23/12/2015 BBC Business Live

This is Business Live from the BBC with Sally Bundock and Ben Thompson.

As 2015 draws to a close, we'll look back on the business year

Welcome to a special edition of Business Live: The Review

China's slowdown has dominated headlines this year,

and the impact has been felt far and wide, but what happens next?

Also in the programme: We've been on Fed Watch for a rate rise.

As America's Central Bank raises the cost of borrowing,

will other Central Banks now do the same?

It's been a record-breaking year for big money mergers.

Pfizer is on track to break a new record as it battles

to close its $108 billion deal with Allergan.

2015 was the year of the Internet of Things so what will 2016 bring?

We'll be joined by celebrated investor, Eileen Burbidge

who is telling us whereis putting her money next year.

They are the BBC exclusive interviews and breaking stories that

We'll contemplate the big moments of the business year

and what the key players said to the BBC with our business

Welcome to this special edition of Business Live.

As a difficult economic year draws to a close,

will 2016 bring more cheer for the global economy?

Well, 12 months ago, the tremors of the financial crisis

might have been finally beginning to fade.

But instead, another challenge came into sharp focus.

And it began with warnings from the IMF and World Bank.

The Chinese economy was slowing, they said, and with it,

the boom in emerging markets and commodity prices.

The effects would be felt around the world.

The heady days of double digit growth were at an end,

replaced instead with more modest expansion of around 7%.

The global economy would slow to around 2.9%, down

One trigger of the slowdown was a fall in consumer

That came partly after a government crackdown on corruption which made

many wealthy Chinese avoid lavish displays of spending.

As a result, sales of luxury brands fell sharply,

everything from Prada to Porsche, Fendi to Ferrari.

After a decade of building tower blocks, airports and bridges

at record speed, China's construction sector also ground

That led to a massive fall in demand for global commodities sparking

Companies everywhere have suffered - steel makers in the UK closed,

copper mines in Chile shut down and iron ore producers in Australia

The Baltic Dry Index which monitors trade levels is currently

So as 2015, the year of the Chinese slowdown,

draws to a close, we turn our attention to the year ahead.

Has the world adjusted to a new normal - the era

Charles Goodhart is a professor at London School of Economics

Lovely to have you on the programme. Give us your thoughts on this year

for China. Of course, it had its plenam as well, where we were trying

to read between the line when the president and others in the

Government were talking about their five year plan. Well, last year and

next year, are a fascinating period because China is changing its

business model. It is moving away from being a manufacturing

industrial super power to being much more of a service economy which

happens when you get richer and incidentally, consumption of

luxuries did slow down sharply in China last year, but the consumption

overall did not, consumption is growing rapidly, but its consumption

of services and it is consumption by the ordinary people, not consumption

by the rich, that is keeping China growing and it is growing steadily.

So from your point of view, is this transition, the great transition

from an economy led by manufacturing made in China by massive

infrastructure spend to a consumer-led economy. Is that

transition going to plan and is it going well? Oh, it is a very

difficult transition, but I think it is going to plan and it is going

pretty much as well as you might hope for. One of the reasons why

there was such a concern about China in the summer was because they

handled the stock market boom and bust really rather badly and that

was not just a problem in itself, but it threw doubt about whether the

leadership actually was capable of making this massive transition away

from manufacturing towards more services. Whether he could handle it

safely and well. But that, there has been a recovery, I think, of

confidence in the Chinese leadership and they don't do everything well.

The one child policy was maintained for far too long. But I think

they're back on track. We talk often about how all of these events are

interconnected around the world we see the impact of China. Is there

anything to mitt grate that influence on the world economy. We

have seen what China has done to world commodity prices and

especially to oil. Is there anything which could mitigate those risks?

For many countries there is a great benefit, the reduction in commodity

prices and oil prices is a huge benefit and particularly to Europe

and the eurozone is going to do better than people expected in 2016

partly because input prices have been going down so very sharply and

the developed economies are benefiting and there is a switch.

From 2008 to about 102014, the emerging economies did very well and

the developed economies did not now. Now it is a around and the develop

economies will do well in 2016 and EM will not.

Thank you very much. In other news: It's been

a record-breaking year They don't come bigger than Pfizer's

take-over of Allergan It was the biggest ever health care

transaction and second biggest In technology, Dell bought EMC

for a whopping $67 billion. And drinks giants AB InBev snapped

up SABMiller this year, And there was no shortage

of stockmarket action. A flurry of flotations kept

global markets moving. In November, Japan Post

listed its shares, raising $12 billion and claiming the the title

of the largest market Japan Post offers mail

delivery but also loans, And big business often means big

scandal, and this year Volkswagen admitted to cheating

emissions tests in the US, after it emerged the car giant had

used a piece of software Chief executive Martin Winterkorn

stepped down and VW recalled 11 The scandal could cost the German

car giant around $30 billion in costs, compensation

and falling sales. Sales in Europe and the US have also

fallen by up to a fifth and shares in the company are now trading

near four year lows. For more on the year in Business,

there's much more on the website with our correspondents around

the world weighing up the biggest Jonty Bloom is assessing

whether Greece really Our Economics correspondent,

Andrew Walker, is looking at who stands to gain

from the slide in oil prices. 2015 has also been

the year of Fed watching. Month in, month out, the BBC -

the financial press and financial markets worldwide were hanging

on every word from its new chief Janet Yellen for any clues

as to when the US central bank For our US correspondent

Michelle Fleury, this meant many days on the steps of the Federal

Reserve building in Washington. Janet Yellen used her first day

of testimony to provide greater clarity on the timing

of the first interest rate hike. Most investors here on Wall Street

still think such a move is likely Dropping the word patient

from the statement released after every meeting does not mean

a rate hike is imminent, according to Janet Yellen,

but she and her colleagues are trying to prepare the financial

markets for the day when finally, monetary policy starts

to return to normal. The intense spotlight

on Janet Yellen and the other Federal Open Market Committee

members shows just how dependent the markets have become

on the Central Bank. It's an addiction the Fed hopes

to break when it begins The US Federal Reserve wrapped up

a two-day meeting in Washington on Thursday with the announcement

that interest rates would remain unchanged, leaving many people

asking Janet Yellen what would it After seven years of near zero,

Janet Yellen, the chairwoman of the Federal Reserve has finally

announced a rate rise of 0.25%. Now, for a long time,

the financial markets have been obsessing over the timing

of the first rate hike. Now they have another

question to ponder. What will be the size

and the frequency of Michelle Fleury, BBC News

in Washington, DC outside Joining us now is Gillian Tett,

US managing editor for the Financial I imagine you have had quite a year

as well. Talking about not so much about waiting for God, but waiting

for the Fed. We have been waiting all year and when it finally

happened, frankly it was an anticlimax. The markets reacted

smoothly and everything went to plan and we were wondering what are we

going to write about in the FT? It was breaking the cycle of record low

rates that had been at that level for so long. It was actually a big

watershed in terms of history. Not so much in terms of raising traits

because the Fed has done that many times in recent decades, but because

never before in history have had a Central Bank kept rates so low for

so long on such an extraordinary scale. The Fed's balance sheet has

quadrupled in the last few years. Extraordinary what's going on. The

big question is how do you get out of that? It is not just the rate

rise, but it was all that went before, the so-called quantitative

easing that we are familiar with now, but from your point of view,

what impact has this had? Well, the good news is thus far there hasn't

been a big market reaction. The FedEx cuted this pretty well. They

are hoping that Janet Yellen will be like the pilot of a plane coming

into land and going forward, the rate rise will be so gradual and

gentle that you will come down from this high altitude of super

extraordinary monetary policy experiments and the passengers, ie,

the markets won't even notice it will be so gentle, but to my mind

there are three things to watch right now. Firstly, what's going to

happen to those big bubbles that have been blown as a result of the

Central Bank poly in the risky markets? What's going to happen to

investor portfolios? Most investors are positioned presuming that rates

will stay low forever? The third issue which is geeky and nerdy, deep

inside the bowels of the financial system, there have been strange

things going on recently because the rates have been so low. How is that

going to unwind? Gillian, when will the next move be? Markets are

betting on April 2016? Markets think there will be two rises. The Fed

have predicted four next year. In 2016 venlgt my bet is around March,

but the big question is, are the market right or is the Fed right?

That affects how investors price their portfolios. We will all be

watching. Thank you. Ben. Well, what a year it was

on the financial markets. The best performing stock market

in the world was China's Shenzhen. Despite the big falls in August,

it's still up by 68% at the close At the other end of the scale,

Tthe prize for worst performing Well, the exchange is dominated

by commodity companies that have And speaking of that slump

in commodity prices, oil was the worst performing

commodity of the year. And that's been enough to drag

down European markets, particularly the FTSE 100 in London,

that's heavily weighted with oil Still to come: They were

the newsmakers of the year and they were speaking to the BBC

when they made headlines. Our Business Editor,

Kamal Ahmed will take us through some of his exclusive

conversations from 2015. You're with Business

Live on BBC News. In the UK, if we are not

obsessing about the weather, we are tracking and trying

to predict the direction Yes, there was one clear message

from the National Association "If you have the money,

buy your home now." Victoria Fritz went to the most

expensive street in If you want to buy average property

on Victoria Road in west London, It has just been named the most

expensive street in the UK. You need upwards of ?8 million

normally to buy one of these homes. Here to explain why,

Grainne Gilmour from Knight Frank The Chancellor has introduced a raft

of measures aimed at tackling One of the things he has done

is really tried to boost That is what we struggle

with in the UK, not enough housing Another factor he introduced

in December last year was a change For buyers buying under ?1.1

million, it is cheaper to buy a property now but it is more

expensive for homes over that ?1 million mark in London

and around the UK. What we have seen in London

particularly, prime locations in London suffered a bit

of a slowdown in activity which hits the tax receipts from stamp duty

but we see the market starting Speaking of property taxes,

we're not done with the changes. Yes, in the Autumn Statement,

the Chancellor announced he wanted to introduce an additional 3% stamp

duty for buy-to-let investors We have a consultation coming out

in January so we will have So a little more detail

to come but at the moment, what is your best bet

for what will happen to prices over We are seeing the same level

of growth across this year as we have seen last

year, 4% or just under. We allow for out performance in key

commuter towns and regional cities House prices will be

underpinned by economic growth. We have seen wages rise in the last

couple of years and also consumer confidence has bounced back over

the last year or so. Also, house prices are being

underpinned in many areas by the lack of supply,

and under-supply is something that affects most of

the UK housing market. We will leave it there

but interesting that Grainne notices what is going on with

economic growth. When the IMF was here

at the beginning of the month, they said UK house prices pose

a real risk to the economic You're watching a special

edition of Business Live, as we take a look at

the business year that was. And with the help of some experts,

we're assessing what lies And let's turn our attention

to the world of technology. This was the year of the so-called

Internet of Things. From tech giants like Facebook

to tech minnows like Jawbone, it's been a hot topic of debate

and investment this year. According to Forbes,

the top 100 Internet of Things start-ups received venture capital

funding of nearly $6.5 billion So as that tech area matures,

what will 2016 bring? For our next guest, Eileen Burbidge,

cyber security and FinTech are both She's a partner at venture capital

fund Passion Capital and serves on the advisory board

for Tech City UK. She's previously worked

for Apple, Skype and Yahoo. Before we look at the year ahead,

talk us through 2015 for you. Like you said, I think it was a lot of

discussion around the Internet of Things. The funny thing about those

of us who are looking at the sector is that it is quite nebulous and

very vague. The way we translated that was wearable devices like

Jawbone and fitness trackers, or how people were going to try to consume

more data or produce more data in their daily lives. Really, what has

started to happen was you started to see more of that coming through

bigger devices, vehicles, cars, homes, and then you started to see

things like the on demand or sharing economy, so things like Uber,

Airbnb, home food delivery and cleaners and how people dealt with

large Internet of Things because of what it enabled. That was the

biggest trends in the UK and globally. At the start of the year,

we were all a bit sceptical about your home heating system or getting

your fridge wired up to the Internet but now it is increasingly common

and people think the benefits of it. I suppose alongside the security and

the personal information risks, the benefits of interconnectivity are so

important. The theme of all of this, whether it is cars, homes, holiday

rentals or devices, is the convenience and the ability to be

able to have the power or the control over what you want for your

own environment. If we look at what will happen in the next year, what

are people going to be doing intelligently and creatively with

the data being collected? How are you protecting people's privity and

their data? What are you doing to personalise services? How that

translates to other sectors and not just personal convenience. That is

becoming increasingly important because technology is everywhere, so

pervasive, whether it is in your home life, career or future plans.

It seems to be involved in every aspect of our lives and yet we are

all as individuals quite concerned about where the data is going and

what is being done with it. That in turn has led to a lot of problems. I

completely agree but I would also see massive opportunities. A lot of

it relates to how people and consumers, users are being affected

by technology. Now we are going to see technology becoming not quite so

pervasive and disruptive of other business sectors. -- it will be. You

will see it creep into business sectors and in security concern not

just for personal data about enterprise data and some of the

other stories you have been talking about of this past year. Cyber

security as a sector I think will continue to flourish and be an area

of sensitivity, and disruption to the financial services sector, not

just in payment unremitting this but in making services, how it relates

to property insurance and rigging else. It is a long list! Thank you

for joining us. This year was also

one of digital video. Our online offering exploded,

with videos streaming across Facebook and the website

and being viewed by millions Now, we've had a whole host

of newsmakers on the programme this The big names, the top bosses

and the exclusive interviews. And when it comes to

getting the inside track, our business editor,

Kamal Ahmed is the man for the job. Whether it's covering the falling

oil price or cracking We'll speak to him in a moment,

but first, in the year that's been dominated by the falling

price of oil, here's Kamal's interview

with the boss of BP back in January and his assessment on where oil

prices could end the year. This is a significant change

in the industry that will have wide-ranging effects on geopolitics

and the energy industry itself. I think we have got to plan on this

being down, we don't know at exactly what level but certainly, a year,

probably two or maybe three years. So Bob Dudley, there, speaking at

the beginning of a year which was dominated by the oil prices. In a

way, he set the tone for the year. He said there that he felt this low

prize would remain in place for two or three years. I'm going to try to

catch up with him again at the World Economic Forum in January and asking

the same question. I would not be surprised if he said the low oil

price might extend out further. On the supply side, two big pressures

on the price downward, the US starting to export oil, probably

during 2016 and secondly, Iran will be starting to export oil as

sanctions are lifted. Two important points to contribute to the down

pressure. Also a big year when it comes to stepping up efforts against

hacking. A number of firms in the headlines. Absolutely, cyber attacks

have been one of the issues of the year, political ones, allegations

against China and Iran, for example on in that area. But also for

corporate, big attacks around the world. One of the biggest was in the

UK, TalkTalk, the telecommunications firm. I spoke to Dido Harding, the

chief executive of the company and asked her whether all of the data

that had been accessed was encrypted. The awful truth is I

don't know. Shouldn't you know that as chief executive, you should know

as chief executive should know, surely if the details are restricted

so even if they are stolen, they may not be used? I would love to be able

to give you that complete an unequivocal assurance but it would

be wrong of me to give that today when the amount of data that the

criminals have been able to access is a large. Dido Harding, there, the

Chief Executive of TalkTalk and another interesting conversation you

had was with Christine Lagarde, the head of the IMF. Let's hear what she

had to say about the UK and EU's relationship. I personally hope that

the British economy is within the European Union but that is a

personal option and a personal choice. We are generally come at the

IMF, for whatever opens up trade, facilitate exchanges. Christine

Lagarde, there. It could be an instrumental year as far as the EU

referendum is concerned. We know it will happen before the end of 2017

but it could be in 2016. It looks probable that the British

governorate will go for it in 2016. The IMF itself will play a big role.

They will bring out a big report in the spring over the economic

effects, both for Britain and the rest of the European Union on this

most important matter. It will be a huge theme, not just for Europe but

the world looking at Europe as well. Thank you for joining us.

Thanks for your company in this special edition of Business Live.

So that was how 2015 looked in the business world.

Hello. It looks like a pretty decent day forgetting out and about. Still