12/07/2016 BBC Business Live


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This is Business Live from BBC News with Ben Thompson and Alice Baxter.


"The lady's not for turning" - famous words from Margaret Thatcher


but could they also apply to Britain's new leader Theresa May?


With Brexit negotiations round the corner, is she the right


Live from London, that's our top story on Tuesday 12th July.


Theresa May is set to become the next Prime Minister


of the United Kingdom, potentially cutting short months


We'll take a look at what's next for Britain, following the country's


An international court is due to issue its verdict


What does this mean for the $5.3-trillion worth of trade


to flow through these contested waters?


We will find out. And this is what the markets look like, the first


half an hour of trade under way in Europe. We will have the details for


you. And we'll be talking to successful


entrepreneur William Kendall about his latest venture,


selling chocolate-maker Green Blacks to Cadbury,


and what needs to be fixed Today we want to know how


you would improve your office space It's all the rage among


the big tech giants So let us know your office


improvement thoughts. Seriously, people have bouncy


castles in their office?! If you have one, let us know!


It's been an eventful couple of weeks in UK politics


but Theresa May has emerged as the next Prime Minister


Yesterday, Andrea Leadsom, her main rival for the role,


pulled out of the race to become leader of the Conservative Party.


So what could May's leadership mean for the economy?


Mrs May says she'll put worker representatives on executive boards


in order to address the "unhealthy and growing gap" between


She's also pledged to increase the power given to shareholders


This comes after investors in several companies attempted


Ultimately, these were shareholder protests that went ignored


With me is Jessica Ground, of UK equities fund manager Schroders.


We have the second woman to Dubai Number Ten one quarter of the


century, an exciting time for the UK. She has got a big task in front


of her, who will make up the Cabinet? The first priority, who


will be the Chancellor? She has got about 100 posts to fill and this is


her chance to return papers and set her agenda out. The interesting


thing about yesterday is she was quite critical of the Treasury and,


by default, George Osborne. Saying he had not done enough to solve


productivity, which is such a key games for so many people and the


growth of the country, and also that he perhaps had not done enough on


infrastructure investing, so, following that, I would be quite


surprised if George stayed in the hot seat in the Treasury, and the


speculation going that Philip Hammond would prefer that. I think


the question is, does he get the other big job he would like, which


is in the Foreign Office with a focus on trade? How likely is it


that she will include some of those prominent Brexiteers around the head


table, Mr Johnson and Mr Gove particularly? I think Mr Gove


probably more likely than Mr Johnson, who is probably seen as a


live wire. She was a Remain campaigner and she will want to be


pretty clear that, she has said that Brexit what happened, and so she is


going to want to give Brexit good weight in the Cabinet, and I think


people like Liam Fox, who supported her in this, they should see good


position is coming to them. In terms of her economic strategy, she was


pretty critical of some of Mr Osborne's strategies in their past,


she has criticised his focus on two of our great regional cities, if you


like, a suggestion she might want to develop more than just London and


Manchester is what many people in third from those comments. She also


pledged to tackle predatory takeover power was on the part of some


corporations out there and also wanting to close the gap between


executive pay and work paid. Is the city were read by these comments? I


think much of what she has said, the city has been on a introductory


already. If we just look at the issue of pay, we have seen big votes


against CEO pay, certainly in the US where there is more disclosure on


CEO pay relative to average workers' pay. So I think that momentum is


already underway. I think the protection for industries, that has


sort of been on the table since Kraft taking Deborah Cadbury, the


feeling that promises given were not delivered, so I don't think those


are surprising. I think there has been a feeling for some time that


this issue of inequality needs to be looked at and, believe it or not,


even in the city, for we, as investors, we want sustainable


business models, companies treating employees well, we have been


campaigning for the living wage and encouraging companies to adopt that.


I think it is right that we look at, how do all stakeholders, the


environment, customers, workers, benefit, and it cannot just be CEOs'


pay and nothing for the rest of the country. She was on the Remain camp


but reiterated again, Brexit is Brexit and let's crack on with it.


Good to talk to you, Jessica. A big task ahead for Theresa May.


Absolutely, and we will keep you across all of the developments


there. US officials didn't prosecute HSBC


for money laundering in 2012 because they were worried it


could cause a "global That's the verdict of


a report from US Congress. Four years ago, HSBC was accused


of breaching US sanctions and allowing drug cartels to use


its branches to launder money. The bank paid a $1.92 billion


settlement but did not Ikea has announced that it's


recalling 1.7 million chests of drawers in China over


concerns they could pose a danger to children if not


properly fixed to walls. The recall covers items in the Malm


range that were manufactured The announcement's after the Swedish


furniture company recalled 36 million dressers in North


America. Coffee giant Starbucks is to raise


wages for workers at its stores It comes after the company


was criticised for cutting staff hours and raising prices


to meet profit targets. In a letter to employees,


Starbucks' boss Howard Schultz said the company was looking to strike


a balance between profit Let's take you quickly to the


Business Live page. We talked yesterday about the Farnborough


airshow, which kicked off with a big deal. A Boeing ?3 billion deal


yesterday, hard to top, as the live page points out. Our correspondent


is at the airshow and says it is not raining yet, fingers crossed the


weather stays good because it was particularly terrible...


A torrential downpour! Such a shame. And this from David Jones, one of


our regular guests, we have talked about the slumping value of the


pound so much recently in the wake of the Brexit boat but things are


tipping up a little bit, looking slightly better, and we will talk


about that more in the markets later.


Let's head to Asia, because after more than three


years and many hearings, a ruling is expected in The Hague


later on the hugely contentious issue of China's claims over


The Philippines brought the case to court in 2013,


and disputes China's territorial claims for about 90%


Well, it's thought $5.3 trillion worth of trade passes


through the disputed waters every year.


So it's vital for China, but also for energy.


The South China Sea is also thought to contain billions of barrels


of crude oil and up to 900 trillion cubic feet of natural gas.


And China has already invested $20 billion in finding out


We can speak to Eufracia Taylor, Asia analyst at risk


consultancy Verisk Maplecroft, in Singapore for us.


Nice to see you. Just explain, we have tried to touch on the


significance of the South China Sea, but give us your take on what is at


stake and why it is so vitally important, and why we will be


looking at the verdict from the Hague today? It is important


particularly for merchandise trade between the regions, and really


between Asia and the rest of the world. The South China Sea act as a


gateway for Asian manufacturers, consumers, to getting products out


and bringing products in, and, as you mentioned, probably one of the


most contentious issues around the territorial dispute is in terms of


energy. Huge amounts of crude oil and liquefied natural gas is


channelled through the South China Sea each year and a huge proportion


goes to China, and it is one of the key reasons that it is so eager to


ensure it has control over those waters. It is also one of the


reasons why Japan in particular, despite sitting on the shelves of


the South China Sea, is also watching the issue so closely as it


depends significantly on the South China Sea to bring through its own


liquefied natural gas supplies and power its industry. We are seeing,


as imagined, in terms of internal trade but also energy security, it


is a huge issue. About 60% of the $5 trillion of trade that passes


through the South China Sea ends up in China, but they have said that


they are ignoring the outcome of today's's ruling, whatever it will


be, in the Hague. What do you think the ruling will be, and what sort of


impact can it have, given what China has set? At this moment it is


incredibly difficult to determine what the ruling will be, primarily


because there are 15 claims specifically that the court in the


Hague will be ruling on, and the court has also reserved its direct


consideration of some of the most contentious claims, such as the


status of China's historical claims. One thing we can say for sure is


that even though China, as you mentioned, will reject the award, it


cannot ignore it, because regardless of whether the court rules against


China's claims feathers in Beijing have been ruffled and it is now at


the point where, even if the court at Staines from ruling on those most


contentious measures, people have scrutinised China's claims deeply


and there has been a rallying of support around the smaller players


in the dispute, which, if nothing else, has caused some embarrassment


for China. We have to leave there, but thank you.


Let's have a quick look at the numbers for you. The arrows tell the


story, a bitter Bob Riley, particularly in Asia. The McKay


doing well on the back of that Nintendo game, Pokemon go, winning


legions fans around the world will -- around the world.


Later this morning Bank of England governor Mark Carney appears


in front of MPs along with other members of


the Financial Stability Committee to answer questions


US stock-market investors sail into earning season this week,


wind at their backs, provided by the all-time


high on the S 500, but conditions may already be


worsening after the record close on Monday, metals giant Alcoa put


out the first major earnings release, and it was


They made $135 million in the second quarter, a decline on last year,


driven by falling aluminium prices and cutbacks.


Later in the week, JP Morgan and Citigroup,


along with others, will also release their latest accounts.


Investors will hope this view of the health of corporate America


shows more plain sailing ahead, though given the events


in the global economy, they would do well to prepare


Joining us is Cornelia Meyer, chief executive of Australian mining


Good to see you this morning. Actually, I am Chief of resources at


a business consultancy. Apologies. Let's talk about the global rally


that we are seeing at the moment. What would you say are the main


factors behind this, helping stocks rebound after the slumps we saw


after the Brexit vote? The first thing that we saw was, when we had


the jobs report that was better than anticipated last Friday, and on the


back of that it rallied, and then it rallied even further, everybody was


very unhappy with the uncertainty that we had in the UK, no


leadership, the opposition and Government in disarray, and now


finally we have leadership, a way forward, somebody who has stepped


up, a decisive lead in the says, OK, I will create an action plan, we


will move forward. I think people want certainty, people want to see


everyone move forward. I don't think business likes the idea of Brexit


but at least if you have Brexit, it is a fact now, let's get on, let's


have a road map and start negotiations.


Somebody who has been studying the ship is Mark Carney, he has had to


step in the breach and reassure the market. He will give evidence to MPs


ahead of a cut in interest rates on Thursday. How crucial with his


evidence be? Is very crucial in terms of reassuring the markets, but


they are reassured, because he was the steady pair of hands when nobody


else was there. They really -- a bit like Rudy Giuliani after 9/11. The


markets are addicted to low interest rates and constitute easing. If he


says interest rates go down, the markets will love it. I think at


some stage we will have to get up again with interest rates, because


when the next crisis comes, we will have no leaders left. We will watch


closely. You will be back to talk us through the papers later.


The sweet taste of success, but what's the secret


We'll meet the man behind chocolate brand Green Blacks.


He will tell as his secret to success.


You're with Business Live from BBC News.


It's been more than two weeks since the UK went to the polls


There are still plenty of unanswered questions about the impact


UK farming has strong links with the EU, how could that change?


Victoria Fritz is at the Great Yorkshire Show finding out.


Welcome to the Great Yorkshire Show, we are expecting 130,000 people


to come through these doors in the next three days,


there are 12,000 animals of all different varieties competing


This is a showcase of the best of British, but it is also a place


for farmers to discuss the next big issue for agriculture.


That is the vote from Britain to leave the EU, because the EU


is the biggest market for British agricultural exports,


about 63% of British exports went to the EU last year.


The NFU has described the vote as a political car crash,


For me, I believe there could be some good opportunities


The direct support received from the EU on many of our


At the end of the day the role for the NFU is to bring people


together and get a good result for British agriculture.


We have seen a lot of funding go into milk production in terms


of grants to support a lot of the infrastructure


and technology, are you not concerned that that disappears


At the end of the day the Government is going to have to realise that


food security is a bigger issue than it has ever been before,


At the end of the day, we have got to support ourselves.


We have a huge imbalance, so if we cannot turn that around,...


We need help from the Government as well.


About half of all farmers' incomes come from EU subsidies,


so there is a lot of uncertainty about the income in the future.


But a lot of opportunity and some optimism as well that the future


A quick story from the BBC business page, Asos confident for the 2016


sales. After a frantic couple weeks in UK


politics, Theresa May is to become the next Prime Minster


of the United Kingdom. She's vowed to reduce


what she describes as "the growing More details on that as it develops,


and what happens over the next week will be pretty crucial.


In the wake of the financial crisis more and more of us have chosen


to start our own business, rather than work for someone else.


But what's the secret to success when starting your own firm?


Well, our next guest knows a thing or two about doing just that.


William Kendall's first business venture was in 1990


with the New Covent Garden Soup Company.


He turned a company with a $2.6 million turnover into one


with nearly $260 million in less than ten years.


Next came the chocolate firm Green Blacks.


Founded in 1999, he helped grow the business until it


attracted the attention of confectionary giant Cadbury's.


His latest venture is Cawston Press, an independent soft-drinks company.


Last year, it sold five million cans in 12 countries,


All the more impressive in a sector that's facing falling sales.


You are smiling at those numbers, you are clearly quite pleased,


pretty impressive, in such a market. It is hard to know where to start,


but let's begin at the beginning, what got you into doing this? You


a business, turn it around and sell a business, turn it around and sell


it off. I grew up on a farm, making things happen very quickly is what


appeals, getting involved in small businesses, you can make a


difference. I tried working for a big company, it did not work for me,


it is too slow. Did you have a specific way that you work? Do you


identify things that are short-term and long-term? Or do you have a


different strategy? It is about teamwork. It is about finding good


people who do the work with you. All I can do is gather people around me.


On your own you are lost. Each business has been about having a


trends. All of the businesses are in trends. All of the businesses are in


areas that have interested me and my team-mates. Then you try and find a


business that is small and struggling but is in the right space


and then you have got a following wind, the market is moving in your


direction, the figures are exciting, but it is hardly surprising that


people want to drink soft drinks that contain less sugar and taste


delicious. One thing that you have delicious. One thing that you have


spoken about that I found interesting is regret overselling


Covent Garden soup and green and blacks to early, you called it a


British disease, selling something the moment it becomes successful.


You going to hang onto your current brand? It was more of a general


point, and each is this is different. Covent Garden had a


venture capital shareholder, so we were under pressure to sell. Green


Blacks, we had less pressure, but we still did. You often define success


by how much you sell the business for. Sometimes selling it is the


right thing to do for the business and for you, but think of the other


options beforehand. When we talk about Cawston Press, as we said in


the introduction, the industry is shrinking, because we are trying to


get healthier drinks, reducing sugar, so what was the appeal? I was


one of those people. You go to a one of those people. You go to a


party, there is a delicious white wine being presented, you think, I


am driving, or I don't want to drink to night, the alternative is warm


elderflower cordial or a glass of water, they might as well give you a


badge saying loser, so you drink wine even though you did not intend


like me who don't particularly like like me who don't particularly like


sugar, don't want to drink all the time, but we don't get the


alternatives, so it was obvious to me that there must be more demand


out there than was being satisfied out there than was being satisfied


majors. When you talk about the big majors. When you talk about the big


brands, how difficult is it being a niche brand and going up against the


likes of Coca-Cola and Pepsi? It is a covered market, they have the


economies of scale and marketing budget, so how difficult is it? It


is difficult. In some ways it is easier than the food brands, because


we are less dependent on the supermarkets. A lot more drinks sold


outside supermarkets, so you have more places to sell, but the


brands have got huge budgets and brands have got huge budgets and


they tried to close you out. Some places are no go areas, unless you


have got a big cheque-book. But there are plenty of places, there


are lots of people who want to drinks that are not loaded


sugar that taste good, and those are sugar that taste good, and those are


the people weighed you can sell to, those are the niche shops and


chains. He said one of the things you think you are good at is


spotting long term trends, and you think one trend that we can look


forward to is insects as food, is that the next big thing? I am


involved in another business that is looking at fly farming, not


necessarily for humans, but replacing protein. My daughter has


done her dissertation on it, she says it is a long-term trend.


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