28/06/2016 BBC Business Live

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

British Prime Minister David Cameron is set to face European leaders -

as ratings agencies downgrade the UK following its vote to

Live from London, that's our top story on Tuesday 28th June.

The long road to Brussels. The British premised is braced for his

first talks with the European leaders. What will the reception be

like? South Korea unveils a 17-billion

dollar spending package - in a bid to weather economic

volatility following the UK's vote. And markets in Europe, the only way

is up. These are yesterday's closing numbers. They are higher across the

board and we will explain why. And what does Brexit

mean for business? In our special series this week,

we're meeting businesses from both sides of the debate -

about what happens next and how Britain's vote to leave

will affect them. Today we chat to the man that runs

this events firm. And we'll assess how the world's

newspapers are following the story - and get the international

perspective on what Brexit It's a critical day ahead -

a European Union summit gets underway in Brussels in a few hours

time and the UK's decision to leave It comes as Britain's economic

standing has suffered a fresh blow. Two credit rating agencies have

downgraded its prospects. Fitch says fears about the impact

on Britain's public finances had Standard and Poor's has also

stripped Britain of its last Moritz Kraemer is Chief Ratings

Officer at Standard Poor's. We believe the Brexit vote has

manifested that the institutional setup and the governance standards

of the UK are no longer of the shader that we believed before in

terms of predictability, stability, effectiveness of policy-making. It

is hard to foresee how governments would react. We really reassessed a

review of the institutional capacity of the UK Government to react to a

financial crisis. What about the European Union? How will it be

affected? Trade is one area that is vitally important. Last year, the UK

exported $294 billion of goods to the European Union. Over

that time period, it imported $383 billion.

difference, there is an $89 billion deficit, a lot more exported to the

UK than imported. For Germany, they could be one of the biggest losers,

if trade is restricted. Written as Dr Volker Treier is the Chief

International Economist at the German Chambers of Industry

Commerce. Clear something up for us. There's a

lot of about the relationship between the

UK and Germany. Suggestion that we need you as much as you need us.

Explain the rationale and the feeling.

It is true, we both need each other, for German businesses, the UK is the

third-largest trading partner, the fifth trading partner, we're running

a trade surplus, we export more than we import. That means it's a big

market, and we are desperately concerned about the situation. Talk

me through the conversations you've had with German businesses. How did

this result go down? One thing is the currency, the British pound is

now devalue eating -- devalued, that means the power of Britain will go

down and it will reduce their ability to import a product from

Germany. You can hatch a bit of the currency risk not not all. On the

other side, we are even more dependent on the market and we are

selling products all over the world, the euro has appreciated. It has

evaluated. There might be other opportunities as well. A brief word

on the timing. Would you like to see this wrapped up quickly? Would you

like a negotiation that ensures it is done in the right way? The UK

will Remain an important trading partner. But it is clear that the

more delectable and stable the framework is, the quicker the

negotiations. It will be better for German

business. Thank you for your time.

We're getting lots of breaking news, comments from the Chancellor of the

Exchequer. He's talking on BBC radio right now. Some of the points. We

are absolutely going to have to provide fiscal security, which could

mean increasing taxation and a cut in spending. He warned about this

prior to the vote last week but when it comes to the timing of that, he

would not be pin down. Another line we're getting in, the

need to provide fiscal security, he says we are

going to need to show the rest of the world that the government can

live within its means. Asked if that meant tax rises, you said,

absolutely. Tax rises and spending cuts. We will have more on that for

you later. Over in Portugal, there's a separate

meeting taking place Our correspondent Theo

Leggett is there for us. What are listening to you? This

meeting takes place on an annual basis in these pleasant

surroundings, and is supposed to offer a relaxed occasion to chew

over the remains of the day. But things have been overshadowed by the

developing situation. The programme is going ahead but behind-the-scenes

it is clear the volatility on the markets

is a dominant theme. I'm interested in what people are saying to you.

Absolutely, it is odd that you have this agenda that is fixed and people

are still making speeches on the subject. Behind the scenes, all that

anybody is talking about is the British referendum, and people seem

genuinely shocked and very concerned. Among the people

attending is Trichet, former president of the central bank, he

presided over it during the demise of Lehman Brothers. I asked him what

he made of it. I am very sad. I was hoping they would not leave. It is a

sentiment of all Europeans and it makes the decision of the British

people even more appalling. It is very hard to believe. That bought

the former president of the European Central Bank. We expect to hear

from Dragi, the current man in charge, surely. What will he say?

That is a good question. How far will he go to reassure investors? He

has tools at his disposal. Interest rate rises, quantitative

easing, buying up sovereign debt. here is a message that the European

Central Bank is ready to do what it takes to

keep the situation under control until the aftermath of the

referendum vote. Volkswagen has agreed to pay nearly

15 billion dollars to settle claims It would be the largest ever

class-action settlement The case involves lawyers

and government officials representing 475,000

Volkswagen vehicle owners. It also includes just over

$10 billion to buy back affected Microsoft has agreed to pay

a Californian woman $10,000 after an automatic Windows 10 update

left her computer unusable. Teri Goldstein said her Windows 7

computer had automatically tried to update itself to Windows 10

without her permission. She said the update had

made her machine unstable, leaving her unable to use it

to run her business. Microsoft said it had dropped

its appeal to save on legal costs. There is a story about Hinkley

Project, likely to become casualties. This is the nuclear

power station slated to be built in the south of England to solve energy

problems in the UK. It has been a controversial project. There is some

concern about whether this will get the go-ahead.

When it comes to dealing with the impact of Britain's

decision to leave the EU - you might expect that Europe,

maybe even the US would have contingency plans in place.

Please explain. The Koreans are pumping $7 billion in stimulus

because of these fears. Markets are being lifted on these signs that the

fallout is happening, the currency gained 1% along with many other

emerging market currencies. The idea is to use this money to stabilise

the markets if there is more volatility as well as creating jobs

because Korea have been suffering from growth, exports have fallen.

The government is taking concrete steps to lift growth.

We will look at the European market in more detail in a few moments.

Let's look stateside. US markets are reeling. Investors will be drawn to

the latest economic data. Investors concerned about the underlying

strength of the US economy, after this vote, will get

clearer snapshot when they reveal the final growth figures. GDP grew

at an annual rate of 0.8% between January and March. The housing

market remains steady in April and consumer confidence improved.

Fourth-quarter results improved for Nike, or will they say how it has

affected them? Joining us is Maike Currie,

Investment Director Nice to see you. Good morning.

Markets bouncing back up. I'm looking at the numbers, the FTSE 100

up 2.2%. We have seen in Frankfurt the DAX is up over 2%. Why? Well,

yesterday was a very brutal day for markets. I think what is happening

is what Benjamin Graham says in the short-term the market is a voting

machine and in the long-term it is a weighing machine and what there

really means in the short-term the market acts like a popularity

contest with traders moving in and out of stocks and yesterday's

unloved stocks become today's loved stocks. The pricing really reflects

really interesting because today the really interesting because today the

big winners are the banking stocks, Barclays Bank doing well. Barclay's

has been hit hard Friday and Monday, as has its peers and energy stocks

doing well and pharmaceutical companies out of favour? The banking

sector very much reflects what is happening in the real economy and

there were a lot of expectations that the banking stocks would

eventually start paying income again and there would be a turn around.

Now with the uncertainty, banks are unloved again. The same thing with

defensives. People go to defensives at certain times. Barclays is one of

the few investment banks we have here still. From that point of view,

it is affected as well. Thank you. You will be back to talk us through

the papers. We'll meet one firm in London

that's already planning We'll ask whether there

are opportunities as well as risks. You're with Business Live from BBC

News. Away from the referendum,

business goes on. This morning the online grocery

retailer Ocado updated markets. It says profits were up 5.7%

for the first half of the year, It's also continuing its push

overseas, hoping to sign up other international retailers

to use its technology Let's get more detail. Let's cross

live to the newsroom and speak to Adam Leyland. Adam, good morning.

Just explain the figures for us. On the face of it good, but it is that

international push they will be watching closically? Yeah, that's

right. The performance continues to be reasonable. 15% growth isn't bad

in a market with the supermarkets at each other's throats and profits are

up 6%. It is heavy weather for them and that's really weighing on their

share price. And then there is the Amazon prospect as well. The

inability for them to land one of the international clients is still

hurting it. You've got the factors weighing on the share price while

the business itself is growing at 15% which is faster than any other

of the online grocers. It is quite interesting, isn't it, how you see

that disconnect between what the share price is doing and what the

company is doing in terms of per fortunateliance. What's the outlook

for Ocado? It has to sort of expand. I mean, it is against Amazon sorry,

it is growing, you know, it is growing very fast, 15% and that's

enough, even if Amazon was to build and fill two depots and it just

launched its first, that's the sort of growth it is achieving

year-on-year. That's good. What it really needs as a stock to land

international clients to service deals such as the one it has with

Morrisons elsewhere in the world. So everyone is sort of waiting on that

as piece of good news. Its prospects not just in the UK market, but as a

software developer that have been crucial to its valuation. Adam thank

you for your analysis on that story. Ocado numbers coming in nice and

strong. If you want more details as a result

of the downgrade of the credit rating, more details on the website:

It is interesting a day like this when a downgrade of a credit rating

just, our third story, big times. Interesting times.

The rating agency are are slashed for the UK economy. All that

fall-out as a result of the vote to leave the European Union. But what

we'll do now is analyse whether there are some benefits as well as

risks and what it means for business because for some smaller firms, now

preparing for life outside the European Union, it can be a daunting

prospect. It can, particularly for those who have customers across the

single market. One of those is a company called EMC3. It is an events

firm based in the capital. It is now looking at ways to diversify its

business after the result we got last week. Baba Epega Runs EMC3 and

it is with us now. We shall be clear, we spoke to you before the

vote and you wanted to remain in. Yes. That hasn't happened. So I'm

interested in what you do now on a practical level in terms of how

you're assessing your options? Well, it broke my heart to be honest that

we didn't remain. We have diversified our business, making

sure that we have pre-Brexit offices set-up in Boston and Lagos, Nigeria

and we're seeing that kind of move actually has helped our business in

the way of having different markets to trade in n the way of events and

marketing as well. It has been a positive move from our side, but

yeah, my head is thinking of course, this is not a bad thing. Tourism

coming to London, cheaper pound and everything, but my heart is still

broken. So emotionally you say you're in a

bad place, but actually ahead of this decision, you diversified

anyway and a company that's well diversified in terms of its

operations worldwide is key really, isn't it? Yes, it is very important

and we should really look at this as a, we are in a strong position. The

UK has got a very good, robust economy and we will bounce back, but

we do have to work together on this. Let's talk pros and cons, it is easy

for businesses to say, "This is terrible." I've got to adjust for

this new reality, but there are some benefits and it is about where you

position yourself, is it? Tourism is a big thing. People coming to

London. The pound will be cheaper. So we have packages for tours in

London and across the UK. We hope some of our international clients

will be taking up more now the pound is weaker. So what do you want to

see next in terms of how this plays out? It is that big cliche, isn't

it, business wants certainty. Is it about clarity and transparency and

negotiations to get an idea of what is going to happen? I think it is

about clarity. And it is about decisive decisions by the

Government. We would like to see obviously a Prime Minister, that's

always a good start, but also negotiations for UK. Very important

that we actually, our representatives actually negotiate

for better, for trading for the UK. Has anyone got hold of you and said,

"The event we wanted you to do for us is off." At the moment, no, but

2017, 2018 we're talking about clients about that and it is a bit

of a wait and see policy. See what the UK does in the next couple of

months. Baba Epega Chairman and founder of EMC3. A Prime Minister

would be a start! We will see what we can do!

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whenever you need to know. What other business

stories has the media been Joining us again is Maike Currie,

Investment Director One article in the Telegraph, the

FTSE 250 which represents the UK more in terms of the economy as

opposed to the FTSE 100. The 250 is a better reflection of the domestic

economy. The FTSE 100, those are doble earners and a lot of these

companies earn their revenues in US dollar. So weaker sterling is good

news for the FTSE 250. The FTSE 250 has fallen. There is a good quote

saying the companies dig up things out of the ground in Africa, price

it in dollars and sell it in China and that's the sum total of what the

FTSE 100 does. A huge exposure to mining companies and a lot of the

companies are gold miners. As investors look for safer investments

they move to gold as a safe haven asset. Not known for mincing his

words. Let's talk about guilty or not Sorros. He warned about this.

What is happening at the moment is that the fall-out has been so

extreme that the public is asking the question - can Britain get out

of this result? Which is interesting. Also quite interesting

when he was asked about whether he played the pound during this

referendum he said he didn't. One we will watch closely.

Thank you. Thank you to for your company today. Much more. We will

stay across the fall-out of that vote over the course of the week,

but same time, same place tomorrow, we will see you then. See you soon,

bye-bye.