17/12/2015 BBC Business Live


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Hello everybody, this is business live, good to have you with us.


Markets around the world are heading higher following the most expected


move from the Federal reserve. If you did not know, they did go up. We


will pump out what that means for the global economy. This is live


from London. Thursday the 17th of December. Yes, we have liftoff, the


US has raised interest rates for the first time in almost a decade, a


move that is likely to cause ripples around the world and could increase


pressure on other countries to raise their rates. Also in the programme.


As if Facebook was not already a big part of our lives, the tech giant is


now teamed up with Bluebird to enter the transport business. As always we


will show you the markets in Asia and all around the world, that is


following the news, that the Fed has raised rates for the first time in a


very long time, since 2006. And we will be getting the inside track on


what it takes to make money in the music business that is increasingly


based around streaming platforms. We will be speaking with the head of


PRS music. And we want to know whether you back that US Fed rate


rise or not? Is it too early? Should they have done it a long time ago,


should they have waited until next year? Get us know. -- let us know.


OK welcome to the programme, lots going on, we start of course with


the big news affecting the markets and businesses and people, all of us


around the world, the American central bank, the US Federal reserve


has raised the cost of borrowing for the first time in almost a decade.


The Fed increased its benchmark interest rate by a quarter of 1%. It


is a small step but is it the first of many rises? Our US interest rates


about to skyrocket? What has really should investors is the tone of the


big boss, Janet Yellen who has said that the progress is likely to


proceed gradually. They say that the cost of borrowing is likely to be


about just under 1.4% by the end of next year. That implies for more


rate rises next year. Traders are betting that the next move will be


in April but that is assuming, that the US economy remains in good


health. I am joined by Stephanie Flanders, the chief market


strategist, for Europe JP Morgan. It has happened, it is the morning


after, give us your thoughts? I think it is funny because there has


been this feeling that we would have this


great moment certainty. One of the arguments for this rate rise would


be that it gave a sense that we were on this path to normality, of course


we have just got more things to be uncertain about. Now a lots of the


focus will be on what the pace of those further rate rises will be,


how the US responds to them, what inflation looks like in the US, does


it do what the Federal reserve is expecting? The further path is one


thing, but also we are testing the water on how the rest of the world


reacts, addictive illegal emerging market economies. We know that the


end of super cheap money, has caused a lot of adjustment problems for


them because they had a lot of benefits from money flowing into


their economies, this could be the high watermark for their problems


because people know what they are doing now they could say. That is


what a lot of people in the central banks will thing, or it could be the


start their trouble. The big focus where we are is on Mark Carney, the


big boss of the Bank of England, but how much pressure is put on other


central banks in developed economies because they watch very closely? The


UK is widely considered to be next in line, probably the only country


that you put in the same category of the US, quite far wrong with even a


little bit of upward wage pressure. Inflation is far below the target.


You have seen Mark Carney acts like he's completely oblivious to what


goes on in Washington, of course, they are affected by the fact that


the US now has made this rate rise, if that could stick and it looks


like it will stick, that is an environment in which it is a bit


easier for the Bank of England to go second. But with all of the question


marks over Brexit and the EU referendum, we are not sure. It


could be later in the year. In terms of the effect on the global economy,


we have talked a lot about looking at various countries and the impact


of various individuals, because the dollar is changing in value, give us


your take on that response because many watching us in Asia, or in


Latin America, are thinking OK this will have a real impact on me, when


I am painful things in US dollars? The thing about markets is that they


should be forward-looking so we should have had most of the response


to high rates, this is the most anticipated, if there was anybody in


the financial markets, thinking, I am going to buy dollars, you would


think they were a bit behind the curve, so the hope would be, most of


the adjustment of higher rates at least on a slow path, has already


happened because it is so were anticipated, does that mean we will


get a view more months of dollar strength? As we factor in a higher


and faster rate rises, possibly, but I think the hope would be, that


there wouldn't be another big leg up in the dollar and that would be good


news for the rest of the world. Time to squeeze in some other stories.


Facebook has entered the transportation business.


The firm has agreed to work with Uber to allow users to hail


Uber cabs directly from the Messenger app.


The new service means Messenger users will be able to ask


for an Uber vehicle without leaving the Facebook software.


"Uber on Messenger" began in parts of the US this week,


Argentina is to scrap foreign exchange restrictions,


allowing individuals and companies to buy dollars freely


The move comes six days after pro-business President


Mauricio Macri took office promising deep economic reforms.


The controls were set up by former president Cristina Kirchner to stop


capital leaving the country - but critics say they have hurt


The value of the peso is now expected to slump from less


than 10 to the dollar - the official exchange rate -


to as low as 15 in line with the black market.


Hong Kong's central bank has also raised the base rate it charges


to a seven-year high of 0.75%, tracking the decision by the US


The Hong Kong dollar's peg to the US Dollar means the city's monetary


Let's take a look round the world at what's business stories


Heathrow is making headlines again. The chairman is


stepping down. We have got some tablet problem so this is controlled


elsewhere, he throws hugely in the spotlight in the UK, it is the


busiest airport, the second busiest airport in the world. In terms of


passenger numbers. A huge debate just continues over the third


runway. I am still talking. Third runway, or will it go to Gatwick?


Yes fine, now little talk about Ted Baker. Ted Baker is to buy property


for ?55 million, many will say that it is not the nicest looking


building. They have agreed to purchase the freehold for that


amount, plus costs ?3 million. The acquisition will be financed by ?60


million secured term loans. Costing quite a bit of money in the process,


new headquarters for that company. Are you finished? I am. Let us look


at some of the other business stories. We are going straight over


to the offices, we are going to talk to the reaction, the big Fed


decision. Winners and losers in Asia, those that export to the


United States could benefit because it will be cheaper to export to the


US with a higher dollar, but those sitting on dollar debt, that is more


expensive for them? Absolutely although across Asia we saw markets


finishing broadly higher this Thursday, despite the fact when you


break down what the US Fed move is going to mean for them as you just


referred to it going forward, the future rate rises is what many in


the region will still be vulnerable to. Asia was the first to respond


from the news. Any rate rises will be


gradual but higher interest rates will cause problems for economies


that are far too exposed to US dollar-denominated debt, and Asian


central bankers are caught between a rock and a hard place. They need to


cut rates to boost growth, many of the countries in the region of


Basingstoke growth but if they do that, they risk sending more money


out of their financial systems which will weaken their currencies


further. It is a tough position to beat him. With slower growth


expected to hit the region even further in 2016, it is becoming a


real dilemma for policymakers. Thank you very much.


Staying with markets - not much more to add really.


As you can see the markets around the world embracing that FED


decision to lift rates for the first time in donkeys years...


The uncertainty over will they or won't they -


now obviously gone and the markets have certainty...


This was seen as a mark of confidence. It is also piling on the


painful oil prices. Oil prices have fallen again -


more supplies into the already In fact keep your eye on US


lawmakers who could be voting tomorrow to lift a four decade US


ban on crude oil exports. Joining us is Tom Stevenson,


Investment Director Nice to see you. Looking at those


numbers, France and Germany, 2%, I mean, I wouldn't expect a bounce to


that degree given the fact that on Tuesday night they all closed up 3%,


it has been quite a week? Markets tend to move on things they don't


expect. Surely this was the most overran a light, over speculated


rate ever. No surprise. But it has cleared the uncertainty, that is why


the markets are buoyant this morning. Something we didn't get


time to ask Steph, many are betting that April is the next move up. Your


thoughts? That is the interesting gap between what the Fed is saying


and what the markets are saying. The Fed is clearly saying that they


expect full quarter point races next year, and the same in 2017, the


market is more cautious. It is expecting a couple of quarter point


rise is. I think that if we do get signs that the Fed is pushing for


four rises next year, that actually will be taken badly. That is clearly


not priced in at the moment. Briefly, I want to talk about oil,


the Fed made the move, the oil price drops further but it is interesting


about this move, possibly by lawmakers tomorrow? Yes, if the US


does exporting, that is another source of oil, we have got Iran


coming on stream. Things may be clearing up in Libya, oil coming


from there, if the US starts exporting oil,


the oversupply will get worse and it will keep the price is low for the


considerable future. More stories to discuss, but we have more to do


right now. We're going to be talking music


and in particular how people make Later in the show we will be


speaking to the man behind the group which makes sure songwriters,


composers publishers all get what they are owed


in an increasingly digital world. You're with Business


Live from BBC News. How will the UK be affected


by the US interest rates decision? Ben's in central London


to tell us more. We've heard about the impact of that


rate rise in America, around the world, but what does it mean in the


UK and will the Bank of England follow suit in raising the cost of


borrowing? Monica is with me, and Jeremy. Monica, what does it tell us


here in the UK about America thinking America is on the mend?


Will the UK follow suit? I think so. Both economies are seeming to be


back on track, in terms of lower unemployment numbers, steeper GDP


growth, so I think we are expecting the Bank of England to follow suit


with an interest rate rise later next year, but I think both are


going to be quite cautious, in the pace of the rises to make sure we


are on firm footing. Away from these emergency measures, arranged to


kickstart the economy, getting back to something like normality? I don't


think anyone knows what normality still is. This was the 1st rays in


10 years. We are starting to see... The word they use last night was


gradual, the emphasis is on how slow these rises will be. The 1st step on


a very long road. The last thing the federal bank or the central bank of


England want to do is scare the horses. We are looking at the


International picture, what does it mean for investors and business? It


is the start of a long process of rates rising, how would you start to


prepare? So far we have seen a positive reaction from markets.


Tokyo and Hong Kong opened up. Investors should be feeling pretty


positive. Different effects on other assets, but overall anything that is


positive overall for the economy is positive for investors. Thank you


very much. That is the view from here in London. The big question is


if the bank of England will follow suit, what will it look at when it


looks at the cost of borrowing in the UK? America has fired that


starting gun. Will UK follow suit is the question?


This is business to live. Our top story: the American central bank


announced that rise in the interest rate. Seen as a powerful statement


about the improving health of the US economy. Markets in Europe and Asia


are bouncing on that news, as we have been discussing.


The music industry hasn't exactly had the easiest time


Illegal downloading and low cost streaming services have led


to a steady decline in music sales, forcing artists to look at more


One of the companies at the vanguard of that effort is 'PRS for Music'.


Formed in 1997, they look after the usage rights of over 10


million songs - representing everyone from blockbuster


songwriters like Adele, to classical composers.


Their role is to ensure songwriters, composers and music publishers


are paid whenever their content is played, performed or reproduced.


In total the firm collected almost a billion dollars in music rights


in 2014, a 1% increase on the year before.


If we break that down though we can see that only 12% of that amount


came from online sources with half of their collected revenues coming


from live performances and the broadcasting of music.


Robert Ashcroft, is the firms Chief Executive and is with us


Great to have you with us. I was just going to say, it all sounds so


complicated to me. I am a Luddite, I still use CDs. I have to look to my


kids to download things for me if I cannot get it on a CD. But it is


huge business, and it is something developing over a very long time for


both artists and users of the songs you are representing the lot?


Absolutely. We have been in business for 101 years now. It has changed


enormously since the advent of the Internet. We had seen recorded media


sales going down. We've seen downloads replacing sales of CDs.


Now we are into the streaming era. Last year our streaming revenues


were higher than our download revenues. For the first time? Yes,


we cross the threshold in 2014. That makes sense because it seems to be


the way... People don't want to own that necessarily, but just to stream


it. I wonder, I guess it is easy to keeps track of streamers and


downloads, but how do you do it in all quarters of the world of people


using one of the songs and somebody not realising they have to pay for


it. There is a network of societies around the world. We have reciprocal


arrangements with 150 countries. We represent their musicians in the UK.


If you are running a pub and you get a license, you automatically have


that license with us to play Argentinian music, Filipino music,


music from all around the world. We have the same arrangements. Funnily


enough, in parts of our business we are monopoly in the UK. I thought


when I joined it was the end of my travel. I used to work for Sony and


travelled all around the world, suddenly I found myself travelling


to Argentina, Japan, Hong Kong, China, all around the world,


developing relationships and understanding how they work, to


track that usage. For the artist, how does it work, in terms of what


he or she actually gets paid? If you find somebody is using a Dell's new


hit single Hello in the backwaters of Shanghai and they have not had


proper authority or paid, talk us through the logistics? There is the


music copyright Society of China and they copyright all the hotels and


businesses. They are not as well penetrated in their market as we


are. It is a developing market for copyright, so we cannot be sure


everything is captured, but we are in dialogue with them. We see who


they have licensed, how they license them and check how they collect the


money. We are going through business dialogue to make sure we are being


paid for our members. And then you pay Adele? Yes. We have spoken on


other programmes, you and I, about the difference in what the artist


would receive from a download, to streaming. There were a lot of


artist two were not happy about what they were receiving, what they were


getting back? Absolutely so. In the old days you could say I have a song


and a CD, CD sales are ?10 and I get my share. But it doesn't really


matter if your song is really popular song... If somebody bought


the CD for a particular song, then you get into the download era, you


are getting about 5p per download. Then you get into the streaming era,


where it gets very compensated because you have the free streaming


services, advert supported ones, you Tube, sound cloud, Facebook, all


these places where you can listen to music. We can take the example of


Spotify. The leading subscription service, it works out on premium


about 50 streams, the equivalent of a download. As we talked about last


time, you can see that working over the long-term. The challenge now is


that most people are listening to their music on the YouTube and sound


cloud. We are trying to get it onto a level playing field, to make sure


songwriters can make their money, regardless of where their music is


played on the Internet. We have to leave it there. It is fascinating to


stop Robert Ashcroft, thank you for coming in. Chief Executive of PRS


for Music. Let's now take a quick look at some


of the best business news out A story is dominating... Do we have


to do it again? The front page of the Financial Times, about the Fed


impact, what it means, the of cheap money, by raising the cost of


borrowing by 0.25%. The Japan Times is reporting in


spite of that big deal on climate struck in Paris last weekend, Japan


and South Korea are both still planning an opening 60 new coal


fired plants in the next ten years. And if you like using Uber


and Facebook this story in the UK Apparently the two companies


are teaming up to allow you to book taxi's via the social networks


messaging app. Tom Stephenson is with us again in


the studio. Let's start with Facebook and Uber. What does it


mean, then teaming up together? Others out there will be thinking


two big disrupters. You could see why Uber would want to get into


Facebook messenger, it has 700 million monthly users. Uber gets


access to them. If you live in that I environment you want to be able to


order your taxi whilst you are in that environment. The Facebook it is


good news as well. They will get the payment details from Uber, which


they will be able to use for other things. Is quite a scary thought.


It is scary, I have no more to add on that. LAUGHTER


OK! Can we move on... We talked about


and talked about it, that two week Hague climate summit, finally got a


deal after many, many years. The world got this deal and now we hear


Japan and South Korea are going to build these coal powered plants. We


didn't focus on Japan and South Korea, there was a lot of pressure


on China. Japan? That is where the attention was on, the big emerging


markets and how to get them into the fold so we could get this landmark


deal announced. But there was or is going to be a gap between the


aspiration and the reality of pushing it through. This story


really underlines that. That between them, Japan and South Korea are


going to build 60 new coal fire plants in the next ten years.


Japan's aspirations for cutting CO2 emissions over the next 40 years,


very modest. The reality is we may be looking at a 2% degree cap but


the reality is the measures already signed up to not going to deliver


it. Thank you for coming in. You got it in! That is it from us


today, see you soon. See you tomorrow. The by. -- goodbye.


Hello. It has been a fairly cloudy and breezy start the day for most


places. A bit of sunshine on the cards, but equally some rain. This


was the view yesterday across Inverness. You can see some blue


sky. There will be more in


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