06/07/2016 World Business Report


06/07/2016

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Those are the latest headlines from BBC World News.

:00:00.:00:00.

Now for the latest financial news with Aaron

:00:00.:00:07.

One of Europe's biggest airlines in a Brexit bother.

:00:08.:00:21.

We're taking a look at how easyJet's business model,

:00:22.:00:23.

based on the freedom of movement across Europe,

:00:24.:00:25.

may be in trouble once Britain is out of the EU.

:00:26.:00:30.

And from Brexit loser to potential Brexit winner -

:00:31.:00:33.

how India's multi-billion dollar clothing industry is hoping

:00:34.:00:35.

for a better trade deal with the UK after it leaves the EU.

:00:36.:00:51.

This is a bite-size snapshot of the latest in the world of business and

:00:52.:01:02.

money. As the dust settles

:01:03.:01:03.

following the UK's decision to leave the European Union, businesses

:01:04.:01:05.

are taking stock over the impact the decision may or may not have

:01:06.:01:08.

on their daily operations. One company whose core

:01:09.:01:11.

business is based on freedom of movement across Europe is the low

:01:12.:01:13.

cost airline easyJet, which is reportedly already in talks

:01:14.:01:17.

with aviation regulators from EU member states about acquiring an air

:01:18.:01:21.

operator's certificate in a European country so it can carry

:01:22.:01:26.

on with business as usual. I will explain all of that in a

:01:27.:01:34.

moment. EasyJet says it has "no plans"

:01:35.:01:36.

to move its headquarters from Luton, but will need

:01:37.:01:38.

to consider its options. I'm joined by Alan Bowen,

:01:39.:01:44.

Managing Partner at AGB Associates. Great to have you with us. Good

:01:45.:01:54.

morning. Can we bring the map up? Where is it? Obviously it was not

:01:55.:02:00.

going to work. Hang on. There we go. This is the problem. You explain

:02:01.:02:07.

this to me. EasyJet is in EU airline and it can fly point-to-point

:02:08.:02:12.

anywhere within the EU. Absolutely. If the UK leaves the EU, easyJet

:02:13.:02:21.

comes a UK alone. Any EU airline to fly between any two points. Once we

:02:22.:02:26.

cease to be in the EU, I write terminates, and we would have to

:02:27.:02:28.

negotiate with each individual country on a bilateral agreement

:02:29.:02:35.

which will be slow and difficult. EasyJet's model is based on the

:02:36.:02:39.

freedom of movement. It has headquarters in a lot of these

:02:40.:02:45.

countries. Yes. It has bases in 11 countries, and owns an airline in

:02:46.:02:49.

Switzerland already, which bought some time ago. There is easyJet

:02:50.:02:54.

Switzerland. But that will not help in the future. It is looking at

:02:55.:02:59.

setting up a domicile in another country to enable it to get a new

:03:00.:03:04.

licence. It has bought a Swiss airline, but could buy an airline in

:03:05.:03:08.

one of these EU countries, and that could give it the same access? It

:03:09.:03:12.

could, it doesn't want to do that at the moment. The market is very

:03:13.:03:16.

tight. Ryanair is its biggest competitor and is an EU airline

:03:17.:03:21.

because it is based in the Republic of Ireland. Norwegian airlines is

:03:22.:03:29.

number three. They have an agreement occurs they allow freedom of

:03:30.:03:35.

movement, so even though it is not an EU country, it gets the benefits.

:03:36.:03:43.

If we broaden this out further globally, you has an open skies

:03:44.:03:46.

agreement with the United States. That allows pretty much every

:03:47.:03:49.

airline from either side to go anywhere. If the UK leaves the EU,

:03:50.:03:56.

then what? Unless we reach a new agreement and the Americans already

:03:57.:03:58.

said we are going to be at the back of the queue for new agreements, we

:03:59.:04:02.

go back to the original agreement, open skies, which was called Bermuda

:04:03.:04:08.

two, and that allowed two airlines from the US and to from the UK to

:04:09.:04:13.

fight transatlantic -- two from the UK. If you limit that to two

:04:14.:04:19.

airlines, rises will go to the roof. Absolutely. Prices are much lower

:04:20.:04:25.

than they were 25 years ago, and we could potentially go back to where

:04:26.:04:32.

we were before. So there is British Airways and virgin, but then you

:04:33.:04:35.

have all of the minor airlines which I UK based. Yes, and there are more

:04:36.:04:41.

than two US airlines flying transatlantic as well, and it is

:04:42.:04:44.

where many make their money. There is no benefit for the airlines, and

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no benefit for the consumer. We appreciate it. We may see you live

:04:48.:04:58.

next week at the airshow. Shares in Tokyo have seen

:04:59.:05:00.

a bad day so far today. The Nikkei ended the morning

:05:01.:05:03.

session down close to 3%. Investors are moving out

:05:04.:05:07.

of stocks and into currency, with the yen continuing to gain

:05:08.:05:09.

as it's seen as a safe haven. The more people by the yen, that

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which is its value up and makes it much more expensive for the Japanese

:05:27.:05:31.

exporters, and for us to buy them, so we buy less. That is not good.

:05:32.:05:34.

And, Sharanjit, apparently this is because of Brexit -

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That is not good at all, and the Japanese exporters are not liking

:05:37.:05:45.

it. But I should say that the yen, seen as a safe haven, is rising

:05:46.:05:51.

significantly against the pound. The pound earlier hit a 31 year ago

:05:52.:05:56.

against the US dollar. Markets are still remaining very edgy in the

:05:57.:06:02.

wake of the Brexit folk, and the yen is something of a safe haven, and it

:06:03.:06:07.

is now driving down Japanese stocks, which are explained pretty well.

:06:08.:06:13.

Brexit is having a lot of impact in Asia. A lot of nervousness overnight

:06:14.:06:19.

on Wall Street. There are about 1000 Japanese firms that operate in the

:06:20.:06:24.

UK, many of which could say a huge impact on its operations due to

:06:25.:06:32.

Brexit. They see the UK as a portly Dylan with Europe, and the outlook

:06:33.:06:35.

for Stelling does not appear incredibly bright -- port for

:06:36.:06:43.

dealing with Europe. Bloomberg are projecting that the pound will fall

:06:44.:06:47.

to new parity to the US dollar by the end of September, $1.16. That is

:06:48.:06:54.

a real shock for many. Thank you. That is a nice and Rosie theme to

:06:55.:07:00.

leave us on. No holidays left for us! Thank you. We will speak to you

:07:01.:07:07.

soon. But good news to UK exporters. Let's talk about another story. We

:07:08.:07:10.

can't get away from Brexit. Take India's textile exports

:07:11.:07:13.

to the UK as an example. They're worth around $2 billion

:07:14.:07:15.

a year, and the UK is the most important market in Europe

:07:16.:07:19.

for garment traders in India. Their business is already hurt

:07:20.:07:21.

by the fall in the pound, as Yogita Limaye

:07:22.:07:24.

reports from Mumbai. Made in India to be sold overseas.

:07:25.:07:38.

All of the clothes manufactured at this factory in Mumbai are for

:07:39.:07:43.

export. The company produces 1.8 million garments every month. And

:07:44.:07:47.

60% of its business comes from the UK. So with a value of the pound

:07:48.:07:56.

falling sharply after Brexit, its earnings are being hit. If I don't

:07:57.:08:01.

get a proper pricing, we will be looking for a different market. I

:08:02.:08:06.

can go to other countries like USA or other European markets or a

:08:07.:08:09.

study, and we can get the business. I can't take immediate steps or

:08:10.:08:16.

strategies, but in the long-term, yes, if I don't get support, I will

:08:17.:08:23.

definitely save it. More than a third of India's textile exports go

:08:24.:08:28.

to the European Union, and the UK is the biggest buyer. Traders here have

:08:29.:08:34.

heard it been finding Europe a tough market to sell. A T-shirt made here,

:08:35.:08:41.

when a retailer buys it, they have to pay import tax. If a similar

:08:42.:08:45.

T-shirt is bought from a country like Bangladesh, there is 0% duty.

:08:46.:08:49.

That makes Indian clothes less competitive. Now that the UK has

:08:50.:08:57.

voted to cut itself away from the EU, it is expected to start looking

:08:58.:09:00.

to do more trade with other markets. And the Indian government is

:09:01.:09:06.

demanding a better deal. The benefits which were given to

:09:07.:09:10.

Bangladesh and a few other countries were not extended to India. As a

:09:11.:09:18.

result of that, not just the loss in terms of employment generation, but

:09:19.:09:23.

a sector which had strength, which pioneered, and reached a global

:09:24.:09:29.

market, it was unfairly pushed out of its traditional markets. So that

:09:30.:09:35.

I would think would give us the advantage in a matter of a couple of

:09:36.:09:39.

years to be able to serve the UK and the European Union. Ironing out such

:09:40.:09:48.

an agreement will take time. For now, Indian factories will be

:09:49.:09:50.

looking for answers from their UK partners.

:09:51.:09:59.

Avid Life Media, the owner of infidelity dating website

:10:00.:10:01.

Ashley Madison, is being investigated

:10:02.:10:02.

Last year, hackers stole the personal information of millions

:10:03.:10:06.

of the website's customers, which helps link up married people

:10:07.:10:09.

Mostly married blokes, I believe. That'll teach them!

:10:10.:10:21.

Don't forget you can get in touch with me and some

:10:22.:10:24.

We will be back to look at the newspaper shortly.

:10:25.:10:34.

NHS inspectors from the Care Quality Commission have revealed that

:10:35.:10:36.

a patient lay dead for up to 4.5 hours before

:10:37.:10:41.

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