16/03/2016 BBC Business Live


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Hello this is business live from the BBC. The world's top central bank


and the world's biggest economy, the US Fed takes centre stage again as


it wraps up its interest rate meeting. Live from London, it is our


top story on Wednesday the 16th of March.


It is the big one, the US Federal reserve meeting wraps up, with


insight into the health of the biggest economy and global growth.


Also in the programme, balancing the books, it is budget day in the UK


cuts and tax rises over worrying cuts and tax rises over worrying


over the global economy. This is the London stock exchange, and Deutsche


Post, agreeing to a merger, we will look at what they call a merger of


equals. And it has got a cult following, so we will look at the


man behind the Brompton foldable bike, but will the man behind the


expansion plan reap the rewards? We will talk to him very soon. Also do


get in touch with us, use the hashtag.


Hello to you, a warm welcome. We are starting the day in America where


the world's largest central bank, the US Federal reserve NZ stay


meeting. Investors will be looking at that very closely for insights


into the health of the world's biggest economy and for grow ball


growth. He, we will scrutinise every word used by Janet Yellen, for the


path of interest rates, known as a. Plot. And for the American economy.


The Fed raised the cost of borrowing in December for the first time in a


decade. For the first time it hinted that rates could go up four more


times this year but many economists are now predicting, that two or


three in 2016. Recent data has shown that the US economy is in pretty


good health with inflation and jobs figures continuing to get stronger.


I am joined by Professor Richard Portis who is an economist at the


London business School. Welcome to the programme. You are with the vast


majority who believes in no interest rate change today, what will Janet


Yellen say? I'm with the consensus on that, I think that she will say


that there is probably no balance of risk statement which they omitted in


January which was quite significant. And that suggests that there is a


real disagreement within the Federal open market committee. I will


elaborate on that in the moment. She will also communicate, they will


communicate what their plot is, their projections by the market


community members of where they think interest rates will be in


three months, in six months, in nine months and so forth. It is not the


same as the market but it gives us an insight into how they are


evaluating the risks. What is the disagreement? The disagreement is


really about substantively, it is about inflation expectations, and


the state of the labour market and there are disagreements partly


arising from the date. There is real confusion on the data about


inflation expectations, and different measures and so forth. But


the labour market, again we don't know how much slack there is in the


US labour market. You can say goodness, unemployment is very low,


but then there is still a lot of people out of the labour force who


were there, before the crisis. So it is quite hard to read how healthy


the US economy is, so for that reason patients will be the message


that we will get today? Not just for that reason, it is hard to read and


there is substantive disagreement among members of the committee. On


the one side you might say is Stanley Fischer and several others


who I can name if you wish, and on the other side, is Lionel braid, who


will be making the case for great caution, because she is concerned


about the inflation expectations. And the state of the global economy.


You might member that if you weeks ago, the IMF just before the G20's


summit, the IMF warned about the risks, the major risks in the global


economy. The T20 did nothing. Team might still think there is cause for


concern. Thank you so much for sharing your


thoughts on that. As soon as we do get any news, from the federal


reserve we will bring it to you. Deutsche Boerse says it has


reached a merger agreement It says it sees additional potential


cost savings of almost 500-million dollars a year


for the combined company. The german exchange said its saw


potential cost savings of 450 million euros


($499 million) per year Unemployment in South Korea hit


a five-year high in February It was higher than economist


expected, due to shrinking manufacturing and construction


sectors. Apple has said the Founding Fathers


of the US would 'be appalled' by the ongoing battle


between the technology giant and the US government over access


to an encrypted mobile phone. The FBI wants Apple to develop


software so it can unlock the iPhone which belonged to one of the gunmen


involved in the San Bernadino Plenty more stories on the business


line website, it is dominated by the UK budget as you can see, that is


our Chancellor or finance minister if you prefer Chancellor George


Osborne of course. You can see plenty more about that. Other


stories feature China backing a new five-year economic plan, we will


have more details about that. Also, Amazon is investigated for alleged


tax evasion in Italy, and Spain. Amazon responding to a statement


saying that it pays all applicable taxes in every juror sticks and were


it operates including Italy. Once again, Amazon hitting the headlines


for all of the wrong reasons. In Asia, China's annual


National People's Congress has ended, with the country's leader


pledging to keep the country's What else did we learn? We have


heard the sort of statements before and they have pledged some ambitious


targets, flesh this out, what did we hear? Guillem act you can probably


see the dreadful smog behind me, that is one issue on the minds of


China's leader. As they close the session. But it is the economy that


has dominated proceedings, and it dominated the closing press


conference of the Premier, he spoke about the challenges and


opportunities. He insisted that it was possible for China to both carry


out difficult reforms, reduce overcapacity, reformed those


inefficient state-owned enterprises and at the same time as all of that,


keep hitting that growth target of 6.5% every year for the next five


years. That is an extraordinary ambitious plan, there are many


people who have their doubts and their is one thing that you are left


with at the end of the session, that is the lack of scrutiny. Those in


the parliament but also in the press conference, in which all questions


were vetted in advance. So we heard him arguing in that very same event,


for more media scrutiny. John, thank you for the details of what we have


heard in what is always an interesting statement, the question


is whether the market will believe what they have heard. You can see


the nick a ending down on the day, and a similar picture in Hong Kong.


But there are only one or two stories in town, it is the US


Federal reserve, that investors will be keeping an eye on. In the UK,


there is budget day, so it will have big imprecations for the equity


markets, particularly the FTSE, in terms of spending and taxation. We


will talk about that in a bit more detail but let us head to Wall


Street, and speak to Michele Ferrari who will be talking about what is


happening ahead. All eyes are on the Federal reserve, at least on Wall


Street, they are on autopilot until the result of the US central bank


lost a policy meeting are out, cute expect any changes in the rates,


they will be scaring Janet Yellen's comments for clues, about how likely


a move in June is. Rising prices would lay a foundation for that and


an uptake in one measure of inflation is expected this


Wednesday. But a second report on industrial production may paint a


gloomy picture of the economy. In terms. To keep an eye on, watch out


for Valiant shares, the embattled maker plunged more than 20% after it


said that it might default on its debt, and cut its revenue forecast.


That prompted an activist investor to say that his hedge fund would


take a much more proactive role to try and protect its loss-making


investment that is Michele in New York, Amy is with us, he is a


manager at PIMCO. Guillem act two things that are focusing investor's


mind, one, which will have more of an impact on weight UK market will


go, which is the Fed that we were talking about earlier. For us, as


individuals the budget is key. So on the one hand, you have got the Fed


who will try and talk up the US economy and hopefully the global


economy and will say that hopefully things are still OK and they look to


raise rates in the months ahead ideally, an George Osborne will say,


that things are a bit trickier from my seat so I will worry about the


global outlook. A little bit of a balancing act. Our senses that


things are generally OK but a bit of both. Budget day in the UK, clearly


we will be live to gnat that pretty closely, it is about the direct


coronation that will have on the stock markets because there are


certain firms that will benefit on it very well. Spending on


infrastructure, others can suffer if there is a rise on tax, things like


petrol in the spotlight, cigarettes, syntaxes as they are called.


Different parts of industry like insurance could be hit? That is


right, you have really hit the nail right, you have really hit the nail


on the head with the budget, the budget will know the broad brush


approach, to try and keep spending down and to try and keep the deficit


down so it will be about individual sectors, and I suspect, things like


petrol duty, it does look like quite a popular one. OK, you will return


in five-minute time to talk about some other stories in business. In


the meantime, a folding fortune, we meet the man behind the cult folding


bike, the Brompton. We will try and do that live. The firm has big plans


overseas so the question is, can it keep the wheels turning? First more


on the budget and down unusual look ahead from Steph McGovern.


Come rain or shine, every spring the chance presents Britain with a


budget, a plan for the country's future which involves a fair bit of


forecasting. This time last year, the outlook was pretty sunny for our


economy, but it seems that the forecasts were off the mark and in


the Chancellor 's own words, there are storm clouds gathering. Growth


this year, is cooling, with a 2.5% predicted, more likely to be 2.2%.


One of the pressure is bringing in those storm clouds is coming from


the East. China is like the sun, it has been relied on for its warmth to


warm up the world, it has not been as hot as it would have been like so


we have not grown as much, it has also caused turmoil in the financial


markets, so we have not sold off our stake in Lloyds because we didn't


think we would have a good enough price. If the economy is not growing


as fast, the economy will be taking as much money as it hoped from tax,


making it tougher for the Chancellor to balance the books by 2020. The


calls of this we are expecting to hear today about more spending cuts,


it is not all gloom though, and there are some warm fronts. One ray


of sunshine has come from changes to the interest that the government


pays on its debts, giving us an extra ?27 billion. Also there are


more people on work than ever before, 31 million and fewer people


claiming benefits. But critics argue that the employment statistics are


not as sunny as they look with some of the growth coming from part-time


work and wages are not growing as fast as expected. It is likely to


mean that we will see some tax rises to make up that shortfalls such as


some possible rises in fuel duty, and more so-called syntaxes. But


like a lot of forecast it is a mixed picture. Either way the Chancellor


has said that there will be more austerity, so unprotected government


departments are likely to have to make more savings. That brings you


up to date with the weather on budget day. What is this? And Q.


And you can keep abreast of the budget as it happens


in our special programme with Huw Edwards at 11:30 on this


channel and BBC2 and of course BBC online.


Our top story: The world's top central bank and the world biggest


economy - no wonder the US Fed takes centre stage today as it wraps


And we'll see what Fed boss Janet Yellen has to say


about the path of interest rates, the health of the US economy


And now let's get the inside track on a British company that's cornered


the market for upscale commuter bikes.


Brompton's folding bike has a bit of a cult following,


its a familiar sight in the capital's streets and tucked


It was designed and built by Andrew Ritchie in 1975


The bikes are British made - Brompton is the UK's largest bike


manufacturer, churning out more than 45,000 per year.


With a headcount of 240, the firm sells its bikes all over


Now, more than three-quarters of sales are overseas.


Here with us in the studio is Will Butler-Adams,


Chief Executive of Brompton Bicycle.


Now, you started out, your career, you are an engineer and you were


working in the chemicals industry, how did you become the boss of


Brompton? I was looking after chemical plants in Middlesbrough and


I thought I was going go and be trendy and do an M BA and go to


consultancy and in the midst of that I sat on a bus when I was visiting


London and it turned out that the man I sat next door to was the best


friend at university of the inventor of the Brompton. I got chatted and I


sounded interesting. I wept to the factory and saw a very cool product


and I whizzed around on and I saw the factory that was like something


stuck in the 50s and I thought this looks loads more fun and I got stuck


into making bikes. It is the design that is iconic and one that people


who don't have the space to store it and you can carry it around with


you. There is a hefty price tag, but it is the fact you can carry it


around and I'm going to try and assemble this bike. That is the bit


that people struggle with. Ben will try and unfold the bike. It is not


cheap. You're looking at ?750 to ?1,000. Yes The unique selling point


is you can carry it around. Yes, what is happening, we are moving


into cities and people are moving into cities and we are not that


happy. We are getting shoved down a little hole and going on tube and


not doing enough exercise and once you start getting on a bike, and


exploring your city, you find there is wonderful things to do and you


get fitter, but you need a bike that is flexible. Oh, my Lord, here he


goes. Not looking bad. I have got the handlebars. It is meant to be


less than 10 seconds. This is the kind of bike we see. He is six foot


7! Here we go. Nearly! Very good. That is it. Yes. There is a hinge


that you have forgotten to clamp, so you will probably fall off. But now


you're ready to go. How much research and development went into


this? A lot of work is involved to get it to this stage and once you


have that design you can replicate it around the world. To a point, the


bike is different to what Andrew built, but the design has changed.


If you look at great iconic design, the design doesn't change, but


material, science, engineering allows us to optimise it. It is


lighter and more efficient. The original design is still there. Yes.


That is what makes it so poop you already. -- popular. But the last


year, you didn't sell as many and your profits fell yet, you're


investing in a massive way on further expansion and new ideas for


the bike becoming an electric version. Just talk us through that.


There is a worry that you're investing a lot, spending a lot when


you're getting less in. We have grown for the last three to five


years, but we are investing for the future. There are two main strands.


One is that in northern Europe in particular there is a movement in


the urban area to electric. They're not motor cycles, most of the time


it does nothing and it you hit Notting Hill as it gives you help.


You don't sweat. Now the image, you mentioned Notting Hill. It is a


feeling that it is a very London bike. BBC manager bike! It featured


in that spoof doctmentry. -- documentary. How do you deal with


that image, it is expensive and used in cities. We want to make a product


that works. Doesn't work just the day you buy it, by five, ten, 15


years later. We are not spending millions nurturing our image. We


just make a flipping good product. If it works it will be useful for


this, that and the other person. In most major cities, it is very


dangerous to get on a bicycle. Well it isn't. Well it is, I know people


who have been knocked off. But we know people who have had accidents


in their cars. The perception is worse than the reality. If you talk


to people about burglaries and all sorts of things, they think it is


worse than it is, BP it is getting better. In London safety is going


up, because more people are cycling. It has been a pleasure to have you


on the programme. Is that your bike? Yes. And my aim is not to break it.


I'm feeling smug I did that, people say it is difficult to put up and


you see people struggling with them. Less than #10shgs maybe 15 seconds,


I think there is a market here. Do I get a badge? Ben got that job not


me. It would have taking me half an hour. We have more comment on the


elections in the United States this morning. It is the morning after


super Tuesday two. Trump and Hillary Clinton boosted their chances in the


White House race. It's early days yet,


so we've not heard much yet on the economic plans


from the presidential hopefuls. But there has been some debate


about the vast powers That was a question I put


to Ted Roosevelt Malloch, Fellow in Management Practice


at the Said Business School. There is animosity on some extreme


sides of Republican Party and the Democratic Party about the Fed and


its power and control over the economy. I don't think that it is


very likely that one would challenge that independence. But they do


operate in a politicised environment and it is an election year I would


think there would be caution on part of FMOC, they won't be moving


quickly. Sorry we were still chatting between ousts. Mike is


back. To talk through some of the paper storieses. We were going to


talk about the budget but we have talked about it a lot. Now Forex.


The big inquiry that has been going on with the Serious Fraud Office no


longer happening. No, the challenge here and they have dropped the case


if they think, in the article they say, they think there is wrong-doing


that has been done, but they can't get enough evidence to pursue the


case. That is bad news. The good news is that there have been some


significant fines for the banking industry on that. If wrong-doing was


done, it is not like the banks have off got free. It will be a


perception issue. There is that debate among the public about


whether banks got off Scott free during the banking crisis. I


wouldn't underestimate the discussion in the city, you have the


Bank of England and the Government, with a massive review of market


behaviour led by one of deputy governors. The city is aware of it,


but the perception is not good. Businesses insider is looking at


that investors in Iran are looking to London property to add to their


assets. Yes as the sanctions come down, Iranian investors will want to


diversify and there is speculation they will put money into London.


That I suspect is good news if you look along the London skyline. There


not a shortage of property for sale. Thank you. We appreciate you coming


in on such a busy day. We will be following the budget. Full coverage


across the BBC today. We will see you soon. Goodbye.


For some a day of gloomy skies, but for many after a grey start, more


sunshine than yesterday. That sunshine comes in the wake of this


cold front that has


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