01/07/2016 BBC Business Live


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This is Business Live with Victoria Fritz and Sally Bundock.


Just a week on from that vote to leave the European Union, Paris,


Frankfurt and Dublin look to lure financial firms away from London,


as lobbyists from the UK's financial engine scramble to steady the ship.


Live from London, that's our top story on Friday, 1 July.


The Brexit balls keep on moving. Global stocks rise again as the Bank


of England hints more stimulus measures.


The electric car made by Tesla is investigated after a fatal crash.


And the latest from the markets. You can see them rising yet again after


those promises made by Mark Carney. And we hear from the chief executive


of Royal Dutch Shell. He says he is eager for the UK to


retain access to the single market. Plus, one week on from Brexit, what


are your questions about this historic decision? Kamal Ahmed will


be here to answer them for you. Just send them in.


The UK's decision to leave the EU could potentially have a huge impact


on the City of London, which is Europe's biggest


Almost 415,000 people work in the City.


An additional 150,000 jobs are in nearby Canary Wharf,


where many big international banks are based.


France's President Francois Hollande has warned that leaving the EU means


London would need to give up its role in processing euro


currency transactions, worth hundreds of billions of euros.


Euro clearing services would likely move to Paris and Frankfurt.


And if Britain ends up outside Europe's single market,


UK-based banks could also lose their so-called


passporting rights, which let them sell financial


If this happens, London banks would then need to move


staff into the eurozone to serve customers there.


Our economics editor, Kamal Ahmed, joins us now.


Almost immediately after we heard about this decision, we were hearing


rumours about banks relocating people. Any bank, whether it is


based in the UK, the US or Asia, has something in London. What does this


mean? At the moment we can't be very clear about what the relationship


will be between the UK and the European Union in terms of trade


relationships. Nothing has actually changed. A number of banks, JP


Morgan HSBC, have said they may need to move some operations into the


euro error -- area, if Britain gets no kind of single market agreement.


London is an incredibly powerful global market. And it is a


competitor to Singapore, Hong Kong and New York. It is much larger than


Frankfurt or Paris. This is all about markets. It is about where


businesses in Europe and in the UK can find the cheapest capital. They


want markets which are the deepest and the most functioning. There was


a movement in the 1990s to move some transactions work to Frankfurt. It


all moved back to London because in London there are far more


counterparties. You can borrow more cheaply in London because there is a


deeper market. Anyone who has been to Paris or Frankfurt will no that


in size terms they are tiny compared to London. Although there is


nervousness and concern, London's size at the moment is much more


advantageous than maybe some of the reporting suggests. Also, there is a


very strange and perhaps double-edged sword in terms of


bankers bonuses. The British government lobbied unsuccessfully to


get rid of the EU bonus capped. If Britain was to leave the EU, it


could scrap that world altogether and presumably money talks, people


will stay if they think they will be paid more? Absolutely right. Money


and location talk. It plays -- London attracts talent from around


million people live in the British million people live in the British


capital. If you look at things like the bonus tax, the other issue was


the financial transactions tax, seen as something that would not be good


for London. I don't want to say there are no risks. But there are


many people who argue, particularly the speak to banking executives


privately, we say that London's sheer size will maintain its


position in the short to medium term. Obviously over the longer


term, because this is a service industry based on people and talent,


they can move easily. It is not like you were moving a steel factory from


London to France. You are moving people. And if they can move


quickly, once things start changing, they can change rapidly. Apparently


on Monday we are guiding you something about the London stock


exchange. A merger. Any thoughts on what they might say next week? Yes,


the German regulator has made it clear that given the vote last week


on Britain leaving the European Union, it is more uncomfortable


about this new merged entity being headquartered in London. There will


be an issue if this deal goes through and the shareholder revolts


are imminent, if this deal goes through there is a greater chance of


headquarters being in Frankfurt rather than London. That would raise


some issues about this being a takeover rather than a merger. There


are some big issues which will be made more confusing and more


difficult because of the referendum result. Like we need more confusion!


Kamal will return in about ten minutes. Send us your questions


about Brexit. I am sure you have many. He will try to tackle them for


you. Authorities in the US


are investigating the death of a man who was using the autopilot feature


in a Tesla electric car. The 45-year-old died in a crash


in Florida in May, when the system, which automatically switches lanes,


failed to spot a lorry. The company said the crash


was "a terrible loss". The European Union's top trade


official, Cecilia Malmstrom, says the UK cannot begin negotiating


terms for doing business with the bloc until after


it has left the EU. After Britain leaves,


she said trade would be carried out based on World Trade Organisation


rules until a new deal was complete. US chocolate giant Hershey has


rejected a $23 billion takeover the owner of brands including


Cadburys and Oreos. The deal would have


created the world's top confectionery company,


overtaking the current leader Mars. But Hershey's controlling


shareholder - a charitable trust created by the founder in 1894 -


said the board had unanimously rejected the offer and decided there


was no basis for further discussion. There is more detail on the website


about that story. It was a Newsnight interview with Cecila miles from,


where she talked about this situation with regards to win the UK


can begin to negotiate its terms of leaving the European Union. If you


want to read more detail, it is a very interesting article. This is at


odds with many of the other opinions out there that we can start


negotiating when we hit the Article 50 button. This is saying there are


two negotiations that need to take place. The first is how we lead and


after that, under EU rules, it is only then that we will be able to


negotiate any kind of trade deal. Very interesting. One wonders if the


rule book will apply in the next couple of years. It will keep us


busy. Japan loses ownership of one


of its most well-known electronics brands today, when Taiwan's Foxconn


officially takes over The move may see as many


as 7000 job losses. Mariko Oi is in Singapore


for us this morning. How does Japan feel about losing


ownership of one of its most iconic brands? We have been talking about


this $3.5 billion deal for several months, several years, in fact. I


bet my entire monthly salary this would not go ahead because the


country's technological sector has been known to be very insular and


never accepting takeover offers from a foreign company. Sharp is


definitely the first. Earlier in the week I spoke to some shoppers in


Tokyo. Some of them said they were sentimental. Others expressed


concerns because it is Fox con, which is owned by Taiwan, and China.


China has often been accused of copying other people's technology.


Job cuts maybe around the corner. There is speculation about whether


that will happen, even though the fox con management promised they


would try to protect as many jobs as possible. Thank you very much.


A quick look at the markets. Many of the main industries raised the Foals


sparked by last week's decision by Britain to leave the EU. On the


European markets, they are pushing hard for a second day. Shares are


very much basking in the prospect of more stimulus to ward off a Brexit


induced economic slowdown. Samir Rojo sene is in New York.


On Friday, Puerto Rico faces a potential default on a chunk of its


debt. If it cannot make $1.9 billion worth of payments. Congress has


approved a relief plan to help were to Rico address 70 billion of that


debt. The Puerto Rico government has said the island will still default


on some of what they owe. US numbers are out today and are expected to


have risen by 5%. 2015 was a record high for car sales. While this year


sales numbers are quite strong, it looks unlikely they will be able to


break another record. In fact, some analysts believe the peak of sales


in the automobile industry has passed. And finally, US


manufacturing numbers out today suggest economists are not expecting


much left for the month of June. Struggling overseas economies and


limited business investment are to blame.


Joining us now is Lawrence Gosling, editor-in-chief of Investment Week.


Samir are talking about the data coming out of the US. She talked


about manufacturers and the difficulties they are facing. A


strong dollar is not helping, is it? Not at all. We have seen huge swings


in currencies in the past week. The dollar is the safe haven currency


for global investors. The US economy is pretty strong. Strong dollar not


great for US manufacturers. I would imagine that is on Janet Yellen 's's


might? A little bit. Central banks do not have a huge the Power to


manipulate currency. We heard some of that from Mark Carney yesterday.


I was at the Bank of England yesterday and we saw a massive rise


in the value of the Footsie within the first ten minutes of him


speaking. Doesn't this Telus and all full lot about low interest rates?


Obviously the dangers and the uncertainty have not really gone


away, particularly on the fiscal side, yet everybody is now ploughing


back into equities? Yes, the symbol at -- the simple economics have not


changed. The UK economy is OK but it is a little fragile, as the bank of


England has said. The one obvious to they have is a cut in interest


rates. It is interesting as to whether they do it on the 14th of


July, or they hold off during the summer. The summer is notoriously


difficult to judge from an economic perspective. A lot of it is driven


by the weather. It is called the silly season. A hot summer is good


for consumer spending. It has been soggy so far. Things like that they


do actually look at. They will not press the button because there is a


little bit more rain than perhaps was forecast. We will see you later.


The BBC has been speaking to the boss of the oil giant Shell. And


some of his fears about Britain use -- losing access to the single


market. You're with Business


Live from the UK. Now, can Britain plough


its own furrow, or is there UK farmers will meet today


to discuss the post-Brexit future. Meurig Raymond is President


of the National Farmers Union. The NFU hazard -- advised its


members to remain before the referendum. Farmers were pretty


divided. Many voted Leave. Of course, this is a huge issue. I


wonder where you even begin to start with this today? Good morning.


Obviously food and farming is so important to the nation. You produce


the food for people to it, the ingredients for the food and drinks


sector. The NFU Council, the governing body of the National


Farmers' Union, will meet today to look at priorities, to look at


options. Following on from the meeting, we will go out to


consultation with our 50,000 members across England and Wales, to put


together a domestic agricultural policy that will be fit for purpose


for UK farming. We want this opportunity to give us the ability


to compete, to be profitable and increase our productivity for the


future. The EU subsidies represent more than half the income of UK


farms. Each farm gets more than ?70,000 per year from Brussels. Will


you ask the UK government for the equivalent? Let's go through the


consultation today with our members. That is so important. Following on


from that, all I would say is that we must not be disadvantaged from


our European competitors, from other competitors around the world,


because if our competitors are receiving support from their


government, it is so important that we have equal support, otherwise we


will become uncompetitive and find it difficult to expand our


production. All the surveys we have done a the NFU with the British


people highlight that the British people want to see more British food


on their plates. We need that competitive and innovative,


productive sector to drive British agriculture fought. -- forward.


In an very important subject for both UK and European farmers. More


details about the challenges they are facing. Look when you have time.


64% of exports coming from Paris, Frankfurt and Dublin are all


looking to lure firms away from London, our capital.


A quick look at how markets are faring.


It's the final trading day of the week, and the week has probably gone


better than many would have expected. Remember, at the start of


the week, we saw heavy, heavy losses. Then we went into bounce-


back mode. We seem to have stayed in that place, thanks to Mark Carney


who spoke yesterday afternoon. The FTSE yesterday, closing at a ten


month high. We saw sterling fall against the dollar. It's at 100 and


-- we've seen a link between the


falling sterling and the rise of the FTSE.


Let's stay with Brexit because - like Britain's banks -


the bosses of the world's largest oil companies are also trying


The BBC has been speaking to Ben van Beurden, the chief executive


I hope that the relationship that will be defined by the governments


of the UK and the EU will give us access to the single market.


Ideally, the free movement of people. Important borough company


like us. But at this point in time it would be speculative to see what


is going to happen. I think nothing will happen. I think we will still


meet our investment programmes that we have in the UK, we were still


recruit people in the UK, supply energy to them. In the short term,


there is no change, but how it will play out in the long run.


Our economics editor, Kamal Ahmed, is joining us again.


Keep your questions coming in. Let's take a question from Kevin. He says


what time frame is most likely the British Government to invoke article


50? A huge question. Theresa May, who is currently then you run run


for the leader of the Conservative Party, and therefore Prime Minister,


she isn't in a hurry to spark article 50. We need to be clear on


what we want, as Britain, from the EU, before article 50 is sparked. It


seems possible that it would be next year. And once it drift into next


year then it could be longer. There's no immediate article where


that will be sparked. What you make of Cecilia Maelstrom's comments to


Newsnight? There's a huge difference between the politics of the issue,


the legality of the issues and the business issues around it. Legally,


it may be correct what she said about the sequencing, so that you


have to negotiate your exit and then your re-entry. What kind of market


relationship we will have with the EU. Politically, it would be very,


very difficult to achieve. This is now up in it -- political issue.


Businesses in both Europe and Britain will not want to wait for


username to get the definition of what a single market or the style of


relationship will be between Britain and Europe. We've got some viewers


in Africa, John P O, says what were the aid mean between written in


Europe? It's an interesting question. In terms of the commitment


to send 0.7% of its GDP on international development. It could


end it would be up to the new Prime Minister to decide that. In terms of


trade, leaving the EU it could be very positive. When we were ejected


from the exchange rate mechanism, which was the four word for the


single currency, there was rapid increase in sterling. So companies


could be obliged to look elsewhere for opportunities and emerging


economies in Africa, South Africa particularly. Nigeria, Angola,


picked, powerful economies. One of the sticking points with -- is what


happens with the movement of freedom -- free movement of people? We had


this from Shane Dowling, could we not agree that people could get work


permits and give no automatic rights for UK benefits system? There's


tensions around this, not just in Britain, but in other countries,


Denmark, France, the Netherlands. I think what you could get to is free


movement minus. So it's the freedom to work wherever you want in Europe


if you have a job. Not the right of every citizen to go to the country


and look for work. There could be something around that which were not


highly mean that Britain could be in a single markets with the EU without


free movement. But in fact free movement minor -- free movement


minus. Who came up with a? IDs! This free movement issue isn't just an


issue for Britain. Other countries might want to work on changing that


central pillar. We thank you for your questions. It's good to get


answers to what you are thinking about. Let's get a little bit more


about that story from Tesla. The US authorities are investigating the


death of a man who is using autopilot in one of their cars. The


45-year-old died when the system that changes lanes fail to notice a


lorry. We have the details. Tesla is a company considered to be at the


cutting edge of card technology, not just in the way it powered vehicles


but how it controls them as well. One of the new features is a feature


called autopilot, that's the way that the car is automatically able


to change lanes, speed up and slow down according to traffic. US


investigators are looking at that feature and are wondering if its


malfunction led to the death of a man using it on one of its roads in


May. If the software is found to be at fault there could be a recall and


Tesla could be asked to disable the function on the car. Some are asking


whether this technology is really ready to be used on public roads


just yet. Lawrence is back to talk to us about some of the stories in


the business. So many angles on Brexit. Why buyers tempted by the


weak pound? They'd been sweeping on London according to the Financial


Times. They have picked up high quality art. There was a


contemporary Art auction which when 20% over the estimated sort of


prices. The people who deal in fine wine are reporting huge trade last


week and this week. It's an asset that may not go down in value in


other assets are all over the place? We've seen huge uplift in the


evaluation in the last 10-15 years because it's a great store of value.


There's only one Picassos as it said. That how you transport this is


going to be very interesting. At the moment, we are a low tax gateway.


Presumably if that's changes then there could be markets and more


profitable. We have a very low percent, 5%, compared to 20 plenty


Germany. In London might not be quite as attractive if we see the


effect of Brexit on the tariffs. What about virtual reality


technology? There are concerns about headaches and whether it suitable


for children, which is obviously a big part of intent to's market. And


the elderly! They love some of the consoles, don't they? I don't really


want my children spending a lot of time with virtual reality equipment


and getting headaches and that sort of thing. That's it from us today.


Plenty more on the website. Have a lovely


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