05/12/2016 BBC Business Live


05/12/2016

Similar Content

Browse content similar to 05/12/2016. Check below for episodes and series from the same categories and more!

Transcript


LineFromTo

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

:00:00.:00:11.

A loss in the Italian referendum triggers the resignation

:00:12.:00:13.

The euro has sunk even further as nationalism sweeps the continent.

:00:14.:00:18.

Live from London, that's our top story on Monday 5th December.

:00:19.:00:41.

Italy votes No in the referendum and as promised,

:00:42.:00:43.

Prime Minister Renzi quits - the euro is now at 20-month

:00:44.:00:46.

We assess what's at stake for the Eurozone's third

:00:47.:00:54.

Also in the programme....The new connection between the Hong Kong

:00:55.:00:58.

and Shenzhen stock exchanges is now live - giving international

:00:59.:01:00.

investors access to hundreds of Chinese companies for the first

:01:01.:01:03.

time - we'll take you there for the latest.

:01:04.:01:10.

markets are looking like this after that referendum. We will assess what

:01:11.:01:16.

it means for the future of the Eurozone.

:01:17.:01:17.

From LED disco balls and Christmas lights through to 3D mascara...

:01:18.:01:20.

Later in the programme, we'll get the Inside Track

:01:21.:01:22.

on the changing face of advertising with the boss of

:01:23.:01:24.

JML are famous for their household gadgets, so we want to know

:01:25.:01:31.

what household gadget can you not live without?

:01:32.:01:37.

Get in touch - just use the hashtag #BBCBizLive.

:01:38.:01:52.

My favourite gadget with a toastie maker.

:01:53.:01:55.

So as you've been hearing, Italy has voted a resounding No,

:01:56.:01:59.

rejecting the electoral reforms proposed by Prime

:02:00.:02:00.

He's now announced his intention to resign.

:02:01.:02:05.

The result has ushered in a fresh crisis for the Eurozone,

:02:06.:02:08.

with one of the founder members of the European project mired

:02:09.:02:10.

Here's a look at some of the problems facing the country.

:02:11.:02:15.

Italy has been stuck in a rut: the economy has barely grown over

:02:16.:02:19.

the last eight years, and is likely to remain

:02:20.:02:21.

Meanwhile, public debt is around 130% of GDP -

:02:22.:02:33.

in other words, the economy doesn't sell and produce enough goods

:02:34.:02:35.

Unemployment stands at 11.6%, that's about 2%

:02:36.:02:51.

above the eurozone average and youth unemployment is at breaking point -

:02:52.:02:54.

nearly 39% of young people are out of work.

:02:55.:02:56.

The IMF says Italian banks are holding around

:02:57.:02:59.

$400 billion worth of non-performing loans.

:03:00.:03:00.

This amounts to about one third of all bad loans in the euro area.

:03:01.:03:03.

More than 75% of these are loans to companies.

:03:04.:03:05.

Now that we have a No vote, some analysts warn we could see

:03:06.:03:09.

the failure of up to eight Italian banks and the Prime Minister's

:03:10.:03:12.

bank bailout programme could well be scrapped.

:03:13.:03:13.

Francesco Guerrera is Chief Financial Correspondent

:03:14.:03:15.

It sounds like a real mess. Talk us through what is at stake here. All

:03:16.:03:34.

attention is on these big banks in Italy that could be left high and

:03:35.:03:40.

dry. Yes, the stakes are much higher for the Italian banking sector and

:03:41.:03:44.

European banking sector than for the Eurozone as a whole. The most

:03:45.:03:48.

important thing now is to see whether Italy's third largest bank,

:03:49.:03:52.

Europe's oldest bank, will be able to pull off a 5 billion euros

:03:53.:03:57.

recapitalisation programme, which is badly needed and has been an

:03:58.:04:02.

important measure of how investors feel about Italy. The no vote throws

:04:03.:04:05.

that into a huge amount of doubt. It could make it fail. I understand

:04:06.:04:12.

that the plan was to have private investors come in and rescue that

:04:13.:04:18.

back, and some other banks as well. Why use the overnight results

:04:19.:04:22.

calling that into question? Because investors don't like to write checks

:04:23.:04:26.

during a period of political uncertainty, especially for a

:04:27.:04:30.

country like Italy, which has made a big brand out of political

:04:31.:04:34.

uncertainty and has had repeated moments of political uncertainty. $5

:04:35.:04:38.

billion for a bank like this is a lot of money. So a lot of investors

:04:39.:04:42.

this morning are already rethinking their stance towards that bank. But

:04:43.:04:48.

what are the other options? The Italian government cannot bail out

:04:49.:04:52.

these banks because of rules stated by the fact that it is part of the

:04:53.:04:57.

Eurozone. Exactly, so a state bailout is ruled out under Brussels

:04:58.:05:04.

rules. The other options are for a recapitalisation that hits the small

:05:05.:05:07.

investors in Italy bulges politically unpalatable. What does

:05:08.:05:13.

this mean for the economy as a whole, with Italy in political

:05:14.:05:18.

turmoil once again? Italy is used to this. Italy is used to turmoil, but

:05:19.:05:23.

this is different. Italy has more bank branches than pizzerias, so

:05:24.:05:27.

this was a chance to reduce the amount of inefficiency in the fiscal

:05:28.:05:30.

sector. That chance might be missed now. We are keeping a close eye on

:05:31.:05:37.

this story as it unfolds and how it has played out in markets around the

:05:38.:05:39.

world. More on that later. The Royal Bank of Scotland says it

:05:40.:05:41.

will pay just over a billion dollars to settle compensation claims linked

:05:42.:05:45.

to a rights issue in 2008. At the time, it was acquiring

:05:46.:05:51.

the Dutch bank ABN Amro - but that ultimately led to it

:05:52.:05:54.

seeking a bailout from The agreement is with three

:05:55.:05:56.

of the five shareholder groups Venezuela's central bank says six

:05:57.:05:59.

new denominations of banknotes will come into circulation

:06:00.:06:08.

on December 15th. Soaring inflation amid an economic

:06:09.:06:16.

crisis means that the largest 100 bolivar banknote is only

:06:17.:06:18.

worth about two US cents and people often have to use bags

:06:19.:06:21.

full of money to make payments. The new bills range from 500

:06:22.:06:24.

to 20,000 bolivars. The central bank says they will make

:06:25.:06:26.

payments more efficient. The business life page is dominated

:06:27.:06:50.

by events in Italy. Shares for that bank that we were talking about,

:06:51.:06:58.

Monte dei Paschi, are down. A lot of pressure is on Italy's biggest

:06:59.:07:00.

banks. Much more on the website. Hong Kong has launched

:07:01.:07:04.

its second stock-trading link It means foreign investors will get

:07:05.:07:06.

greater access to more than 800 companies listed

:07:07.:07:09.

on the Shenzhen exchange. Helier Cheung is at the Hong Kong

:07:10.:07:15.

Stock Exchange for us. Will foreign investors be

:07:16.:07:33.

interested? It is the end of the trading day in Hong Kong now, and

:07:34.:07:37.

has been exciting day because for the first time, international

:07:38.:07:40.

investors have access to nearly 900 pubs of stocks in the Shen and

:07:41.:07:46.

exchange. It is the second busiest stock exchange in the world and has

:07:47.:07:52.

access to nearly $3 trillion worth of stocks. The types of stocks are

:07:53.:07:56.

also interesting, because these are technology shares. The fifth of the

:07:57.:08:00.

shares available in Shenzhen from the technology sector, which is

:08:01.:08:04.

viewed as part of China's future, so a lot of investors will be

:08:05.:08:14.

interested in that. China wants to internationalise its markets, and

:08:15.:08:26.

this is seen as part of that. As far as the markets are concerned, the

:08:27.:08:27.

main story is Italy. Worries over political

:08:28.:08:33.

stability in Europe - in the wake of that Italian vote -

:08:34.:08:35.

weighing on Asian markets - but it's in Europe where we'll see

:08:36.:08:38.

the first real impact. Here's what it's looking

:08:39.:08:40.

like across the continent right now. Austria's vote didn t deliver

:08:41.:08:43.

a shock, the far-right leader failing to gain enough votes,

:08:44.:08:46.

but it's the impending resignation of Matteo Renzi that now throws

:08:47.:08:48.

Italy into a new era The most pressing question,

:08:49.:08:51.

as we've been discussing, is how to save the country's third

:08:52.:08:55.

largest bank, Monte dei Paschi. The euro has stabilised

:08:56.:09:00.

at $1.06 after falling We'll talk more on that

:09:01.:09:02.

a little later. But first, Samira has

:09:03.:09:14.

the details about what's ahead We can expect some little bits of

:09:15.:09:28.

economic data and company earnings coming our way this week. On Monday,

:09:29.:09:33.

the ISM survey is out. This looks at the strength of a variety of sectors

:09:34.:09:37.

outside of manufacturing, and it gives investors an idea of how

:09:38.:09:40.

different parts of the economy are faring. The wholesale retailer

:09:41.:09:46.

Costco will be reporting earnings on Wednesday. Falling prices for

:09:47.:09:50.

groceries have likely hurt sales, and traffic to Costco stores was

:09:51.:09:54.

slightly lower in the first two weeks of November ahead of the US

:09:55.:09:59.

presidential elections. Investors will be looking for comments on the

:10:00.:10:03.

upcoming holiday season. Finally, Friday is when we see how strong

:10:04.:10:09.

consumer sentiment is in the US. Remember, for an economy that relies

:10:10.:10:13.

heavily on consumer spending, it is important to see how confident

:10:14.:10:17.

people are feeling and how that will influence how much they spend.

:10:18.:10:20.

Joining us is Jeremy Stretch, head of G10 FX strategy at CIBC.

:10:21.:10:30.

Looking at markets in Europe, they are all headed up. That was not the

:10:31.:10:37.

reaction we were expecting, or worldly? Perhaps this result was

:10:38.:10:41.

priced in. For once, the opinion polls have proved to be correct. In

:10:42.:10:45.

essence, we had already been anticipating that, so the was

:10:46.:10:49.

already under pressure into the event. So the bosses are higher,

:10:50.:10:53.

although you have not got the Italian one there. But the currency

:10:54.:11:00.

markets were largely discounting the result. Yes, Asia is often a more

:11:01.:11:06.

volatile session as we saw in the aftermath of the US election, but

:11:07.:11:14.

people have been saying, what is the Italian situation going to be now?

:11:15.:11:19.

Are we going to have a caretaker government until 2018? That seems

:11:20.:11:25.

the most likely scenario. The pressure point is what will keep us

:11:26.:11:28.

on our toes, because this is where we have to get into detail. It is

:11:29.:11:32.

one thing saying they have to save the banks, but how is a different

:11:33.:11:37.

thing. Indeed. We have been working on plans to try and provide

:11:38.:11:41.

liquidity and capitalisation to the banks, but those plans are now very

:11:42.:11:47.

much up in the air. That is a uncertainty that investors will not

:11:48.:11:52.

like. And the political risk in Europe is setting the tone for next

:11:53.:11:56.

year to a great degree. It is, because if we had the worst case

:11:57.:12:01.

scenario playing out in Italy that we have early elections, which are

:12:02.:12:04.

brought forward to next spring, that would add another layer of political

:12:05.:12:09.

uncertainty into a year of political uncertainty as we know, with the

:12:10.:12:13.

elections coming up in France, the Netherlands and Germany. So there is

:12:14.:12:17.

European political uncertainty. The central institutions will do what

:12:18.:12:21.

they can to provide liquidity, and that will be the theme that comes

:12:22.:12:27.

out of the decision on Thursday, but the politics is the other big

:12:28.:12:31.

variable. That is what has been driving the markets throughout 2016,

:12:32.:12:36.

as we have seen with Brexit and Trump. I can just picture Mark

:12:37.:12:45.

Carney and the other heads of central institutions with their

:12:46.:12:51.

superhero cape is on, coming to the rescue. Well, I don't want to be in

:12:52.:12:59.

your mind, but it is down to the institutions to try and save the

:13:00.:13:01.

world and provide time for the politicians to do what is necessary.

:13:02.:13:05.

Can't you see them swooping in with a cape on? Well, their ability to go

:13:06.:13:12.

sweeping in has come mitigated over time. No one wants to be in Sally's

:13:13.:13:14.

head. Still to come, from LED disco balls

:13:15.:13:16.

and Christmas lights Later in the programme,

:13:17.:13:19.

we'll get the Inside Track on the changing face of advertising

:13:20.:13:22.

with the boss of Gadgets, gizmos and the things you

:13:23.:13:24.

cannot live without. You're with Business

:13:25.:13:32.

Live from BBC News. In the UK, the online estate agent

:13:33.:13:37.

Purple Bricks has been hoping to shake up the housing market

:13:38.:13:40.

by offering low-cost estate They've promised to be

:13:41.:13:42.

in profit by their third anniversary this spring,

:13:43.:13:46.

but this morning they published results for the six months

:13:47.:13:48.

to October and it shows they've The chief executive

:13:49.:13:51.

Michael Bruce joins us now Congratulations on hitting that

:13:52.:14:07.

target, but I am interested in how you have done it, given everything

:14:08.:14:10.

we have heard about the housing market. Yes, there is a seismic

:14:11.:14:15.

change happening in the estate agency market. Purple Brix has

:14:16.:14:20.

demonstrated that it can deliver for customers as a credible alternative

:14:21.:14:23.

to the high street. We have seen enormous growth in our business as

:14:24.:14:27.

people move away from the very expensive rigs and mortar commission

:14:28.:14:30.

based fee structure to something that is fixed. They can take more of

:14:31.:14:38.

that money and put that in their pocket to spend on their families.

:14:39.:14:42.

At the same time, they are getting a better service than they would

:14:43.:14:45.

ordinarily have got. That is what Purple Bricks is the most positively

:14:46.:14:49.

reviewed estate agent possibly in the world, certainly in the UK, in

:14:50.:14:53.

an industry that is often dogged by criticism about the service it

:14:54.:14:55.

provides. How do you plan to keep the momentum

:14:56.:15:11.

up? We are eating away every day at the market share as more and more

:15:12.:15:16.

people decide to move away from the high street and we're confident that

:15:17.:15:19.

wherever the head winds are in the particular industry, the sector or

:15:20.:15:23.

the economy that Purple Bricks will certainly capitalise on what's in

:15:24.:15:26.

market and available to us and that's been demonstrated by the

:15:27.:15:29.

results we announced today. All right. We will keep an eye, that's

:15:30.:15:34.

for sure, see if you can deliver next time. Thank you very much

:15:35.:15:39.

indeed for your time. This is the news from whirlpool of

:15:40.:15:53.

the serious house fires. The company committed to reducing the waiting

:15:54.:15:56.

time for repairs or replacements to ten days, but an investigation has

:15:57.:16:01.

found that could take between six and 12 weeks. Many people are told

:16:02.:16:05.

it is safe to use them, but only to use them if you're in the who is and

:16:06.:16:09.

keep an eye on them. But the picture there of a big fire in West London

:16:10.:16:12.

caused by that tumble drier. You're watching Business Live.

:16:13.:16:16.

Our top story: Italy votes

:16:17.:16:18.

"no" in a referendum As promised, the Italian Prime

:16:19.:16:20.

Minister Matteo Renzi has resigned, causing the euro to sink

:16:21.:16:25.

against the dollar. A quick look at how

:16:26.:16:30.

markets are faring. We are seeing that markets are

:16:31.:16:44.

rising. Until there is any certainty about how Italy intends to deal with

:16:45.:16:48.

its debts or the problems at some of its largest banks.

:16:49.:16:51.

Now let's get the inside track on the lucrative business

:16:52.:16:53.

JML sells everything from cat toys to copper-stone frying pans and has

:16:54.:16:57.

a unique business model - pretty much every product it

:16:58.:17:00.

The incredible air powered disc that's perfect for indoor sport. The

:17:01.:17:14.

compact torch and toolkit you can take anywhere. Simply plug it in at

:17:15.:17:19.

home and watch your party come to life!

:17:20.:17:25.

JML is migrating towards online sales. The company markets its

:17:26.:17:32.

products in over 70 countries. They make those ads that you just saw in

:17:33.:17:39.

27 different languages! JML has a turnover of close to ?100 million.

:17:40.:17:44.

They sell 15 million products every year around the world.

:17:45.:17:46.

Ken Daly is the Chief Executive of JML and has been

:17:47.:17:49.

Good to see you. Welcome to the programme. Good morning. We were

:17:50.:17:59.

giggling after the back of the little short clips because they are

:18:00.:18:03.

the kind of adverts that drive you around the twist and yet you watch

:18:04.:18:07.

them and think, "They must be selling that stuff." Yes, I can

:18:08.:18:11.

assure you that we are selling that stuff. We are having a record

:18:12.:18:14.

Christmas and in fact seven out of ten homes in the UK have a JML

:18:15.:18:19.

product. The reason you have to have the ads is because your products are

:18:20.:18:22.

products that need to be demonstrated? Absolutely. They are

:18:23.:18:25.

the kind of gadgets that we need to know how to work them? That's our

:18:26.:18:30.

USP. We develop and market products that need some kind of explanation

:18:31.:18:34.

for the consumer to understand the features and benefits, but when they

:18:35.:18:37.

do, they really, really want to buy them. Is it about convincing buyers

:18:38.:18:42.

that they actually need it? Some of them are really useful products.

:18:43.:18:47.

They are things we use every day. Some maybe less so, they maybe more

:18:48.:18:51.

aspirational gifts. Talk us through why the ideas come from? The ideas

:18:52.:18:57.

come from all over the world. Our mission is to make consumers lives

:18:58.:19:02.

easier. Some of them are more quirky at Christmas because we are trying

:19:03.:19:05.

to make gifting more easy at Christmas and the ideas come from

:19:06.:19:11.

inventors, trade shows, some of them, we develop ourselves and come

:19:12.:19:14.

up with the ideas ourselves. Sometimes factories that we work

:19:15.:19:18.

with develop the ideas. So it is a whole range of sources. The weirdest

:19:19.:19:26.

product? Oh, the weirdest, possibly the light that illuminates your

:19:27.:19:29.

toilet bowl lend you enter the bathroom! A weird one, I guess...

:19:30.:19:34.

Did gu with it? It is something that we will be developing, yes. Ah,

:19:35.:19:39.

watch this space. You can't wait for that advert!

:19:40.:19:46.

Just in terms of the amount of stuff you're selling, how much, how many

:19:47.:19:49.

products have you got, you know, that you're selling at the moment

:19:50.:19:53.

and how do you keep across it all in terms of where it is coming from and

:19:54.:20:06.

quality and supply? Sure. We focus on key products and sell very, very

:20:07.:20:11.

large volumes of the key products the ones we're advertising on

:20:12.:20:15.

television. In terms of quality, absolutely it is our number one

:20:16.:20:18.

priority. We don't want to have anything like the tumble drier

:20:19.:20:22.

scenario that you just reported. You joined as a salesman, didn't you,

:20:23.:20:27.

initial? Initially? You came up with a lot of new ideas as to how the

:20:28.:20:30.

sell these things. What's the most important way of selling? Is it TV

:20:31.:20:37.

adverts or the JML shopping channel? Well, we want to reach the consumer

:20:38.:20:41.

whichever way they want to buy, but actually retail is still, believe it

:20:42.:20:45.

or not, despite the challenges in retail, retail is still the biggest

:20:46.:20:51.

avenue for us. It is 75% of our turnover is retail distribution. A

:20:52.:20:55.

quick word on cost. We have been talking about the imported inflation

:20:56.:20:58.

that we will get as a result of Brexit and the fall in the value of

:20:59.:21:01.

the pound. What does that mean for you? I imagine a lot of your stuff

:21:02.:21:07.

is sold here, but made abroad? Our attitude is we are a consumer

:21:08.:21:11.

product company and we have to protect the consumer. So at the

:21:12.:21:15.

moment we're absorbing the costs pretty much. How long can you do

:21:16.:21:19.

that before prices have to go up? With the dollar at 120, we can

:21:20.:21:23.

probably absorb the costs, but if it falls any lower than that, then we

:21:24.:21:26.

might to start looking at increasing some of the retail prices, but at

:21:27.:21:30.

the moment, that's not been the case and pretty much all of our price

:21:31.:21:35.

have remained the same. There is so much more we could discuss, but time

:21:36.:21:39.

has got the better of us. Ken, thank you very much for coming in. Make

:21:40.:21:44.

sure you bring us that light on the toilet the next time you come in. Do

:21:45.:21:47.

you need it then? It is always useful!

:21:48.:21:49.

Improve aim! Let's see what other

:21:50.:21:51.

stories are being talked The Business Live pages is where you

:21:52.:22:02.

can stay ahead with the day's breaking business news. We want to

:22:03.:22:11.

hear from you too. Get involved on the BBC Business Live web page at:

:22:12.:22:17.

On Twitter, we're at: You can find us on Facebook.

:22:18.:22:23.

Business Live, on TV and online, whenever you need to know.

:22:24.:22:27.

The BBC's Dominic O'Connell is with us.

:22:28.:22:32.

Hello. Just the software, not the car, and the first time they have

:22:33.:22:44.

confirmed? It is the worst kept secret in Silicon Valley this. Is

:22:45.:22:51.

Project Titan. Software and hardware as well, I think, but in filing with

:22:52.:22:56.

the US regulators they have admitted they were interested in this. If you

:22:57.:23:00.

think about it, under Steve Jobs they could have done anything they

:23:01.:23:05.

wanted. They went from personal computers into mobile phones

:23:06.:23:09.

seamlessly. Tim Cook is not Steve Jobs. If he goes into this field,

:23:10.:23:17.

which I'm sure, they will, it will be the first time, and he will have

:23:18.:23:23.

to make a success of it. It is Detroit versus the West Coast where

:23:24.:23:27.

all the fun stuff is coming out about driverless cars. Let's look at

:23:28.:23:31.

a story of Brussels and perhaps a free trade deal with Japan. Talk us

:23:32.:23:35.

through that one? They have been talking for a long time about it and

:23:36.:23:39.

it illustrates how Brussels and the European Union is forging away,

:23:40.:23:43.

throwing its weight around on the global scale and it illustrates the

:23:44.:23:48.

scale of the task. This is almost certainly going to happen. There are

:23:49.:23:51.

some issues around it, but it has been a long time in the works. It is

:23:52.:23:57.

going to come soon. It is quite interesting with the United States

:23:58.:24:02.

as well and the fact that the euro trade deal maybe off the boil

:24:03.:24:05.

because of president-elect Donald Trump, so Brussels looking

:24:06.:24:08.

elsewhere? Brussels looking to Asia and China is keen on free trade

:24:09.:24:13.

because it suits its domestic policies and the Trans-Pacific trade

:24:14.:24:17.

partnership, America and China has been looking shaky recently. The

:24:18.:24:19.

European Union now is the one that's making the running. The

:24:20.:24:24.

Trans-Pacific Partnership is America and Asia, but not China? Not China

:24:25.:24:28.

at the moment. China has been thinking of doing its own thing.

:24:29.:24:36.

There are conflicting agendas, each nation is trying to promote its

:24:37.:24:42.

domestic agenda through foreign policies. Let's talk about Donald

:24:43.:25:04.

Trump. He persuaded Carrier air conditioning to keep jobs. Now he

:25:05.:25:08.

has a company that was planning to move staff into Mexico. He has been

:25:09.:25:09.

saying, tweeting overnight, saying he could level 35% tariffs against

:25:10.:25:12.

products that are manufactured by jobs that are taken out of the

:25:13.:25:17.

American homeland. What's your most useful gadget in your home would you

:25:18.:25:22.

say? Well, everybody has the boring answer of the iPhone. I think

:25:23.:25:28.

probably the iment phone is pretty powerful. Householdy, not tech? I'm

:25:29.:25:37.

not gooden a hairdryer, I must say! We had the boss of JML on. So

:25:38.:25:44.

miracle warrior, whoever he was, "My hand-held vac." Another viewer says,

:25:45.:25:51.

"I need my small mobile phone." Another viewer says he needs his

:25:52.:25:57.

juice blender. Mine is my toasty maker. Too many. That light for the

:25:58.:26:02.

toilet! Have a good day. Bye-bye.

:26:03.:26:08.

Good morning. It has ban really cold and frosty start for many of us this

:26:09.:26:16.

morning. Not much fog around. This is as cold as it is

:26:17.:26:17.

Download Subtitles

SRT

ASS