04/01/2017 BBC Business Live


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04/01/2017

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This is Business Live from BBC News with Rachel Horne and Sally Bundock.

:00:00.:00:07.

Are Eurozone's prospects beginning to inflate?

:00:08.:00:10.

In a few hours we find out if price rises in

:00:11.:00:13.

Live from London, that's our top story on Wednesday 4th January.

:00:14.:00:31.

Will inflation continue its march towards the European

:00:32.:00:34.

Reports suggest the Japanese company could draw a line

:00:35.:00:43.

under its faulty airbags saga, but how much will it cost?

:00:44.:00:45.

We'll cross live to Asia with the latest.

:00:46.:00:57.

The European markets have opened. The FTSE is slightly down. We will

:00:58.:01:04.

bring you more figures throughout the programme.

:01:05.:01:06.

Turning back time on a family business.

:01:07.:01:08.

Later in the programme we'll speak to the young entrepreneur who's

:01:09.:01:11.

hoping to revive the watch-making company set up my his ancestors.

:01:12.:01:14.

And according to the Trade Union Congress, today's the day that

:01:15.:01:16.

an average Chief Executive in the UK has earned as much as an average

:01:17.:01:20.

worker in a whole year, so we want to know,

:01:21.:01:22.

In a few hours we'll receive the latest inflation figures

:01:23.:01:40.

The block managed growth of 0.3% in the third quarter of last year

:01:41.:01:47.

and a sustained rise in prices could lead to the scaling back

:01:48.:01:50.

of the European central Banks de facto money-printing program.

:01:51.:01:53.

As you can see here, there has been a marked improvement

:01:54.:01:59.

in the rate of inflation for the block and in yellow you can

:02:00.:02:03.

see the 1% inflation rate that Economists are predicting

:02:04.:02:05.

Although this is still some way below the European Central Bank's

:02:06.:02:12.

target of just under 2%, it's still a marked improvement

:02:13.:02:15.

Back in February of last year, the Eurozone was actually suffering

:02:16.:02:22.

But since then, the value of oil has more doubled and this has fed

:02:23.:02:29.

Looking forward, many experts expect the US dollar to continue

:02:30.:02:33.

strengthening against not only the Euro, but against nearly

:02:34.:02:35.

Again, this feeds into the oil price story as a stronger dollar pushes up

:02:36.:02:42.

With me is our economics correspondent Andrew Walker.

:02:43.:02:56.

Rachel outlining the reason why we are seeing such a leap in December.

:02:57.:03:02.

Presumably that could continue this year? Indeed, the price of crude oil

:03:03.:03:08.

started the year on a strong note as markets with thinking that perhaps

:03:09.:03:12.

the agreement by Opec, the oil producers group, with some

:03:13.:03:17.

nonmembers to restrict supply in the New Year and that would bite. It

:03:18.:03:21.

does seem to have reinforced a price that is already well up from below.

:03:22.:03:29.

It is only half the level it was in 2014. But there is the prospect for

:03:30.:03:33.

further increases in energy prices paid by consumers and therefore any

:03:34.:03:37.

further increase in the headline rate of inflation. Let's look at the

:03:38.:03:43.

other rate of inflation without oil, what is it telling us? Things are

:03:44.:03:49.

remaining in the Eurozone, pretty subdued. What we are expecting is no

:03:50.:03:54.

change in that rate, not .8% is among recent figure. -- 0.8%. We

:03:55.:04:03.

expected to stay at about the same level. The European Central Bank,

:04:04.:04:08.

and it does care what the headline rate is, but the story that also

:04:09.:04:15.

indicates more about the strength of inflationary pressures generated

:04:16.:04:19.

within the Eurozone economy itself, is that underlying rate. I think it

:04:20.:04:23.

is telling us demand across the Eurozone does remain a bit subdued.

:04:24.:04:29.

What kind of a year can we expect from an economic point of view? We

:04:30.:04:34.

have this situation of inflation being pushed up by the price of oil

:04:35.:04:39.

but everything is substituted, elections in France and Germany and

:04:40.:04:42.

often the economy is a factor for voters? And the fact is you have a

:04:43.:04:55.

rise of anti-euro and anti-forces in those political systems has the

:04:56.:04:58.

potential to create a lot of uncertainty that will hang over

:04:59.:05:01.

economic life. Another point worth bearing in mind, in terms of

:05:02.:05:09.

avoiding deflation, this rise in inflation is welcome to the European

:05:10.:05:12.

Central Bank. When wage growth is pretty subdued as well, it does mean

:05:13.:05:18.

it will hold back on consumer spending power. The rise in

:05:19.:05:22.

inflation is not an unambiguously good thing. So the EU will not

:05:23.:05:28.

change its plan for tapering back in April in terms of the money it is

:05:29.:05:34.

pumping in? No, but there have been calls for some economists in Germany

:05:35.:05:37.

saying it should end this programme in March, as it originally suggested

:05:38.:05:42.

it should do. The German inflation figures were pretty strong, 1.7% but

:05:43.:05:48.

I don't think the ECB is ready to pull the plug yet. Thank you,

:05:49.:05:52.

Andrew. When we do get the numbers, we will fill you in here at the BBC.

:05:53.:05:56.

Ford has said it will cancel a $1.6 billion plant it

:05:57.:06:00.

planned to build in Mexico and instead extend operations

:06:01.:06:02.

The boss of the US car giant, Mark Fields, said the decision

:06:03.:06:06.

was partly due to falling sales of small cars and partly

:06:07.:06:09.

a "vote of confidence" in Donald Trump's policies.

:06:10.:06:11.

The President-elect has criticised both Ford and its rival

:06:12.:06:15.

General Motors over production of models in Mexico.

:06:16.:06:17.

Some British Airways cabin crew are to stage a 48-hour strike

:06:18.:06:20.

Members of the UK's Unite union have rejected a new offer aimed

:06:21.:06:26.

A previous walkout planned for Christmas Day and Boxing Day

:06:27.:06:31.

BA says it will ensure that all their customers can travel

:06:32.:06:39.

Tesla, one of the world's biggest electric car makers,

:06:40.:06:43.

increased vehicle production by 64% last year.

:06:44.:06:44.

The company made almost 83,000 cars in 2016 but missed its delivery

:06:45.:06:47.

target for the final three months of the year.

:06:48.:06:51.

Tesla, which is run by Elon Musk, said that problems with the cars

:06:52.:06:55.

new Autopilot driving hardware had led to the company producing fewer

:06:56.:06:57.

vehicle's than they had previously forecast.

:06:58.:07:07.

There is more competition out there because the world's fastest self

:07:08.:07:17.

driving electric car has been unveiled. The company plans to

:07:18.:07:25.

release the car in 2018 with a range of up to 482 miles.

:07:26.:07:28.

Shares in troubled car parts maker Takata jumped 17% today in Tokyo.

:07:29.:07:31.

This is down to reports of a possible deal with the US

:07:32.:07:35.

authorities over faulty airbags which have been linked to 11

:07:36.:07:38.

We have our guest in our Asia hub today. It has all been about Takata

:07:39.:07:54.

shares sinking dramatically. Will this company draw a line under this

:07:55.:08:01.

saga? We saw Takata car shares rally at the end of last year. It is

:08:02.:08:06.

continuing on the first trading day of 2017 in Tokyo. It is because of

:08:07.:08:12.

reports the company could be settling a US criminal probe into

:08:13.:08:17.

its exploding airbags. It'll be before the Obama Administration

:08:18.:08:22.

leaves office. Part of settlement would include Takata pleading guilty

:08:23.:08:27.

to criminal misconduct and it might have to pay up to $1 billion. South

:08:28.:08:35.

Korea's shipping, once one of the biggest container shipping companies

:08:36.:08:37.

in the world which went bankrupt last you, they surged on their daily

:08:38.:08:46.

limit by 30% because of a possible deal. Thank you for your time.

:08:47.:08:51.

It feels like the markets are still celebrating the New Year.

:08:52.:08:53.

Stocks in Japan up 2.5%, making the biggest gains

:08:54.:08:57.

in about two months, and closing at its highest level

:08:58.:08:59.

Hang Seng was slightly down but the Dow Jones closed up.

:09:00.:09:06.

Investors looking forward to the tax cuts and regulatory

:09:07.:09:09.

reform they believe President-elect Donald

:09:10.:09:11.

Michelle Fleury has the details about what's ahead

:09:12.:09:26.

After a strong 2016, is the party over when it comes to US car sales.

:09:27.:09:46.

Ford said Americans were not buying as many small cars. We should get a

:09:47.:09:50.

clearer picture of the health of the industry were major car companies

:09:51.:09:55.

report their figures later on Wednesday. Minutes from last month's

:09:56.:10:03.

Federal Reserve policy meeting could explain their thinking on how many

:10:04.:10:09.

increases to expect in 2017. In December, America's Central bank

:10:10.:10:14.

raised rates for only the second time in nearly a decade. The head of

:10:15.:10:19.

Friday's job data, look out for a report on employment in the private

:10:20.:10:24.

sector. Quite a busy week in The States. Our guest is from GKFX.

:10:25.:10:44.

Michelle talking about lots of information, employment data at the

:10:45.:10:48.

end of the week, they keep going up. I know the FTSE 100 is down a bit

:10:49.:10:54.

now, but what is going on? It is just record highs after record

:10:55.:11:00.

highs. Are you not loving it, is it not your dreamtime? We want

:11:01.:11:06.

volatility, when the markets go in one way, it gets boring. Less

:11:07.:11:14.

opportunity for money markets? This does not give you any opportunities.

:11:15.:11:18.

Eventually it will turn round and that is the worrying point. Not much

:11:19.:11:23.

substance on the way up, all on the back of Donald Trump winning the

:11:24.:11:28.

election. When it does turn around, and it will sooner or later, when

:11:29.:11:32.

there is no substance on the way up, the downside can be quite

:11:33.:11:35.

aggressive. It is how quickly it can come back down after that. When do

:11:36.:11:41.

you think that will come? Once things start to happen? I would love

:11:42.:11:47.

to know exactly when it will happen, it would make my job incredibly

:11:48.:11:51.

easy. The whole world is waiting for this Dow Jones level. Once it goes

:11:52.:11:58.

to the 20,000 level, there is a lot of profit-taking, people taking

:11:59.:12:01.

their money out and a lot of big orders coming in and that sparks the

:12:02.:12:06.

markets to come lower. We are still quite a way away from there. That is

:12:07.:12:16.

half an hour's work. Check it out, James Hughes is honest. What else

:12:17.:12:20.

are you watching, the equity rallies are a big deal, or oil, the dollar,

:12:21.:12:27.

what else is on your mind? The oil price is the key one. Yesterday we

:12:28.:12:31.

were running very strongly, oil prices fell off a cliff yesterday.

:12:32.:12:35.

We have oil inventories today which could see oil rise again this

:12:36.:12:39.

morning and they could give us a bit more reason why that is going up.

:12:40.:12:46.

Opec deal, non-Opec deals, we have a lot going on. James will be talking

:12:47.:12:56.

about fat cat pay. Turning back time on a family business. Late in the

:12:57.:13:00.

programme we will speak to the young entrepreneur who is hoping to revive

:13:01.:13:05.

the watchmaking company set up by his ancestors.

:13:06.:13:07.

You are with Business Live from BBC News. Next has reported its

:13:08.:13:20.

Christmas sales figures. Overall sales for November and December were

:13:21.:13:26.

down 0.4% and sales for the whole year were down 1.1%. But there are

:13:27.:13:30.

online catalogue service fared better, up 3.6% in 2016. Let's talk

:13:31.:13:39.

to Kate Hardcastle about this. Good to see you. What is going wrong with

:13:40.:13:44.

Next? Their shares down around 11% on the FTSE 100? I cannot say Next

:13:45.:13:52.

has any challenges specific to them. It is the high street and the Battle

:13:53.:13:56.

of sales. 20% of online sales versus heavy discounting from expectation

:13:57.:14:02.

from consumers. Black Friday coming in at the end of November,

:14:03.:14:07.

discounting in that period prior to Christmas and consumers feeling that

:14:08.:14:10.

is the way they want to shop and that is the state of the high Street

:14:11.:14:15.

and the state of retail. When you look at other companies, they are

:14:16.:14:19.

not seeing a similar fall of like Marks Spencer is an Next. Some

:14:20.:14:26.

analysts said they are specific to next and they are not grabbing the

:14:27.:14:30.

interest like they used to do. It is the middle high-street brand, a

:14:31.:14:36.

vanilla brand, not cutting edge of fashion are not discounted heavily

:14:37.:14:40.

enough to appeal to those consumers. The consumers have one set of money,

:14:41.:14:45.

whoever will provide the fashionable goods and excitement, that is where

:14:46.:14:50.

they will shop. You have got to fight hard for the sales and Next

:14:51.:14:54.

are dictating that is what next year will look like. Next also want

:14:55.:15:00.

prices could rise by as much as 5% next year because of inflation, do

:15:01.:15:04.

you think consumers. At that? With an increase in textiles and prices,

:15:05.:15:11.

consumers will be looking for discount, high fashion and they will

:15:12.:15:14.

only buy so much. Increasing prices will not make them buy any more.

:15:15.:15:18.

Kate Hardcastle, thank you very much.

:15:19.:15:24.

Tashi that making headlines for the wrong reasons against. The Japanese

:15:25.:15:31.

media porting they are under fire again for lying about their profits.

:15:32.:15:33.

Read the details on our website. In a few hours' time we'll receive

:15:34.:15:40.

the latest inflation figures The headline rate of inflation is

:15:41.:15:46.

expected to jump to 1%, from 0.6%. This is a significant improvement

:15:47.:15:54.

given that the Eurozone was grappling with inflation

:15:55.:15:56.

through much of 2016. And now let's get the inside track

:15:57.:16:02.

on one entrepreneur's attempt The Fears Watch Company was founded

:16:03.:16:05.

in 1846 and for well over 100 years it produced watches that

:16:06.:16:13.

were designed in England Then, due to lack of interest

:16:14.:16:15.

from the fourth and fifth generation of the family,

:16:16.:16:20.

the business was But in 2016, after a hiatus

:16:21.:16:21.

of some 60 years, the great-great-great-grandson

:16:22.:16:26.

of the company's founder took up the challenge of bringing

:16:27.:16:30.

the brand back to life. Nicholas Bowman-Scargill,

:16:31.:16:36.

director of Fears Watch Company, We mentioned you are a young

:16:37.:16:52.

entrepreneur, 29? 30 next month. Before you started, you were working

:16:53.:17:01.

for Rolex? Yes, I worked in the workshops for five years as they

:17:02.:17:06.

watched technician, doing parts of repairing, but also serving

:17:07.:17:08.

customers, talking to them about their watches, what was going wrong

:17:09.:17:12.

and how to fix it. That is a coincidence, given that you have

:17:13.:17:17.

this heritage and your family. But what prompted you to work at Rolex?

:17:18.:17:23.

I knew half the story. I was aware there had been watchmakers in the

:17:24.:17:27.

family, and I thought it could be a career I could take up, but it was

:17:28.:17:32.

only when I was at Rolex that it became apparent that there was more

:17:33.:17:35.

to the family history. It was over Sunday lunch at the story came out,

:17:36.:17:41.

I had been talking about wanting to set up my own business and my mum

:17:42.:17:45.

said, why don't you restart the family company? Doing a start-up is

:17:46.:17:51.

one thing, but restarting a business like this is quite different. Did

:17:52.:17:56.

you have any copyright issues? The first thing was to check and make

:17:57.:18:02.

sure I could incorporate the name, but then trade market. With the

:18:03.:18:07.

heritage, it is difficult, because it is a blessing, you have the

:18:08.:18:13.

watches and the story to go back to, but it means you have to be careful

:18:14.:18:17.

that what you are doing is going to last another hundred years, as the

:18:18.:18:21.

company did before. How do you get the interest back? Fears is not a

:18:22.:18:27.

name people will have heard of. It is a great story of hundreds of

:18:28.:18:31.

years ago and a family history, but how do you get yourself on the

:18:32.:18:35.

market when it is so saturated already? Exactly, and there is a lot

:18:36.:18:41.

of interest in things like smart watches as well. But being true to

:18:42.:18:48.

the heritage, the story, that does not mean just putting the date on

:18:49.:18:56.

it, but by going back to the values of the company and certain design

:18:57.:19:00.

elements and the history, bringing those things and updating them for

:19:01.:19:05.

today, people like to look back and see that something has been

:19:06.:19:09.

authentic, it has not just been picked up for no reason. None of

:19:10.:19:14.

your family had an auld Fears watch, so how did you get hold of them? To

:19:15.:19:19.

ones, I first turned to eBay, and ones, I first turned to eBay, and

:19:20.:19:24.

started looking online and came across them. For several years I was

:19:25.:19:29.

picking them up for a few pounds. Since the relaunch of the company,

:19:30.:19:33.

you cannot do that any more, unfortunately. Once I got them, I

:19:34.:19:39.

was inspired to find out more, and then speaking to different family

:19:40.:19:42.

members, I was pleased that nobody else had thought to do the relaunch,

:19:43.:19:47.

but it was nice to find little snippets of information, that a bit

:19:48.:19:52.

of history, everybody started going through all photo albums and started

:19:53.:19:55.

finding of documents and paperwork. It is a reddish story, -- British

:19:56.:20:03.

story, but an element of the watches have to be made in Switzerland? As

:20:04.:20:13.

the case is today, if you want to make a watch in Switzerland, you

:20:14.:20:16.

have loads of companies all next to each other, all in the same region,

:20:17.:20:21.

who make the individual components. To try to do that in the UK is

:20:22.:20:24.

almost impossible. There are people who do it but the watches result in

:20:25.:20:30.

being very expensive. It may get better over time, but for the moment

:20:31.:20:35.

Switzerland is the place to go to. At the moment it is just you, so how

:20:36.:20:39.

do you market? You don't have a marketing or PR team. It is a lot

:20:40.:20:45.

easier than it was five or ten years ago, with social media? Exactly. In

:20:46.:20:51.

the summer last year before I launched, I had several months of

:20:52.:20:55.

building up interest just using Instagram, Twitter, Facebook, using

:20:56.:21:01.

photographs, things from the heritage and the archives, and

:21:02.:21:04.

starting to generate a buzz around it. I had never used Instagram until

:21:05.:21:10.

June, so it was all new to me, but once you get going, it is exciting

:21:11.:21:16.

and creative, and you are getting interest from people. Fears used to

:21:17.:21:23.

export to 95 countries. Today I already have watches on almost every

:21:24.:21:27.

continent. That is largely because on social media you can put out a

:21:28.:21:31.

tweet or photo and somebody in Tokyo can look at it and get in contact

:21:32.:21:34.

with you straightaway, there is no delay. To use a terrible cliche,

:21:35.:21:39.

time will tell! A fascinating story. In a moment we'll take a look

:21:40.:21:47.

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

:21:48.:21:50.

of how to get in touch with us. PowerPage is where you can stay

:21:51.:21:59.

ahead with all of the day's breaking business news. We will keep you

:22:00.:22:02.

up-to-date with the latest details with insight and analysis from the

:22:03.:22:05.

BBC's team of editors around the world. We want to hear from you. Get

:22:06.:22:10.

involved in the BBC business life web page. We are on Twitter and

:22:11.:22:15.

Facebook. You have been getting in touch with

:22:16.:22:33.

the story we are about to talk about. UK bosses make today, January

:22:34.:22:46.

the 4th, the amount that the average worker would earn in a whole year.

:22:47.:22:51.

That is a staggering statistic. ?28,000. The average wage is ?28,200

:22:52.:22:58.

or whatever, and if you take into account the average pay from these

:22:59.:23:03.

bosses is enormous, around ?5 million a year, from one working

:23:04.:23:11.

week, by Wednesday afternoon they have earned the same amount as the

:23:12.:23:14.

annual average wage, which is staggering. One of the real key

:23:15.:23:19.

things about this, and why people get so annoyed, it is an insane

:23:20.:23:26.

amount of money for anyone, but these people get paid this money

:23:27.:23:30.

whether you succeed or fail. But if it is a listed company and you have

:23:31.:23:39.

shareholders, maybe not. A good example is not necessarily a listed

:23:40.:23:43.

company but a company owned by the Government, RBS and the banks. There

:23:44.:23:48.

is so much public rush on those companies, and it is the companies

:23:49.:23:50.

with public Russia where you will see a EEO who will forego his bonus

:23:51.:23:56.

or will not get paid all of this money. But the FTSE 100 companies,

:23:57.:24:01.

not all of them do that, so there are companies that do not perform

:24:02.:24:08.

well but still pay. When it looked at the average CEO, they measured it

:24:09.:24:18.

as a ?4 million average salary. If you added Martin Sorrell's salary

:24:19.:24:21.

in, it would skew the figures, because he is paid $71 million. He

:24:22.:24:27.

started the company from nothing and built the company up to stop play on

:24:28.:24:32.

the world's biggest advertising agency. Sometimes you can say, OK,

:24:33.:24:38.

if somebody has built up a company to be so successful, you deserve a

:24:39.:24:42.

lot of money, but it is the company where it is more of a Public

:24:43.:24:45.

service, and the companies are not assembly performing well. One person

:24:46.:24:53.

tweeted to say, they still earn less than a footballer. If they create

:24:54.:24:55.

jobs and wealth for others, it is fine.

:24:56.:25:00.

One person says, as long as they are held accountable by shareholders,

:25:01.:25:05.

they are worth it, but then some others say, nobody brings that much

:25:06.:25:08.

value to a company or needs or deserves a salary so high. Total

:25:09.:25:15.

mixed opinion. Let's look at another story, getting talent from students

:25:16.:25:17.

in China. Do you play golf? Yes, and if you

:25:18.:25:23.

watch on TV there is an enormous movement of people from China, South

:25:24.:25:29.

Korea, the far east, playing golf and being incredibly good at it. One

:25:30.:25:34.

every where it is massive if the women's game. The LPGA tour is

:25:35.:25:39.

dominated by people from the Far East. The young golfers are getting

:25:40.:25:44.

scholarships to study in the United States, which is fantastic. If you

:25:45.:25:51.

can do it, do it. I wish I could! That is it. There is more business

:25:52.:25:56.

news through the day on the BBC life web page and on world business

:25:57.:25:59.

report. See you again tomorrow, goodbye.

:26:00.:26:09.

It is a bit cloudy now, but we have lots of sunshine in the forecast

:26:10.:26:17.

today. Tonight it will

:26:18.:26:18.