05/07/2016 BBC Business Live


05/07/2016

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This is Business Live from BBC News with Aaron

:00:00.:00:07.

There's a cloud of uncertainty around the UK's future post Brexit

:00:08.:00:18.

MPs and bank bosses meet later to try to work out what it means for

:00:19.:00:26.

the public? Live from London, that's our top

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story on Tuesday, 5th July. Gazing into their crystal ball -

:00:30.:00:42.

the UK''s political and economic leaders are going to be peering

:00:43.:00:47.

into the future today try and work out what the UK might

:00:48.:00:50.

look like post Brexit. Could it bring a new period

:00:51.:00:53.

of opportunity and growth or just Now need help finding your

:00:54.:01:12.

smartphone or monitoring your pet? South Korea are launching their

:01:13.:01:16.

first low-cost network to make the money more country. The markets are

:01:17.:01:21.

a little off today, we will explain why.

:01:22.:01:22.

And there's no more dancing around the issue.

:01:23.:01:25.

The UK is leaving the European Union.

:01:26.:01:27.

We continue our special series looking at the sectors

:01:28.:01:29.

Today we assess the impact on higher education with the head

:01:30.:01:35.

And as the head of the IMF says that the EU "will get more work

:01:36.:01:41.

We want to know, did the EU get too big too quickly,

:01:42.:01:45.

and will a smaller, more nimble EU achieve more?

:01:46.:01:50.

Et us know. -- let us know. Lots going on.

:01:51.:01:59.

Today could be the day that some of the post Brexit

:02:00.:02:04.

Three important bodies in the UK will today be looking

:02:05.:02:09.

into their crystal balls to see what the country's vote to leave

:02:10.:02:12.

The Treasury Select Committee and Foreign Affairs Select Committee

:02:13.:02:16.

both gather today to discuss how UK's relationship

:02:17.:02:23.

with the European Union and the wider world might now change.

:02:24.:02:26.

The Bank of England will also today publish its latest biannual

:02:27.:02:28.

Financial Stability Report on their outlook for

:02:29.:02:30.

To top it all off the UK's Finance Minister George Osborne

:02:31.:02:35.

is also spending the day meeting with the heads of some of the major

:02:36.:02:39.

With me is Helen Goodman, a Labour party member of the UK's

:02:40.:02:46.

Nice to see you. Welcome to Business Live. A lot for you to do today and

:02:47.:02:56.

a lot for you to find out. Run me through the headline things that

:02:57.:03:00.

you're looking to discover today? Well, people have probably noticed

:03:01.:03:03.

there isn't a plan for Brexit so we're going to explore how we might

:03:04.:03:06.

leave the EU. The first thing we're going to discuss is what homework

:03:07.:03:09.

ministers need to do. How they're going to prep for the negotiations.

:03:10.:03:15.

How the negotiations are handled. Then we're going to look at the

:03:16.:03:19.

Norway option and we're going to look at a looser arrangement and

:03:20.:03:22.

we're going to look at wider questions like what are the

:03:23.:03:24.

implications for Scotland and Northern Ireland. Why is there no

:03:25.:03:32.

plan? Well, you'd have to ask those people who argued for Brexit that

:03:33.:03:35.

question. I was a Remain person and I feel the Brexit people have really

:03:36.:03:39.

let the country down. I think it was very irresponsible of them. So we

:03:40.:03:44.

find ourselves in this position without a plan, whoever's fault that

:03:45.:03:46.

is. Clearly, the challenge is to come up with a plan and this is what

:03:47.:03:50.

you want to do today. It strikes me there are so many things and there

:03:51.:03:54.

are many things in which we don't have expertise, we've talked a lot

:03:55.:03:57.

about the trade deals that need to be done and we don't have trade

:03:58.:04:00.

negotiators because they are all in Europe. Where do we get that

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expertise? Where do we start to come up with a plan? OK, what ministers

:04:04.:04:09.

told me is they are recruiting now. They will recruit from the EU, I

:04:10.:04:15.

think, I think they will recruit from law firms in London, but

:04:16.:04:19.

they're trying to staff up the unit and it will probably take a couple

:04:20.:04:23.

of months. Let's talk Article 50. That's the big thing. The big cloud

:04:24.:04:27.

that's hanging over us all about whether it will be triggered and if

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it will be triggered and when. I suppose the challenge for that, you

:04:33.:04:35.

know, is from a business point of view, some say, yes do it now and do

:04:36.:04:40.

it quickly and we have certainty, others say hang on, make sure we do

:04:41.:04:43.

it right. Which way is it going to go? I hope it will go slightly more

:04:44.:04:48.

slowly because once we trigger Article 50, the clock is ticking.

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Once the clock is ticking, the other EU member states have got a stronger

:04:55.:04:57.

hand to play and we're in a weak position because we've got to get it

:04:58.:05:02.

done and at the moment we don't know exactly how we want to run these

:05:03.:05:06.

negotiations. So it is better for us to get our act together before we

:05:07.:05:12.

trigger Article 50. In addition, there is a case for putting Article

:05:13.:05:17.

50 into primary legislation so that it is approved by Parliament before

:05:18.:05:22.

it is triggered and that would be quite a good idea because then we'd

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increase the transparency, the public could see what the deal was

:05:27.:05:30.

going to be, they could comment on it, so that has some attractions. I

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was going to say before, watching around the world, who don't know the

:05:35.:05:40.

intricasies of Article 50 is the button, once that's triggered, the

:05:41.:05:44.

clock starts ticking to getting out. Can I ask you this, everybody talks

:05:45.:05:47.

about the Norway model, very briefly can you explain what the Norway

:05:48.:05:51.

model is and it could be a perfect option for the UK? OK. So Norway

:05:52.:05:56.

still pay contributions to the EU budget. But they have full access to

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the single market and they have to accept EU citizens coming to work in

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the country. So you're almost a member, but not quite.

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Right. OK. Well, there is a lot going on. The best of luck with

:06:12.:06:17.

today! We need it. Can you find some leadership while you're doing that

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as well because that kind of would help. Definitely. Helen, thank you.

:06:21.:06:26.

Standard Life Investments has suspended trading in its UK property

:06:27.:06:28.

fund blaming "exceptional market circumstances" following

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The fund manager said the number of investors asking

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to withdraw their money had increased following the vote.

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The last time Standard Life stopped investors taking their money out

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of the fund was during the financial crisis.

:06:46.:06:48.

The United States has overtaken Saudi Arabia as the biggest

:06:49.:06:51.

That's according to a Norwegian consultancy.

:06:52.:06:55.

More than half of remaining oil reserves in the US are shale oil

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The US shale boom was one of the reasons behind the recent oil

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price collapse to $30 a barrel earlier this year.

:07:07.:07:10.

But since then oil prices have rallied and it's now

:07:11.:07:12.

Silver, it is long considered the poorer cousin of gold,

:07:13.:07:21.

is trading at its highest price in more than two years.

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It comes as investors put their money into precious metals

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Silver rose by as much as 7% in US trading

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It has risen 11.5% in the past three days.

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Gold added more than 1% to settle at $1,350 - that's a two-year high.

:07:35.:07:52.

Guess what our producer took out of that? The hot dog story! Yeah, he is

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telling me. Our producer doesn't know how to make good television,

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but we can only try! We can try! Osborne is meeting with bank chiefs

:08:03.:08:17.

today. MPs will meet those giving evidence about what happens next in

:08:18.:08:21.

terms of coming up with a plan. We talked about that, but what will it

:08:22.:08:27.

mean for the UK's future for financial services. George Osborne

:08:28.:08:32.

meeting bank bosses later today to find out what happens next? There is

:08:33.:08:37.

simply no plan. So they will try and come up with something and they're

:08:38.:08:40.

trying to find someone to lead the country to do it, but we'll talk

:08:41.:08:43.

about that later. So how do you like your

:08:44.:08:52.

eggs in the morning? No seriously, what about getting

:08:53.:08:54.

some help to find your smartphone if you lose it or perhaps a coffee

:08:55.:08:58.

maker that delays making your cup of java if you hit your alarm

:08:59.:09:01.

clock's snooze button? One country leading the way

:09:02.:09:04.

in what's been dubbed the Internet of Things is South Korea

:09:05.:09:06.

where the largest mobile carrier is to invest $87 million in making

:09:07.:09:09.

the nation more connected. Sharanjit Leyl is in

:09:10.:09:11.

Singapore for us. Explain this for us because the

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internet of things, we know about it, it is about connecting these

:09:21.:09:24.

devices. South Korea leading the way? It is, indeed. Certainly do

:09:25.:09:30.

believe it because according to one analyst South Korea is amongst the

:09:31.:09:34.

wide countries in the world and this will help it maintain its lead.

:09:35.:09:38.

Certainly, you talk about that cup of java, but I can't wait for a

:09:39.:09:42.

device to help me monitor my pet dog. This is a much touted

:09:43.:09:47.

technology that really aims to connect household devices,

:09:48.:09:49.

buildings, it helps fridges or printers tell its owners when it

:09:50.:09:53.

needs to be refilled and South Korea, of course, the first country

:09:54.:09:56.

and it is also really interesting because it has done this low-cost

:09:57.:10:02.

which is really aimed at making the country more connected. It is the

:10:03.:10:06.

phone carrier which is behind the initiative. It is using technology

:10:07.:10:10.

that will allow it to reach 99% of the country's population. And

:10:11.:10:15.

certainly, the Netherlands is the only other country which has an

:10:16.:10:22.

internet of things or IOT Network. The telecoms firm is investing up to

:10:23.:10:26.

90 million to further develop the infrastructure which it hopes will

:10:27.:10:29.

be a new source of revenue. Now, users will have to subscribe to

:10:30.:10:35.

monthly price plans of under $2 and in a statement, the company said the

:10:36.:10:43.

price plans are of course highly affordable which will ease the cost

:10:44.:10:48.

burden of start-ups and small and medium enterprises. So I can't wait

:10:49.:10:54.

to go to South Korea and try this out for myself. And get some help

:10:55.:11:00.

for your dog! You could look after your dog yourself!

:11:01.:11:03.

She has gone! Asian shares snapped a five-day

:11:04.:11:09.

winning streak on Tuesday as nervous investors took some profits

:11:10.:11:18.

despite hopes of increased Central Bank stimulus to offset a likely

:11:19.:11:21.

downturn triggered by Brexit. Let me just explain that -

:11:22.:11:24.

Britain's vote to leave the European Union has ramped up

:11:25.:11:26.

the urgency for some of these Asian central banks

:11:27.:11:29.

to ease monetary policy, because of a prolonged

:11:30.:11:34.

period of uncertainty which threatens a wider down-shift

:11:35.:11:40.

in trade and investment. Shares in Italian banks,

:11:41.:11:44.

saddled with a mountain of bad loans, dropped nearly 4%

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after Italian government said the country had no plans to pump

:11:55.:11:58.

public money into its banks, a move that could be seen

:11:59.:12:02.

as defying EU rules. Joining us is Sue Noffke, UK

:12:03.:12:11.

Equities Fund Manager at Schroders. Let's talk about Mark Carney, he is

:12:12.:12:22.

a man that seems to have a plan. He is laying out the stability report

:12:23.:12:25.

at the Bank of England, the governor of the Bank of England, he is trying

:12:26.:12:28.

to give us some reassurance that everything will be OK? Certainly,

:12:29.:12:34.

the financial system is not going to gum up around lending and capital

:12:35.:12:39.

requirements for banks. So that's what he is going to be talking about

:12:40.:12:45.

today. Potentially, reducing the tightening capital requirement that

:12:46.:12:48.

banks were going to have and potentially taking those off the

:12:49.:12:52.

table, potentially doing more funding for lending. So cheap funds

:12:53.:12:57.

for banks to onward lend to businesses and individuals. To keep

:12:58.:13:02.

the economy going at a time of acute uncertainty.

:13:03.:13:09.

Urn certainty this is what leads investors to putting money, taking

:13:10.:13:13.

money out of the markets and where do we put them, into safe havens, I

:13:14.:13:18.

mentioned silver, gold, but you were mentioning Government debt, right?

:13:19.:13:24.

At times of uncertainty, investors tend to go for safer assets. So that

:13:25.:13:30.

can be precious metals. So gold, silver, platinum, it can be

:13:31.:13:35.

currencies where the central banks don't seem to want to devalue those

:13:36.:13:40.

currencies. So the Swiss Franc, the Japanese yen, the US dollar and then

:13:41.:13:46.

are Government bonds which repay you are Government bonds which repay you

:13:47.:13:50.

in five or ten years' time with a small amount of interest. Those

:13:51.:13:54.

yields, so the returns you're getting paid by those central banks

:13:55.:14:00.

have fallen to historic lows and in some cases are paying investors

:14:01.:14:04.

negative interest rates. So investors are paying to park their

:14:05.:14:07.

money in the Government bonds. That's unprecedented.

:14:08.:14:12.

Sue, thank you. I know you'll talk us through the paper stories later.

:14:13.:14:21.

Still to come, funding the future of you're

:14:22.:14:24.

In the UK, the house builder Persimmon has reported strong

:14:25.:14:35.

figures for the first half of the year but says its too

:14:36.:14:37.

early to judge the impact of the vote to leave the EU.

:14:38.:14:40.

The company's shares plunged by almost a third in the wake

:14:41.:14:43.

of the EU referendum but says it still expects the market to provide

:14:44.:14:46.

It comes after yesterday's figures for the construction sector

:14:47.:14:53.

which showed its worst performance in seven years

:14:54.:14:55.

in a study carried out largely before the referendum.

:14:56.:15:00.

Gillain Econopouly is Head of Policy and Research at the Construction

:15:01.:15:03.

Can we take a step back? Those numbers, the worst in seven years or

:15:04.:15:18.

something, before the referendum, what's the problem, what was the

:15:19.:15:21.

problem behind that? Why? Is construction down?

:15:22.:15:26.

We are expecting to see the drop in PMI. A lot of construction firms

:15:27.:15:30.

said they were holding back on investment or delaying projects

:15:31.:15:32.

because they didn't know which way the vote would go.

:15:33.:15:43.

Persimmon has said there are still opportunities, but companies may

:15:44.:15:50.

still be flexible. Construction we tend to think of as just houses, it

:15:51.:15:55.

is really reliant on infrastructure. It strikes me the industry needs

:15:56.:16:01.

some reassurance in terms of infrastructure, roads, railways, to

:16:02.:16:07.

save those jobs. Absolutely, housing is really important, but

:16:08.:16:10.

infrastructure has a huge role to play. The more reassurance is that

:16:11.:16:14.

governments can give employers, the more confident employers will feel

:16:15.:16:18.

and that will help them train their staff which is crucial of the -- for

:16:19.:16:33.

the country. Thank you, I said your name wrong again! LAUGHTER

:16:34.:16:42.

I want to bring you some more BHS news. More evidence, an interview

:16:43.:16:50.

that Adam has done, the former owner of BHS describing the ?2.6 million

:16:51.:16:58.

that he took out of the company, he says it is a drop in the ocean. It

:16:59.:17:02.

is the first interview there, you can watch it on the website.

:17:03.:17:06.

You're watching Business Live - our top story.

:17:07.:17:12.

With Brexit on its way, some of the UK's top figures are holding these

:17:13.:17:22.

meetings today to try to forge a path forward. Later today the UK's

:17:23.:17:28.

Finance Minister will be discussing the vote with bank bosses. George

:17:29.:17:34.

Osborne is already talking about how the finances will be affected by

:17:35.:17:38.

what he calls a cyclical downturn as a result of Brexit.

:17:39.:17:42.

A quick look at how markets are faring.

:17:43.:17:51.

To losses in Germany and France are a little lower this morning and a

:17:52.:17:55.

pound will buy you $1 32 cents. As part of our special series,

:17:56.:18:02.

we've been assessing the impact And asking whether there

:18:03.:18:04.

are opportunities as well as risks. But what about higher education -

:18:05.:18:08.

and the free movement of students from across the European Union

:18:09.:18:11.

who can choose to study and work There are currently 125,000

:18:12.:18:14.

EU students in the UK, and they're entitled to similar

:18:15.:18:18.

loans to those offered And those EU students at UK

:18:19.:18:22.

universities generate ?3.7 billion - that's around $4.9 billion

:18:23.:18:31.

for the UK economy. Between them they support more

:18:32.:18:34.

than 34,000 jobs in the UK. Leaving the EU could force students

:18:35.:18:38.

from within the Union to pay much higher fees of up to $46,000

:18:39.:18:44.

a year to study in the UK and remove their access

:18:45.:18:48.

to the British student loan scheme. In the run-up to the referendum,

:18:49.:18:52.

Leave campaigners said they would protect the money

:18:53.:18:54.

universities receive But there are still no details

:18:55.:18:56.

on exactly how this would happen. Mark Featherstone-Witty, founding

:18:57.:19:00.

principal and Chief Excecutive of The Liverpool Institute

:19:01.:19:09.

for Performing Arts joins us. I'm sorry, it is a long name. We

:19:10.:19:21.

pronounce that one right! Talk us through what Brexit means for you.

:19:22.:19:31.

You have the students from the EU coming to Liverpool. Not just the

:19:32.:19:35.

EU, students from around the world, a third come from outside the

:19:36.:19:40.

country, a third come from outside of Europe from those. As it happens,

:19:41.:19:48.

for some bizarre reason, we had... Currently we have three students

:19:49.:19:52.

from the EU and this year 23 have started to study with us. The

:19:53.:19:59.

interesting thing that has happened, nobody knows what is happening, do

:20:00.:20:03.

they? You are doing a wonderful job trying to piece it all together, but

:20:04.:20:08.

anybody can guess. Joe Johnson who it happens our central body met on

:20:09.:20:14.

the day that the announcement was made about Brexit, said like a lot

:20:15.:20:20.

of government ministers, it is business as usual. You have to

:20:21.:20:23.

remember the universities that everything is on a three-year cycle,

:20:24.:20:29.

they are three-year courses. There is a contract that universities

:20:30.:20:32.

enter in with those students, you cannot stop it part of the way

:20:33.:20:37.

through. You are breaking your contract with them in a way. I

:20:38.:20:42.

believe that it will take three years anyway to work through. You

:20:43.:20:48.

cannot accept people and say I am terribly sorry, you cannot be here

:20:49.:20:53.

any more. It will not be fast. We will check in with you each year!

:20:54.:20:59.

LAUGHTER We night to get an inside look and

:21:00.:21:04.

feel for the person we are chatting too. How did you get involved? You

:21:05.:21:10.

come from a showbiz background, you are without a mobile phone, who

:21:11.:21:16.

doesn't have a mobile phone? I love this, a showbiz background! In the

:21:17.:21:19.

end it was more of an entrepreneurial background although

:21:20.:21:25.

I did spend some time acting. One of the interesting things, you had a

:21:26.:21:29.

picture at the beginning of we are going to talk this person from the

:21:30.:21:32.

performing arts and you showed a picture of people on the stage

:21:33.:21:37.

dancing. The thing I would like to say is everyone who is watching and

:21:38.:21:42.

indeed to you, it is called show business for a reason. It is shallow

:21:43.:21:51.

and business. 76% of those working in the entertainment business

:21:52.:21:55.

ourselves employed. -- it is show and business. Those people cannot

:21:56.:22:03.

just be luvvies, they have to manage their business lives. 84% of SN

:22:04.:22:11.

evens in the performing arts have less than three or four people. --

:22:12.:22:18.

SMEs. It would be crazy to run the performance arts institution that

:22:19.:22:23.

did not teach business to everyone. What is so interesting about that is

:22:24.:22:27.

you need to teach students to deal with the real world and be their

:22:28.:22:32.

agents and avoid sharks and deal with casting and that is the

:22:33.:22:37.

business of it. It is money in exchange for a service and they need

:22:38.:22:40.

to be worldly wise. Correct, exactly right. Lovely, nice to see you. Time

:22:41.:22:47.

is against us, I would love to talk some more. Thank you very much. We

:22:48.:22:55.

have a tweet, how enthusiastic are these guys, they definitely had

:22:56.:22:59.

their Weetabix this morning! It is you! LAUGHTER

:23:00.:23:09.

Thank you for coming in. He has gone!

:23:10.:23:10.

In a moment we'll take a look through the Business Pages,

:23:11.:23:12.

but first here's a quick reminder of how to get in touch with us.

:23:13.:23:16.

We will keep you up-to-date with insight and analysis from the team

:23:17.:23:22.

of editors from right around the world and we want to hear from you

:23:23.:23:26.

as well. Get involved on the business website on the BBC. You can

:23:27.:23:38.

find us on Twitter and Facebook. We are on TV and online, whenever you

:23:39.:23:52.

need to know. Sue is back to talk to us about the papers. Given all that

:23:53.:23:56.

we have seen about George Osborne wanting to cut corporation tax in

:23:57.:24:02.

the UK, and extra tax on tech firms to pay for things in San Francisco.

:24:03.:24:06.

Property prices have gone up because of the influx and the success of

:24:07.:24:12.

these tech companies. It is about people who have not benefited from

:24:13.:24:20.

the boom. The global income, the inequalities that felt around the

:24:21.:24:24.

globe. People who felt left out, their housing costs have gone up,

:24:25.:24:28.

they are asking the tech firms in some princes go to pay. The problem

:24:29.:24:34.

in putting this kind of thing together and the chances of success

:24:35.:24:39.

are very low because although it is populist, trying to get tech

:24:40.:24:44.

companies... What is the definition of a tech company, where is San

:24:45.:24:53.

Francisco starting and ending? It will be problematic. The

:24:54.:24:56.

protagonists are saying many of these tech companies have Balanta

:24:57.:25:01.

the efforts that are global and they need to do something more. Many are

:25:02.:25:05.

already playing the statutory rate of tax. That is in addition. -- they

:25:06.:25:12.

have charitable efforts that are global. The EU will get more work

:25:13.:25:19.

done with Britain gone. Really? Stay tuned. Yes, but there is a lot of

:25:20.:25:27.

water to go under the bridge to get Britain gone. There will be a lot of

:25:28.:25:33.

work in getting rid of us! Getting Britain gone! That will be the quote

:25:34.:25:42.

of the day. Always a pleasure. But policymakers will try to work out

:25:43.:25:47.

what is happening next, I will stay across the full details, there is

:25:48.:25:50.

full coverage throughout the day across the BBC and on the website.

:25:51.:25:56.

We will see you later, plenty more business news, you have a little bit

:25:57.:26:00.

more. We will see you soon, goodbye!

:26:01.:26:03.

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