01/06/2016 BBC Business Live


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An impeached president and an economy mired deep


in recession, how does Latin America's largest economy,


Live from London, that's our top story on Wednesday, 1st June.


Laden with debt and a shrinking economy, can Brazil's interim


president drag the country back into growth?


And from one commodity rich country to another but it's a very different


Its latest growth number is surprisingly good news,


boosted by exports and consumer spending.


A quick look at how the European markets begin the day. Lots of red


on the board. We'll tell you why later. Aaron.


And we'll be talking to entrepreneur Lloyd Dorfman who opened one small


bureau de change shop in London back in 1976.


It's called Travelex and today it's the world's biggest


And we're looking at how a British retail institution.


Marks Sparks is turning off the music in its stores - why?


Because its ageing customers are complaining about the noise?


But hang on - what about us youngens,


But hang on - what about us youngens, what about younger people?


Latin America's biggest economy, Brazil, it's got soaring government


debt, rising inflation and escalating unemployment


and just to add to the mix it's also mired in political scandal.


It's due to report its latest growth figures and it looks like it is only


The interim president, Michel Temer, is proposing a raft of economic


measures, but can they rescue Brazil's economy?


The government has a huge deficit and needs to make savings


Mr Temer wants to create constitutional spending limits,


reducing the growth of health and education spending.


He also wants to reform the country's pension system,


making Brazilians work longer and retire later.


Opening up the oil sector to foreign firms is also on the agenda,


making the industry less reliant on government investment.


Edward Glossop, emerging market economist at Capital Economics.


Edward great to have you in the studio with us. You know, you go


boy, where do you start with Brazil? No, seriously, there is so much to


do to try and bring it back from the brink. The $50 billion saving a


year... Yes. Where is that going to come from? Well, it is a good


question. 90% of spending is mandated and earmarked by the


constitution or fiscal rules and so that spending is going to be


extremely difficult to cut. He has got his work cut out getting that


through Congress for sure. The more an economy cuts, an economy that's


already, right, you know, soaring unemployment, inflation, is up


nearly 11% the last time I looked, the currency has taken a hammering.


The more you cut, the more it will hurt the other stuff, isn't it?


Absolutely. That's going to exacerbate the recession. When the


commodities boom was, commodity prices were high and rising, now


that the commodities boom fizzled out it overspent in the boom and how


it is having to cut back when times are tough. We've got this


impeachment. It is a six month investigation, it is an impeachment


trial. Is that still putting off investors? There is still


uncertainty, right? Of course. That's putting off investors


investing in Brazil and probably making it one would imagine hard for


Brazil to go to the foreign money markets and raise money? Of course.


What does it do? This is an interim Government. This week he had two


members of the Cabinet resign. So it is not a good start for Temer. It is


in a difficult place right now. The Olympic Games. A small shot in the


arm, a boost to the economy, yes? Well, typically for these economies,


especially for large economies like Brazil the Olympic Games don't have


a huge boost to the economy. For what it is worth we don't expect it


to have a significant boost or have any significant impact in terms of


dragging the economy out of recession. We think the boosts are


overdone. Edward short and sweet, but we appreciate it.


You can keep that cup now since you've drunk out of it.


Japan's Prime Minister Shinzo Abe is expected to announce a delay


The tax is one of the key planks of Mr Abe's promised


reforms, aimed at boosting the country's inflation rate.


The move is expected to be delayed until 2019.


Tourism spending has outpaced global trade for the fourth year in a row.


The US followed by China, followed by France and Spain. Figures


released this month show international tourism grew by 4% in


2015 generating $1.5 trillion. Japanese telecommunications giant


SoftBank have said it will sell at least $7.9 billion of its shares


in Chinese ecommerce SoftBank is the major


shareholder in Alibaba and its stake will fall to about 28%


of the Chinese firm. Softbank shares climbed


3.5% on the news to The tablet is working today. We're


looking at the Business Live page. You and I touched on the plastic


money. The Brits. Us Aussies had plastic money for a long time. We're


playing catch up. Is the new ?5, does it survive in the washing


machine? Yes, it should. It's plastic. The key is in the word! I


want to just do this here. The world's longest tunnel. Oh yes. It


is about to open, isn't it? Today. Longest, deepest rail tunnel.


Switzerland, isn't it? This is like a quiz. Am I winning? How long is


it? 25 miles. It is de-Seend to make easy connection between the ports of


Northern Europe and Southern Europe. The Europeans love their tunnels.


Just in time for the school holidays as well. 25 miles!


I haven't lived there for a long time, but the Aussie economy is


growing. Australia's economic growth


is at its fastest since 2012. It grew at a better-than-expected


1.1% in the first three The Aussies are selling more stuff


abroad, but the Aussies are buying stuff on the ground in Australia?


That's right. They're doing a bit of both and of course, we know this is


an economy known as the Thunder from Down Under, that's not you Aaron,


that's your economy we're talking about here! It is a surprise because


we know how all regional economies have been hit by a slowdown in


China. Australia counting on China as its largest trade partner,


growing better than expected. So up 1.1% in the first quarter. It was up


3.1% annually, a pace of growth that Australia hasn't enjoyed since late


exports you talked about and thanks exports you talked about and thanks


to a boost in household spending and we know that Australia's been


struggling for growth since the mining boom tapered off mainly due


to that slowdown in China. But this time, we're seeing service based


industries, finance, retail, trade industries all contributing to


growth and natural gas and the commodity exports that we saw a


slowdown in. Economists saying the latest growth figures should reduce


the need for further interest rate cuts and it might help boost the


chances of current Prime Minister Malcolm Turnbull who is trying to


defend his Government against the Labour Party ahead of an election in


a month's time on 2nd July. Thank you very much indeed.


Looking at the Asian markets - the Nikkei ending Wednesday


Doesn't seem to have been boosted by that expected delay


to the increase in sales tax in Japan.


Of course that hasn't yet been officially announced.


Perhaps the Asian markets tracking the weakness


of shares on Wall Street which were down on Tuesday,


as investors in the US brace for a possible rise in interest


Michelle Fleury has the details about what's ahead


As one trader told me me, this Wednesday is all about the Ms. Wall


Street will be paying close attention to China's manufacturing


index as they try to get a fix on global economic conditions. Closer


to home, investors will be keeping an eye on the institute for supply


management's manufacturing index. In spite of tepid demand from abroad


and a strong dollar, the report is expected to show the sector expanded


for a third straight month in May. The ought owe industry has been a


bright spot for the economy, ranging up record sales in the US last year


and it continues to do well. Sales for May are expected to total 17.3


million for the month, but analysts suggest that the rate of increase in


sales is starting to slow and that car-makers are beginning to rely on


higher discounts to boost demand. Maike Currie, investment director


at Fidelity International. Maike. Good to see you. He will


delay the increase from 8% to 10%. It was supposed to come in next


year, right, he will delay it two years, late 2019. That's a market


story. I was looking at factory activity in ash yasmt it is not good


news. All these countries, the factory-driven economies if you


will, churning up stuff around the world we buy, down for the month of


May again. China, world's second largest economy, barely improved


last month. It ain't looking pretty, is it? No, lots of market attention


is focussed on the UK's EU referendum and of course, the Fed's


decision on interest rates. It is easy to forget about the other big


concern which, of course is China. In light of this, the Chinese


figures coming out later this week are really important. Of course...


The PMI. These are forward looking numbers. That's right. That should


give us an idea how confident Chinese manufacturers? Yes. Still in


deflationary terry. This is a number the ECB will probably reference


tomorrow when it makes its announcements on interest rates. The


expectation is for no change, but Japan, Europe still in deflationary


territory and the question is how do we kick-start the economies? We're


going to leave it there. I know you're coming back for the papers.


The European Central Bank, a key function of a Central Bank is to


control inflation, right? That's right. They should be more on to


that, some say! Still to come: And we'll be talking


to entrepreneur Lloyd Dorfman, who founded the firm,


Travelex, back in 1976. It's now the world's biggest


foreign exchange retailer. It's the first day of trading for


the new owners of Tata Steel's Long The plant was under threat


of closure before Greybull Capital stepped in and agreed to buy it


for ?1 a few weeks ago. Rob Young is in our business


newsroom. Rob good to see you. Rob, a new


brand, but surely many are asking really, is it a new dawn for British


Steel? Well, this is a rarebit of good news for an industry which has


been in crisis for the past couple of years. We have had thousands of


job losses in the UK steel industry. The SSI steelworks on Teesside


closed as well. And this, part of Tata Long products division which


makes railway lines for Network Rail for example was bought by a turn


around company for just ?1. It says it will invest ?400 million and says


that its plan to turn around the business is bearing fruit. They say


over the past couple of months, the company made a profit at an


operating level, that's down to the recent rise in the steel price which


we have seen, but also the fact that the 4800 workers agreed to take a


pay cut and accept a reduced pension contributions as well.


Rob, thank you for that update. We appreciate it. We'll talk to you


soon. Rob Young there. You have not been buying enough


Lycra. Apparently not. Sales of cycling kit have fallen. Bikes,


pumps, Lycra outfits. It is the weather. It is a technical British


story! House prices edging higher for the


month of May. Up 0.2%. The average price of a house, what do you think


it is? It is right there. About 200,000. Good guess! Funny that!


That is according to nationwide. This is the business life page we're


looking at. We have British Steel, of course. It does have a story we


are going to touch on shortly, M, stopping the music.


People have been complaining about the noise. Distracting while you are


trying to make a purchases. Is it a nail in the Coffin for M?


You're watching business life. Our top story, laden with debt, a


shrinking economy, can Brazil's interim president dragged that


country back into growth? We are expecting the latest figures


to be released in a few hours. It's the age of the disruptor -


from AirBnB to Uber - all challenging established norms,


and in some cases turning One entrepreneur who's been


particularly good at spotting market changes and providing people


with a service they didn't know In 1976, he launched the first


Travelex bureau in London. Forty years on it has


become the world's biggest In 2010, he brought a stake


in The Office Group, which provides flexible work space


to thousands of start-ups And in 2014, he co-founded Doddle,


which lets customers have online packages delivered to their location


rail station where Businessman and philanthropist


Lloyd Dorfman joins us. I was reading some of your


background. This is your words. You said at school you are quite


mediocre. You are not a genius but you were not an idiot. You failed


economics, you did not go to university, in 1976 you opened a


pure discharge. How do you go from that? A lot of hard work, a lot of


persistence, a lot of self belief. And it was a time when I think the


big banks traditionally provided these services. This was not a core


business for them. The euro came in and they were less interested. We


always saw the euro as -- an opportunity than threat.


Is there anything at the moment, a niche that has not been to -- that


has not been filled... Obviously you are not pretty tell us what it is!


Is there something at the moment that someone is not doing? Not at


the moment. But we are looking at some new businesses. Some


interesting new photographer the Rio Grande to launch it the next few


months. Watch this space. Click and collect is not really new. Nobody


has cracked the problem. This is Doddle we are talking about. One of


my bugbears. Most of us consumers are big online purchasers. It is a


pain to send it off. You are a co-founder of this, right? You got


together and you thought, there is a little hole? This was originally an


idea being looked at by Network Rail. They came to me to partner


with them. I bought them out about six months ago. And we are building


and developing as a business. The real inside here as far as the


retail network is concerned is for people to be able to do this at


convenient commuter locations. On your way to work you can return


things. On your way to work you can collect things. Doddle is growing


into quite a powerful IT capability, to really drive click and collect


for retailers as well as consumers. Your other businesses the office


group which provides space for start-ups and new companies. How was


the climate for people starting out? Easier or harder than when you


started? Think it is easier, principally through technology. You


can start a business from your bedroom. Last year we had a record


number of businesses started in this country. People used to refer to us


as a nation of shopkeepers. Perhaps it is a nation of entrepreneurs now.


It is technology. You do not need bricks and mortar snout. No, you can


sit at home and do it. I am curious about your background. In 1973 you


went into an investment bank with no experience, no qualifications. 73.


Can you remind viewers around the world and those perhaps here in


Britain, what happened in 73? Within three months we had a quadruple in


the oil price overnight, strikes, three-day working weeks, the


collapse of the stock market, the property market, the collapse of the


government, strikes... A baptism of fire. Absolutely. I went to do this


to get as much commercial experience in a short time. But it was an


incredible apprenticeship. I would going to meetings were not only the


borrowers were in trouble, the bank was in trouble, the Bank of England


was trying to hold things together. It was a great apprenticeship.


Quickly, that is what is giving you the tools to go forward? Yes, it was


a great insight for me. I have is -- I have always loved business. When


you have been through that -year-old Frannie Challis. What was it about


the exchange market that piqued your interest? We were coming into 1977,


I thought it would be an interesting thing to do. It became a global


business. We appreciate your time. Thank you. An honorary Australian,


by the way. He loves Australia, don't you? I do. You have got to


sponsor the cricket team. In a moment, the business pages. First, a


quick reminder of how to get in touch.


The business life pages where you can stay ahead with the breaking


business news. We will keep you up-to-date with the latest details,


with insight and analysis from the team of editors around the world.


And we want to hear from you. Get involved on the bees -- -- BBC


business life page. We got about one half minutes. M


Music. Thank you for tweeting in. Don says music is the least of the


problems for M Bring back good womenswear. Sally in France saying


music is for a start. A big turn-off. Rubbish is what it


generally is. It is an interesting story in light


of the insolvencies we have seen on the high street with Austin Reed,


BHS. The retailers are under tremendous pressure. They are either


going to have to compete on price, like the discounters, primer, Lidl


etc, or they have to compete on experience, like the Apple Store.


M is doing neither this moment. The problem a lot of customers have


is that it had not -- has not changed in 22 years. An interesting


decision. They will save some money. Is this rarely what customers want?


If they want to appeal to a younger customer base... When you are


listening to music time seems to go more quickly. If you are in a shop


and the music is playing, you lose track of time. Yes, I think it adds


to the experience. I enjoy the music. One of our producers said


they do not have clocks in shops. You lose track of time. They do in


the homeware department but they are set to different times. It is like


pumping fresh air into a Las Vegas casino. What is next? Are you


interested in oil? Let's talk about it. The Opec meeting is on Thursday.


Investors will be keeping a close eye on this. It is all about supply


and demand. Supply has been corrected with things like the


wildfires in Canada and military action in Nigeria. The discovery of


new oil wells, which is dropped off immensely. The consensus is there


will be no co-ordinated cut. No surprises there. That is presumably


until the shale companies realise the price has gone up. We will not


see oil passing the $100 mark again but we could see at stabilising at


$60 per barrel, a far cry from where it was earlier this year. Very


quickly, that last newspaper story. It seems that in 2015, the world


loved to travel. We like to travel more than we like to buy stuff? That


is right. The two main markets are the US and China. The amount of


Chinese tourists travelling the world has increased since 2004,


which is a remarkable number. Just last year alone they increased their


spending by 25%. That is a major factor driving the economy.


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