30/06/2016 BBC Business Live

This is Business Live from BBC News,

with Ben Thompson and Sally Bundock.

Who will be in charge of the Brexit negotiations?

Today is the deadline for nominations

in the race to be Britain's next Prime Minister.

Live from London, that's our top story on Thursday 30th June.

Key European leaders say that a la carte is off the menu,

whoever gets the top job is told Britain must allow migration

if it wants to sell into the single market tariff-free.

Also in the programme: One of Singapore's biggest lenders

telling investors they need to be cautious.

and the relief rally on markets is now over, as you can see, markets

across the board in Europe are headed lower, we will explain why.

but we'll meet the man gearing up for Christmas.

The boss of greetings card firm Design Group

will be here to discuss business, Brexit

and making Christmas crackers for the Queen.

And we'll assess how the world's papers are covering the fallout

of Brexit, including news that New Zealand is offering

to lend its top trade negotiators to the UK

to help talks over 50 new trade deals.

We have got it all, crackers, the Queen, you name it! Get in touch

with your questions. What kind of trading

relationship will Britain have with the European Union

following the vote to leave? The UK has set up a government task

force to prepare for negotiations. The first is what is often described

as the Norway model, out of the EU, but belonging to the

European Economic Area, or EEA. It would give Britain

almost total tariff-free access It's the option which is most

similar to the status quo. As well as paying into

the EU budget, and accepting the majority of EU law,

European leaders have said it would need to accept

free movement of people. as immigration was a central issue

in the UK's debate to leave the EU. Option two, the UK could

try for an association agreement with the EU,

giving partial market access. But there are big questions

over whether this would protect access for London's

financial services market. Britain could try to rely

on World Trade Organisation rules. But exports to the EU

would likely be taxed. For instance, US cars sold in the EU

have a tariff of 10%. Well, at the end of

the EU summit yesterday, European Council President Donald

Tusk insisted that Britain will have to accept Europe's terms if it wants

access to the single market. European Union must be

orderly, and there will be no negotiations of any kind

until the UK formally Leaders made it crystal clear today,

access to the single market requires acceptance

of all four freedoms, There will be no single

market a la carte. Sir Simon Fraser is a managing

partner at Flint Global. Previously, he was

the Permanent Under-Secretary at the Foreign

and Commonwealth Office. Let's pick up on the idea of

cherry-pick the best bits, because we were told we cannot do this a la

carte, I do accept the terms of the open market or walk away. Talk me

through that process, because it is a varying degree of access interns

for trade, isn't it? The key thing is the amount of access you can get

the extent to which you are prepared the extent to which you are prepared

to accept the rules and obligations that go with that. Under the

scenarios you have described, for example, the Norway scenario you

described, a lot of access to the market, almost in it completely, but

you have to accept rules like freedom of movement, and you have to

make a financial contribution. If you go to another option, like a

free-trade agreement or association agreement, you have you obligations,

but your preferential access in the market, where we do nearly half of

our trade, is only covered by the areas and sectors that you actually

negotiated in. Is it too early to say which is most likely? I think it

is rather early to say that. This was an unprecedented negotiation,

the European Union is deeply integrated in terms of the national

economies. The former head of the WTO has a nice way of describing it,

I am told, he says we know how to make an omelette out of eggs, but we

don't know how to make an egg out of omelette. Lovely analogy! New

Zealand offering trade negotiators, this struck me that New Zealand

offering top trade negotiator to the UK, saying, we have the expertise of

doing this, we have had to do this and strike deals, they are talking

about 50 trade deals needing to be signed, talk me through the

practical realities of how you start to do that. One set this uses our

elation ship with Europe, but there is another set of this use, which is

the rest of the world. That and anon of the options have we described

with the UK be governed by the external trade arrangement of the

European Union. -- under none of the options. Now, the EU currently has a

number of agreements covering about 50 countries, not 50 agreements, but

the coverage is 50 countries. We would have to look at those markets.

And this is a two way street, because the IMF has said they might

downgrade German growth broadcast as a result of Brexit, emphasising how

important that trade is in both directions. Absolutely true, and

while they say that the UK should not be allowed to cherry-pick

options, we have mutual interests with Europe in finding a solution

which works for everybody. Sir Simon Fraser, thank you for explaining all

of that. US President Barack Obama says

the UK vote to leave the EU raises longer-term concerns

about global growth. He said Brexit would freeze

"The possibilities of investment in Great Britain or in

Europe as a whole." Mr Obama appealed to the UK

Prime Minister and other EU leaders to ensure an orderly process

for a British exit. Confidence among British consumers

fell sharply in the days after the country decided to leave

the European Union, The index measures people's economic

sentiment on a daily basis but showed it had slumped

to its lowest level since May 2013. That's when Britain's economy

was starting to emerge from the worst

of the financial crisis. And in other news, the US Senate

has approved a relief plan to help Puerto Rico tackle

debts of $70 billion. It's facing potential default

on Friday when $1.9 billion worth

of payments are due. The US territory has been suffering

a decade-long recession that has seen thousands flee

for the US mainland. Businesses have closed,

electricity is in short supply, and hospitals

are lacking medication. Just to say, the Zika viruses also

impacting Puerto Rico as well, having a difficult time. The live

pages where you will find... I love this picture, the Airbus over houses

in west London. That really does highlight the controversy over the

expansion of airports in the south-east of England. You will know

that Heathrow, the UK's biggest and busiest airport, but there is

controversy over its plans to add another runway. Given the political

turmoil we have been talking about as a result of the vote to leave the

European Union, the suggestion is a decision will not be made any time

soon about a new runway. Business is not happy about that.

It was supposed to be announced on July the 7th, so we shall see.

Kicked into the long grass, maybe. To Asia, and one sector

being particularly affected by Britain's decision to leave

the EU is property. Many of the region's

biggest developers and banks And the third largest lender

in Singapore has decided to stop

giving loans to buyers in London. It is quite a significant move that

shows the global repercussions of Brexit. Exactly, the fallout

continues. We're talking about Singapore's third largest bank, UOB,

United Overseas Bank, and they have suspended temporary debt loan

programme for London properties because of the uncertainty caused by

the vote to leave the European Union. UOB has said they are looking

to show their customers cautious with putting money into London

property while the outlook remains quite murky. To put into context,

Singaporeans were the top Asian buyers of London property last year,

and that is according to a consultancy. So the banks here, not

just UOB, but the other two big leaders, they are telling customers

they need to because just because of foreign exchange risks. Obviously,

we have seen the pound for to a three decade low, and the Singapore

dollar has risen quite sharply against it. So if they invest in

London property, even if the value of that house rises, any gains will

be eroded if sterling continues to depreciate against the Singapore

dollar. So that is the worry, and so the banks here are all monitoring

the situation very closely. OK, thank you so much, very interesting

story emerging in Singapore there. Let's look at markets now, we saw a

slight gain in Japan, Hong Kong up 1%, but behind me that is the Dow,

Wall Street had a strong session on Wednesday, as did Europe. But it

would seem that the relief rally has come to an end, let's look at

Europe, all markets down. Not significantly, let's not forget the

FTSE was up 3.6% yesterday, recovering completely from the post

Brexit losses, as it were. So no surprise today that markets are

taking a bit of a pause and perhaps taking a little bit of profit on

some stocks that rallied significantly on Wednesday. We will

talk some more about what is going on on financial markets at the

moment in Europe, but first Samira Hussain has the details about what

is ahead on Wall Street. On Thursday, Yahoo will hold

its annual shareholder meeting. Investors are expected to approve

Yahoo's new Board of Directors, which was expanded to 11

from nine members in April. The meeting comes as Yahoo

has put itself up for sale. There are many rumours

over new possible buyers, Shareholders will likely ask

for an update on the process. New applications

for US unemployment benefit likely increased last week,

but probably remained below a level associated

with a healthy labour market. This report will be closely watched

in the weeks ahead for any signs of a fallout from

last week's Brexit referendum. Finally, for baseball fans

out there, online voting will determine which players

will participate in the 12th of July Major League Baseball

All-Star game in San Diego. The deadline to cast your vote

is 11.59 Eastern Standard Time. Deadlines all over the place at the

moment! You cannot escape them! That was Samira sane Almac.

Breaking news from Richard Westcott, news on the story we were talking

about earlier, Heathrow expansion. The Government will now defer a

decision on expanding Heathrow until there is a new Prime Minister in

place. That means that the deadline of this year is unlikely, pushing

back expansion of airport capacity in the south-east of England. The

decision was expected to be announced on July the 7th, so very

soon. I was just talking to the boss of Gatwick Airport about this,

whether the Brexit situation has pushed that into the long grass, as

it were, very much on the back burner. As Richard Westcott has

confirmed, that is definitely the case. Boris Johnson has very

different ideas to David Cameron about whether the expansion should

take place and where. We will be covering this turbulent story into

the future. We have seen a markets dip today,

different yesterday, when we saw some pretty impressive figures, the

FTSE 100 back up above levels before the referendum vote? Well, of

course, the knee-jerk reaction of the Brexit boat was a surprise,

markets went down across the world, growth was revised down, and that is

what you would expect. But we have been here before, so central bankers

are used to boa -- volatility. News has come out that the Federal

Reserve might not raise rates until December, some are saying not until

next year. In the UK, we have talks about rate cuts, perhaps to zero,

all sorts of things like that, and traders are taking advantage of

that. So much more volatility, it is much more liquid than it was. And it

will be like this for some time, a strong day followed by profits being

taken, it will be very volatile for some time, would you say? I think it

will be for a long time, depending on what news comes out. And what the

central bankers really do. We know that Mark Carney is speaking this

afternoon at four o'clock UK time, that will help calm markets again.

There is going to be a lot of talk, but I think this volatility is with

us for some time, and growth will be lower. In uncertain times, and that

is everywhere, people do not spend, and companies do not invest. The UK

will be worst hit. Look at the FTSE 250, the larger index which covers

mostly UK firms, that is well below the three Brexit level. So it is

going to be an uncertain time for a long time, and eventually earnings

will be lower. It is 8% below where it was before

Brexit. We have heard the Government will

defer a decision on airport expansion. Passenger numbers at

Gratton that -- we have had record levels of passengers at Gatwick

Airport. It would like the new runway to be built there are rather

than at Heathrow. I spoke to the boss to find out what he had to say.

Gatwick finds itself at the centre of this debate.

We have said for three years as we have made the case

for Gatwick that this is all about which runway ultimately can be

If Heathrow were going to happen, it would have by now.

This is the first time that Gatwick has

That is because we have separate ownership with separate shareholders

who are backing us on our campaign to get the runway.

If you look at the merits of the Gatwick runway,

we're faster to deliver, can be open by 2025,

so we get all of the economic benefits flowing earlier,

we get the same connectivity for long-haul and short-haul to and from

the UK in terms of choice of destinations.

We do it at a third of the cost of Heathrow with no

Environmentally, we are cleaner and quieter.

There are a lot of other UK stories around. The world's media have been

update on BHS, because there was update on BHS, because there was

more evidence given to MPs yesterday about the collapse of BHS, who is

responsible, who paid what to whom responsible, who paid what to whom

and who knew what when. The former owner Philip Green says he wants an

apology from Frank Field, the MP, because he has been giving evidence.

Sir Philip says that BHS's collapse showed shocking behaviour. It all

relates to the collapse with the 11,000 job losses.

A stress test took place in the United States, looking at all banks

operating their to see if they could suffer a financial shop. They nearly

all pass, apart from Santander and Deutsche Bank. We will talk about

that in a few minutes. You can see the detail on our website. Our top

story: Who will be in charge of story: Who will be in charge of

Brexit negotiations? It seems obvious but it is far from obvious.

Today is the deadline for nominations to become Britain's's

a reality show! Let's have a look at a reality show! Let's have a look at

the markets. The FTSE closed up sharply yesterday

but has dropped a little on opening today. We should be looking at the

FTSE 250, which gives us a clearer indication about what smaller UK

businesses are feeling. on what Brexit means for businesses

with a truly global footprint. IG Design is one of

the largest companies in the international

gift packaging market. The company sells a wide range

of products, including Star Wars-branded

birthday cards and gift-wrapping endorsed

by the Queen of England. IG has a presence

in over 150,000 retailers and more than 80

countries worldwide. This includes markets

both inside and outside Paul Fineman is the CEO

of IG Design Group. Nice to see you. Thank you. What

does it mean? Bill we are a diversify group with a global

portfolio, so our reality is that a third of our businesses actually

made in the country where we are delivering. Our Dutch factory

factory delivers to the United factory delivers to the United

States and so on. In those areas, Brexit will have very little impact.

Our largest growth market is the United States, so actually, from a

translate favourably into sterling. translate favourably into sterling.

Probably the toughest aspect of this will be where we are importing

product in US dollars into the British and European market. There

are, you have currency hedging requirements. Our position is, we

are fully hedge, so actually, our exposure is minimal. We are selling

about 500 million products per year which are low ticket items. We feel

that we are very well placed to be resilient to any difficult market

headwinds. You give us the impression that we

will wrap our gifts this Christmas non-at how we feel about our

personal circumstances, so you are selling that. And you're sober

diversify that although there will be the odd Nokia and there, it will

not harm you to a great degree, so you're not really concerned? You're

right. We are certainly not complacent. All business have had to

deal with challenges in recent years. This is another one. As we

years, our group is very well placed years, our group is very well placed

to deal with this. Are there opportunities here? Bail-mac from an

export perspective, 25% of our manufacturing in the UK goes

overseas. If currency rates remain at the current levels, we would be

think that business communities in think that business communities in

general are very adaptable and flexible in terms of dealing with

any kind of challenges or headwinds, and we have that mindset ourselves.

You are into Christmas crackers. That is becoming big

internationally, isn't it? You are right. We recently started selling

to Mexico, and we had an opportunity to make divali crackers for India.

We are making them for baby showers, weddings. It is becoming an everyday

table decoration rather than just a Christmas item. Who would have

thought. Vancouver joining us. In a moment we'll take a look

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

of how to get in touch with us. the latest details, with insight and

analysis from the BBC's team of editors around the world. We want to

hear from you. Get involved on the BBC business live web page at BBC

.com/ business. We are on Twitter .com/ business. We are on Twitter

and Facebook. What other business

stories has the media been Joining us again is

economist Bronwyn Curtis. We talked about New Zealand offering

trade negotiations. It is generous, so thank you, New Zealand! The trade

delegation would help us strike deals around the world. And they

have more experience than us. When they couldn't trade as much with the

UK, they looked to the rest of the world, and they sell all around the

world. It may be a small country, but they have been negotiating trade

deals. It takes a lot of experience, and time to train these negotiators.

Australia and New Zealand, just like the rugby coaches that come here to

help the UK to win, that is something they can offer. May be

European leaders would prefer a New Zealander to come across and

negotiate on our behalf as opposed to speaking to a Brit! It might go

better for us! Here in the UK, when it comes to trade negotiators, we

don't have that many any more because we have farmed it out to

Europe. I think it is about 40 keirin about 550 in Europe. You

would find it out to Europe if you were going to be in. Why would you

need them? Could you imagine trying to do these negotiations with

everybody around the world? It is going to be really difficult. Now is

the time to train to be a trade negotiator, apparently. Go after New

Zealand, train, come back, and those will be the top jobs. Time is

running out. Pop stars are complaining to Brussels about you

Tube. They are not getting enough revenue, they are saying. There is a

consumption of YouTube content and consumption of YouTube content and

they are not getting paid. It is big names, and it has come at the same

time as Warner music and Sony music are negotiating with future. Thank

you. That's it from us. Have a good day. -- negotiating with you Tube.