11/07/2016 BBC Business Live


11/07/2016

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Giving reassurance over the 'special relationship' -the UK's finance

:00:00.:00:22.

Minister flies to the US for Brexit talks Live from London,

:00:23.:00:25.

that's our top story on Monday the 11th of July.

:00:26.:00:33.

George Osborne heads to New York to tell American investors that

:00:34.:00:42.

Britain leaving the European Union is an opportunity and not a worry.

:00:43.:00:44.

Also in the programme, Aaron's in Farnborough.

:00:45.:00:51.

It is the Farnborough International airshow, one of the most important

:00:52.:00:59.

aviation events. Despite the care of optimism among big industry chiefs

:01:00.:01:05.

gathering, there are some headwinds facing the passenger jet business. I

:01:06.:01:11.

have the boss of bowling joining us live very shortly.

:01:12.:01:14.

We are 30 minutes in in London and there are more

:01:15.:01:23.

And we'll also be hearing from the head of Boeing,

:01:24.:01:29.

one of the world's largest global aircraft manufacturers on everything

:01:30.:01:37.

So today we want to know when it comes

:01:38.:01:41.

to travelling by air what is most important to you?

:01:42.:01:43.

Bigger seats, more leg room, or is just about security?

:01:44.:01:45.

The British Finance Minister is today flying to New York

:01:46.:02:09.

for talks with major investors in an effort to strengthen trade

:02:10.:02:14.

links between the US and the UK after the vote to leave

:02:15.:02:17.

In a piece for the Wall Street Journal George Osborne said that

:02:18.:02:25.

improving ties with the US is now a "top priority".

:02:26.:02:38.

The two countries are each other's largest investors,

:02:39.:02:40.

with almost $1 trillion dollars invested in each other's economies.

:02:41.:02:52.

In fact the US invests 10 times more in the UK than it does in China

:02:53.:02:56.

while the UK invests 50 times more in the US than China does.

:02:57.:02:59.

Additionally a million people in the US work for British companies

:03:00.:03:02.

with the same number working for American firms in the UK.

:03:03.:03:05.

Andrew Walker is a BBC economics correspondent.

:03:06.:03:07.

Andrew, we are hearing about the numbers involved from Sally there.

:03:08.:03:16.

told we would be at the back of the queue for US- UK trade deals.

:03:17.:03:23.

that by President Obama, but you have to bear in mind that he is not

:03:24.:03:28.

the person managing the queue, as it were, it will be his successor.

:03:29.:03:30.

There is no question that for the US, the economic relationship

:03:31.:03:42.

with the EU will be a higher priority. It is a bigger economy

:03:43.:03:47.

than the UK. Having said that, the UK is no minnow. Because of the

:03:48.:03:54.

investment relationship in particular, it will be a big deal.

:03:55.:03:58.

The UK, bearing in mind that the United States the biggest single

:03:59.:03:59.

export market, clearly, it is a very important relationship.

:04:00.:04:13.

For the US, important. Maybe China and the rest of the EU are bigger,

:04:14.:04:17.

but not one to be ignored. In terms of deals that are currently

:04:18.:04:19.

in place. We have this massive deal going on

:04:20.:04:22.

between the US and Europe, TTIP. What does this mean for that, do you

:04:23.:04:33.

think? It means that Britain is ultimately

:04:34.:04:35.

not going to be a partner to that deal as it stands.

:04:36.:04:41.

Therein mind that we shouldn't assume

:04:42.:04:44.

that -- bear in mind that we shouldn't assume that that

:04:45.:04:48.

deal is nailed down. It has a long way to go and it is controversial,

:04:49.:04:55.

particularly on the European side. There are some provisions that are

:04:56.:04:58.

absolutely loathed by political absolutely loathed by political

:04:59.:05:03.

forces in Germany and here. Some people see it as a threat to the

:05:04.:05:06.

National Health Service. Some are concerned about provisions for

:05:07.:05:13.

companies to sue governments. The other point that campaigners for the

:05:14.:05:17.

Leave vote would make is that it is a lot easier to negotiate for one

:05:18.:05:20.

country than it is coordinate the negotiating positions

:05:21.:05:28.

of 28 members of the EU. The future, I think, for TTIP is

:05:29.:05:30.

deeply uncertain, but it will clearly be on Mr Osborne's mind

:05:31.:05:36.

while he is in the United States. Thank you, Andrew.

:05:37.:05:43.

Eurozone finance ministers will today meet in Brussels

:05:44.:05:45.

to discuss the state of the bloc's economies.

:05:46.:05:47.

High on the agenda will be whether or not to impose fines

:05:48.:05:50.

on Spain and Portugal for breaching the Eurozone's Stability

:05:51.:05:53.

Both countries have been running large budget deficits

:05:54.:05:58.

which exceed the agreed limit of 3 percent of GDP.

:05:59.:06:13.

Deutsche Boerse says it's considering lowering the approval

:06:14.:06:15.

threshold for its proposed merger with the London Stock

:06:16.:06:17.

The German exchange is concerned that the threshold could be hard

:06:18.:06:20.

to reach with the current structure of its voting shareholders.

:06:21.:06:23.

If the deal goes through, the tie-up will create the world's

:06:24.:06:25.

The outlook for the global economy remains grim despite it having

:06:26.:06:29.

overcome the impact of the 2008 financial crisis.

:06:30.:06:32.

That's the verdict of the world's 20 largest economies who have

:06:33.:06:35.

been meeting in Shanghai for a G20 summit.

:06:36.:06:37.

In June the World Bank cut its forecast for the global

:06:38.:07:04.

economy in 2016 from 2.9 percent to 2.4 percent.

:07:05.:07:06.

Let's take a look round the world at what's business stories

:07:07.:07:09.

First, the success of a new Pokemon app is good news for Japanese

:07:10.:07:13.

gaming company Nintendo - who's shares are soaring.

:07:14.:07:15.

Ashleigh Nghiem has been following the story.

:07:16.:07:20.

Some argue about -- arguing about the value of these things and say it

:07:21.:07:28.

is hard to gauge the value of companies that are not making

:07:29.:07:32.

profits. Big profits expected for airline

:07:33.:07:33.

manufacturers. The Farnborough airshow is the

:07:34.:07:45.

biggest international show of its kind, I think.

:07:46.:07:47.

Let's look at some other stories. Among the big winners on the markets

:07:48.:07:52.

today, Japan are doing well. First, the success of a new Pokemon

:07:53.:08:06.

app is good news for Japanese gaming company Nintendo -

:08:07.:08:09.

who's shares are soaring. Ashleigh Nghiem has been

:08:10.:08:11.

following the story. Nintendo shares have surged 25%

:08:12.:08:22.

today. Since its debut last Friday, Pokemon Go has added $7 billion to

:08:23.:08:26.

the company's market value in just two days. What is the fuss about?

:08:27.:08:31.

The game is a clash between reality and fantasy. It gets people to move

:08:32.:08:39.

around their neighbourhoods to catch virtual Pokemon characters using

:08:40.:08:44.

their smartphones. Nintendo was late to move into mobile gaming, but at

:08:45.:08:51.

least one analyst has said that Pokemon Go would need to bring in

:08:52.:08:56.

more than $150 million each month to have any meaningful impact on the

:08:57.:09:00.

firm's profits. That is a pretty high number. Good

:09:01.:09:06.

to see you, Ashley. Look at the close in Tokyo - up almost 4%, a

:09:07.:09:13.

really good performance despite the fact that the yen is still extremely

:09:14.:09:17.

strong in relation to the dollar. Hong Kong followed suit. US payroll

:09:18.:09:23.

figures came through better than expected, which boosted trade in

:09:24.:09:37.

Asia. Japan's president got a majority in the upper chamber, which

:09:38.:09:40.

would allow him to push through some reforms. You can see gains are

:09:41.:09:46.

particularly strong in Germany and France. We will talk some more about

:09:47.:09:52.

the trading day in a moment, first, here is some era in New York to talk

:09:53.:10:00.

us through what to expect. -- Samira. Markets are hoping for a

:10:01.:10:13.

lift this week. The economy had 287,000 new jobs in the month of

:10:14.:10:17.

June. Demand is likely to pick up, good news for an economy that

:10:18.:10:22.

depends on consumer spending. Numbers on consumer prices,

:10:23.:10:25.

industrial production and consumer sentiment will also be released and

:10:26.:10:29.

could add more good cheer for investors. In earnings news, JP

:10:30.:10:35.

Morgan Chase will kick-off the US bank earnings season, whilst Fargo

:10:36.:10:38.

will announce results. Joning us is Maike Currie,

:10:39.:10:48.

investment director Quite a lot going on, but such a

:10:49.:10:57.

positive note to start the week across the board. Yes, and it is

:10:58.:11:03.

thanks to Friday's US job figures. Asian markets have risen

:11:04.:11:09.

significantly. Not as strong a week as we expected, though. The Nintendo

:11:10.:11:15.

news, it highlights the importance of tech. It is a core part of the

:11:16.:11:21.

Japanese market. The question it raises is the credibility of

:11:22.:11:25.

negative interest rates. The bank of Japan has moved into that negative

:11:26.:11:31.

territory, but still its currency is very strong. Looking ahead, there

:11:32.:11:36.

are various things going on in the US. We had the payroll numbers on

:11:37.:11:41.

Friday, which was positive. The previous month, it was that nasty

:11:42.:11:46.

surprise, not many jobs added to the economy. Give us your thoughts on

:11:47.:11:53.

where we are rat. There is a lot of negative news about the UK

:11:54.:11:55.

referendum and the negative impact of that. -- where we are at. I don't

:11:56.:12:05.

think we will see the US raising interest rates in July, probably not

:12:06.:12:10.

in September, but perhaps in December, which means it will be a

:12:11.:12:14.

full year since the last rate rise. Thank you for joining us. We will go

:12:15.:12:20.

through the papers shortly. Aaron is at Farnborough.

:12:21.:12:28.

Yes, it is one of the most important aviation events on the planet. Think

:12:29.:12:35.

big, think huge business, hundreds of billions of dollars of deals

:12:36.:12:39.

taking place here on the grounds of this airport. This year, there are

:12:40.:12:44.

some headwinds facing the industry. I have the big boss of bowling, he

:12:45.:12:48.

is standing in the wings, and he will join us live very shortly.

:12:49.:12:59.

Britain has enjoyed a generally strong economic recovery, but not

:13:00.:13:04.

all parts of the country are feeling the benefits. Then Thomson is in

:13:05.:13:11.

Skegness. He has been talked -- Ben Thomson. He has been talking to

:13:12.:13:18.

local businesses about boosting the economy in seaside towns. It is

:13:19.:13:21.

gloriously and quiet, but the problem is about how to get people

:13:22.:13:31.

here for the for the rest of the year. It is about getting more

:13:32.:13:38.

people coming here, more people working here and crucially, getting

:13:39.:13:42.

more people spending here. Craig Leyland is with me this morning. We

:13:43.:13:46.

look around and it is a glorious morning - you would wonder why

:13:47.:13:50.

people wouldn't want to come, but it is not always like this, and the

:13:51.:13:56.

challenge is to get people here all year round, how do you do it? We

:13:57.:14:02.

have about half ?1 billion a year of a tourist economy. It is about how

:14:03.:14:06.

we maintain that and make it an all year round economy. We are seeing

:14:07.:14:10.

inward investment from local businesses, and we are looking to

:14:11.:14:14.

attract outside business. We have a premier in planned, subject to

:14:15.:14:18.

planning permission, which will raise the profile. It is about

:14:19.:14:25.

getting infrastructure in place. It is cheaper for people to go overseas

:14:26.:14:30.

in many cases, but it is about investment in roads, railways.

:14:31.:14:36.

People are sane you can't get a meal after 6pm in some towns, and you

:14:37.:14:41.

can't get a train after 8pm to get home. We need to sort out that

:14:42.:14:46.

stuff. That's right. Those criticisms are well founded. I

:14:47.:14:52.

attended the British hospitality Association conference two weeks

:14:53.:14:55.

ago, where all these issues were raised. This is about making

:14:56.:15:02.

recommendations happen. We have to look at infrastructure. Rail

:15:03.:15:07.

infrastructure is another issue. Getting people here is critical. We

:15:08.:15:12.

have blue flag beaches here, they are a fantastic attraction all year

:15:13.:15:18.

round. We're cleaning them first thing in the morning. We have lots

:15:19.:15:25.

to offer. That is Ben, who is talking to politicians and leaders

:15:26.:15:29.

there. Aaron is at Farnborough. We are forever you could want us to

:15:30.:15:35.

be. -- we are wherever you could want us to be.

:15:36.:15:47.

This is Business Live. George Osborne is picking up the special

:15:48.:15:55.

relationship, going to the US for post-Brexit talks. All of the

:15:56.:15:59.

markets are in healthy shape, making gains at the start of Monday.

:16:00.:16:03.

And now let's get the inside track on the world of aviation.

:16:04.:16:12.

The Farnborough International Airshow is under way.

:16:13.:16:15.

It is a huge event that takes place every year.

:16:16.:16:22.

Again we can expect deals worth tens of billions of dollars to be done.

:16:23.:16:25.

All the biggest players in the industry are there along

:16:26.:16:28.

of course with our very own Aaron Heslehurst

:16:29.:16:30.

Where are you? I am here! As you keep saying, I am at Farnborough

:16:31.:16:40.

Airshow! Lug around! It is certainly one of the most important aviation

:16:41.:16:46.

events of the year. For the lay people, when we think of

:16:47.:16:49.

Farnborough, we think of the wonderful displays, the weapons of

:16:50.:16:54.

war, commercial aircraft doing their thing in the sky. Sometimes we

:16:55.:16:57.

forget that behind the scenes there are chalets and bungalows and

:16:58.:17:01.

pavilions behind the airport where big deals are being made. Every two

:17:02.:17:10.

years, this airshow, the last one, over $200 billion of aircraft orders

:17:11.:17:16.

placed. This year, some are saying perhaps not as big in terms of that

:17:17.:17:20.

number in terms of orders because of headwinds facing the industry. Let's

:17:21.:17:25.

find out. We have one of the biggest aeroplane makers in the world

:17:26.:17:29.

without, Boeing, and I am joined by the CEO, the President, he is

:17:30.:17:36.

everything. Dennis, welcome to Business Live. Boeing is 100 years

:17:37.:17:40.

old and you look pretty good for your age. Not bad for 100 years! We

:17:41.:17:45.

are a great company and we will celebrate the centennial this

:17:46.:17:51.

Friday. Let's talk about Turkey. You had a cracking year in 2014 at

:17:52.:17:56.

Farnborough. Even last year, some great borders, a lot of aeroplanes

:17:57.:18:03.

on the order books. How is business given the global economic climate?

:18:04.:18:08.

Generally strong. We have 750 commercial aircraft in backlog. Our

:18:09.:18:13.

orders are about 121 this year. We have tough economic situations

:18:14.:18:17.

around the world but we still sees strong passenger growth overall.

:18:18.:18:23.

Some airlines are hesitant, going forward, about the current climate.

:18:24.:18:29.

They are delaying their orders. Have you seen that? We continued to see

:18:30.:18:35.

strong orders in the narrow bodies, small aircraft, worldwide. Some

:18:36.:18:40.

hesitancy in the wide bodies, which is where we see market demand and

:18:41.:18:44.

economic uncertainty. Over the next 20 years, we still see global market

:18:45.:18:51.

demand for 99,000 new aircraft. Wow. Despite Chinese pick-ups? --

:18:52.:19:05.

hiccups? We still see passenger growth in China at 15 to 30%. Back

:19:06.:19:11.

to the narrow bodies, short to mid range. The Boeing 737 Max is your

:19:12.:19:19.

competition to the Airbus 320. A little birdie has told me it has

:19:20.:19:25.

been outselling yours. Not really. We launched the Max about one year

:19:26.:19:30.

after Airbus, and since then it has been about 50-50 market share. We

:19:31.:19:37.

have sold more than 200 maxes and we will be flying it at Farnborough for

:19:38.:19:44.

the first time. Some may not know this, but UK aerospace industry is

:19:45.:19:47.

the second-largest in the world the United States. It employs 130,000

:19:48.:19:53.

people and contributes billions of dollars to the economy. I guess that

:19:54.:19:58.

will be highlighted today. You are going to meet the Prime Minister,

:19:59.:20:01.

David Cameron, and he is going to put pen to paper on a new deal. We

:20:02.:20:06.

are excited about our growth in the UK. It is our third biggest Boeing

:20:07.:20:11.

operation globally. Great supply chain, great technology, great

:20:12.:20:15.

talent, and we will be announcing additional growth and investment as

:20:16.:20:19.

part of our prosperity initiative to Drake, including great news about

:20:20.:20:27.

the PA. That is a naval aircraft. And the Prime Minister will be

:20:28.:20:33.

signing an update, or a deal on updating the Apache helicopters. You

:20:34.:20:40.

started as an intern at Boeing 30 years ago. This has got to be an

:20:41.:20:45.

American success story. I started as an engineering intern in Seattle 30

:20:46.:20:49.

years ago and it is an extraordinary privilege to lead the company today.

:20:50.:20:53.

And think about what the world has done in terms of changing in the

:20:54.:20:56.

last century and what aircraft has done. Walking on the to walking on

:20:57.:21:05.

the moon, from riding horses to flying aircraft. To have the

:21:06.:21:08.

privilege to lead this company at our centennial is a privilege. The

:21:09.:21:13.

future is even greater. It is phenomenal. Where this industry has

:21:14.:21:19.

gone and where your company has gone in 100 years. You wonder what next?

:21:20.:21:25.

How do you go beyond the Dreamliner? Composite material and high-tech

:21:26.:21:31.

technology. Aeroplanes have been the same for lots of years, fuse a

:21:32.:21:36.

large, wings and a tail. We are looking at commercial aeroplanes to

:21:37.:21:41.

make them safer, more efficient and environmentally friendly. We are

:21:42.:21:44.

looking at higher speed transportation, so maybe a future

:21:45.:21:47.

where supersonic aircraft can get you anywhere in the world in an hour

:21:48.:21:52.

or two. We are now building the first rocket to take the first human

:21:53.:21:57.

to Mars. That is not going to be me! Dennis, we appreciate it and thank

:21:58.:21:59.

you for joining on Business Live. The

:22:00.:22:16.

Chinese are here in a very big way. For the first time they have their

:22:17.:22:18.

own national pavilion and the Chinese are saying they are open for

:22:19.:22:21.

business. The Chinese say they are ready to compete with the big guys.

:22:22.:22:23.

Plenty more from Farnborough Airshow throughout the day. See you soon.

:22:24.:22:26.

Thank you. He will be there all week, so we will hear from him. You

:22:27.:22:30.

could hear the engines or the world's largest hairdryer behind

:22:31.:22:36.

him! We asked you to get in touch with your thoughts on the most

:22:37.:22:39.

important thing when it comes to air travel. Viewers have said that he is

:22:40.:22:45.

like a boy in a candy store. You have also been tweeting us about

:22:46.:22:50.

that question that what is most important to you. James says troops

:22:51.:22:55.

service that does not feel economically calculated or

:22:56.:22:57.

artificial. Attention to fine detail when I am flying. Johann said price

:22:58.:23:04.

and legroom in particular. Boeing aircraft are more legroom than ever.

:23:05.:23:09.

Let us know if you are watching from Airbus. Either they have something

:23:10.:23:13.

to say. And this one, security and security, nothing precedes it. Maike

:23:14.:23:19.

Currie is with us in the studio. You are from South Africa and you do

:23:20.:23:23.

that flight all the time so what is important to you? It is a long

:23:24.:23:29.

flight, 12 hours. Comfort, service and the in-flight entertainment

:23:30.:23:33.

system needs to work. That is a good point. I did a 16 hour flight from

:23:34.:23:37.

Sydney to Dubai and the entertainment system was broken in

:23:38.:23:41.

the seat and I only had the channel that gives you the food of the

:23:42.:23:47.

interview with the chief executive! When I go on a flight with my

:23:48.:23:50.

family, three little boys, my challenge is getting to the end of

:23:51.:23:52.

the flight without drinks down my front. If I can get to the other end

:23:53.:23:56.

clean, I have achieved something. And that is not me spilling! The

:23:57.:24:04.

children! I am not clumsy. Other stories in the papers now. Theresa

:24:05.:24:09.

May, one of two women vying for the new leadership role of the

:24:10.:24:11.

Conservative Party and therefore new Prime Minister of the UK. She is on

:24:12.:24:16.

a corporate crackdown on the front page of the Financial Times. Very

:24:17.:24:22.

interesting. Theresa May is framing herself as a one nation leader. If

:24:23.:24:26.

there is anything that the European Union referendum revealed, this is a

:24:27.:24:31.

divided nation. She is looking at the corporate system in particular

:24:32.:24:34.

to build on the policies introduced by David Cameron, such as cracking

:24:35.:24:38.

down on non-Dom is paying tax, the buy to let crackdown and just a

:24:39.:24:46.

fairer system. Moving towards the centre ground, which some say is a

:24:47.:24:50.

risky strategy, because she needs the support of the older right-wing

:24:51.:24:54.

Conservatives. It'll be interesting to see how it out. In the article,

:24:55.:25:01.

she is talking about making the annual shareholder vote on corporate

:25:02.:25:04.

pay not just advisory bookbinding, so that is a lot power. We saw BP in

:25:05.:25:10.

the headlines this year because of the unhappiness about chief

:25:11.:25:14.

executive pay. Leadership change in the UK and in Japan it is the status

:25:15.:25:20.

quote with Shinzo Abe getting the majority he needed in the upper

:25:21.:25:24.

house in elections on Sunday. Does this mean more stimulus? Markets are

:25:25.:25:30.

betting on that but will he do that? He needs to because there is an

:25:31.:25:34.

expectation that he needs to do more. It is an interesting election.

:25:35.:25:39.

The younger vote came through. They dropped the age from 20 to 18, so

:25:40.:25:45.

lots more younger voters voted. There is a question over whether the

:25:46.:25:51.

voters are backing Shinzo Abe or whether they are disillusioned with

:25:52.:25:55.

the opposition. Thank you for coming in to go through the newspapers. And

:25:56.:26:00.

thank you for your company. There is much more from Farnborough later on

:26:01.:26:05.

the BBC. Stay with us and have a good day. Goodbye.

:26:06.:26:08.

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