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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