30/06/2016 BBC Business Live


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This is Business Live from BBC News,


with Ben Thompson and Sally Bundock.


Who will be in charge of the Brexit negotiations?


Today is the deadline for nominations


in the race to be Britain's next Prime Minister.


Live from London, that's our top story on Thursday 30th June.


Key European leaders say that a la carte is off the menu,


whoever gets the top job is told Britain must allow migration


if it wants to sell into the single market tariff-free.


Also in the programme: One of Singapore's biggest lenders


telling investors they need to be cautious.


and the relief rally on markets is now over, as you can see, markets


across the board in Europe are headed lower, we will explain why.


but we'll meet the man gearing up for Christmas.


The boss of greetings card firm Design Group


will be here to discuss business, Brexit


and making Christmas crackers for the Queen.


And we'll assess how the world's papers are covering the fallout


of Brexit, including news that New Zealand is offering


to lend its top trade negotiators to the UK


to help talks over 50 new trade deals.


We have got it all, crackers, the Queen, you name it! Get in touch


with your questions. What kind of trading


relationship will Britain have with the European Union


following the vote to leave? The UK has set up a government task


force to prepare for negotiations. The first is what is often described


as the Norway model, out of the EU, but belonging to the


European Economic Area, or EEA. It would give Britain


almost total tariff-free access It's the option which is most


similar to the status quo. As well as paying into


the EU budget, and accepting the majority of EU law,


European leaders have said it would need to accept


free movement of people. as immigration was a central issue


in the UK's debate to leave the EU. Option two, the UK could


try for an association agreement with the EU,


giving partial market access. But there are big questions


over whether this would protect access for London's


financial services market. Britain could try to rely


on World Trade Organisation rules. But exports to the EU


would likely be taxed. For instance, US cars sold in the EU


have a tariff of 10%. Well, at the end of


the EU summit yesterday, European Council President Donald


Tusk insisted that Britain will have to accept Europe's terms if it wants


access to the single market. European Union must be


orderly, and there will be no negotiations of any kind


until the UK formally Leaders made it crystal clear today,


access to the single market requires acceptance


of all four freedoms, There will be no single


market a la carte. Sir Simon Fraser is a managing


partner at Flint Global. Previously, he was


the Permanent Under-Secretary at the Foreign


and Commonwealth Office. Let's pick up on the idea of


cherry-pick the best bits, because we were told we cannot do this a la


carte, I do accept the terms of the open market or walk away. Talk me


through that process, because it is a varying degree of access interns


for trade, isn't it? The key thing is the amount of access you can get


the extent to which you are prepared the extent to which you are prepared


to accept the rules and obligations that go with that. Under the


scenarios you have described, for example, the Norway scenario you


described, a lot of access to the market, almost in it completely, but


you have to accept rules like freedom of movement, and you have to


make a financial contribution. If you go to another option, like a


free-trade agreement or association agreement, you have you obligations,


but your preferential access in the market, where we do nearly half of


our trade, is only covered by the areas and sectors that you actually


negotiated in. Is it too early to say which is most likely? I think it


is rather early to say that. This was an unprecedented negotiation,


the European Union is deeply integrated in terms of the national


economies. The former head of the WTO has a nice way of describing it,


I am told, he says we know how to make an omelette out of eggs, but we


don't know how to make an egg out of omelette. Lovely analogy! New


Zealand offering trade negotiators, this struck me that New Zealand


offering top trade negotiator to the UK, saying, we have the expertise of


doing this, we have had to do this and strike deals, they are talking


about 50 trade deals needing to be signed, talk me through the


practical realities of how you start to do that. One set this uses our


elation ship with Europe, but there is another set of this use, which is


the rest of the world. That and anon of the options have we described


with the UK be governed by the external trade arrangement of the


European Union. -- under none of the options. Now, the EU currently has a


number of agreements covering about 50 countries, not 50 agreements, but


the coverage is 50 countries. We would have to look at those markets.


And this is a two way street, because the IMF has said they might


downgrade German growth broadcast as a result of Brexit, emphasising how


important that trade is in both directions. Absolutely true, and


while they say that the UK should not be allowed to cherry-pick


options, we have mutual interests with Europe in finding a solution


which works for everybody. Sir Simon Fraser, thank you for explaining all


of that. US President Barack Obama says


the UK vote to leave the EU raises longer-term concerns


about global growth. He said Brexit would freeze


"The possibilities of investment in Great Britain or in


Europe as a whole." Mr Obama appealed to the UK


Prime Minister and other EU leaders to ensure an orderly process


for a British exit. Confidence among British consumers


fell sharply in the days after the country decided to leave


the European Union, The index measures people's economic


sentiment on a daily basis but showed it had slumped


to its lowest level since May 2013. That's when Britain's economy


was starting to emerge from the worst


of the financial crisis. And in other news, the US Senate


has approved a relief plan to help Puerto Rico tackle


debts of $70 billion. It's facing potential default


on Friday when $1.9 billion worth


of payments are due. The US territory has been suffering


a decade-long recession that has seen thousands flee


for the US mainland. Businesses have closed,


electricity is in short supply, and hospitals


are lacking medication. Just to say, the Zika viruses also


impacting Puerto Rico as well, having a difficult time. The live


pages where you will find... I love this picture, the Airbus over houses


in west London. That really does highlight the controversy over the


expansion of airports in the south-east of England. You will know


that Heathrow, the UK's biggest and busiest airport, but there is


controversy over its plans to add another runway. Given the political


turmoil we have been talking about as a result of the vote to leave the


European Union, the suggestion is a decision will not be made any time


soon about a new runway. Business is not happy about that.


It was supposed to be announced on July the 7th, so we shall see.


Kicked into the long grass, maybe. To Asia, and one sector


being particularly affected by Britain's decision to leave


the EU is property. Many of the region's


biggest developers and banks And the third largest lender


in Singapore has decided to stop


giving loans to buyers in London. It is quite a significant move that


shows the global repercussions of Brexit. Exactly, the fallout


continues. We're talking about Singapore's third largest bank, UOB,


United Overseas Bank, and they have suspended temporary debt loan


programme for London properties because of the uncertainty caused by


the vote to leave the European Union. UOB has said they are looking


to show their customers cautious with putting money into London


property while the outlook remains quite murky. To put into context,


Singaporeans were the top Asian buyers of London property last year,


and that is according to a consultancy. So the banks here, not


just UOB, but the other two big leaders, they are telling customers


they need to because just because of foreign exchange risks. Obviously,


we have seen the pound for to a three decade low, and the Singapore


dollar has risen quite sharply against it. So if they invest in


London property, even if the value of that house rises, any gains will


be eroded if sterling continues to depreciate against the Singapore


dollar. So that is the worry, and so the banks here are all monitoring


the situation very closely. OK, thank you so much, very interesting


story emerging in Singapore there. Let's look at markets now, we saw a


slight gain in Japan, Hong Kong up 1%, but behind me that is the Dow,


Wall Street had a strong session on Wednesday, as did Europe. But it


would seem that the relief rally has come to an end, let's look at


Europe, all markets down. Not significantly, let's not forget the


FTSE was up 3.6% yesterday, recovering completely from the post


Brexit losses, as it were. So no surprise today that markets are


taking a bit of a pause and perhaps taking a little bit of profit on


some stocks that rallied significantly on Wednesday. We will


talk some more about what is going on on financial markets at the


moment in Europe, but first Samira Hussain has the details about what


is ahead on Wall Street. On Thursday, Yahoo will hold


its annual shareholder meeting. Investors are expected to approve


Yahoo's new Board of Directors, which was expanded to 11


from nine members in April. The meeting comes as Yahoo


has put itself up for sale. There are many rumours


over new possible buyers, Shareholders will likely ask


for an update on the process. New applications


for US unemployment benefit likely increased last week,


but probably remained below a level associated


with a healthy labour market. This report will be closely watched


in the weeks ahead for any signs of a fallout from


last week's Brexit referendum. Finally, for baseball fans


out there, online voting will determine which players


will participate in the 12th of July Major League Baseball


All-Star game in San Diego. The deadline to cast your vote


is 11.59 Eastern Standard Time. Deadlines all over the place at the


moment! You cannot escape them! That was Samira sane Almac.


Breaking news from Richard Westcott, news on the story we were talking


about earlier, Heathrow expansion. The Government will now defer a


decision on expanding Heathrow until there is a new Prime Minister in


place. That means that the deadline of this year is unlikely, pushing


back expansion of airport capacity in the south-east of England. The


decision was expected to be announced on July the 7th, so very


soon. I was just talking to the boss of Gatwick Airport about this,


whether the Brexit situation has pushed that into the long grass, as


it were, very much on the back burner. As Richard Westcott has


confirmed, that is definitely the case. Boris Johnson has very


different ideas to David Cameron about whether the expansion should


take place and where. We will be covering this turbulent story into


the future. We have seen a markets dip today,


different yesterday, when we saw some pretty impressive figures, the


FTSE 100 back up above levels before the referendum vote? Well, of


course, the knee-jerk reaction of the Brexit boat was a surprise,


markets went down across the world, growth was revised down, and that is


what you would expect. But we have been here before, so central bankers


are used to boa -- volatility. News has come out that the Federal


Reserve might not raise rates until December, some are saying not until


next year. In the UK, we have talks about rate cuts, perhaps to zero,


all sorts of things like that, and traders are taking advantage of


that. So much more volatility, it is much more liquid than it was. And it


will be like this for some time, a strong day followed by profits being


taken, it will be very volatile for some time, would you say? I think it


will be for a long time, depending on what news comes out. And what the


central bankers really do. We know that Mark Carney is speaking this


afternoon at four o'clock UK time, that will help calm markets again.


There is going to be a lot of talk, but I think this volatility is with


us for some time, and growth will be lower. In uncertain times, and that


is everywhere, people do not spend, and companies do not invest. The UK


will be worst hit. Look at the FTSE 250, the larger index which covers


mostly UK firms, that is well below the three Brexit level. So it is


going to be an uncertain time for a long time, and eventually earnings


will be lower. It is 8% below where it was before


Brexit. We have heard the Government will


defer a decision on airport expansion. Passenger numbers at


Gratton that -- we have had record levels of passengers at Gatwick


Airport. It would like the new runway to be built there are rather


than at Heathrow. I spoke to the boss to find out what he had to say.


Gatwick finds itself at the centre of this debate.


We have said for three years as we have made the case


for Gatwick that this is all about which runway ultimately can be


If Heathrow were going to happen, it would have by now.


This is the first time that Gatwick has


That is because we have separate ownership with separate shareholders


who are backing us on our campaign to get the runway.


If you look at the merits of the Gatwick runway,


we're faster to deliver, can be open by 2025,


so we get all of the economic benefits flowing earlier,


we get the same connectivity for long-haul and short-haul to and from


the UK in terms of choice of destinations.


We do it at a third of the cost of Heathrow with no


Environmentally, we are cleaner and quieter.


There are a lot of other UK stories around. The world's media have been


update on BHS, because there was update on BHS, because there was


more evidence given to MPs yesterday about the collapse of BHS, who is


responsible, who paid what to whom responsible, who paid what to whom


and who knew what when. The former owner Philip Green says he wants an


apology from Frank Field, the MP, because he has been giving evidence.


Sir Philip says that BHS's collapse showed shocking behaviour. It all


relates to the collapse with the 11,000 job losses.


A stress test took place in the United States, looking at all banks


operating their to see if they could suffer a financial shop. They nearly


all pass, apart from Santander and Deutsche Bank. We will talk about


that in a few minutes. You can see the detail on our website. Our top


story: Who will be in charge of story: Who will be in charge of


Brexit negotiations? It seems obvious but it is far from obvious.


Today is the deadline for nominations to become Britain's's


a reality show! Let's have a look at a reality show! Let's have a look at


the markets. The FTSE closed up sharply yesterday


but has dropped a little on opening today. We should be looking at the


FTSE 250, which gives us a clearer indication about what smaller UK


businesses are feeling. on what Brexit means for businesses


with a truly global footprint. IG Design is one of


the largest companies in the international


gift packaging market. The company sells a wide range


of products, including Star Wars-branded


birthday cards and gift-wrapping endorsed


by the Queen of England. IG has a presence


in over 150,000 retailers and more than 80


countries worldwide. This includes markets


both inside and outside Paul Fineman is the CEO


of IG Design Group. Nice to see you. Thank you. What


does it mean? Bill we are a diversify group with a global


portfolio, so our reality is that a third of our businesses actually


made in the country where we are delivering. Our Dutch factory


factory delivers to the United factory delivers to the United


States and so on. In those areas, Brexit will have very little impact.


Our largest growth market is the United States, so actually, from a


translate favourably into sterling. translate favourably into sterling.


Probably the toughest aspect of this will be where we are importing


product in US dollars into the British and European market. There


are, you have currency hedging requirements. Our position is, we


are fully hedge, so actually, our exposure is minimal. We are selling


about 500 million products per year which are low ticket items. We feel


that we are very well placed to be resilient to any difficult market


headwinds. You give us the impression that we


will wrap our gifts this Christmas non-at how we feel about our


personal circumstances, so you are selling that. And you're sober


diversify that although there will be the odd Nokia and there, it will


not harm you to a great degree, so you're not really concerned? You're


right. We are certainly not complacent. All business have had to


deal with challenges in recent years. This is another one. As we


years, our group is very well placed years, our group is very well placed


to deal with this. Are there opportunities here? Bail-mac from an


export perspective, 25% of our manufacturing in the UK goes


overseas. If currency rates remain at the current levels, we would be


think that business communities in think that business communities in


general are very adaptable and flexible in terms of dealing with


any kind of challenges or headwinds, and we have that mindset ourselves.


You are into Christmas crackers. That is becoming big


internationally, isn't it? You are right. We recently started selling


to Mexico, and we had an opportunity to make divali crackers for India.


We are making them for baby showers, weddings. It is becoming an everyday


table decoration rather than just a Christmas item. Who would have


thought. Vancouver joining us. 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 latest details, with insight and


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


hear from you. Get involved on the BBC business live web page at BBC


.com/ business. We are on Twitter .com/ business. We are on Twitter


and Facebook. What other business


stories has the media been Joining us again is


economist Bronwyn Curtis. We talked about New Zealand offering


trade negotiations. It is generous, so thank you, New Zealand! The trade


delegation would help us strike deals around the world. And they


have more experience than us. When they couldn't trade as much with the


UK, they looked to the rest of the world, and they sell all around the


world. It may be a small country, but they have been negotiating trade


deals. It takes a lot of experience, and time to train these negotiators.


Australia and New Zealand, just like the rugby coaches that come here to


help the UK to win, that is something they can offer. May be


European leaders would prefer a New Zealander to come across and


negotiate on our behalf as opposed to speaking to a Brit! It might go


better for us! Here in the UK, when it comes to trade negotiators, we


don't have that many any more because we have farmed it out to


Europe. I think it is about 40 keirin about 550 in Europe. You


would find it out to Europe if you were going to be in. Why would you


need them? Could you imagine trying to do these negotiations with


everybody around the world? It is going to be really difficult. Now is


the time to train to be a trade negotiator, apparently. Go after New


Zealand, train, come back, and those will be the top jobs. Time is


running out. Pop stars are complaining to Brussels about you


Tube. They are not getting enough revenue, they are saying. There is a


consumption of YouTube content and consumption of YouTube content and


they are not getting paid. It is big names, and it has come at the same


time as Warner music and Sony music are negotiating with future. Thank


you. That's it from us. Have a good day. -- negotiating with you Tube.


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