04/07/2016 World Business Report

The British Finance Minister wants to promote the country as open

for business by slashing the corporation tax to the lowest

The battle of the financial centres -

how will Brexit effect the planned merger between

the London Stock Exchange and Frankfurt's Deutsche Boerse,

You can't see me at the moment, but you can hear me. These robotic

cameras, you want to kill them at times. You will see me shortly. Or I

could walk down and sit on the chair. No, they are coming back!

What a great start. What is going on.

How do you attract businesses to a Britain outside the EU?

That question must have kept the UK's Finance Minister,

Chancellor of the Exchequer George Osborn, awake at night.

In an interview with the Financial Times,

Mr Osborne says he will cut corporation tax to 15%.

At present, the tax businesses pay on their profits

But in March, Mr Osborne said the corporation tax

He gave no hint as to when the drop to 15%

would take place, so your guess is as good as mine.

One thing is certain, though, - it would bring the UK close

to Ireland's very competetive and somewhat controversial

All this is very different from what Mr Osborne was suggesting

There will be a hole in public finances.

You have Chancellors from two different political parties saying

taxes will have to go up, spending will have to be cut.

That is the reality of quitting the EU.

Let's stay with the theme of Brexit. We are not going to escape it.

The planned merger between the London Stock Exchange

and Germany's Deutsche Boerse is now in doubt after the UK's vote

The deal was meant to bring together Europe's leading financial

hub, London, with Frankfurt, home of the European Central Bank,

creating a giant able to compete with US and Asian rivals.

But Brexit has cast doubt on where the EU's financial centre

Some predict Frankfurt will become the continent's finance hub.

Jonathan Beastall, Senior Advisor at Pinsent Masons, joins us.

We had a sneak preview of you earlier, thank you for coming to the

studio at this time of the morning. Before we talk about the impact of

Brexit, can I ask you this? Why the talk of this deal in the first

place? It is common knowledge that the global nature of business is

ever more competitive, and I think it has been thought for many years

that a combination of European stock exchanges would be much more

competitive and able to offer new products in a rapidly changing

global market. Very good point. I am just wondering now, with the Germans

looking over towards us here and say be passed to the exact the past

week, the pound has dropped, we have seen the markets tumble and banking

stocks taking a hammering, and they are looking and going, I am not sure

if this is what we originally agreed to sign up to all who wanted to sign

up to. I figure will be uncomfortable on the side. But this

merger has been a long time in the planning. It was not conditional

upon a positive vote in the EU referendum. It is not set to close

and to the first quarter of next year. Everybody knew about the

referendum. They never said is the deal would go ahead if there was a

yes or no? There are no conditions with this major in relation to that

thread. Some European cities, satisfying effect, in London or the

UK goes out, its title as the financial hub might be lost -- such

as Frankfurt. Do we have European cities jostling with each other to

see who will take that title? There has already been, Tish and between

Frederick, London and Paris as to which is the leader -- competition

between Frankfurt. But that pressure has certainly increased as a result

of this vote, not least because there is quite a lot of discomfort

about the idea of Euro trade deal being settled in London yet not

being part of the EU. The reason we are talking about it today is

because the LS see shareholders are getting to vote whether they want to

put this plan forward -- LSC. This scheme of arrangement is a chord

orientated process, any court said first you need a shareholder vote to

approve it, and then they come to us and assess whether the merger should

go ahead. This is a stage vital to be processed but not the end of the

process. We have to leave it there. If you were a betting man, will go

ahead? Overall, there are a lot of hurdles to get over, put it that

way. Great answer. We appreciated. -- appreciate it.

Australia could be facing the prospect of a sovereign credit

rating downgrade in the wake of the inconclusive federal election

Rico Hizon in our Singapore bureau has been following the situation.

There is a similarity in what we are seeing around the world, in the UK,

in the United States, voters are a little miffed. Uncertainty.

Uncertainty. But you know what? Let me tell you this. I should be

talking about a study and the economy, you are the Australian

expert! -- are studying politics. We have a election cliffhanger. There

is so much uncertainty right now in the Australian political economic

and here. You have to major political parties failing to secure

a majority to form the next government. By Minister Malcolm

Turnbull has promised to stabilise the government but it is still not

clear if he will have a majority or be able to form a coalition. Most

ballots have been counted, but it will be Tuesday before we get the

final result in this knife edge poll. If you have a hung parliament

or a minority government, there is an inability to pass, rancid

economic and budget reform agendas to the Senate, and for Australians

like yourself and Australian business, you cannot afford a

gridlock. The priority is approving the Australian standard of living

for a strong and growing economy. Although the economy has been

growing for the past 25 consecutive years, let's just hope that the

streak will not be broken with all of this uncertainty. Hopefully we

will soon have a few Prime Minister in three years. -- we might soon

have. It is quite embarrassing, really. We will talk to you soon. It

would be better if the Australian dollar had dropped last week!

The potential effects of Brexit are far-reaching.

D'Addario is one of the world's largest manufacturers of guitar

Their headquarters are 50 miles outside of New York City.

But their CEO says that Britain's decision to leave the EU could force

The D'Addario family has been making these strings long before George

Harrison started using them. But the uncertainty on the other side of the

Atlantic is not exactly music to their ears. Give me a sense of how

much of your business depends on your. It is close to 35%, export is

very important to us worldwide. Europe is the biggest market right

now. So what can send you the most about Brexit? There is a lot of

uncertainty because nobody expected this thread to go that way.

Uncertainty always makes people hesitant to restock their infantry

is and so on. They started jamming things back -- inventories. That is

always a concern for us. We have witnessed the dollar getting very

strong, so that really puts a damper on exports. Have you already started

making contingency plans Chris Mack not really. Not to the extent we

probably should have. -- contingency plans? We did not think the vote

would go this rate. Business is so, located today in the have to focus

on so many different things to manage all of the channels out there

in the fact the world is getting so much smaller. Sometimes you just

take your eye of things, we probably were not thinking about it enough.

The dizziness in Europe is making it difficult even for a company in New

York that makes its money from Harmony -- descendants.

The markets are slightly up. The Australian dollar under pressure

because of the results from the federal election. I will be back to

look at the newspapers shortly.