02/08/2016 BBC Business Live


02/08/2016

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This is Business Live from BBC News with Ben Thompson

:00:00.:00:07.

You're out - South Korea orders Volkswagen to sling its hook

:00:08.:00:11.

as Asia's fourth largest economy tells the German car-maker

:00:12.:00:15.

it can no longer sell its products in the country.

:00:16.:00:19.

Live from London, that's our top story on Tuesday the 2nd of August.

:00:20.:00:38.

South Korea has suspended sales of eighty Volkswagen vehicle models

:00:39.:00:41.

and fined it millions of dollars, alleging that the German company

:00:42.:00:43.

fabricated documents on emissions and noise levels.

:00:44.:00:49.

Also in the programme - China's state-run news agency says

:00:50.:00:51.

more delays over the Hinkley Point nuclear power station is harming

:00:52.:00:54.

Could it lead to China pulling the plug on tens of billions

:00:55.:00:59.

In the first half-hour, the markets look like this.

:01:00.:01:12.

And after yesterday's poor manufacturing numbers - today's

:01:13.:01:14.

And they're not likely to be too hot, either.

:01:15.:01:19.

That is following what we heard yesterday from manufacturing.

:01:20.:01:23.

Hotels, motels and hostels are hitting back -

:01:24.:01:25.

trying to lure the young lucrative millennial generation away

:01:26.:01:27.

We'll be talking to one company about how they're doing it.

:01:28.:01:34.

And as a new report suggests self-driving cars could give a boost

:01:35.:01:37.

to the bar and restaurant industry, we want to know,

:01:38.:01:40.

would having your own self-driving car encourage you to drink

:01:41.:01:43.

I think it is just working here that encourages us to drink more!

:01:44.:02:10.

Nonetheless, let us know at the hashtag #BBCBizLive.

:02:11.:02:11.

Following Volkswagen's involvement in the diesel emissions scandal,

:02:12.:02:14.

the South Korean government has taken the unprecedented step

:02:15.:02:16.

of suspending sales of certain models of VW cars.

:02:17.:02:19.

The country's Environment Ministry has accused the business of forging

:02:20.:02:22.

documents on emissions and noise-level tests.

:02:23.:02:28.

The move will affect 80 models in total -

:02:29.:02:30.

Volkswagen branded cars, but Audis and Bentleys produced

:02:31.:02:33.

The suspension could prove to be a major setback in one of VW's

:02:34.:02:39.

Group sales in South Korea have increased three-fold over the past

:02:40.:02:44.

five years, and although the country still only forms a small percentage

:02:45.:02:47.

of total Volkswagen sales, the suspension poses a threat

:02:48.:02:50.

to the brand's reputation in neighbouring China.

:02:51.:03:02.

Stephen, great to see you, as always. Simple question, why now,

:03:03.:03:19.

why this action by the South Korean Government now? Because the wheels

:03:20.:03:25.

of the law grind exceedingly slow. Basically, this all goes back to

:03:26.:03:31.

last autumn when the faking of results by Volkswagen emerged. There

:03:32.:03:37.

have been settlements in the US. South Korea got the legal process in

:03:38.:03:43.

place with the investigation of whether import documents, for

:03:44.:03:49.

example, were accurate. It has proceeded to finger the collars of

:03:50.:03:53.

executives for Volkswagen in South Korea. It has been very vigorous.

:03:54.:03:57.

It's now gets to the stage where it feels as if it has had hearings

:03:58.:04:03.

about the whole event and we have not had satisfactorily answers,

:04:04.:04:09.

therefore we are suspending these permits. You might say, sceptics

:04:10.:04:14.

might say that South Korea has got big car companies of its own, the

:04:15.:04:21.

vigour of its response is because of that. Obviously the authorities are

:04:22.:04:26.

not saying that. People in Germany might think that. What the

:04:27.:04:31.

authorities believe is that it is a very serious matter. Volkswagen was

:04:32.:04:35.

caught at it and it should pay a penalty. What do we know about the

:04:36.:04:43.

timing of how long this ban or suspension will go one fall? It is

:04:44.:04:51.

indeterminate. It will depend on when Volkswagen can assure the

:04:52.:04:55.

authorities that the new cars being sold meet the required standard. In

:04:56.:05:02.

terms of that there are disputes with people who bought the car, as

:05:03.:05:07.

there are a new rep and the US, even more particularly. -- as there are

:05:08.:05:19.

in Europe and the US. We simply do not know, that is the tantalising

:05:20.:05:25.

part. We will leave it there, but thank you for joining us.

:05:26.:05:27.

China says it will not tolerate unwanted accusations

:05:28.:05:29.

about its investments in the UK after the delay of the Hinkley

:05:30.:05:32.

Those comments came from the country's state-run news

:05:33.:05:35.

agency which said it could not understand the suspicious approach

:05:36.:05:38.

It follows reports suggesting the UK Prime Minister stepped in to review

:05:39.:05:44.

the deal over concerns for national security given China's

:05:45.:05:46.

Amit Pau is with us, he's a managing director

:05:47.:05:56.

at the investment firm Ariadne Capital.

:05:57.:06:06.

I could not pronounce that, I should have looked at that first! You kind

:06:07.:06:15.

of go, oh, gee, with Brexit around the corner, I just wonder if the

:06:16.:06:20.

British Government needs to tread very carefully with some of their

:06:21.:06:24.

words. When Britain is out of the European Union, surely to goodness

:06:25.:06:28.

Britain will be looking at China going, can you help us, we want to

:06:29.:06:32.

trade with you. You don't want to do the dirty on China now? The decision

:06:33.:06:39.

on Hinkley is really strategic, so it needs to be considered. But

:06:40.:06:44.

changing mind at the last minute has huge ramifications on a global

:06:45.:06:49.

basis. Focusing on China, the golden era of China/ UK relationships is in

:06:50.:06:53.

question. The rhetoric that the UK Government, Mr Timothy, Prime

:06:54.:07:00.

Minister May's Senior adviser, has not been helping. Investment into UK

:07:01.:07:06.

from China has increased tenfold in the last five years. By 2020, the

:07:07.:07:11.

Chinese plans to invest ?101 billion the UK economy. Hinkley alone would

:07:12.:07:21.

have equated 25,000 jobs. Can we afford to make such decisions? Also

:07:22.:07:26.

the way it has been communicated post-Brexit, I would say no. There

:07:27.:07:31.

is no debate about why the investment is needed, I suppose the

:07:32.:07:35.

question is whether it is welcome. Some would say that Theresa May was

:07:36.:07:39.

doing the right thing, the British prime ministers says, this deal was

:07:40.:07:42.

done under the previous leadership, I will simply look down, look at the

:07:43.:07:46.

fine detail and come up with a decision later in the year. You

:07:47.:07:51.

would expect that? Firstly, this is such an important decision it needs

:07:52.:07:52.

to be done in a considered manner, so the new

:07:53.:08:10.

Prime Minister has the right to review it, no doubt. But in her last

:08:11.:08:13.

role as Home Secretary, she raised questions on national security, it

:08:14.:08:15.

is really questionable. If it is correct, when you want to send a

:08:16.:08:18.

message to the global economy, there is language in some of the rhetoric

:08:19.:08:23.

shared by the UK Government. Thank you very much for speaking to us. We

:08:24.:08:25.

appreciate your time. In other news, the Reserve Bank

:08:26.:08:27.

of Australia has cut interest rates Weak wages and a strong currency

:08:28.:08:30.

are causing inflation to fall The central bank hopes the move will

:08:31.:08:34.

boost the country's jobs market. We will talk about this story more

:08:35.:08:45.

later. Here he is. Japan's Prime Minister,

:08:46.:08:48.

Shinzo Abe, is expected to announce further details

:08:49.:08:50.

of the government's It's thought a significant amount

:08:51.:08:52.

will be set aside to build long-term We are talking about 270 billion

:08:53.:09:10.

dollars. It will be the biggest stimulus since the financial crisis

:09:11.:09:13.

of 2009. The Japanese government said in the last 15 or 20 minutes

:09:14.:09:18.

that they hope to boost gross domestic product by about 1.3%. Will

:09:19.:09:23.

it work? We will find out. US electric carmaker Tesla says it's

:09:24.:09:26.

reached a deal to buy solar panel The deal, announced in June,

:09:27.:09:29.

will expand Tesla's Tesla chief executive Elon Musk

:09:30.:09:32.

already owns 22% of SolarCity SolarCity's chief executive

:09:33.:09:37.

and Mr Musk are cousins. Keeping it in the family!

:09:38.:09:58.

Let's look at the life page. You have to be related to do business

:09:59.:10:02.

these days, clearly. I just hope they don't fall out.

:10:03.:10:09.

Lots of families do! Love Tanzer, the German national

:10:10.:10:12.

carrier, its boss says they will pay out, pays dividends. -- Lufthansa,

:10:13.:10:25.

the German national carrier. Like many legacy European carriers,

:10:26.:10:29.

Lufthansa are struggling with the mighty Gulf state carriers, like

:10:30.:10:38.

Emirates, Qatar and Etihad. Lufthansa has had a raft, if you

:10:39.:10:43.

will, of strike action for the past 18 months. It keeps rumbling on.

:10:44.:10:48.

Annual profits will be below the 1.8 billion euros of last year. Weak

:10:49.:10:52.

trends, the terror attacks across Europe are not helping many of those

:10:53.:10:57.

airlines. Good stuff. Let's show you the

:10:58.:10:58.

numbers. Japan's Nikkei down for the first

:10:59.:10:59.

time in three days thanks largely to falling oil prices and a firmer

:11:00.:11:02.

yen that dented investor confidence. Banking shares saw a bit of profit

:11:03.:11:06.

taking after two days This is how Europe

:11:07.:11:08.

looks right now... Ahead of construction data -

:11:09.:11:16.

likely to follow the lead of that weak manufacturing data

:11:17.:11:19.

yesterday across Europe. More on that in a moment,

:11:20.:11:27.

but first Samira has the details We will also talk about the Japanese

:11:28.:11:37.

stimulus later. Samir request an 2015 was a record

:11:38.:11:44.

year for car sales, so analysts will be watching closely when analysts

:11:45.:11:49.

report on vehicle sales for the month of July. Annual sales are on a

:11:50.:11:54.

six-year run of games. The longest ever. Will the numbers show

:11:55.:12:00.

continued strength, or will we start to see a plateau? The commerce

:12:01.:12:03.

Department will release personal spending month -- numbers for the

:12:04.:12:08.

month of June. If there is an increase, as economists expect, that

:12:09.:12:12.

will provide a bigger push for the economy as incomes continue to grow.

:12:13.:12:17.

Finally, some big companies are reporting earnings on Tuesday.

:12:18.:12:22.

Procter and Gamble and Pfizer, both part of the Dow Jones industrial

:12:23.:12:29.

average. They are also reporting -- the American International group,

:12:30.:12:30.

AIG, is also reporting. Joining us is Jane Foley, senior

:12:31.:12:32.

currency strategist at Rabobank. She is a familiar face. Welcome to

:12:33.:12:41.

the programme, as always. Let's start with Japan. Another kitchen

:12:42.:12:46.

sink, basically? The Prime Minister has found another kitchen sink to

:12:47.:12:53.

the tune of $270 billion, I am not even a Japanese expert but it

:12:54.:12:58.

frustrates me to no end. 25 years, this economy has been in the

:12:59.:13:03.

doldrums, 25 years. Why are they so reluctant to do what everybody says

:13:04.:13:08.

they need to, structural economic reform? This is a sense of deja vu.

:13:09.:13:13.

This is a rant about the 26th fiscal stimulus and the early 1990s. Every

:13:14.:13:19.

year we see this. Every year the economists say we will get some

:13:20.:13:23.

spending, that will raise GDP by some degree, can it be sustained

:13:24.:13:26.

without the structural reform. Structural reform is about including

:13:27.:13:31.

more women in the workforce in Japan, that is really important.

:13:32.:13:36.

They have the worst demographics in the developed world, are

:13:37.:13:41.

significantly ageing population, a cultural resistance to import

:13:42.:13:45.

workers. The population is shrinking, the working population is

:13:46.:13:47.

supporting more and more pensioners, so they need those women. There is a

:13:48.:13:53.

cultural resistance to doing that. Shinzo Abe, the Prime Minister, has

:13:54.:13:57.

said he is making steps towards that, but it appears slow. They need

:13:58.:14:02.

to raise productivity. That is output per head. That is something

:14:03.:14:07.

which they don't seem to be doing, certainly not at the pace that Abe

:14:08.:14:13.

be promised when he came into power. As a currency expert, is one of the

:14:14.:14:18.

problems faced by Japan, maybe it is out of hand, its currency is seen as

:14:19.:14:23.

a safe haven, the yen. So when it gets a bit Hegga be around the

:14:24.:14:26.

world, investors take money out of stocks, they will buy began, so they

:14:27.:14:31.

think it is safe, that pushes the value of the yen up, hitting

:14:32.:14:36.

Japanese companies who want to sell things abroad? There is a strong

:14:37.:14:39.

correlation between the McKay and the value of the yen. One of the

:14:40.:14:45.

important things to years that the Japanese yen is currently not overly

:14:46.:14:49.

expensive. It is undervalued against many measures. One problem for them

:14:50.:14:52.

is that whilst we are focusing on the value of the yen versus the US

:14:53.:14:56.

dollar, their biggest trading partner is China. Recently we had

:14:57.:15:02.

seen a weakening in the Chinese currency, which is not very good

:15:03.:15:06.

Japanese exporters. You will take us through the papers later, some great

:15:07.:15:10.

paper stories. Speak to you soon. A line of copy

:15:11.:15:15.

from Volkswagen, related to events in the United States this time. You

:15:16.:15:19.

know that the omission scandal is rumbling on. They have paid money to

:15:20.:15:23.

buy back a number of cars in the United States and rectify the

:15:24.:15:27.

problem. This is a class action lawsuit are taken out against

:15:28.:15:30.

Volkswagen, they are filing for that to be dismissed. Those bringing the

:15:31.:15:36.

case accuse the chief executive of Volkswagen and the current brand

:15:37.:15:41.

chief, they were alleged to be directly involved in the preparation

:15:42.:15:45.

of allegedly misleading statements. DW says that has no merit and they

:15:46.:15:50.

are calling on that to be dismissed. Nonetheless, Volkswagen is accused

:15:51.:15:54.

of deception for failing to inform investors about cheating those

:15:55.:15:56.

emissions tests. Traditional hotels, motels

:15:57.:16:03.

and hostels are hitting back - trying to lure the young

:16:04.:16:06.

lucrative travellers away We'll be talking to one company

:16:07.:16:09.

about how they're doing it. You're with Business Live

:16:10.:16:16.

from BBC News. In the UK, home ownership

:16:17.:16:22.

has fallen to its lowest level since the 1980's,

:16:23.:16:28.

according to new figures. Major English cities -

:16:29.:16:29.

particularly Manchester - have seen the sharpest falls

:16:30.:16:32.

since reaching a peak Our Business Correspondent,

:16:33.:16:37.

Victoria Fritz, reports. After booming in the 1980s,

:16:38.:16:41.

home ownership has But now new analysis shows

:16:42.:16:43.

homeownership in England The Resolution Foundation says

:16:44.:16:48.

the number of people who own their home has dropped

:16:49.:16:53.

to 64%, down 7% from The biggest falls have been

:16:54.:16:57.

in Greater Manchester and outer London, although the West Midlands

:16:58.:17:03.

and West Yorkshire have also Northern Ireland has seen

:17:04.:17:06.

the most dramatic switch The think-tank which carried out

:17:07.:17:12.

this analysis argues that the housing crisis is no longer

:17:13.:17:17.

confined to London. They also warn it's threatening

:17:18.:17:21.

to reduce living standards In response, the Government says

:17:22.:17:23.

policies like Right to Buy and starter homes mean that more

:17:24.:17:29.

than a decade-long decline in home The Prime Minister Theresa May has

:17:30.:17:33.

acknowledged there's more to do, although some experts argue

:17:34.:17:40.

that the move towards renting could also be due to

:17:41.:17:42.

changing lifestyles The pies and pasties have helped to

:17:43.:18:06.

deliver profits. At Greggs, they have risen by 7%. They did not

:18:07.:18:15.

comment on the decision to leave the European Union but said they were

:18:16.:18:18.

alert to any change in consumer demand which may result from the

:18:19.:18:21.

current economic uncertainty. There are demands for the PPI

:18:22.:18:36.

deadline to be enforced. It has been proposed that June 2019 be the final

:18:37.:18:41.

date for claims to be made. They plan to hold an awareness campaign

:18:42.:18:47.

to inform the public the deadline. A quick look on the story about Byron,

:18:48.:18:55.

the burger chain put up details on the live change. -- the burger

:18:56.:18:58.

chain. South Korea has suspended sales on

:18:59.:19:20.

the EW 's. Volkswagen has sold more than 80,000 Volkswagen. It also

:19:21.:19:25.

includes Audi and Bentley. This is on the basis of false information.

:19:26.:19:31.

Hotels, motels and hostels are hitting back -

:19:32.:19:33.

trying to win back the lucrative younger generation away from online

:19:34.:19:36.

Young travellers are an increasingly important market,

:19:37.:19:40.

with the World Tourism Organisation suggesting they spend more

:19:41.:19:43.

And it is a market which is growing quickly.

:19:44.:19:51.

By 2020, it's thought those young people, the so-called "millennials",

:19:52.:19:54.

One firm trying to recapture that market is Generator Hostels -

:19:55.:20:01.

which has 14 properties across Europe - and also has plans

:20:02.:20:04.

With us is Fredrik Korallus, chief executive of Generator Hostels.

:20:05.:20:15.

Great to have you in the studio. Great to be here. Can we start with

:20:16.:20:23.

something we have been talking about the last week or so. We had numbers

:20:24.:20:27.

from airlines and we talked about European tourism. It has taken a bit

:20:28.:20:32.

of a kit with terror attacks and attempted coups, Brexit. -- a hit.

:20:33.:20:42.

If an airline sees a downturn in one area, it can move its planes to an

:20:43.:20:46.

area that is better. You have bricks and mortar, you cannot move those.

:20:47.:20:52.

That is true. Our audience, you spoke about millennial is, they are

:20:53.:20:56.

travelling fast and furious. We are having the busiest summer on record.

:20:57.:21:03.

That said, we are very vigilant to what may happen. Right now it is

:21:04.:21:08.

optimistic. What do you do differently? We talk about the rise

:21:09.:21:15.

in websites like a B and people sorting out their own accommodation.

:21:16.:21:26.

70% of our room stock is hostel stock. That means we can offer

:21:27.:21:33.

affordable accommodation. The product is highly designed and gives

:21:34.:21:39.

a lifestyle experience. How is that different to AirBNB. That can be in

:21:40.:21:47.

the centre of a city" cheap. We see it as complimentary. AirBNB offers

:21:48.:21:54.

an individualistic experience. You are in the sharing economy and

:21:55.:21:58.

experiencing social engagement. Sharing everything nowadays, aren't

:21:59.:22:04.

they? Cars, all those sorts of things. It has been a long time

:22:05.:22:10.

since I've stayed in a youth hostel but I did my fair share, backpacking

:22:11.:22:15.

around the world. I am wondering how they vary compared from the late 80s

:22:16.:22:22.

to now. I am assuming Wi-Fi technology in the kind of thing. I

:22:23.:22:27.

would say the traditional hostel you experienced is still there. At

:22:28.:22:33.

Generator we bring a lifestyle experience which is designed led to

:22:34.:22:36.

this traveller. We offer premium products. We sell bed board between

:22:37.:22:47.

25 and 35 euros. -- we sell bed for between. There is beverage, music,

:22:48.:22:51.

nightclubs and entertainment. All this brings everyone together in the

:22:52.:22:59.

best experience. You have been known to turn hotels around. What do you

:23:00.:23:05.

focus on? What do people want? Not just food and location, it must be

:23:06.:23:09.

power sockets by the bed and goodbye five. I would say relevance. Wi-Fi,

:23:10.:23:20.

efficiency, cleanliness and security does that is fundamental. They are

:23:21.:23:24.

looking for representation of what is local. That is what Generator is

:23:25.:23:29.

about. There is nothing standardised. The local culture, the

:23:30.:23:36.

local arts, the local fashion. One thing we do not have is a lot of

:23:37.:23:40.

time. Good luck with everything. Nice to meet you. A quick reminder

:23:41.:23:51.

of how you can get in touch on the programme.

:23:52.:24:24.

Jane is back with us to talk us through the papers stories.

:24:25.:24:31.

Restaurants, alcohol producers cashing in on self driving cars.

:24:32.:24:38.

Jerry says, I am sure that self driving cars require a sober,

:24:39.:24:43.

accredited driver to take over if difficulties arise. Who knows? In 20

:24:44.:24:49.

years' time, what research is saying if every drinker had one more drink

:24:50.:24:54.

a month, that would expand the beverages market by $31 billion.

:24:55.:25:00.

That is a huge increase. There are expansionary prospects will produce

:25:01.:25:05.

in that environment. That is the big issue. Things like the smoking ban

:25:06.:25:09.

really affected clubs and pubs and nightclubs. There was a time not

:25:10.:25:15.

long ago when UK pubs are closing down at the rate of one a week. Much

:25:16.:25:20.

of that was associated with the smoking ban. There were cultural

:25:21.:25:26.

changes with people eating out or drinking in pubs. Against those

:25:27.:25:29.

headwinds, this could be something to allow a new channel about to open

:25:30.:25:36.

up. Would it work for you? If you knew you had a driverless car at the

:25:37.:25:41.

front, would you like another drink? If I trusted the car, I might do.

:25:42.:25:48.

That is the problem. Only joking. Short and sweet. Sorry about that.

:25:49.:25:54.

We will be back the same time and same place tomorrow. Goodbye.

:25:55.:25:58.

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