28/06/2016 BBC Business Live


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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!


Here is how to keep across information. The Business Live page


is where you can stay ahead with the day's breaking business news. We


will keep you up-to-date with the latest news with insight and


analysis from the BBC's team of editors from around the world. We


want to hear from you too, get involved on the BBC Business Live


web page at: On Twitter, we're at BBC business


and you can find us on Facebook at: Business Live on TV and online


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,




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