:00:00. > :00:08.This is Business Live from the BBC with Sally Bundock and Ben Thompson.
:00:09. > :00:11.As 2015 draws to a close, we'll look back on the business year
:00:12. > :00:18.Welcome to a special edition of Business Live: The Review
:00:19. > :00:41.China's slowdown has dominated headlines this year,
:00:42. > :00:49.and the impact has been felt far and wide, but what happens next?
:00:50. > :00:52.Also in the programme: We've been on Fed Watch for a rate rise.
:00:53. > :00:56.As America's Central Bank raises the cost of borrowing,
:00:57. > :00:58.will other Central Banks now do the same?
:00:59. > :01:00.It's been a record-breaking year for big money mergers.
:01:01. > :01:03.Pfizer is on track to break a new record as it battles
:01:04. > :01:05.to close its $108 billion deal with Allergan.
:01:06. > :01:14.2015 was the year of the Internet of Things so what will 2016 bring?
:01:15. > :01:32.We'll be joined by celebrated investor, Eileen Burbidge
:01:33. > :01:34.who is telling us whereis putting her money next year.
:01:35. > :01:37.They are the BBC exclusive interviews and breaking stories that
:01:38. > :01:40.We'll contemplate the big moments of the business year
:01:41. > :01:43.and what the key players said to the BBC with our business
:01:44. > :01:46.Welcome to this special edition of Business Live.
:01:47. > :01:48.As a difficult economic year draws to a close,
:01:49. > :01:50.will 2016 bring more cheer for the global economy?
:01:51. > :01:53.Well, 12 months ago, the tremors of the financial crisis
:01:54. > :01:55.might have been finally beginning to fade.
:01:56. > :01:59.But instead, another challenge came into sharp focus.
:02:00. > :02:02.And it began with warnings from the IMF and World Bank.
:02:03. > :02:05.The Chinese economy was slowing, they said, and with it,
:02:06. > :02:07.the boom in emerging markets and commodity prices.
:02:08. > :02:10.The effects would be felt around the world.
:02:11. > :02:13.The heady days of double digit growth were at an end,
:02:14. > :02:18.replaced instead with more modest expansion of around 7%.
:02:19. > :02:21.The global economy would slow to around 2.9%, down
:02:22. > :02:27.One trigger of the slowdown was a fall in consumer
:02:28. > :02:32.That came partly after a government crackdown on corruption which made
:02:33. > :02:35.many wealthy Chinese avoid lavish displays of spending.
:02:36. > :02:39.As a result, sales of luxury brands fell sharply,
:02:40. > :02:42.everything from Prada to Porsche, Fendi to Ferrari.
:02:43. > :02:45.After a decade of building tower blocks, airports and bridges
:02:46. > :02:47.at record speed, China's construction sector also ground
:02:48. > :02:53.That led to a massive fall in demand for global commodities sparking
:02:54. > :03:02.Companies everywhere have suffered - steel makers in the UK closed,
:03:03. > :03:04.copper mines in Chile shut down and iron ore producers in Australia
:03:05. > :03:15.The Baltic Dry Index which monitors trade levels is currently
:03:16. > :03:20.So as 2015, the year of the Chinese slowdown,
:03:21. > :03:23.draws to a close, we turn our attention to the year ahead.
:03:24. > :03:26.Has the world adjusted to a new normal - the era
:03:27. > :03:30.Charles Goodhart is a professor at London School of Economics
:03:31. > :03:47.Lovely to have you on the programme. Give us your thoughts on this year
:03:48. > :03:51.for China. Of course, it had its plenam as well, where we were trying
:03:52. > :03:53.to read between the line when the president and others in the
:03:54. > :03:58.Government were talking about their five year plan. Well, last year and
:03:59. > :04:03.next year, are a fascinating period because China is changing its
:04:04. > :04:06.business model. It is moving away from being a manufacturing
:04:07. > :04:12.industrial super power to being much more of a service economy which
:04:13. > :04:16.happens when you get richer and incidentally, consumption of
:04:17. > :04:22.luxuries did slow down sharply in China last year, but the consumption
:04:23. > :04:26.overall did not, consumption is growing rapidly, but its consumption
:04:27. > :04:30.of services and it is consumption by the ordinary people, not consumption
:04:31. > :04:35.by the rich, that is keeping China growing and it is growing steadily.
:04:36. > :04:40.So from your point of view, is this transition, the great transition
:04:41. > :04:45.from an economy led by manufacturing made in China by massive
:04:46. > :04:48.infrastructure spend to a consumer-led economy. Is that
:04:49. > :04:52.transition going to plan and is it going well? Oh, it is a very
:04:53. > :04:56.difficult transition, but I think it is going to plan and it is going
:04:57. > :05:01.pretty much as well as you might hope for. One of the reasons why
:05:02. > :05:08.there was such a concern about China in the summer was because they
:05:09. > :05:13.handled the stock market boom and bust really rather badly and that
:05:14. > :05:20.was not just a problem in itself, but it threw doubt about whether the
:05:21. > :05:23.leadership actually was capable of making this massive transition away
:05:24. > :05:29.from manufacturing towards more services. Whether he could handle it
:05:30. > :05:33.safely and well. But that, there has been a recovery, I think, of
:05:34. > :05:38.confidence in the Chinese leadership and they don't do everything well.
:05:39. > :05:43.The one child policy was maintained for far too long. But I think
:05:44. > :05:48.they're back on track. We talk often about how all of these events are
:05:49. > :05:52.interconnected around the world we see the impact of China. Is there
:05:53. > :05:56.anything to mitt grate that influence on the world economy. We
:05:57. > :05:59.have seen what China has done to world commodity prices and
:06:00. > :06:05.especially to oil. Is there anything which could mitigate those risks?
:06:06. > :06:08.For many countries there is a great benefit, the reduction in commodity
:06:09. > :06:11.prices and oil prices is a huge benefit and particularly to Europe
:06:12. > :06:16.and the eurozone is going to do better than people expected in 2016
:06:17. > :06:20.partly because input prices have been going down so very sharply and
:06:21. > :06:29.the developed economies are benefiting and there is a switch.
:06:30. > :06:34.From 2008 to about 102014, the emerging economies did very well and
:06:35. > :06:41.the developed economies did not now. Now it is a around and the develop
:06:42. > :06:43.economies will do well in 2016 and EM will not.
:06:44. > :06:46.Thank you very much. In other news: It's been
:06:47. > :06:48.a record-breaking year They don't come bigger than Pfizer's
:06:49. > :06:53.take-over of Allergan It was the biggest ever health care
:06:54. > :07:07.transaction and second biggest In technology, Dell bought EMC
:07:08. > :07:19.for a whopping $67 billion. And drinks giants AB InBev snapped
:07:20. > :07:21.up SABMiller this year, And there was no shortage
:07:22. > :07:26.of stockmarket action. A flurry of flotations kept
:07:27. > :07:28.global markets moving. In November, Japan Post
:07:29. > :07:30.listed its shares, raising $12 billion and claiming the the title
:07:31. > :07:32.of the largest market Japan Post offers mail
:07:33. > :07:37.delivery but also loans, And big business often means big
:07:38. > :07:40.scandal, and this year Volkswagen admitted to cheating
:07:41. > :07:43.emissions tests in the US, after it emerged the car giant had
:07:44. > :07:46.used a piece of software Chief executive Martin Winterkorn
:07:47. > :07:50.stepped down and VW recalled 11 The scandal could cost the German
:07:51. > :07:53.car giant around $30 billion in costs, compensation
:07:54. > :07:55.and falling sales. Sales in Europe and the US have also
:07:56. > :07:59.fallen by up to a fifth and shares in the company are now trading
:08:00. > :08:01.near four year lows. For more on the year in Business,
:08:02. > :08:04.there's much more on the website with our correspondents around
:08:05. > :08:07.the world weighing up the biggest Jonty Bloom is assessing
:08:08. > :08:09.whether Greece really Our Economics correspondent,
:08:10. > :08:14.Andrew Walker, is looking at who stands to gain
:08:15. > :08:17.from the slide in oil prices. 2015 has also been
:08:18. > :08:20.the year of Fed watching. Month in, month out, the BBC -
:08:21. > :08:23.the financial press and financial markets worldwide were hanging
:08:24. > :08:26.on every word from its new chief Janet Yellen for any clues
:08:27. > :08:29.as to when the US central bank For our US correspondent
:08:30. > :08:32.Michelle Fleury, this meant many days on the steps of the Federal
:08:33. > :08:38.Reserve building in Washington. Janet Yellen used her first day
:08:39. > :08:42.of testimony to provide greater clarity on the timing
:08:43. > :08:44.of the first interest rate hike. Most investors here on Wall Street
:08:45. > :08:47.still think such a move is likely Dropping the word patient
:08:48. > :08:59.from the statement released after every meeting does not mean
:09:00. > :09:02.a rate hike is imminent, according to Janet Yellen,
:09:03. > :09:04.but she and her colleagues are trying to prepare the financial
:09:05. > :09:07.markets for the day when finally, monetary policy starts
:09:08. > :09:13.to return to normal. The intense spotlight
:09:14. > :09:17.on Janet Yellen and the other Federal Open Market Committee
:09:18. > :09:19.members shows just how dependent the markets have become
:09:20. > :09:22.on the Central Bank. It's an addiction the Fed hopes
:09:23. > :09:25.to break when it begins The US Federal Reserve wrapped up
:09:26. > :09:33.a two-day meeting in Washington on Thursday with the announcement
:09:34. > :09:36.that interest rates would remain unchanged, leaving many people
:09:37. > :09:41.asking Janet Yellen what would it After seven years of near zero,
:09:42. > :09:51.Janet Yellen, the chairwoman of the Federal Reserve has finally
:09:52. > :09:57.announced a rate rise of 0.25%. Now, for a long time,
:09:58. > :10:00.the financial markets have been obsessing over the timing
:10:01. > :10:04.of the first rate hike. Now they have another
:10:05. > :10:07.question to ponder. What will be the size
:10:08. > :10:09.and the frequency of Michelle Fleury, BBC News
:10:10. > :10:13.in Washington, DC outside Joining us now is Gillian Tett,
:10:14. > :10:34.US managing editor for the Financial I imagine you have had quite a year
:10:35. > :10:38.as well. Talking about not so much about waiting for God, but waiting
:10:39. > :10:41.for the Fed. We have been waiting all year and when it finally
:10:42. > :10:46.happened, frankly it was an anticlimax. The markets reacted
:10:47. > :10:51.smoothly and everything went to plan and we were wondering what are we
:10:52. > :10:56.going to write about in the FT? It was breaking the cycle of record low
:10:57. > :11:00.rates that had been at that level for so long. It was actually a big
:11:01. > :11:04.watershed in terms of history. Not so much in terms of raising traits
:11:05. > :11:09.because the Fed has done that many times in recent decades, but because
:11:10. > :11:13.never before in history have had a Central Bank kept rates so low for
:11:14. > :11:17.so long on such an extraordinary scale. The Fed's balance sheet has
:11:18. > :11:21.quadrupled in the last few years. Extraordinary what's going on. The
:11:22. > :11:26.big question is how do you get out of that? It is not just the rate
:11:27. > :11:28.rise, but it was all that went before, the so-called quantitative
:11:29. > :11:34.easing that we are familiar with now, but from your point of view,
:11:35. > :11:38.what impact has this had? Well, the good news is thus far there hasn't
:11:39. > :11:42.been a big market reaction. The FedEx cuted this pretty well. They
:11:43. > :11:45.are hoping that Janet Yellen will be like the pilot of a plane coming
:11:46. > :11:49.into land and going forward, the rate rise will be so gradual and
:11:50. > :11:53.gentle that you will come down from this high altitude of super
:11:54. > :11:56.extraordinary monetary policy experiments and the passengers, ie,
:11:57. > :11:59.the markets won't even notice it will be so gentle, but to my mind
:12:00. > :12:04.there are three things to watch right now. Firstly, what's going to
:12:05. > :12:10.happen to those big bubbles that have been blown as a result of the
:12:11. > :12:16.Central Bank poly in the risky markets? What's going to happen to
:12:17. > :12:20.investor portfolios? Most investors are positioned presuming that rates
:12:21. > :12:26.will stay low forever? The third issue which is geeky and nerdy, deep
:12:27. > :12:29.inside the bowels of the financial system, there have been strange
:12:30. > :12:34.things going on recently because the rates have been so low. How is that
:12:35. > :12:41.going to unwind? Gillian, when will the next move be? Markets are
:12:42. > :12:48.betting on April 2016? Markets think there will be two rises. The Fed
:12:49. > :12:52.have predicted four next year. In 2016 venlgt my bet is around March,
:12:53. > :12:57.but the big question is, are the market right or is the Fed right?
:12:58. > :13:00.That affects how investors price their portfolios. We will all be
:13:01. > :13:11.watching. Thank you. Ben. Well, what a year it was
:13:12. > :13:20.on the financial markets. The best performing stock market
:13:21. > :13:25.in the world was China's Shenzhen. Despite the big falls in August,
:13:26. > :13:28.it's still up by 68% at the close At the other end of the scale,
:13:29. > :13:32.Tthe prize for worst performing Well, the exchange is dominated
:13:33. > :13:41.by commodity companies that have And speaking of that slump
:13:42. > :13:44.in commodity prices, oil was the worst performing
:13:45. > :13:53.commodity of the year. And that's been enough to drag
:13:54. > :13:57.down European markets, particularly the FTSE 100 in London,
:13:58. > :13:59.that's heavily weighted with oil Still to come: They were
:14:00. > :14:03.the newsmakers of the year and they were speaking to the BBC
:14:04. > :14:05.when they made headlines. Our Business Editor,
:14:06. > :14:07.Kamal Ahmed will take us through some of his exclusive
:14:08. > :14:09.conversations from 2015. You're with Business
:14:10. > :14:17.Live on BBC News. In the UK, if we are not
:14:18. > :14:20.obsessing about the weather, we are tracking and trying
:14:21. > :14:22.to predict the direction Yes, there was one clear message
:14:23. > :14:27.from the National Association "If you have the money,
:14:28. > :14:34.buy your home now." Victoria Fritz went to the most
:14:35. > :14:36.expensive street in If you want to buy average property
:14:37. > :14:41.on Victoria Road in west London, It has just been named the most
:14:42. > :14:45.expensive street in the UK. You need upwards of ?8 million
:14:46. > :14:48.normally to buy one of these homes. Here to explain why,
:14:49. > :14:52.Grainne Gilmour from Knight Frank The Chancellor has introduced a raft
:14:53. > :14:57.of measures aimed at tackling One of the things he has done
:14:58. > :15:07.is really tried to boost That is what we struggle
:15:08. > :15:11.with in the UK, not enough housing Another factor he introduced
:15:12. > :15:16.in December last year was a change For buyers buying under ?1.1
:15:17. > :15:20.million, it is cheaper to buy a property now but it is more
:15:21. > :15:25.expensive for homes over that ?1 million mark in London
:15:26. > :15:28.and around the UK. What we have seen in London
:15:29. > :15:30.particularly, prime locations in London suffered a bit
:15:31. > :15:33.of a slowdown in activity which hits the tax receipts from stamp duty
:15:34. > :15:36.but we see the market starting Speaking of property taxes,
:15:37. > :15:39.we're not done with the changes. Yes, in the Autumn Statement,
:15:40. > :15:43.the Chancellor announced he wanted to introduce an additional 3% stamp
:15:44. > :15:47.duty for buy-to-let investors We have a consultation coming out
:15:48. > :15:52.in January so we will have So a little more detail
:15:53. > :15:56.to come but at the moment, what is your best bet
:15:57. > :15:59.for what will happen to prices over We are seeing the same level
:16:00. > :16:07.of growth across this year as we have seen last
:16:08. > :16:09.year, 4% or just under. We allow for out performance in key
:16:10. > :16:12.commuter towns and regional cities House prices will be
:16:13. > :16:15.underpinned by economic growth. We have seen wages rise in the last
:16:16. > :16:19.couple of years and also consumer confidence has bounced back over
:16:20. > :16:21.the last year or so. Also, house prices are being
:16:22. > :16:25.underpinned in many areas by the lack of supply,
:16:26. > :16:28.and under-supply is something that affects most of
:16:29. > :16:30.the UK housing market. We will leave it there
:16:31. > :16:33.but interesting that Grainne notices what is going on with
:16:34. > :16:34.economic growth. When the IMF was here
:16:35. > :16:38.at the beginning of the month, they said UK house prices pose
:16:39. > :16:41.a real risk to the economic You're watching a special
:16:42. > :16:53.edition of Business Live, as we take a look at
:16:54. > :16:58.the business year that was. And with the help of some experts,
:16:59. > :17:01.we're assessing what lies And let's turn our attention
:17:02. > :17:04.to the world of technology. This was the year of the so-called
:17:05. > :17:08.Internet of Things. From tech giants like Facebook
:17:09. > :17:10.to tech minnows like Jawbone, it's been a hot topic of debate
:17:11. > :17:14.and investment this year. According to Forbes,
:17:15. > :17:18.the top 100 Internet of Things start-ups received venture capital
:17:19. > :17:21.funding of nearly $6.5 billion So as that tech area matures,
:17:22. > :17:29.what will 2016 bring? For our next guest, Eileen Burbidge,
:17:30. > :17:33.cyber security and FinTech are both She's a partner at venture capital
:17:34. > :17:41.fund Passion Capital and serves on the advisory board
:17:42. > :17:42.for Tech City UK. She's previously worked
:17:43. > :17:58.for Apple, Skype and Yahoo. Before we look at the year ahead,
:17:59. > :18:03.talk us through 2015 for you. Like you said, I think it was a lot of
:18:04. > :18:06.discussion around the Internet of Things. The funny thing about those
:18:07. > :18:11.of us who are looking at the sector is that it is quite nebulous and
:18:12. > :18:15.very vague. The way we translated that was wearable devices like
:18:16. > :18:20.Jawbone and fitness trackers, or how people were going to try to consume
:18:21. > :18:23.more data or produce more data in their daily lives. Really, what has
:18:24. > :18:29.started to happen was you started to see more of that coming through
:18:30. > :18:32.bigger devices, vehicles, cars, homes, and then you started to see
:18:33. > :18:42.things like the on demand or sharing economy, so things like Uber,
:18:43. > :18:46.Airbnb, home food delivery and cleaners and how people dealt with
:18:47. > :18:50.large Internet of Things because of what it enabled. That was the
:18:51. > :18:54.biggest trends in the UK and globally. At the start of the year,
:18:55. > :18:57.we were all a bit sceptical about your home heating system or getting
:18:58. > :19:01.your fridge wired up to the Internet but now it is increasingly common
:19:02. > :19:05.and people think the benefits of it. I suppose alongside the security and
:19:06. > :19:09.the personal information risks, the benefits of interconnectivity are so
:19:10. > :19:16.important. The theme of all of this, whether it is cars, homes, holiday
:19:17. > :19:19.rentals or devices, is the convenience and the ability to be
:19:20. > :19:22.able to have the power or the control over what you want for your
:19:23. > :19:26.own environment. If we look at what will happen in the next year, what
:19:27. > :19:30.are people going to be doing intelligently and creatively with
:19:31. > :19:35.the data being collected? How are you protecting people's privity and
:19:36. > :19:38.their data? What are you doing to personalise services? How that
:19:39. > :19:42.translates to other sectors and not just personal convenience. That is
:19:43. > :19:46.becoming increasingly important because technology is everywhere, so
:19:47. > :19:50.pervasive, whether it is in your home life, career or future plans.
:19:51. > :19:53.It seems to be involved in every aspect of our lives and yet we are
:19:54. > :19:58.all as individuals quite concerned about where the data is going and
:19:59. > :20:04.what is being done with it. That in turn has led to a lot of problems. I
:20:05. > :20:07.completely agree but I would also see massive opportunities. A lot of
:20:08. > :20:11.it relates to how people and consumers, users are being affected
:20:12. > :20:18.by technology. Now we are going to see technology becoming not quite so
:20:19. > :20:23.pervasive and disruptive of other business sectors. -- it will be. You
:20:24. > :20:26.will see it creep into business sectors and in security concern not
:20:27. > :20:29.just for personal data about enterprise data and some of the
:20:30. > :20:33.other stories you have been talking about of this past year. Cyber
:20:34. > :20:38.security as a sector I think will continue to flourish and be an area
:20:39. > :20:41.of sensitivity, and disruption to the financial services sector, not
:20:42. > :20:45.just in payment unremitting this but in making services, how it relates
:20:46. > :20:46.to property insurance and rigging else. It is a long list! Thank you
:20:47. > :20:56.for joining us. This year was also
:20:57. > :20:58.one of digital video. Our online offering exploded,
:20:59. > :21:00.with videos streaming across Facebook and the website
:21:01. > :21:02.and being viewed by millions Now, we've had a whole host
:21:03. > :22:09.of newsmakers on the programme this The big names, the top bosses
:22:10. > :22:12.and the exclusive interviews. And when it comes to
:22:13. > :22:14.getting the inside track, our business editor,
:22:15. > :22:17.Kamal Ahmed is the man for the job. Whether it's covering the falling
:22:18. > :22:26.oil price or cracking We'll speak to him in a moment,
:22:27. > :22:30.but first, in the year that's been dominated by the falling
:22:31. > :22:32.price of oil, here's Kamal's interview
:22:33. > :22:34.with the boss of BP back in January and his assessment on where oil
:22:35. > :22:37.prices could end the year. This is a significant change
:22:38. > :22:41.in the industry that will have wide-ranging effects on geopolitics
:22:42. > :22:43.and the energy industry itself. I think we have got to plan on this
:22:44. > :22:47.being down, we don't know at exactly what level but certainly, a year,
:22:48. > :22:58.probably two or maybe three years. So Bob Dudley, there, speaking at
:22:59. > :23:03.the beginning of a year which was dominated by the oil prices. In a
:23:04. > :23:10.way, he set the tone for the year. He said there that he felt this low
:23:11. > :23:13.prize would remain in place for two or three years. I'm going to try to
:23:14. > :23:18.catch up with him again at the World Economic Forum in January and asking
:23:19. > :23:22.the same question. I would not be surprised if he said the low oil
:23:23. > :23:28.price might extend out further. On the supply side, two big pressures
:23:29. > :23:32.on the price downward, the US starting to export oil, probably
:23:33. > :23:37.during 2016 and secondly, Iran will be starting to export oil as
:23:38. > :23:41.sanctions are lifted. Two important points to contribute to the down
:23:42. > :23:46.pressure. Also a big year when it comes to stepping up efforts against
:23:47. > :23:51.hacking. A number of firms in the headlines. Absolutely, cyber attacks
:23:52. > :23:55.have been one of the issues of the year, political ones, allegations
:23:56. > :23:59.against China and Iran, for example on in that area. But also for
:24:00. > :24:05.corporate, big attacks around the world. One of the biggest was in the
:24:06. > :24:10.UK, TalkTalk, the telecommunications firm. I spoke to Dido Harding, the
:24:11. > :24:14.chief executive of the company and asked her whether all of the data
:24:15. > :24:20.that had been accessed was encrypted. The awful truth is I
:24:21. > :24:23.don't know. Shouldn't you know that as chief executive, you should know
:24:24. > :24:27.as chief executive should know, surely if the details are restricted
:24:28. > :24:30.so even if they are stolen, they may not be used? I would love to be able
:24:31. > :24:33.to give you that complete an unequivocal assurance but it would
:24:34. > :24:36.be wrong of me to give that today when the amount of data that the
:24:37. > :24:43.criminals have been able to access is a large. Dido Harding, there, the
:24:44. > :24:46.Chief Executive of TalkTalk and another interesting conversation you
:24:47. > :24:51.had was with Christine Lagarde, the head of the IMF. Let's hear what she
:24:52. > :24:55.had to say about the UK and EU's relationship. I personally hope that
:24:56. > :24:57.the British economy is within the European Union but that is a
:24:58. > :25:03.personal option and a personal choice. We are generally come at the
:25:04. > :25:11.IMF, for whatever opens up trade, facilitate exchanges. Christine
:25:12. > :25:15.Lagarde, there. It could be an instrumental year as far as the EU
:25:16. > :25:20.referendum is concerned. We know it will happen before the end of 2017
:25:21. > :25:23.but it could be in 2016. It looks probable that the British
:25:24. > :25:27.governorate will go for it in 2016. The IMF itself will play a big role.
:25:28. > :25:31.They will bring out a big report in the spring over the economic
:25:32. > :25:35.effects, both for Britain and the rest of the European Union on this
:25:36. > :25:38.most important matter. It will be a huge theme, not just for Europe but
:25:39. > :25:42.the world looking at Europe as well. Thank you for joining us.
:25:43. > :25:45.Thanks for your company in this special edition of Business Live.
:25:46. > :26:15.So that was how 2015 looked in the business world.
:26:16. > :26:16.Hello. It looks like a pretty decent day forgetting out and about. Still