Roberto spit, a finance director. Are you

reassured by what you have seen over the weekend in terms of how the

process will be managed? I certainly am. We want an amicable separation.

We would like to keep the economic harm to an absolute minimum. And

then clearly we want to keep Britain as close to the union as possible.

You concerned this contagion will spread am a bad there will be a

general feeling the EU needs some sort of reform? Definitely needs a

reform and we hope it will be a catalyst. There may be reasons why

banks may not be able to operate fully in London. Maybe you could

explain fully what they are, particularly the issue of euro

clearing. There are other reasons why it is not possible to conduct

negotiations outside the EU? The ECB wants superannuation. They ruled

accordingly and were overruled by the European Court. The High Court.

We will have that issue reopened and very likely we will have euro

clearing moving into Frankfurt. Frankfurt, in terms of those

operations, has an obvious pulled because the ECB is here and it

manages the eurozone. But it does have a very shiny new face that it

has developed over the past decade. It does have unquestionably more

appeal but it is not the only game in town. Luxembourg would like some

of that business as well? Everybody would get some of the business. But

the clearing would come to Frankfurt. We have the biggest

clearer in the eurozone, bigger than all of the other clears in all of

the other countries together. Let me ask you a better deal in the offing,

itself very controversial at the beginning, the deal between Deutsche

and the London stock exchange. Arguments about where headquarters

would be. Is that deal under threat? The industrial logic is clearly

intact. We still believe it is good to have a European solution.

However, it needs recalibration. Now that we know that Britain is leaving

the EU, clearly some of the business will more logically be located in

Frankfurt. We need recalibration. When it comes to headquarters,

Frankfurt brings the majority of the value to the table. We believe it

should be reconsidered. Thank you. Frankfurt is certainly poised. But

there is still the open question, if Britain leaves the EU, when?

Yes, everybody is asking that question. Tanya Beckett.

Andrew Walker, economics correspondent, is with us.

We heard reaction from the city of London. What did you make of George

Osborne's speech? It is striking. Before the referendum he did warn

that there might be a need for an emergency budget. It is not going to

be this week but it is still very much on his mind. He talked about

the need for an assessment by the Office for Budget Responsibility of

the applications for the government finances. And there will need to be

some adjustment, he said, in the public finances. He is not spelling

out in detail what that means. But he did also say that he is

determined to make sure that the progress he says has been made in

managing government finances, that that is maintained. There is a

suggestion there will be a need for some further tightening in

government finances. It is still an open question of whether he will be

the person to do it. You say he talked about the budget, but only

when he was asked about it. He actually spoke for quite some time

and some length about what he has done, but what Mark Carney has done

to bring calm, the challenges ahead. Indeed. He mentioned three

particular challenges. The first, the most immediate one, was about

trying to deal with the volatility that we saw particularly on Friday.

And frankly, yes, it is important for finance ministers to make

reassuring noises in those circumstances. But the real levers

are in the hands of central bank. Mark Carney was indicating what

powers he had particularly in terms of providing support. There have

been similar statements from other central banks around the world. The

Swiss National bank has actually done something. But then Mr Osborne

wanted to talk about the uncertainty about the new relationship, the UK

will have with the rest of Europe. And then the business of deciding

and negotiating what the relationship will be. Clearly he

wants to have a role in it. We will see what position he does have in

those important negotiations. Thank you.

Some breaking news in the UK. Over the weekend here in the UK, we have

had a number of departures from the shadow cabinet, from the opposition.

We have got new appointments to those jobs. Shadow Foreign Secretary

will be Emily Thornberry. Shadow health secretary, Diane Abbott.

Shadow Education Minister secretary, Pat Glass, shadow transport

secretary, Andy McDonald. Defence, Clive Lewis. And Rebecca Long Bailey

shadow Chief Secretary to the Treasury. 12 members departed over

the weekend. They are keen to get things back and running. A swift

response this morning in terms of organising a new cabinet for the

opposition party. Let's look at the Business Live home

page. The key picture, George Osborne at his press conference. It

also talks of the reaction to UK shares and the pound. Continuing to

fall. A slight uptake in Stirling at the beginning of the trading

session. Other stories out there. Companies coming out with profit

warnings, like easyJet. Yes, they have talked about the risk

of Brexit. It could cost them 5% in terms of revenue over the coming

year. There has been a lot of debate about what it could mean for the

open skies agreement, whereby airlines are free to fly anywhere

within the European Union. If the UK votes to leave, question marks over

that arrangement. Do take a look. ABC online. Lots of

other reaction. Business leaders talking about the outcome. Let's get

a sense of how Asia reacts to this. Friday was pretty grim for most of

the main markets in Asia. Yes, markets closed down pretty

sharply. Following Friday's post-Brexit slide

of almost 8%, the Nikkei in Tokyo Our Asia Business Correspondent,

Karishma Vaswani, Is this a bit of profit-taking while

prices are cheap, or is this flying to somewhere that is not a European

market? I think it is a bit of both. There is a sense among many traders

here in Asia and investors that it is a time to take stock. There was a

lot of panic on Friday because there was a sense that the actual

referendum vote was not priced into the markets. Everybody was expecting

a Remain vote. They got what they were not expecting, which is why you

saw the major dramatic falls on shares across Asia on Friday. Japan

has picked up today. Some 2%. It must be said that the strength in

the Japanese yen, that is a safe haven currency, investors selling

the pound and buying the end, that is bad for economic recovery. Even

though we have seen some Asian markets pick we are hearing some

cautionary voices from Asian leaders. The Prime Minister row of

Japan, and the Chinese leader as well, talking about the impact that

Brexit may have on the wider region. Although we did not see any action

from the central bank in Japan, which some were expecting, we have

seen action in China as far as the yen is concerned?

Yes, we have seen action with regard to Chinese officials setting the

midpoint lower. It is a controlled currency. They decide where the

midpoint is right to be. It has now been set to its lowest levels in

five and I have years. China is caught between a rock and a hard

place. It needs the yuan to be cheaper so it can continue to export

the way big economies in Asia do. But it doesn't wanted to be too weak

because then you have a situation where Chinese investors, are wealthy

people in China, get worried about the economy, worried about the

economy, and start to take their money out of the markets. Capital

flight, if you well. What we are seeing across Asia are concerns over

how the pound's weakness is having an impact on the strength of the

Japanese yen and a knock-on effect on the Chinese yuan.

Still to come, what Brexit means for business.

We will speak to one British exporter about

the impact on her business of last week's vote to leave the EU.

From the front cover on our passports to the currency

we take away with us, the decision to leave the EU

will have a big impact on our holidays abroad.

And with the summer holidays approaching,

many of us will already have our trips planned.

Bob Atkinson is a travel expert from Travel Supermarket and joins us

Bob, good morning to you. Good morning. First of all, let's talk

money. People who have not bought euros already, wham pact on them and

people going outside Europe, a lot of those countries have their

currency pegged to the dollar? The first thing I would say at the

moment don't panic. There is a lot of volatility in the market. Whilst

we saw dramatic falls on Friday and who knows what is going to happen?

If you have got a holiday planned immediately then buy the currency

because you need it. You're going to need to buy your euros and buy your

dollars, there is nothing you can do about the exchange rate

realistically, you need to go and get the dollars and euros. If you've

got a holiday further down the line what I wouldn't be doing is trying

to speculate on what could happen. And the value of the pound could

value. It could rise, it could stay the same and so, you know, unless

you've got a crystal ball and let's face t none of us have, I would just

hold on to your money and wait until you need to buy it, but I would be

planning ahead to look at how can I get my best value when I do need to

change my money by avoiding your things like your bank charges and

knowing where to get the best rates. I'd plan ahead for that. Bob,

briefly, for us, let's talk passports. A lot has been made of

whether the purple passport disappears? A word on that. If

you're travelling, until we have negotiated exit, everything carries

on as normal. Your passport will work as normal. You will be able to

use the blue channels arriving through duty-free, your health card

will work and the roaming charges on your phone that have been coming

down, that will stay the same. Basically, nothing changes at the

moment. The only thing that consumers really need to be

concerned about is about the exchange rates and monitoring what

those are and buying, you know, at a time that's suitable to them.

Thanks, Bob. More online. Including news about

HSBC possibly losing staff. Our top story, the UK's

Finance Minister George Osborne has moved to reassure global markets

saying the country is ready to face the future from

a position of strength. A quick look at how European

markets are faring. We are still losing ground, but

nothing like the serious declines we saw on Friday. Some would argue

actually that that news from the UK Finance Minister or Chancellor if

you prefer, has brought some calm to markets in Europe this Monday

morning. The FTSE 100 down. It closed not the worse off across

Europe. Actually the FTSE 100 on Friday closing up on the week, above

the 6,000 level because the psychologically important level is

6,000. You will see the DAX tipping into positive territory. It has been

volatile as you would expect. So we've assessed the economic impact.

Pampeano is an Oxford-based firm that sells leather goods both

It was founded in 2007 and nearly 30% of its sales are to countries

Founder Jennifer Brown was hoping for a Remain vote.

Welcome to Business Live. Give us your reaction to all this as someone

who started a company, you're based in the UK and you're exporting? It

was disappointing news for us, we were keen that we remained. It is

negative news. We purchase everything in dollars so a weak

pound hits us very hard. We're about 18% down on the long-term average of

the pound to the dollar. There is also the very big concern, will this

have an economic, a negative economic effect for us? And so, that

is really not something we want clearly. Can I break this down into

two real issues, one is short-term and that's the volume volatility

we're seeing on the markets. Longer term, I'm interested in whether it

changes your outlook of where you might want to expand and sell to and

hire staff or expand your business. Have you started to consider that?

Not long-term. We have looked in close detail at the next six months

and made decisions on a protect our self basis for the next six months.

Beyond Christmas, this point I'm not going to try and judge what we think

will happen. We've reduced our investment, halt it had wherever we

can, we have put a freezing hire on and we will try and reduce our

inventory so we can get through a negative period if one happens.

Where do you sell to? So the UK, but as you said a moment ago, nearly 30%

to Europe and 8% to the rest of the world. So in terms of your exports

to Europe, I guess, you like everybody else in your position,

you're waiting to hear about what is negotiated and how it will work in

the future? Certainly, yes. It is difficult to tell because as I said,

you know, it, the trade deal is one problem, but that will take

sometime. Let's longer term. In the shorter term, will people stop

buying luxury leather goods? For the six months, will people stop

spending on luxury purchases, that's what really is going to affect us

and our business to Europe because if the consumers aren't buying, our

retailers will not buy, of course, as well. Briefly, time is against

us, but I'm just interested in your priority now, what is the one thing

that you must deal with now? The short-term? To reduce our operating

costs and to free up cash. Thank you for coming in. We appreciate your

time. Good luck. Thank you very much. With the future and how it

works out for your business. In a moment we'll take a look

through the business pages, but first here's a quick reminder

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Some tweets from the programme. Markets not collapsing as was

expected. The pound and the FTSE finding support. Good news for those

in the City and we certainly heard from a few of them at the start of

the programme. He says nowhere near the lows we expected on Brexit. Is

this just the calm before the storm or are we looking at markets in the

UK fighting back? His view, he says, I don't think we have seen the lows

quite yet. Joining us again is Jane

Foley, Senior Currency Where do you think sterling is

headed? I don't think we have seen the lows yet. Yes, there has been

lots of speculators, lots of hedge funds. These are people that may

manage our pension funds, corporate customers, their business is not

foreign exchange, those guy also have stepped away and they will have

tomorrow to come back and given the political uncertainties and given

that we know that political unsrnity is a negative for confidence, for

investment, for concernsies, there is a significant chance that we

haven't seen those lows yet. For people like you, you can't really

afford to be away from your desks right now, but at the same time

those of you that work in the City of London or kay Nairy wharf, you're

worrying about your own futures? Indeed, many of us work for banks or

branches of European banks that are here on passporting rules and there

is a big question mark over what will happen now? Those passporting

rules, they cannot sustain the way they are if Britain comes out of the

EU, what are those arrangements going to be? There is a huge amount

of uncertainty. A huge amount to be negotiated by the politicians in

terms of our future and whilst the uncertainty is there, it hangs over

our heads. Yeah, job insecurity, significantly higher than it was a

couple of days ago. And certainly, as we've just heard with your small

business customer, insecurity means job insecurity for a lack of

investment means job insecurity for a lot of people. You talk about

hedge funds. There is a story in the Times, hedge funds wiped out by vote

to leave. We knew there would be volatility, it depends on your

positioning before and what City was expectingment a lot of people

betting it would be a Remain vote? The bookies odds were skewed because

of the bigger votes in London. London did vote to Remain. Some

speculators got it wrong. In Europe, there was a sense of disbelief that

the UK could ever vote to move out, many investors got it wrong. Real

money and corporates were not really involved in the latest volatility

over those last few days. Those people will have taken their

position and stayed out. This was a very much a speculative trade. Jane,

it has been good to have you with us. Thank you for coming in and

thank you for your company. Dig deep online, more analysis from our team

at the BBC. More on that reshuffle of the Shadow Cabinet. More later.

See you soon. Bye-bye. There is plenty of rain on the

horizon. Cool and blustery at times, but today, not too bad. We are in

between weather