27/06/2016 BBC Business Live


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


As the UK assesses its options after last week's surprise decision


to quit the European Union, we'll weigh up the economic impact


Live from London, that's our top story


The UK's Finance Minister, George Osborne, has been


speaking in the last hour, in an attempt to ease


We'll be live in London's financial district to find out.


We'll take you live to Frankfurt and Sinagpore, as global investors


assess what the vote could mean for them.


Gold prices are up sharply as the pound sinks.


And this is how it's looking in the first half hour of trade.


And what difference will the vote mean for businesses day to day?


We'll speak to one British exporter who voted to stay in,


and ask what it means now the country is heading out.


Send us your questions about the impact on travellers,


Welcome to a special edition of Business Live.


We're assessing the impact of Friday's historic vote -


the UK's decision to leave the European Union.


And after a weekend of political upset and economic fall-out -


today begins the real work of negotiating an exit and finding


the politicians to lead the UK through the uncertainty.


This morning, UK Chancellor, the Finance Minister George Osborne,


sought to calm financial markets in the wake of heavy


He said the economy was in good shape to withstand the volatility


ahead and to confront the challenge the country now faces.


He did resist calls for an emergency budget. He says he wants to play an


active role in the debate over Britain's relationship with the EU.


We'll cross live to the city in just a moment, but first here's


It will not be plain sailing in the days ahead. But let me be clear, you


should not underestimate our resolve. We were prepared for the


unexpected and we are equipped for whatever happens. We are determined


that unlike eight years ago, Britain's financial system will help


our country deal with any shocks and dampen them, not contribute to those


shocks, or make them worse. Stephanie McGovern is


at the financial heart What did traders make of what Mr


Osborne had to say? Good morning. You could have heard a pin drop in


the Chancellor was speaking. These guys reacting. Stuart, what has been


happening? When we came in, everything felt very weak again. Mr


Osborne coming out has been more supportive in terms of staying on.


We don't know how long he's going to stay on for. Sterling has rallied on


that. Original indications on the FTSE, we're down to three, 4%. We


are now only down half a percent. They are down but not as much as you


expected? Exactly that. We still look at European markets. You look


at the euro stocks, a broad base of European shares, and that is up a


third 1%. These Spanish elections have taken quite well. So much going


on in the world, you have to keep your eyes everywhere. Thank you.


Fairly calm. Of course, as we know in this game, things go up and down


pretty easily at the moment. It will keep us all in a job for now!


It would seem the pound is rising a little. There is a little bit of a


feeling of calm in European markets. The mood where you are? A bit more


of a stable tone. The same thing on the Frankfort stock exchange. You


can see the financial district behind me. Some of the words that


emanated from the Chancellor of Germany over the weekend, they had a


much more stabilising effect. Negotiations with Britney to be


carefully handled, they must not be rushed handled in a constructive


manner. I'm joined by Roberto spit, a finance director. Are you


reassured by what you have seen over the weekend in terms of how the


process will be managed? I certainly am. We want an amicable separation.


We would like to keep the economic harm to an absolute minimum. And


then clearly we want to keep Britain as close to the union as possible.


You concerned this contagion will spread am a bad there will be a


general feeling the EU needs some sort of reform? Definitely needs a


reform and we hope it will be a catalyst. There may be reasons why


banks may not be able to operate fully in London. Maybe you could


explain fully what they are, particularly the issue of euro


clearing. There are other reasons why it is not possible to conduct


negotiations outside the EU? The ECB wants superannuation. They ruled


accordingly and were overruled by the European Court. The High Court.


We will have that issue reopened and very likely we will have euro


clearing moving into Frankfurt. Frankfurt, in terms of those


operations, has an obvious pulled because the ECB is here and it


manages the eurozone. But it does have a very shiny new face that it


has developed over the past decade. It does have unquestionably more


appeal but it is not the only game in town. Luxembourg would like some


of that business as well? Everybody would get some of the business. But


the clearing would come to Frankfurt. We have the biggest


clearer in the eurozone, bigger than all of the other clears in all of


the other countries together. Let me ask you a better deal in the offing,


itself very controversial at the beginning, the deal between Deutsche


and the London stock exchange. Arguments about where headquarters


would be. Is that deal under threat? The industrial logic is clearly


intact. We still believe it is good to have a European solution.


However, it needs recalibration. Now that we know that Britain is leaving


the EU, clearly some of the business will more logically be located in


Frankfurt. We need recalibration. When it comes to headquarters,


Frankfurt brings the majority of the value to the table. We believe it


should be reconsidered. Thank you. Frankfurt is certainly poised. But


there is still the open question, if Britain leaves the EU, when?


Yes, everybody is asking that question. Tanya Beckett.


Andrew Walker, economics correspondent, is with us.


We heard reaction from the city of London. What did you make of George


Osborne's speech? It is striking. Before the referendum he did warn


that there might be a need for an emergency budget. It is not going to


be this week but it is still very much on his mind. He talked about


the need for an assessment by the Office for Budget Responsibility of


the applications for the government finances. And there will need to be


some adjustment, he said, in the public finances. He is not spelling


out in detail what that means. But he did also say that he is


determined to make sure that the progress he says has been made in


managing government finances, that that is maintained. There is a


suggestion there will be a need for some further tightening in


government finances. It is still an open question of whether he will be


the person to do it. You say he talked about the budget, but only


when he was asked about it. He actually spoke for quite some time


and some length about what he has done, but what Mark Carney has done


to bring calm, the challenges ahead. Indeed. He mentioned three


particular challenges. The first, the most immediate one, was about


trying to deal with the volatility that we saw particularly on Friday.


And frankly, yes, it is important for finance ministers to make


reassuring noises in those circumstances. But the real levers


are in the hands of central bank. Mark Carney was indicating what


powers he had particularly in terms of providing support. There have


been similar statements from other central banks around the world. The


Swiss National bank has actually done something. But then Mr Osborne


wanted to talk about the uncertainty about the new relationship, the UK


will have with the rest of Europe. And then the business of deciding


and negotiating what the relationship will be. Clearly he


wants to have a role in it. We will see what position he does have in


those important negotiations. Thank you.


Some breaking news in the UK. Over the weekend here in the UK, we have


had a number of departures from the shadow cabinet, from the opposition.


We have got new appointments to those jobs. Shadow Foreign Secretary


will be Emily Thornberry. Shadow health secretary, Diane Abbott.


Shadow Education Minister secretary, Pat Glass, shadow transport


secretary, Andy McDonald. Defence, Clive Lewis. And Rebecca Long Bailey


shadow Chief Secretary to the Treasury. 12 members departed over


the weekend. They are keen to get things back and running. A swift


response this morning in terms of organising a new cabinet for the


opposition party. Let's look at the Business Live home


page. The key picture, George Osborne at his press conference. It


also talks of the reaction to UK shares and the pound. Continuing to


fall. A slight uptake in Stirling at the beginning of the trading


session. Other stories out there. Companies coming out with profit


warnings, like easyJet. Yes, they have talked about the risk


of Brexit. It could cost them 5% in terms of revenue over the coming


year. There has been a lot of debate about what it could mean for the


open skies agreement, whereby airlines are free to fly anywhere


within the European Union. If the UK votes to leave, question marks over


that arrangement. Do take a look. ABC online. Lots of


other reaction. Business leaders talking about the outcome. Let's get


a sense of how Asia reacts to this. Friday was pretty grim for most of


the main markets in Asia. Yes, markets closed down pretty


sharply. Following Friday's post-Brexit slide


of almost 8%, the Nikkei in Tokyo Our Asia Business Correspondent,


Karishma Vaswani, Is this a bit of profit-taking while


prices are cheap, or is this flying to somewhere that is not a European


market? I think it is a bit of both. There is a sense among many traders


here in Asia and investors that it is a time to take stock. There was a


lot of panic on Friday because there was a sense that the actual


referendum vote was not priced into the markets. Everybody was expecting


a Remain vote. They got what they were not expecting, which is why you


saw the major dramatic falls on shares across Asia on Friday. Japan


has picked up today. Some 2%. It must be said that the strength in


the Japanese yen, that is a safe haven currency, investors selling


the pound and buying the end, that is bad for economic recovery. Even


though we have seen some Asian markets pick we are hearing some


cautionary voices from Asian leaders. The Prime Minister row of


Japan, and the Chinese leader as well, talking about the impact that


Brexit may have on the wider region. Although we did not see any action


from the central bank in Japan, which some were expecting, we have


seen action in China as far as the yen is concerned?


Yes, we have seen action with regard to Chinese officials setting the


midpoint lower. It is a controlled currency. They decide where the


midpoint is right to be. It has now been set to its lowest levels in


five and I have years. China is caught between a rock and a hard


place. It needs the yuan to be cheaper so it can continue to export


the way big economies in Asia do. But it doesn't wanted to be too weak


because then you have a situation where Chinese investors, are wealthy


people in China, get worried about the economy, worried about the


economy, and start to take their money out of the markets. Capital


flight, if you well. What we are seeing across Asia are concerns over


how the pound's weakness is having an impact on the strength of the


Japanese yen and a knock-on effect on the Chinese yuan.


Still to come, what Brexit means for business.


We will speak to one British exporter about


the impact on her business of last week's vote to leave the EU.


From the front cover on our passports to the currency


we take away with us, the decision to leave the EU


will have a big impact on our holidays abroad.


And with the summer holidays approaching,


many of us will already have our trips planned.


Bob Atkinson is a travel expert from Travel Supermarket and joins us


Bob, good morning to you. Good morning. First of all, let's talk


money. People who have not bought euros already, wham pact on them and


people going outside Europe, a lot of those countries have their


currency pegged to the dollar? The first thing I would say at the


moment don't panic. There is a lot of volatility in the market. Whilst


we saw dramatic falls on Friday and who knows what is going to happen?


If you have got a holiday planned immediately then buy the currency


because you need it. You're going to need to buy your euros and buy your


dollars, there is nothing you can do about the exchange rate


realistically, you need to go and get the dollars and euros. If you've


got a holiday further down the line what I wouldn't be doing is trying


to speculate on what could happen. And the value of the pound could


value. It could rise, it could stay the same and so, you know, unless


you've got a crystal ball and let's face t none of us have, I would just


hold on to your money and wait until you need to buy it, but I would be


planning ahead to look at how can I get my best value when I do need to


change my money by avoiding your things like your bank charges and


knowing where to get the best rates. I'd plan ahead for that. Bob,


briefly, for us, let's talk passports. A lot has been made of


whether the purple passport disappears? A word on that. If


you're travelling, until we have negotiated exit, everything carries


on as normal. Your passport will work as normal. You will be able to


use the blue channels arriving through duty-free, your health card


will work and the roaming charges on your phone that have been coming


down, that will stay the same. Basically, nothing changes at the


moment. The only thing that consumers really need to be


concerned about is about the exchange rates and monitoring what


those are and buying, you know, at a time that's suitable to them.


Thanks, Bob. More online. Including news about


HSBC possibly losing staff. Our top story, the UK's


Finance Minister George Osborne has moved to reassure global markets


saying the country is ready to face the future from


a position of strength. A quick look at how European


markets are faring. We are still losing ground, but


nothing like the serious declines we saw on Friday. Some would argue


actually that that news from the UK Finance Minister or Chancellor if


you prefer, has brought some calm to markets in Europe this Monday


morning. The FTSE 100 down. It closed not the worse off across


Europe. Actually the FTSE 100 on Friday closing up on the week, above


the 6,000 level because the psychologically important level is


6,000. You will see the DAX tipping into positive territory. It has been


volatile as you would expect. So we've assessed the economic impact.


Pampeano is an Oxford-based firm that sells leather goods both


It was founded in 2007 and nearly 30% of its sales are to countries


Founder Jennifer Brown was hoping for a Remain vote.


Welcome to Business Live. Give us your reaction to all this as someone


who started a company, you're based in the UK and you're exporting? It


was disappointing news for us, we were keen that we remained. It is


negative news. We purchase everything in dollars so a weak


pound hits us very hard. We're about 18% down on the long-term average of


the pound to the dollar. There is also the very big concern, will this


have an economic, a negative economic effect for us? And so, that


is really not something we want clearly. Can I break this down into


two real issues, one is short-term and that's the volume volatility


we're seeing on the markets. Longer term, I'm interested in whether it


changes your outlook of where you might want to expand and sell to and


hire staff or expand your business. Have you started to consider that?


Not long-term. We have looked in close detail at the next six months


and made decisions on a protect our self basis for the next six months.


Beyond Christmas, this point I'm not going to try and judge what we think


will happen. We've reduced our investment, halt it had wherever we


can, we have put a freezing hire on and we will try and reduce our


inventory so we can get through a negative period if one happens.


Where do you sell to? So the UK, but as you said a moment ago, nearly 30%


to Europe and 8% to the rest of the world. So in terms of your exports


to Europe, I guess, you like everybody else in your position,


you're waiting to hear about what is negotiated and how it will work in


the future? Certainly, yes. It is difficult to tell because as I said,


you know, it, the trade deal is one problem, but that will take


sometime. Let's longer term. In the shorter term, will people stop


buying luxury leather goods? For the six months, will people stop


spending on luxury purchases, that's what really is going to affect us


and our business to Europe because if the consumers aren't buying, our


retailers will not buy, of course, as well. Briefly, time is against


us, but I'm just interested in your priority now, what is the one thing


that you must deal with now? The short-term? To reduce our operating


costs and to free up cash. Thank you for coming in. We appreciate your


time. Good luck. Thank you very much. With the future and how it


works out for your business. In a moment we'll take a look


through the business pages, but first here's a quick reminder


of how to get in touch with us. The Business Live page is where you


can stay ahead with all the day's breaking business news. We will keep


you up-to-date with all the latest details. With insight and analysis


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Business Live on TV and online whenever you need to know.


Some tweets from the programme. Markets not collapsing as was


expected. The pound and the FTSE finding support. Good news for those


in the City and we certainly heard from a few of them at the start of


the programme. He says nowhere near the lows we expected on Brexit. Is


this just the calm before the storm or are we looking at markets in the


UK fighting back? His view, he says, I don't think we have seen the lows


quite yet. Joining us again is Jane


Foley, Senior Currency Where do you think sterling is


headed? I don't think we have seen the lows yet. Yes, there has been


lots of speculators, lots of hedge funds. These are people that may


manage our pension funds, corporate customers, their business is not


foreign exchange, those guy also have stepped away and they will have


tomorrow to come back and given the political uncertainties and given


that we know that political unsrnity is a negative for confidence, for


investment, for concernsies, there is a significant chance that we


haven't seen those lows yet. For people like you, you can't really


afford to be away from your desks right now, but at the same time


those of you that work in the City of London or kay Nairy wharf, you're


worrying about your own futures? Indeed, many of us work for banks or


branches of European banks that are here on passporting rules and there


is a big question mark over what will happen now? Those passporting


rules, they cannot sustain the way they are if Britain comes out of the


EU, what are those arrangements going to be? There is a huge amount


of uncertainty. A huge amount to be negotiated by the politicians in


terms of our future and whilst the uncertainty is there, it hangs over


our heads. Yeah, job insecurity, significantly higher than it was a


couple of days ago. And certainly, as we've just heard with your small


business customer, insecurity means job insecurity for a lack of


investment means job insecurity for a lot of people. You talk about


hedge funds. There is a story in the Times, hedge funds wiped out by vote


to leave. We knew there would be volatility, it depends on your


positioning before and what City was expectingment a lot of people


betting it would be a Remain vote? The bookies odds were skewed because


of the bigger votes in London. London did vote to Remain. Some


speculators got it wrong. In Europe, there was a sense of disbelief that


the UK could ever vote to move out, many investors got it wrong. Real


money and corporates were not really involved in the latest volatility


over those last few days. Those people will have taken their


position and stayed out. This was a very much a speculative trade. Jane,


it has been good to have you with us. Thank you for coming in and


thank you for your company. Dig deep online, more analysis from our team


at the BBC. More on that reshuffle of the Shadow Cabinet. More later.


See you soon. Bye-bye. There is plenty of rain on the


horizon. Cool and blustery at times, but today, not too bad. We are in


between weather


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