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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.