18/01/2016

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:00:00. > :00:00.milder across the far west. High pressure will keep the milder air at

:00:00. > :00:08.bay for the next couple of days. We will have cloud floating around.

:00:09. > :00:12.This is Business Live from the BBC with Sally Bundock and Ben Thompson.

:00:13. > :00:16.$28 a barrel or less - oil prices continue to slide

:00:17. > :00:18.after decades of sanctions are lifted against Iran.

:00:19. > :00:36.Live from London, that's our top story on Monday the 18th of January.

:00:37. > :00:45.Oil has fallen to lows not seen since 2003.

:00:46. > :00:48.It's $28 a barrel and set to fall even further.

:00:49. > :00:51.Also in the programme - the downturn in China is being felt

:00:52. > :00:54.here in the UK - Tata steel is set to lay off over 1,000 people

:00:55. > :01:00.It's the start of a new trading week, but the same pressures

:01:01. > :01:04.Oil, China, Middle Eastern tensions and slowing economic growth.

:01:05. > :01:10.And we'll be getting the inside track on how media

:01:11. > :01:17.bartering is transforming the advertising industry.

:01:18. > :01:19.Francis Dickins, the founder and chief executive of Astus,

:01:20. > :01:22.will tell us how companies like Mazda and Sky are trading

:01:23. > :01:28.their services against huge ad bills.

:01:29. > :01:31.Today we want to know as the wealth gap grows -

:01:32. > :01:33.do you feel richer or poorer than you did 10 years ago?

:01:34. > :01:51.Iran's president, Hassan Rouhani called it an economic turning point

:01:52. > :01:53.after sanctions over its nuclear programme were lifted.

:01:54. > :01:56.He said it's time for the country to build and grow.

:01:57. > :02:02.Mr Rouhani says Iran needs 50 billion dollars a year in foreign

:02:03. > :02:05.investment if it's to reach its goal of 8% annual growth.

:02:06. > :02:08.Iran is seen as one of the largest untapped markets in the world

:02:09. > :02:18.And the economic payback for Iran and its potential business partners

:02:19. > :02:24.The US estimates more than $100 billion of funds will be

:02:25. > :02:31.And it's the oil and gas industry, banking, transport and tourism

:02:32. > :02:35.services that will all likely benefit from foreign investment.

:02:36. > :02:39.Amrita Sen, Chief Oil Analyst, Energy Aspects, joins us

:02:40. > :02:53.We have talked about this many times, what will it mean, will it

:02:54. > :03:00.work. It has happened and a knee jerk reaction on the financial

:03:01. > :03:03.markets? We shouldn't we surprised. This has been in the making for six

:03:04. > :03:10.months. Yes, it has probably come about six weeks and we expected and

:03:11. > :03:14.probably the market expected, but I think the markets are reacting as if

:03:15. > :03:18.this has come out of the blue. It is positive for Iran, but for the oil

:03:19. > :03:24.market it will take a bit of time. Because the dollar sanctions are

:03:25. > :03:27.still in place. Things will be a bit slower. Companies need to evaluate

:03:28. > :03:35.how that will impact the other operations. Some of the newspaper

:03:36. > :03:41.articles are saying it is kicking off an oil war in the middle East,

:03:42. > :03:45.what do you think about that? Iran, we have all known once the sanctions

:03:46. > :03:49.are lifted they will come back to the market and sell more. I don't

:03:50. > :03:56.think they will be able to sell a lot more quickly. They are talking

:03:57. > :04:00.about a million barrels a day, but that won't be possible without

:04:01. > :04:06.Western expertise, and that will be the key. It will happen, but it will

:04:07. > :04:10.be slower. If you look at what Saudi Arabia is doing, it is pre-empting

:04:11. > :04:15.Iran coming back in Europe and is starting to make new alliances. It

:04:16. > :04:17.is starting to sell more oil to Eastern Europe, which will become

:04:18. > :04:24.the new battle ground between Iran and Saudi Arabia for oil. You

:04:25. > :04:29.touched on the Western expertise that will be needed, where do you

:04:30. > :04:35.think the biggest investment will come, other than oil and gas? We

:04:36. > :04:38.touched on tourism, banking and it is these big infrastructure

:04:39. > :04:42.projects? It is infrastructure, and some of the deals they are talking

:04:43. > :04:46.about with India and the Chinese are to do with the railway and road

:04:47. > :04:54.infrastructures. That is where the demand story for Iran lies. Iranian

:04:55. > :05:00.oil demand could be on the upside if these infrastructures kick in. I

:05:01. > :05:06.will get you to say how low oil will go in the future, are you willing to

:05:07. > :05:10.give us a number? At the moment, it could literally go anywhere. I was

:05:11. > :05:17.joking with a colleague saying, everyone is talking about $10 oil,

:05:18. > :05:21.what about zero! We are starting to see a lot of cancellations of

:05:22. > :05:25.projects, so the physical side of the market is telling us the

:05:26. > :05:27.rebalancing is starting, but I think it could go a little lower. Nice to

:05:28. > :05:29.see you. Tata Steel is expected to confirm

:05:30. > :05:33.later that it is cutting more About 750 of them in

:05:34. > :05:41.Port Talbot in south Wales. The firm announced 1,200

:05:42. > :05:44.redundancies last year. Chinese president Xi Jinping

:05:45. > :05:47.has officially launched a new international

:05:48. > :05:49.development bank. The Asian Infrastructure Investment

:05:50. > :05:52.Bank or AIIB is seen as a rival Mr Xi said the bank would be used

:05:53. > :06:00.to meet Asia's enormous financing needs and invest in high

:06:01. > :06:04.quality low cost projects. The aid and development charity,

:06:05. > :06:06.Oxfam, says the richest 1% of the world's population,

:06:07. > :06:10.about 73 million people, now has more than the combined

:06:11. > :06:13.wealth of everyone else own as much as the poorest half

:06:14. > :06:41.of the global population, How rich do you feel, do you feel

:06:42. > :06:52.less than you did and at the height of the financial crisis. Let us

:06:53. > :06:59.know. Let's have a look at some of the discussions on our web page.

:07:00. > :07:05.There is a discussion about China, whether it is due for a soft or hard

:07:06. > :07:10.landing. The lower oil price prompted by no demand from China.

:07:11. > :07:15.The growth number for the year will be released. We will be talking

:07:16. > :07:20.about at this time tomorrow. But there will be some discussion about

:07:21. > :07:25.what we can expect on our web page. Also about the situation in Port

:07:26. > :07:32.Talbot in South Wales. The great pictures. These come from a global

:07:33. > :07:40.entrepreneur. He has been developing pictures. This is a rocket and is

:07:41. > :07:51.landing. The whole point is it is reusable. But when it doesn't quite

:07:52. > :07:55.go according to plan. Oh dear! That is the rocket not managing to return

:07:56. > :07:59.quite as successfully as they would have liked. But they are working on

:08:00. > :08:09.that reusable rocket, which will cut the space of the leader-macro -- cut

:08:10. > :08:12.the cost of space travel. But that one cannot recycle. Let's back to

:08:13. > :08:14.the markets. Nervousness in global

:08:15. > :08:16.markets continues. It was enough to send shares

:08:17. > :08:29.in Japan to their lowest level Another difficult start to a week in

:08:30. > :08:36.Asia? Yes, good to talk to you. In Japan, it felt to the lowest level

:08:37. > :08:42.of the year and it follows the falls in the US market and the drop in oil

:08:43. > :08:49.prices to below $28. By closing time, Japan would close some ground

:08:50. > :08:54.and it is the same story much across Asia. Shares in Australia and Hong

:08:55. > :09:00.Kong were down. In China, lob beat property report showed property

:09:01. > :09:10.prices rising 1.6% in December from a year earlier. This good move,

:09:11. > :09:13.along with the central bank to stabilise saw the composite moving

:09:14. > :09:20.out of negative territory closing 4% higher. China's quarterly gross

:09:21. > :09:25.domestic product numbers are out on Tuesday and analysts are expect in

:09:26. > :09:27.shares to be hurt later in the week with falling oil prices and

:09:28. > :09:33.continued worries about economic growth. Thanks very much.

:09:34. > :09:36.So we're starting the week with oil prices nearly 20% lower

:09:37. > :09:41.than the start of the year, and stock markets around 10% lower.

:09:42. > :09:45.And it's widely expected the losses wont stop here,

:09:46. > :09:48.with China and oil prices keeping investors nervous.

:09:49. > :09:57.The lifting of sanctions on iran, good news for some, not great news

:09:58. > :10:01.for oil producing nations as Iran re-enters the oil market pushing

:10:02. > :10:06.That's also sparked heavy falls on Middle Eastern stock markets

:10:07. > :10:08.including Saudia Arabia, Kuwait and the UAE.

:10:09. > :10:11.Markets are closed in the US for a public holiday.

:10:12. > :10:21.Here's how european numbers have opened.

:10:22. > :10:26.Lots of the markets to die just and a lot of nervousness in those

:10:27. > :10:29.figures, even though they are green for now.

:10:30. > :10:32.Joining us is Brenda Kelly, Head Analyst, London Capital Group.

:10:33. > :10:40.Looking at Europe for the start of the week, how they ended on Friday,

:10:41. > :10:45.it's not much, that little bounce back we are experiencing so far? No,

:10:46. > :10:49.since the beginning of the year we have seen serious declines and

:10:50. > :10:55.levels have not been breached over the last few days. A lot of visit

:10:56. > :10:59.down to the oil price and the FTSE 100 and the mining sector as well.

:11:00. > :11:03.It is this slowing global demand, not just in China but in other parts

:11:04. > :11:09.of the world, that is adding to the woes of the FTSE do nominated stop

:11:10. > :11:12.us. Until we see the heightened demand or a cutback in supply,

:11:13. > :11:19.particularly amongst oil or iron ore, we can expect this negativity

:11:20. > :11:23.to follow. If you look at the bets on oil, as in people predicting it

:11:24. > :11:28.will go lower, they are at a record high and often you get a squeeze

:11:29. > :11:33.which sends oil prices higher, because there is little left to

:11:34. > :11:38.sell. Most people have to reduce their positions and buy, which sends

:11:39. > :11:42.the prices higher. But there will be choppy markets for the next few

:11:43. > :11:47.weeks. There is a tendency to talk about oil prices falling as a bad

:11:48. > :11:52.thing, but around the world it makes goods and services in the shops

:11:53. > :11:55.cheaper because fuel is cheaper, it is cheaper to produce things because

:11:56. > :12:01.factories are spending less on energy. Where is the impetus for

:12:02. > :12:05.prices to rise? It is coming from the oil producing countries

:12:06. > :12:10.themselves saying we need the price to be higher? There are a few

:12:11. > :12:14.drivers for oil. Supply is one thing and Saudi Arabia have refused to go

:12:15. > :12:20.back in production because they want to eradicate some of the cheaper

:12:21. > :12:25.shale producers out of the US. That hasn't worked very well. And also

:12:26. > :12:30.political issues have failed to stem the price of oil falling. It is not

:12:31. > :12:36.just a supply issue but a lack of demand. As well, you have seen the

:12:37. > :12:43.US dollar has been rising for the last 18 months. As the dollar rises,

:12:44. > :12:46.commodity prices fall. With expectations the Federal Reserve

:12:47. > :12:50.made put interest rates up higher in the coming year, that is to the

:12:51. > :12:56.detriment of oil as well. We could see the US Federal Reserve deciding

:12:57. > :12:59.not to be as strong headed about tightening monetary policy, because

:13:00. > :13:03.we are beginning to see the fallouts of the emerging markets, oil prices

:13:04. > :13:07.and a manufacturing recession as well. Thank you very much. We will

:13:08. > :13:10.talk to you later in the programme. Still to come: How to cut

:13:11. > :13:14.the cost of advertising. We look at the new way some

:13:15. > :13:17.firms are paying for ads by swapping their goods and services

:13:18. > :13:20.for air time and ad space. You're with Business

:13:21. > :13:23.Live from BBC News. And now a look at some

:13:24. > :13:26.of the stories from around the UK. Tata Steel is to cut more than 1,000

:13:27. > :13:29.more jobs in the UK, with most of the redundancies

:13:30. > :13:34.in Port Talbot in Wales. It's currently the UK's

:13:35. > :13:46.biggest steelworks. Simon, these job cuts we are expect

:13:47. > :13:51.link come on top of a whole raft of cuts that were announced last year?

:13:52. > :14:00.Yes, dark days for the steel industry. The 752 go at Port Talbot

:14:01. > :14:03.on top of 1200 that went in red car on Teesside and the job cuts in

:14:04. > :14:11.Lanarkshire in Scotland. They have an emergency meeting last year. They

:14:12. > :14:14.approach the EU to get approval to offset some environmental subsidies

:14:15. > :14:20.and also an investigation going into dumping of Chinese steel on European

:14:21. > :14:25.markets. But is the problem. Steele has been produced in China, but not

:14:26. > :14:29.being used there because the economy is slowing. So it is flooding

:14:30. > :14:34.European markets. Lots of the UK demand is being met by Chinese

:14:35. > :14:42.imports which means prices for hot coiled rolled steel have fallen.

:14:43. > :14:50.There is some hope a private equity firm might buy some of the Tata

:14:51. > :14:54.operations. But I think it might be too late for the job cuts we have

:14:55. > :15:00.heard about today and on top of the 1200 we have heard about last year.

:15:01. > :15:04.So many parallels only talk about commodities, second macro is in

:15:05. > :15:09.focus, but talking about oil which is what we have been talking about.

:15:10. > :15:14.So many parallels that as demand for what ever commodity falls, we are

:15:15. > :15:15.seeing that immediate reaction and oil firms, steelmakers cutting

:15:16. > :15:25.investment and cutting supply? You were saying isn't the oil cut a

:15:26. > :15:28.jolly good thing? It is. If you look at the knock on effect it is having

:15:29. > :15:32.on the manufacturing supply chain, some of the industries that serve

:15:33. > :15:35.the North Sea industry, that's where you're seeing the problems show up

:15:36. > :15:38.there. Generally a good thing, but in some industries, it is really

:15:39. > :15:44.hurting very badly and we are seeing more evidence of that today. Thank

:15:45. > :15:48.you, Simon. Tata Steel, the story online, as

:15:49. > :15:51.soon as we get confirmation from the company, we will bring you

:15:52. > :15:55.up-to-date as and when the news does come through that the jobs which are

:15:56. > :16:02.widely expected to be chopped are done so.

:16:03. > :16:07.Our top story: Oil prices slide to lower than $28 a barrel

:16:08. > :16:11.as investors weigh up the lifting of sanctions against Iran.

:16:12. > :16:22.For Iran, the economic gains could be immense.

:16:23. > :16:27.For everyone else, the fall is hitting their budgets hard.

:16:28. > :16:30.Now new technology and the internet has changed the way firms advertise

:16:31. > :16:33.and target customers, thanks to social media and web ads,

:16:34. > :16:34.rather than traditional newspapers and billboards.

:16:35. > :16:37.But one thing that hasn't changed is how they pay for it.

:16:38. > :16:39.Firms traditionally pay money in return for advertising space.

:16:40. > :16:44.In the UK alone it's estimated that companies are likely to spend nearly

:16:45. > :16:47.$25 billion on advertising this year.

:16:48. > :16:57.So a growing practice to off-set this whopping cost is something

:16:58. > :17:01.That means that a company will provide goods or service

:17:02. > :17:02.usually whatever they produce themselves -

:17:03. > :17:04.in exchange for a portion of the advertising bill.

:17:05. > :17:08.Astus Group is a leader in the field with nearly half of the market share

:17:09. > :17:11.in the UK which is said to be worth $583 million with many leading

:17:12. > :17:16.Frances Dickens is the chief executive of Astus and is

:17:17. > :17:28.We briefly explained how this media bartering works, but could you just

:17:29. > :17:33.add a bit more meat on-the-bone as it were? Yeah, sure. As you partly

:17:34. > :17:36.explained when brands want to advertise their goods or services,

:17:37. > :17:40.one of the biggest costs that they will face is actually the media

:17:41. > :17:46.spends whether that's television, radio, print or even digital. And

:17:47. > :17:49.what media barter does, it is a process that evolved over the last

:17:50. > :17:52.20 years to allow those companies to lower the cost of that advertising

:17:53. > :17:56.by paying for part of their advertising and their own goods and

:17:57. > :18:02.services because lots of companies will have capital tied up either in

:18:03. > :18:05.unsold goods or services that they have yet to provide. You have media

:18:06. > :18:09.owners on the other hand who always want to get more share. They might

:18:10. > :18:13.want to attract new clients and make it as competitive to them as

:18:14. > :18:16.possible and what the media barter agency is connect the two so that

:18:17. > :18:21.each of them gets what they want, but without having to pay 100% cash

:18:22. > :18:27.for it. What sort of things can you barter? If you produce something

:18:28. > :18:31.that's really useful to that other company, that's useful. But what if

:18:32. > :18:36.you produce something that's niche? How do you find a market? For

:18:37. > :18:40.starters it isn't a direct swap. We will take the product that's being

:18:41. > :18:44.offered and we will move that on according to what the client asked

:18:45. > :18:48.us to do. That's the first difference. And you

:18:49. > :18:52.know, generally, we can find a use for almost anything. We have

:18:53. > :18:57.barterred a huge range of things in the last ten years. Give us some

:18:58. > :19:02.examples. What are the weirdest things you have had to barter? Ah, I

:19:03. > :19:06.knew you were going to ask me something like that! Not the

:19:07. > :19:09.weirdest thing, but the most challenging was some little ceramic

:19:10. > :19:14.bowls that were produced particularly for a food manufacturer

:19:15. > :19:18.and of course, we had to find an alternate use for them. We also

:19:19. > :19:26.early on, we took some cars that were in the UK market, but they had

:19:27. > :19:30.no roof, no doors and they were inpractical for the UK weather, but

:19:31. > :19:35.we managed to find a home for those as well. Why would a big global

:19:36. > :19:40.player, the big brands that are your clients, want to go for this process

:19:41. > :19:45.as opposed to going to a traditional advertising agency and doing is it

:19:46. > :19:48.the normal way? Yeah, well, we always work alongside the media

:19:49. > :19:51.agencies. So they are using the media agency and they will still

:19:52. > :19:55.select the media and negotiate as usual, but our bit is to set up the

:19:56. > :20:00.arrangement where we can pay partly in product. It might be about

:20:01. > :20:04.reducing the cost of the advertising because by using their own product,

:20:05. > :20:07.they can do that. It might be about getting products out there. We have

:20:08. > :20:11.launched several new cars by getting them out on the road early or it

:20:12. > :20:14.might be about clearing stock that they have discontinued and they

:20:15. > :20:19.don't want it anymore and they want us to get rid of it. You're going to

:20:20. > :20:24.expand to China? Yes. And you have just got a licence. Yes. How do you

:20:25. > :20:28.expect this to take off? People have to be educated as who how it works.

:20:29. > :20:32.Do you have any sense as to whether they are ready for this kind of

:20:33. > :20:35.thing? We have spent two years researching on this because you

:20:36. > :20:40.don't get a licence in China overnight. We spent two years

:20:41. > :20:43.covering the ground. The media owners want to do it. We have

:20:44. > :20:48.clients working in the UK and Australia who want us to work with

:20:49. > :20:54.them over there which has been one of the big drivers to go there. We

:20:55. > :21:00.have all three parties saying, yes, yes, please, the Chinese are very

:21:01. > :21:03.entrepreneurial. Social media has changed how the advertising industry

:21:04. > :21:10.works and how you target consumers and you can get a specific pay

:21:11. > :21:15.become for a certain consumer rather than big mass market advertising. I

:21:16. > :21:19.imagine this steps into that neatly because it allows people to target

:21:20. > :21:23.people more specifically? Yeah, I agree and fragmentation is really

:21:24. > :21:27.good for us because it gives us more opportunity to work with people. We,

:21:28. > :21:31.you know, we've run digital campaigns for thousands of pounds

:21:32. > :21:34.for clients, all part of the deal. It doesn't have to be big brands

:21:35. > :21:40.we're working with and social media is a good opportunity for us.

:21:41. > :21:44.All right. Thank you very much for coming in, Frances, and we will

:21:45. > :21:48.watch how you get on in China. Best of luck.

:21:49. > :21:51.In a moment we'll take a look through the Business Pages,

:21:52. > :21:54.but first here's a quick reminder of how to get in touch with us.

:21:55. > :21:59.The Business Live page is where you can stay ahead with the day's

:22:00. > :22:02.breaking business news. We will keep you up-to-date with the latest

:22:03. > :22:06.details with insighing and analysis from the BBC's team of editors right

:22:07. > :22:09.around the world and we want to hear from you too. Get involved on the

:22:10. > :22:19.BBC Business Live web page. Business Live on TV and online

:22:20. > :22:30.whenever you need to know. And Brenda is back

:22:31. > :22:41.to look at the papers. This is another Business Live guest.

:22:42. > :22:46.European Union to scrutinise usage of big data by large internet

:22:47. > :22:51.companies. This is a story as to whether or not

:22:52. > :22:56.this, these companies will be in breach of antitrust rules and would

:22:57. > :22:58.actually block a lot of its rivals in term of joining into the

:22:59. > :23:02.competition. The fact these companies have a huge amount of data

:23:03. > :23:05.on people could become problematic and create something of a monopoly

:23:06. > :23:10.which is what the EU is frightened about. For the time being, it seems

:23:11. > :23:14.that there isn't any real concern, but it is something that they're

:23:15. > :23:20.watching closely and if there are problems, they may very well impart

:23:21. > :23:24.some regulations to ensure there is competition still in this industry.

:23:25. > :23:27.We interviewed the Competition Commissioner on the programme and

:23:28. > :23:30.she made the point we are willing to hand overall of this information

:23:31. > :23:34.about ourselves online because you do so in return for free goods and

:23:35. > :23:37.services and that's the issue. We're handing it over, and then we're

:23:38. > :23:41.asking these companies actually to be careful with what they do with

:23:42. > :23:44.it, clearly. But then, there is a trade off, isn't there? We get

:23:45. > :23:48.something in return therefore the big firms are saying, "We need to

:23:49. > :23:52.use your data as well." That's the case and that's what they are trying

:23:53. > :23:54.to prevent because it might erect barriers to competition. When you

:23:55. > :23:58.have all these large firms like Google and Facebook having all that

:23:59. > :24:03.information, there is a lot they can do with it and it can be obviously

:24:04. > :24:07.positive and negative as well, but this is, I'm just having to make

:24:08. > :24:11.sure the companies use their data and use it in a responsible way

:24:12. > :24:15.rather than selling it on and creating problems within the

:24:16. > :24:17.industry. Now, let's look at the stories about what happened in the

:24:18. > :24:20.Middle East yesterday. Because financial markets were open, of

:24:21. > :24:28.course, on Sunday. It is the beginning of their week. This is the

:24:29. > :24:32.business insider with a picture of a man with his head in his hands.

:24:33. > :24:36.Markets had a rough time. They have had a rough time and the think the

:24:37. > :24:40.markets should have been expecting this sanction to be lifted from

:24:41. > :24:43.Iran, but Saudi Arabia has been not without problems and it has

:24:44. > :24:49.introduced a lot of fiscal changes, but it needs to have oil prices

:24:50. > :24:52.around $45 per barrel and now we're languishing around $28. That and the

:24:53. > :24:58.fact that their currency is pegged to the US dollar is a little bit of

:24:59. > :25:01.a problem for them and they're supporting that currency with huge

:25:02. > :25:07.foreign exchange reserves in order to keep it on an even keel, but for

:25:08. > :25:12.the time being, growth from Saudi Arabia, where it was set ten years

:25:13. > :25:16.is vastly reduced. There maybe some fall-out from this later on. A quick

:25:17. > :25:20.word on Davos, it gets underway tomorrow. Tanya Beckett is winging

:25:21. > :25:24.her way there now for us. It is a golden ticket that gets you into

:25:25. > :25:29.Davos, but it comes at a hefty price tag? It certainly is. If you look at

:25:30. > :25:36.revenue that's been there over the last number of years, revenue to 144

:25:37. > :25:40.million at the end of last June. It is like 3.5% higher than last year.

:25:41. > :25:45.The S and P removed the floor against the euro even buying a drink

:25:46. > :25:49.or a bag of chips in Switzerland at the moment will cost you at least a

:25:50. > :25:52.tenner! What about hot chocolate on the

:25:53. > :25:57.mountains? We will have more from Davos

:25:58. > :25:58.midweek. We will. Thank you for your company today. We will see you soon.

:25:59. > :26:13.Bye-bye. Rather grey and chilly out there for

:26:14. > :26:17.many parts of the country. The chilly theme continues for most of

:26:18. > :26:18.the week. There is milder air trying to push in from the west,