04/07/2016 BBC Business Live


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This is Business Live from BBC News with Ben Thompson


Slashing tax to encourage investment.


As the UK prepares for a future outside the EU, could lower taxes be


Live from London, that's our top story on Monday 4th July.


Is life about to become a little less taxing for UK firms?


The UK Finance Minister George Osborne says he wants to reduce


corporation tax from its current 20% to under 15% but is it enough


Also in the programme - Australia in limbo.


With the country's election currently too close to call, markets


are on edge about the prospect of a hung parliament.


After last weeks record sessions, but well in the week bring in the US


markets? -- what will. And we'll be talking to a seafood


company which is battling the weak pound amid fears it might struggle


to find enough workers once It was ten days ago but it still


dominates headlines. We want to know what you are doing to take a break


from Brexit? Do not say watching this programme!


Why would anybody want to take a break from Brexit? Welcome to the


new week. Let us get started. The UK's Chancellor, George Osborne,


has proposed a massive tax cut for business to encourage more


investment in the UK after it Mr Osborne says he wants


to slash corporation tax He'd already announced plans


to lower the rate to 17% per cent in 2020 but the extra cut


is being seen as a major sweetener for firms preparing


for life outside the EU. The UK is currently a top


destination for foreign investment but there are concerns that leaving


the European Union could affect the number of firms wanting


to set up or invest here. Its thought Britain has received


more than a ?1 trillion - that's $1.3 trillion -


of foreign direct investment. That makes it the biggest


recipient in Europe, and globally behind only


the US and China. But investors could be less


willing to send their money here after the UK leaves the EU,


with some reports forecasting a fall of more than 20% over


the next ten years - something the Chancellor


is keen to prevent. Stephen Adams is a Partner


at the strategic advisory Let us start with that. If the UK


had attempt to corporation tax rate, the lowest for any major economy, is


this enough to keep his Mrs here and attract new business? It depends on


how much corporation tax you pay and depends on how important corporation


tax is for you as a business. Relative to other things. It is only


one of the many taxes businesses pay and more importantly, as we know,


value is a reflection not just of a cost like tax but also a reflection


of prospects and the big issue is one that tax cut looks like when you


put that against the greater uncertainties of the unknown is


about the UK's forward trading framework with the EU and the rest


of the world and that is a trade-off. Is also an issue for


Chancellor and the Finance Minister because across the water you have


Ireland, 12.5% corporation tax, that is lower, and that is in the EU. Do


I go with Ireland, plus it is in the EU? It might be one of the lowest


tax rates for a large developed country, not the lowest tax rate in


the EU, the UK, London has other attractions for businesses, one of


the reasons the UK has prospered even alongside Ireland inside the EU


but it certainly would not be the lowest corporation tax rate in the


EU. What is it UK can offer to foreign companies wanting to invest?


We talk about technology expertise, skills and innovation, we cannot


compete on Labour costs or manufacturing, what can we offer? We


can offer a comparatively high skills base, up to this point it has


always been able to offer the extraordinary advantage of being a


bridgehead to the single market and that is now an advantage that we


almost certainly lose to some extent, it is unsure to what extent.


Very strong cluster of skills in London and elsewhere. A very


long-standing tradition of being a place to do business and a


reputation for being very well network into the global markets. We


don't lose all of those things with Brexit but all of those advantages


have been dulled perhaps by the effect of leaving the EU. And very


briefly, there is talk of investment into the UK, will it continue to be


stalled or put on hold until the investors out there and corporations


can see what the endgame is? That could take some time? It depends on


the extent to which the business you are investing in is focused on the


domestic market and there is a question of the economic impact on


the UK domestic market but if you use the UK for a base for trading


with the rest of the world, at the moment you have a very big question


hanging over the extent to which the UK will retain access to the single


market or on what terms it will retain that and of course it is


trading framework for the rest of the world that have been established


through the vehicle of EU membership and they are up for negotiation and


that is a big uncertainty and it is ultimately about setting the cut in


corporation tax against that uncertainty about the horizon. We


really appreciate your time. Thank you for joining us.


Shareholders in the London Stock Exchange Group will vote in the next


hour on whether to approve a $26 billion merger with German


The two companies insist the deal should go ahead, despite uncertainty


The merger is designed to create one of the largest market


companies in the world, to compete with rivals in Asia


Russian crude exports look set to hit a record this year,


which is intensifying competition in Europe as Iran boosts


Exports were up nearly 5% to 5.5 million barrels a day


Russia's output has risen every month since July 2014, according


National Bank of Abu Dhabi is merging with rival


First Gulf Bank in a deal that will create a regional powerhouse


First Gulf Bank shareholders will hold 52% of the combined


company, and the firm will retain the National Bank of Abu Dhabi name.


I am looking for a story that is not about exit! I have been away for a


week. The story about the future for Hinkley Point in the South of


England. There was to be a vote and all the repercussions of that Brexit


photo but whether that will get the go-ahead and it could be one of the


first casualties of the vote for the UK to leave the European Union. OK.


There is an article about... Don't smile at the camera! Worries over


European farmers. Here in the UK. There are plenty of stories on their


body a lot of it is related to Brexit. Can I talk about where I


come from? Now to Australia, where there's


political limbo ensuing as there's still no result


in Australia's general election. Most ballots have now been counted


but it could be Tuesday before And there are concerns the country's


credit rating might be downgraded. Explain this. Why is this taking so


long and why are the markets nervous? It is uncertainty after


Brexit, that is the last thing you want, more uncertainty and this time


Australia is bracing for what will be more uncertainty because of the


General Election. That results in deadlock. Today is a first training


days since the open -- the poll and the market has been swinging from


early losses to moderate gains and now the major party has won enough


seats to form a majority government and the coveted AAA credit rating


could be in jeopardy but the markets seemed pretty calm at closing.


Despite the unexpected closeness of this context, the Austrian dollar is


trading higher against the US dollar, recovering from an initial


drop of 0.5% and helped by a survey showing inflation picked up at the


fastest pace since December 2013 and analysts say investors are quick to


shrug off the election results as economic fundamentals for the nation


as they remain fundamentally unchanged and that is not something


Australians have not seen before. This is a nation that has had four


prime ministers in under three years. Good stuff, thank you. Let's


look at the numbers. The FTSE 100 posted its best week


since 2011, in the US, the S 500 also managed


to post its best week But given the collapse in value of


the Blind, it makes a market look better. -- the pound.


Markets are closed in the US for the Independence Day holiday


and that means European markets may be a little quieter than usual.


In Asia, the main focus was on that Australian election -


that's failed to produce a clear winner.


The big risk now is that any delay in forming a new government


could undermine the Australian economy and the Ozzie dollar.


In the UK, Bank of England governor Mark Carney was quick to reassure


markets that the central bank remained ready to act


to keep markets stable, and help ease worries over Brexit.


But the big test will be whether other central banks around


We'll discuss that more in a moment - but first,


despite the public holiday today, Samira has the details about what's


On Monday the US celebrates its July the 4th holiday commemorating its


declaration of independence from Great Britain. Stock and bond


markets are closed as the government offices. The July the 4th holiday is


America's top beer drinking holiday, 150 million hot dogs will be


concerned, within 40% the country will watch firework displays and the


value of American firework imports is about $324 million. And most of


those fireworks come from China. Some other things happening- the US


Federal Reserve will release the minutes from its last policy meeting


and on Friday they get the latest employment results. The economy


added only 38,000 jobs in the month of May, the lowest game since the


autumn of 2010. Go on! Joining us is Manji Cheto, Africa


analyst from Teneo Intelligence. Calm down in the gallery! Can we


start with oil? The Russian output is expected to be another record,


churning more of the black stuff. It will continue to suppress the price


and you have it run adding more and Nigeria had a rebound? -- Iran. Most


of the market was driven by the Nigerian market owing down and now


Russia is going back up oil prices hovering around $50 per barrel, is


this equilibria for the medium outlook because we have been asking


questions about whether equilibria is for the oil price is? We should


explain, we talk about the difference between the FTSE 100 and


the 250, the 250 has more UK focus so there is more vulnerability. Why


do we see such good figures on the 100, given the collapse in the value


of sterling and that is having a big effect on the overall market? The


dollar is a lot stronger, the pound is quite weak so earnings have gone


up significantly for dollar companies but this is just a blip


because the next few weeks we shall get company results of company is


giving the first hint as to whether the uncertainty affects earnings


longer term and that might be the beginning of when we might see new


volatility returning to the markets of anybody who was happy at the


moment, older horses, we not quite there. Will you come back to take us


through the papers? Great! Senior Editor. Some other non-Brexit


stories. Still to come... As the pound falters,


we're meeting the businesses The boss of importer


New England Seafood will be here to talk Brexit fears,


fishing and finding enough workers You're with Business


Live from BBC News. Our top story: The British Finance


Minister says he wants to cut a key tax on business profits


following last month's There has been a workplace


demonstration to call for legally guaranteed protection to help the


two million EU migrants who work in the UK. Let's speak to one of the


campaign organisers. Your response from Foreign Secretary, Philip


Hammond who said it is absurd to promise EU nationals that they can


remain in the UK. Look, these are real people, real families with real


lives who have been contributing so much to the British economy for many


years and you can't expect people to live in uncertainty. They will make


their choices about where they want to go. The narrative really has been


very negative about migration. Obviously for years, but


particularly in this very divisive campaign. We want to, you know, show


how much we value the contribution that EU migrants make to Britain.


They're working hard to make Britain great. They represent 7% of the


total UK workforce and pay way more into Britain than they take out and


they are feeling really rejected right now. It is possible for all


the Conservative leadership candidates to make a clear pledge. I


know that pledges are not something they particularly like to do, but it


is possible por them to say, "Look, for those people who are living and


working here right now, their future will be secure."


I hope you don't mind me saying, a little birdie said your partner is


from France. You're concerned about this, on a personal level? My


husband is a French national. We have been here for ten years and


we've go two kids and we've set up and we are seriously considering our


options about whether to stay or not. This isn't my Britain, the


negative narrative about migration isn't Britain. You know, I think


this is all about showing that we don't have a fear of foreigners, we


value the contribution that EU migrants make, in fact all migrants,


but this is about the EU migrants. Thank you, Emily, we appreciate your


time. Cheers. Osborne pledging to cut corporation


tax, there is more on the website. Also the Business Live page, we talk


about it a lot, but it is a really great place to check out the stories


we can't necessarily fit into this programme!


Our top story: The British Finance Minister says he wants to cut a key


tax on business profits following last month's


referendum decision to leave the European Union.


The Chancellor of the Exchequer, George Osborne, has outlined plans


to reduce corporation tax from 20% to under 15%, giving the UK


one of the lowest rates of any major economy.


A quick look at how markets are faring.


After what was a volatile week last week, a mixed picture opening up


across Europe. We have seen a little rally in the


pound. I don't think rally is the word. Some gains. It is a slight


uptake is the description! We're continuing our special series


this week, looking at the firms affected by the UK's vote


to leave the EU. And today we're assessing


the impact on importers. New England Seafood is one


of the UK's biggest importers of fish and it has already having


to face challenges posed The firm has a turnover


of about $133 million a year and imports from dozens of countries


around the world before processing and supplying the seafood


to British supermarkets. They say importers of wild salmon


could be facing price rises of up to 30% as a result of the weaker


pound and the rising costs With 480 staff from more than 30


different countries, the firm is also worried it may


struggle to find enough workers once Dan Ahearn, CEO of


New England Seafood. Dan welcome to the programme. Not


one stitch of anything you brought in with you? No, I didn't. No fish


and chips for us in the morning. Dan, there are three key area,


aren't there, that you're concerned about as an importer. We have just


mentioned them, but there is the value of the British pound...


Absolutely. Migrant workers and the other? Duty tariffs. Whatever they


maybe. Whatever they maybe depending on what we do. What's the biggest


risk for you? The biggest risk really is the impact of sterling on


volume. So inevitably, you know, a business such as ours, a food


business, we are reliant, we work on pretty fine margins, it is a volume


game. It is an efficiency game. You know, food manufacturing counts for


16% of manufacturing turnover in the UK. It is the largest sector,


automotive combined with the aerospace industry, food


manufacturing, it is a massive area for us. You know, businesses like


ours, rely on the ability to invest, in innovation, and efficiency and


productivity and when you see sterling deappreciating, that's ?7


million on a business that would aim to make 3% to 4%. The Chancellor's


possible cut in corporation tax to 15%. That would be a boost for a


company like yours, no? Well, you have got to make the profit to spend


the tax. For us, you know, a 5% break in tax on a ?3 million profit,


?150,000 pails into insignificance when you're staring at up to ?7


million inflation on the cost of goods. Clearly, the issue of


managing that through the chain, you've got supermarkets who are


reluctant to pass inflation on to their consumers given how


competitive that industry is. It really puts a squeeze on, I think,


the food industry and in real term consumers will see the price of


their shopping baskets going up as a result of the decision. Looking at


the pictures we showed earlier of people working in your sites. I


imagine you rely on a lot of migrant workers and you are worried about


being able to get those workers if and when the UK leaves? It would be


a concern. We employ 476 I think at the last count. 117 British, 176


Polish, pull garian, Romanian and Lithuanian 130 and more


nationalities making up the balance. These are people who have worked


with us for 15 years. They have built lives in the UK and moved to


within management positions within the business and they've contributed


hugely. The UK food industry employees 400,000 people which of


which food manufacturing, 25% of those are non-UK EU migrants who


have come to work in the UK. And we're looking for 110,000 more


employees in the next five years. How are we going to find those if we


start to close the gates? Dan, good to talk to you, thank you for your


take on that. Best of luck with the business.


Dan Ahearn There. The fall in the value of the pound


post Brexit Vote has For British companies


which are export-focussed, it's been a gift because it's


made their goods cheaper abroad. The British Hovercraft Company,


based in Kent, has reported a wave of new enquiries from abroad


over the past week. Its owner, Emma Pullen,


is now planning a worldwide export drive, saying Brexit has opened


up a "brave new world" I'm from the British


Hovercraft Company. We make small hovercraft


and we sell about 100 a year throughout the world


for leisure use instead of a boat or a jet ski or for commercial use


so people will use them for rescue We use a lot in Kuwait


and in the Middle East for some of those things and in some


of the colder countries for ice The fall in the value of sterling


was excellent for our business I had 25 new enquiries by Saturday


afternoon from Jamaica, I have also had enquiries


from Africa, and India again has A lot of people that had previously


been considering buying from us realised that the pound having


a massive drop was great for them. My vision is now we are a single


country on our own and very soon be able to trade much simpler


with other countries, I want us to expand to a much bigger


global market and I feel that this is very possible working as the UK


dealing with countries such as India I think we're going to able


to create trade deals that allows us to do business and to trade


with these countries so much easier and it is a brave


new world out there. What other business


stories has the media been Manji Cheto, Africa analyst from


Teneo Intelligence joins us again. The headline is, "Companies in legal


challenge to Brexit"? They want to set this legal challenge, you can't


leave the EU without an Act of Parliament, is that right? The point


is we have so much uncertainty facing us and we're only at the


point where we're trying to decide when do we activate Article 50? For


me, I mean, I think, I'm really frustrated because I'm like let's


just get on it, keep calm, carry on, we've had a vote already, let's get


on with it and start the negotiation which is uncertain. I think, you


know, I understand why companies are going down this route, but at this


point you've got to decide what's best for the national interests and


moving forward... Some leadership would be good. Some leadership


giving us a rudder. You're asking for too much. Let's talk Wall Street


Journal. This is a non-Brexit story. VW rejecting cash offer for European


car owners. This is only interesting because they've offered cash if


you're in America, but if you're in Europe, you won't get it. I don't


think it is a question of saying Europeans are not going to get it,


it is a question of will Europeans get compensation similar to what US


customers are getting and VW's position is no. If they give


compensation to European customers, they could be paying out additional


40 billion euros. This is a moral thing, they say we can get away with


not paying it in Europe, we can't get away with not paying it in


America? I'm not sure it will fly with European authorities, but at


the moment VW made it quite clear where they stand, so we will see


where this goes. I wonder if it will impact future sales within Europe.


If Europeans go, "You don't care about us, take your cars to America,


and we ain't buying anymore." Thank you for your messages, another


viewer says, "I'm getting on with life. Head down. Ignore Brexit." On


that, thank you for your company. We will see at the same time and the


same place tomorrow. See you


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