29/07/2016 BBC Business Live


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This is Business Live from BBC News with Victoria Fritz


The future of the Hinkley Point nuclear power


plant is up in the air after the British


Government unexpectedly put the decision on hold.


It's a big shock, not least to all those companies


who were expecting a boost from the $24 billion project.


Live from London, that's our top story


It's going to cost tens of billions of dollars and take


almost a decade to build, that is if it goes ahead at all.


So is Hinkley point, the UK's first Nuclear power plant


We'll be live at the site - where work is already underway


on the project which the government is yet to sign off on.


The man responsible for delivering billons of parcels to our


door just added a few billion to his net worth.


Jeff Bezos, the man behind Amazon, has just become the world's third


richest man after his company announced a bumper set of results.


And Asian shares slip after touching a one


And Japanese stocks tumbled and the yen strengthened as the Bank


of Japan's fresh stimulus measures disappointed markets.


And we'll be getting the inside track on what Brexit


means for one of the biggest airline groups in Europe.


Later in the show, we'll be speaking to the boss of IAG -


that's the company that owns British Airways.


Following the UK Government's shock decision NOT to sign off just yet


on the building of that $24 billion nuclear power project


we want to hear your best stories of getting cold feet?


It was a big shcok and those companies involved with


the Hinkley Point C Project in Europe are waking up this morning


scratching their heads and wondering what the delay is all about.


Less than 24 hours ago, the British Nuclear Association,


and umbrella group for the companies involved, said it was delighted that


EDF the French company building the plant, had decided to go ahead -


only for the Governemnt to pull back only a few hours later.


This is a hugely controversial project - not least because of some


The cost of the power plant is likely to be


around ?18 billion - close to $24 billion.


Due to the vast cost, Chinese investors, via the CGN


group, have agreed to pay for one-third of the project -


The power plant would provide around 3,200


megawatts of power - about 7% of the UK's total


So what does that mean in every day terms?


Our producers have been doing the maths and it's enough


to make 85.3 million cups of tea at once.


Or alternatively it's enough to keep all the lights


on at the same time in 48.5 million houses.


Oh, and if you've got a smartphone that needs charging,


good news, because this power station can charge 640


While the French and the Chinese are expecting to pay


for the project, they have previously been promised something


in return - a guaranteed price for the electricity it produces.


The UK Government agreed to pay them a price of ?92.50 or $121 dollars 68


cents per megawatt hour of electricity - more than twice


Ben Thompson is down at Hinkley Point where the new plant


Good to see you. Apparently late yesterday a VIP party tent was


erected there, where they were going to do the signing and the VIPs are


not there. What is change heart, is it Brexit or just a new government?


It is funny, welcome to Hinkley Point. You can see the work well


under way and you might be surprised the diggers are moving, although the


plans are on hold. They're doing the ground work and preparing this vast


site for the plant that they still hope will get the go ahead. To show


you where we are, this will be the third nuclear plant on this site.


The blue ones in the background are Hinkley Point A, that is closed and


decommissioned. The one on the right is Hinkley Point B. That is fully


operational, but will be decommissioned in 2023. So they have


to come up with an alternative and that was going to be Hinkley Point


C. But a spanner thrown in the works, the Government in the UK said


it will reconsider that plan and make a final decision in the autumn.


Why? Well I think the main reason will be down to the cost. Building


this site will cost ?18 billion. The big question over whether it could


get higher. Some estimates say 37 billion. So a significant amount and


how much the Government has promised to say EDF for that money. It is


double what the wholesale price is and the fears are that us as


consumers could end up picking up the bill. So much more controversy,


the rate a big issue, the current rate they were going to sign up for


35 years was the twice, more than twice the rate that you pay for the


same electricity now. But the fact that the Chinese were going to own a


third. And worries about is the UK giving away energy security to the


French and to the Chinese. Yes, look, we talk about this a lot on


the programme, international business and getting ex-per seize --


expertise from wherever. The Chinese would fund a third of the cost and


EDF would pick up the rest. From a business point of view the risk is


on them. The government signing a 35 year deal and guaranteeing the


price. But the price on energy can fluctuate wildly. At the moment it


is half what it was. I have been speaking to the nuclear industry


association and they have said over the past five years it has been


higher and lower. It is a gamble and it is taking an education guess on


the way the price will go. Some suggest by the time the plant comes


on line it could be more and it may mean we have a bargain. If it is


lower we may feel we are out-of-pocket and paying more to


compensate for that. It is a calculated gamble. But they're


looking at where the expertise is coming from. There is a concern


about the technology. There are two similar plants like this one that


would be built here. One in Finland and one in France. The one in France


is way over schedule and costing about 7 billion euros more than it


should have done. But they say we know the technology works and we


have a consortium ready to build it and we hope we can build it. EDF


signed off on it last night. It is now down the British Government to


decide in the autumn. Thank you. Gosh, you can talk, can't you. I


thought I could talk. I'm joking! He is done. Thankfully they cut the


sound! Amazon shares are set


to open at a record high, after strong earnings


from the online retail giant. Second quarter revenue


was up 31% on last year Amazon stock is up about


50% since February - that means founder Jeff Bezos has


now overtaken Warren Buffett to become the world's third richest


man, according to Forbes magazine. The company behind Google has


continued to see its earnings boosted by advertising on mobile


devices, like its rival Facebook. Alphabet says revenue


in the April-to-June The results put to rest lingering


concerns about how the rise of mobile might impact Google,


which has a strong mobile presence with its Android


smartphone operating system, but has long relied on desktop


search traffic to power its profits. Switzerland's biggest bank has


posted a big drop this profit. Net profit doped to 14.5%. The firm has


been hit by weak performance in its wealth management and investment


banking. Clients were also spooked about Brexit.


Japan has been throwing money at its economy -


Following its two day meeting, the country's central bank announced


stimulus which fell way short of investors expectations.


And it held interest rates at minus 0.15.


The yen jumped 2.5%, and Japanese shares fell


Karishma Vaswani is in Singapore and has been


These measures weren't audacious enough for investors.


The experts say they need structural reforms? Yes you're right. It


wouldn't be remiss of me to say that the Prime Minister can do with that


kind of advice now from you. Perhaps that is the next trip you should


take to tell him that. The Prime Minister has talked about structural


reforms as part of big plan and monetary policy, structural economic


reforms were part of agenda. Today, we were expecting to see from the


central bank governor a major similar Lues announcement. --


stimulus announcement. That didn't happen. Instead he tweaked policy


slightly. He disappointed the market and investors and in fact he didn't


push interest rates further below zero, as many expected. So there is


a great sense of anxiety about the current economic situation in Japan,


whether any of this is going to help. Thank you. And the markets.


Japan's Nikkei has spent the session swinging


between gains and losses right, after the announcement that the Bank


of Japan maintained its base money target at 80 trillion yen -


as well as the pace of purchases of other assets.


There's a mixed picture opening up across Europe.


Markets here are awaiting the release of the stress


test results on European banks on Friday night.


Michelle Fleury has the details about what's ahead


The US commerce department releases second quarter growth figures. That


could be significant in the election. Both campaigns have talked


about what the two US presidential hopefuls would do for the economy.


This report will offer a clearer picture of the state it is in. The


pace of growth is expected to have picked up with increased consumer


spending. There are still corporate reports for investors to sift


through from oil joints to drug makers and UPS. Their accounts will


not just shed light on how America is doing, but how the global economy


looks. Good on you, Michelle. Sorry. Joining us is David Buik,


Market analyst, Panmure Gordon. You want to talk about UBS. Good


morning, interesting comments, the results were so bad, but very


bearish comments from the Swiss bank, they're worried about the


Swiss franc and about client risk aversion and that sort of thing. But


they're after the Italian bank. What is going on? I think the boss is a


shrewd character. He is basically an investment banker, he has had a


terrible job since they lost 56 billion dollars during that crash


eight years ago. He has been changing the emphasis of the bank


away from general banking to wealth management and it takes time. What


he is still very good at it doing deals. And I don't think necessarily


that UBS will want to invest in the Italian bank. But what I do think is


he probably submitting a good package of who might invest and on


what terms. I think that is exciting. Because this 46 hole in


the banking sector that Italy has got has to be found somewhere. We


will talk about that later when we go through the papers. Shrewd or


crude? I think shrewd. I get called crude. She is shrewd. Shares on that


the Italian bank rose about 6%. Very strongly on the news that we might


get some rescue deal for that bank. Still to come -


we hear from the boss of International Airlines Group,


Willie Walsh, about the impact of Brexit, and what he makes


of drinking in airports. You're with Business


Live from BBC News. Pre-tax profits at Barclays have


tumbled 21% to just a shade over 2 billion in the first half


of the year. And with the increased risk


of recession with lower growth, higher unemployment and falling UK


house prices, the bank is warning that Britain's decision


to quit the European Union could have a detrimental


effect on the Bank. Are the results as bad


as they look? Rob Young is in our


Business Newsroom. Take us through them that. This


essentially is a story of two banks, the core part of Barclays, personal


banking business, that have done all right in the first six months of the


year. But non-core banking, things like French retail banking for


example, bits of the business they are trying to flog off, they have


not done so well. That is why we've seen this fall in pre-tax profits in


the first six months of this year. Barclays has also had to set aside


millions of pounds bra old friend PPI. The scandal continues to hit


the banks. What we did not get from Barclays today is the kind of


language we got from Lloyd's yesterday on the impact of Britain's


decision heard about them cutting jobs, but


they did say Brexit could hit the economy and hit them. Another


company reporting its results today, Foxtons, a South East property


-based company, 42% fall in profits. Is that the Brexit effect? Very much


so. The company has been clear Britain's decision to leave the EU


and the uncertainty caused in the lead up to the referendum has hit


their profits. They said in the first three months of this year,


ahead of a new buy to let stamp duty charge being introduced, property


charges in London were surging. But once that got out of the way, there


was a sharp decline in the number of houses being bought and sold in the


capital. They say that is likely to last for the rest of the year. When


you talk to anybody in the property game or experts, they say the


watchword here is uncertainty, that nobody has a clue what will happen


in the property market in the next few months. To be honest, they never


do! We would be far richer, wouldn't we? We would. The pharmacies in


Sainsbury's supermarkets could soon be wearing the Lloyds logo, not


Lloyds bank, Lloyds pharmacy. You're watching Business


Live - our top story: The UK government has


delayed its decision on the new Hinkley Point


power plant until autumn. This despite French Energy


company EDF approving A quick look at how


markets are faring. European markets, some pretty mixed


earnings out today from lots of the big companies. I want to point you


towards the world's biggest brewer. It said today there were fairly


disappointing volumes in some of its key markets, places like the US.


Places that Mexico has seen strong growth, but in Brazil it is falling


a lot because of a fall in disposable income. That is one of


the big things. It says the SAB-Miller is going to go ahead.


You just had all of that stuff floating around your head. That's


because she likes a drink by the way!


British Airways owner IAG has reported a weaker than expected


operating profit of 555 million euros - or $615 million -


The firm says it is operating in what it has described as


You spoke to IAG CEO Willie Walsh just after the results came out


and asked him about the current headwinds IAG - and the airline


I said, running a European airline at this timeous be like facing a


perfect storm. It is an interesting time and challenging time for us.


One of the biggest impacts, as you will see from the results are


announced today, is the affects of the referendum vote, which has


significantly weakened the pound against the euro and the dollar.


That has had a very noticeable impact on our second-quarter


results. 148 million euros negative, I had never seen that sort of


impact. When you lay on top of that all the issues you mentioned, yes,


it is a challenging environment. But I think we are performing very well,


we have managed these challenges as well as can be expected and are


confident about the performance of the business going forward. Very


briefly, for the uninitiated out there, you talk about the drop in


the pound, it has lost about 10% of its value to the dollar. As you say,


that has an impact because airlines, you have to buy fuel in dollars and


aeroplanes in dollars? That is right and it has an additional impact on


us. Because we report accounts in Europe but we have significant


sterling profits space, when we take that profit in Stirling and


translate into your rose it is at a much lower exchange rate. That has a


reduction in the reported profitability in Europe. We have a


lot of dollar costs, principally fuel costs. When we see a weak pound


and euro against the dollar, those costs increase for us. A big impact


as a result of the weakness of the pound, but also some weakness of the


euro against the dollar. How far and how deep can you keep cost-cutting?


Correct me if I'm wrong, across the group you have a load factor. That


is bottoms on seats, about 72%, and a lot of new big birds coming into


the fleet that need to be filled up. How long can you keep going with the


cost-cutting programmes? It is a 80%, so we have done quite a good


bit of work to improve the number of people flying with us. There is


always opportunity to address the cost base, particularly through new


technology. As we seek technological advances we can see opportunities to


adjust our cost base. That's what we doing. Looking to see if we can


become more efficient, looking for smart things other things are doing,


looking at other industries to see if we can capitalise on some of the


changes they have made. I am confident we can adjust our cost


base. We can't always adjust it as fast as we'd like, so when we get


these short-term shocks it difficult for us to offset the impact on


revenue with a reduction in costs. But over time, we are an industry


that has shown remarkable resilience and a fantastic ability to be able


to adjust. In December last year you were quoted as saying, to the


British government, stop dithering about this decision for a third


runway at London's Heathrow Airport, which is fall to the brim. You said


stop dithering, otherwise I will take British Airways elsewhere. This


has Brexit or possibly the changing government, does that ramp up the


move towards a third runway? I would like to think the government will


address this. Theresa May has demonstrated very clear


determination as Prime Minister. I determination as Prime Minister. I


think we are looking at a different style of government in the UK at the


moment, one that is more decisive and probably one a bit braver than


the previous government. I should say, I didn't say take British are


those elsewhere but that we would look at growing our business


elsewhere. We have the opportunity to grow elsewhere and that is what


we're doing. We are growing Aer Lingus about 10% per annum where


British Airways is growing about 2.5%. We see growth opportunities


out there, but it will principally be outside the UK, unless we see


critical issues of infrastructure is being addressed. There is news


around today in some of the newspaper suggesting UK ministers


are calling for restrictions on the amount of booze being sold in


departure lounge areas, to stop at Al prevent passengers being unruly


in the air. What is your take on that? Would you support it? It is an


issue, we can't deny we have seen issues of unruly passengers


increase, not as much with our airlines as others have reported. I


think it is an issue. It is sensible to look at it, but I think the issue


needs to be examined carefully. The vast majority of 99.9% of passengers


actually enjoy themselves, don't go overboard. This is a very, very


small minority. While it has increased, I think we need to be


sensible about how we deal with these issues. Talking to the big


boss Willie Walsh a little earlier. A creek about... I asked people


about cold feet on something. John Murphy said he spent ?1000 on a tent


for a camping holiday only to give up that idea and book a holiday


home. Chickened out of camping! Terrible expense. Let's talk to


David, back to discuss some of the papers. This story in the Telegraph,


this is about the IMF and a scathing report that came out yesterday,


saying staff were misled by their own board, made a series of real


misjudgements about Greece and became euphoric cheerleaders for the


euro project, when perhaps they could have done with a bit of


distance? I think the remit of the IMF is


ridiculously large. If the IMF help struggling countries, emerging


nations, they do a fabulous job, but when they start thinking they are


the international political springboard, you are bound to get a


trip on a banana skin. This is what I think has happened. The trumpeting


of the euro was ill thought out by a lot of people, because it was or is


going to be a very decent currency within the framework of the European


Union. But as I said before, I went to Tokyo and I said it has two


syllables, otherwise people can't spell it. Of no value whatsoever


over there. Reverting an Greece, that was pretty disgraceful, because


they signed off on that bailout package in 2011 and they were far


from convinced it was really what the doctor ordered and basically we


should have let Greece go and be done with it. And they would now


probably be a very happy nation, with lots of production, in terms of


the value of the drachma. Ten seconds on Amazon, what do you


think? I think he is a top bloke, 15 years of no profit and you are


making $30 billion. Fantastic. I don't know why I am clapping!


Thank you. Plenty more business news available on the website, have a


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