02/08/2016 BBC Business Live


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This is Business Live from BBC News with Ben Thompson


You're out - South Korea orders Volkswagen to sling its hook


as Asia's fourth largest economy tells the German car-maker


it can no longer sell its products in the country.


Live from London, that's our top story on Tuesday the 2nd of August.


South Korea has suspended sales of eighty Volkswagen vehicle models


and fined it millions of dollars, alleging that the German company


fabricated documents on emissions and noise levels.


Also in the programme - China's state-run news agency says


more delays over the Hinkley Point nuclear power station is harming


Could it lead to China pulling the plug on tens of billions


In the first half-hour, the markets look like this.


And after yesterday's poor manufacturing numbers - today's


And they're not likely to be too hot, either.


That is following what we heard yesterday from manufacturing.


Hotels, motels and hostels are hitting back -


trying to lure the young lucrative millennial generation away


We'll be talking to one company about how they're doing it.


And as a new report suggests self-driving cars could give a boost


to the bar and restaurant industry, we want to know,


would having your own self-driving car encourage you to drink


I think it is just working here that encourages us to drink more!


Nonetheless, let us know at the hashtag #BBCBizLive.


Following Volkswagen's involvement in the diesel emissions scandal,


the South Korean government has taken the unprecedented step


of suspending sales of certain models of VW cars.


The country's Environment Ministry has accused the business of forging


documents on emissions and noise-level tests.


The move will affect 80 models in total -


Volkswagen branded cars, but Audis and Bentleys produced


The suspension could prove to be a major setback in one of VW's


Group sales in South Korea have increased three-fold over the past


five years, and although the country still only forms a small percentage


of total Volkswagen sales, the suspension poses a threat


to the brand's reputation in neighbouring China.


Stephen, great to see you, as always. Simple question, why now,


why this action by the South Korean Government now? Because the wheels


of the law grind exceedingly slow. Basically, this all goes back to


last autumn when the faking of results by Volkswagen emerged. There


have been settlements in the US. South Korea got the legal process in


place with the investigation of whether import documents, for


example, were accurate. It has proceeded to finger the collars of


executives for Volkswagen in South Korea. It has been very vigorous.


It's now gets to the stage where it feels as if it has had hearings


about the whole event and we have not had satisfactorily answers,


therefore we are suspending these permits. You might say, sceptics


might say that South Korea has got big car companies of its own, the


vigour of its response is because of that. Obviously the authorities are


not saying that. People in Germany might think that. What the


authorities believe is that it is a very serious matter. Volkswagen was


caught at it and it should pay a penalty. What do we know about the


timing of how long this ban or suspension will go one fall? It is


indeterminate. It will depend on when Volkswagen can assure the


authorities that the new cars being sold meet the required standard. In


terms of that there are disputes with people who bought the car, as


there are a new rep and the US, even more particularly. -- as there are


in Europe and the US. We simply do not know, that is the tantalising


part. We will leave it there, but thank you for joining us.


China says it will not tolerate unwanted accusations


about its investments in the UK after the delay of the Hinkley


Those comments came from the country's state-run news


agency which said it could not understand the suspicious approach


It follows reports suggesting the UK Prime Minister stepped in to review


the deal over concerns for national security given China's


Amit Pau is with us, he's a managing director


at the investment firm Ariadne Capital.


I could not pronounce that, I should have looked at that first! You kind


of go, oh, gee, with Brexit around the corner, I just wonder if the


British Government needs to tread very carefully with some of their


words. When Britain is out of the European Union, surely to goodness


Britain will be looking at China going, can you help us, we want to


trade with you. You don't want to do the dirty on China now? The decision


on Hinkley is really strategic, so it needs to be considered. But


changing mind at the last minute has huge ramifications on a global


basis. Focusing on China, the golden era of China/ UK relationships is in


question. The rhetoric that the UK Government, Mr Timothy, Prime


Minister May's Senior adviser, has not been helping. Investment into UK


from China has increased tenfold in the last five years. By 2020, the


Chinese plans to invest ?101 billion the UK economy. Hinkley alone would


have equated 25,000 jobs. Can we afford to make such decisions? Also


the way it has been communicated post-Brexit, I would say no. There


is no debate about why the investment is needed, I suppose the


question is whether it is welcome. Some would say that Theresa May was


doing the right thing, the British prime ministers says, this deal was


done under the previous leadership, I will simply look down, look at the


fine detail and come up with a decision later in the year. You


would expect that? Firstly, this is such an important decision it needs


to be done in a considered manner, so the new


Prime Minister has the right to review it, no doubt. But in her last


role as Home Secretary, she raised questions on national security, it


is really questionable. If it is correct, when you want to send a


message to the global economy, there is language in some of the rhetoric


shared by the UK Government. Thank you very much for speaking to us. We


appreciate your time. In other news, the Reserve Bank


of Australia has cut interest rates Weak wages and a strong currency


are causing inflation to fall The central bank hopes the move will


boost the country's jobs market. We will talk about this story more


later. Here he is. Japan's Prime Minister,


Shinzo Abe, is expected to announce further details


of the government's It's thought a significant amount


will be set aside to build long-term We are talking about 270 billion


dollars. It will be the biggest stimulus since the financial crisis


of 2009. The Japanese government said in the last 15 or 20 minutes


that they hope to boost gross domestic product by about 1.3%. Will


it work? We will find out. US electric carmaker Tesla says it's


reached a deal to buy solar panel The deal, announced in June,


will expand Tesla's Tesla chief executive Elon Musk


already owns 22% of SolarCity SolarCity's chief executive


and Mr Musk are cousins. Keeping it in the family!


Let's look at the life page. You have to be related to do business


these days, clearly. I just hope they don't fall out.


Lots of families do! Love Tanzer, the German national


carrier, its boss says they will pay out, pays dividends. -- Lufthansa,


the German national carrier. Like many legacy European carriers,


Lufthansa are struggling with the mighty Gulf state carriers, like


Emirates, Qatar and Etihad. Lufthansa has had a raft, if you


will, of strike action for the past 18 months. It keeps rumbling on.


Annual profits will be below the 1.8 billion euros of last year. Weak


trends, the terror attacks across Europe are not helping many of those


airlines. Good stuff. Let's show you the


numbers. Japan's Nikkei down for the first


time in three days thanks largely to falling oil prices and a firmer


yen that dented investor confidence. Banking shares saw a bit of profit


taking after two days This is how Europe


looks right now... Ahead of construction data -


likely to follow the lead of that weak manufacturing data


yesterday across Europe. More on that in a moment,


but first Samira has the details We will also talk about the Japanese


stimulus later. Samir request an 2015 was a record


year for car sales, so analysts will be watching closely when analysts


report on vehicle sales for the month of July. Annual sales are on a


six-year run of games. The longest ever. Will the numbers show


continued strength, or will we start to see a plateau? The commerce


Department will release personal spending month -- numbers for the


month of June. If there is an increase, as economists expect, that


will provide a bigger push for the economy as incomes continue to grow.


Finally, some big companies are reporting earnings on Tuesday.


Procter and Gamble and Pfizer, both part of the Dow Jones industrial


average. They are also reporting -- the American International group,


AIG, is also reporting. Joining us is Jane Foley, senior


currency strategist at Rabobank. She is a familiar face. Welcome to


the programme, as always. Let's start with Japan. Another kitchen


sink, basically? The Prime Minister has found another kitchen sink to


the tune of $270 billion, I am not even a Japanese expert but it


frustrates me to no end. 25 years, this economy has been in the


doldrums, 25 years. Why are they so reluctant to do what everybody says


they need to, structural economic reform? This is a sense of deja vu.


This is a rant about the 26th fiscal stimulus and the early 1990s. Every


year we see this. Every year the economists say we will get some


spending, that will raise GDP by some degree, can it be sustained


without the structural reform. Structural reform is about including


more women in the workforce in Japan, that is really important.


They have the worst demographics in the developed world, are


significantly ageing population, a cultural resistance to import


workers. The population is shrinking, the working population is


supporting more and more pensioners, so they need those women. There is a


cultural resistance to doing that. Shinzo Abe, the Prime Minister, has


said he is making steps towards that, but it appears slow. They need


to raise productivity. That is output per head. That is something


which they don't seem to be doing, certainly not at the pace that Abe


be promised when he came into power. As a currency expert, is one of the


problems faced by Japan, maybe it is out of hand, its currency is seen as


a safe haven, the yen. So when it gets a bit Hegga be around the


world, investors take money out of stocks, they will buy began, so they


think it is safe, that pushes the value of the yen up, hitting


Japanese companies who want to sell things abroad? There is a strong


correlation between the McKay and the value of the yen. One of the


important things to years that the Japanese yen is currently not overly


expensive. It is undervalued against many measures. One problem for them


is that whilst we are focusing on the value of the yen versus the US


dollar, their biggest trading partner is China. Recently we had


seen a weakening in the Chinese currency, which is not very good


Japanese exporters. You will take us through the papers later, some great


paper stories. Speak to you soon. A line of copy


from Volkswagen, related to events in the United States this time. You


know that the omission scandal is rumbling on. They have paid money to


buy back a number of cars in the United States and rectify the


problem. This is a class action lawsuit are taken out against


Volkswagen, they are filing for that to be dismissed. Those bringing the


case accuse the chief executive of Volkswagen and the current brand


chief, they were alleged to be directly involved in the preparation


of allegedly misleading statements. DW says that has no merit and they


are calling on that to be dismissed. Nonetheless, Volkswagen is accused


of deception for failing to inform investors about cheating those


emissions tests. Traditional hotels, motels


and hostels are hitting back - trying to lure the young


lucrative travellers away We'll be talking to one company


about how they're doing it. You're with Business Live


from BBC News. In the UK, home ownership


has fallen to its lowest level since the 1980's,


according to new figures. Major English cities -


particularly Manchester - have seen the sharpest falls


since reaching a peak Our Business Correspondent,


Victoria Fritz, reports. After booming in the 1980s,


home ownership has But now new analysis shows


homeownership in England The Resolution Foundation says


the number of people who own their home has dropped


to 64%, down 7% from The biggest falls have been


in Greater Manchester and outer London, although the West Midlands


and West Yorkshire have also Northern Ireland has seen


the most dramatic switch The think-tank which carried out


this analysis argues that the housing crisis is no longer


confined to London. They also warn it's threatening


to reduce living standards In response, the Government says


policies like Right to Buy and starter homes mean that more


than a decade-long decline in home The Prime Minister Theresa May has


acknowledged there's more to do, although some experts argue


that the move towards renting could also be due to


changing lifestyles The pies and pasties have helped to


deliver profits. At Greggs, they have risen by 7%. They did not


comment on the decision to leave the European Union but said they were


alert to any change in consumer demand which may result from the


current economic uncertainty. There are demands for the PPI


deadline to be enforced. It has been proposed that June 2019 be the final


date for claims to be made. They plan to hold an awareness campaign


to inform the public the deadline. A quick look on the story about Byron,


the burger chain put up details on the live change. -- the burger


chain. South Korea has suspended sales on


the EW 's. Volkswagen has sold more than 80,000 Volkswagen. It also


includes Audi and Bentley. This is on the basis of false information.


Hotels, motels and hostels are hitting back -


trying to win back the lucrative younger generation away from online


Young travellers are an increasingly important market,


with the World Tourism Organisation suggesting they spend more


And it is a market which is growing quickly.


By 2020, it's thought those young people, the so-called "millennials",


One firm trying to recapture that market is Generator Hostels -


which has 14 properties across Europe - and also has plans


With us is Fredrik Korallus, chief executive of Generator Hostels.


Great to have you in the studio. Great to be here. Can we start with


something we have been talking about the last week or so. We had numbers


from airlines and we talked about European tourism. It has taken a bit


of a kit with terror attacks and attempted coups, Brexit. -- a hit.


If an airline sees a downturn in one area, it can move its planes to an


area that is better. You have bricks and mortar, you cannot move those.


That is true. Our audience, you spoke about millennial is, they are


travelling fast and furious. We are having the busiest summer on record.


That said, we are very vigilant to what may happen. Right now it is


optimistic. What do you do differently? We talk about the rise


in websites like a B and people sorting out their own accommodation.


70% of our room stock is hostel stock. That means we can offer


affordable accommodation. The product is highly designed and gives


a lifestyle experience. How is that different to AirBNB. That can be in


the centre of a city" cheap. We see it as complimentary. AirBNB offers


an individualistic experience. You are in the sharing economy and


experiencing social engagement. Sharing everything nowadays, aren't


they? Cars, all those sorts of things. It has been a long time


since I've stayed in a youth hostel but I did my fair share, backpacking


around the world. I am wondering how they vary compared from the late 80s


to now. I am assuming Wi-Fi technology in the kind of thing. I


would say the traditional hostel you experienced is still there. At


Generator we bring a lifestyle experience which is designed led to


this traveller. We offer premium products. We sell bed board between


25 and 35 euros. -- we sell bed for between. There is beverage, music,


nightclubs and entertainment. All this brings everyone together in the


best experience. You have been known to turn hotels around. What do you


focus on? What do people want? Not just food and location, it must be


power sockets by the bed and goodbye five. I would say relevance. Wi-Fi,


efficiency, cleanliness and security does that is fundamental. They are


looking for representation of what is local. That is what Generator is


about. There is nothing standardised. The local culture, the


local arts, the local fashion. One thing we do not have is a lot of


time. Good luck with everything. Nice to meet you. A quick reminder


of how you can get in touch on the programme.


Jane is back with us to talk us through the papers stories.


Restaurants, alcohol producers cashing in on self driving cars.


Jerry says, I am sure that self driving cars require a sober,


accredited driver to take over if difficulties arise. Who knows? In 20


years' time, what research is saying if every drinker had one more drink


a month, that would expand the beverages market by $31 billion.


That is a huge increase. There are expansionary prospects will produce


in that environment. That is the big issue. Things like the smoking ban


really affected clubs and pubs and nightclubs. There was a time not


long ago when UK pubs are closing down at the rate of one a week. Much


of that was associated with the smoking ban. There were cultural


changes with people eating out or drinking in pubs. Against those


headwinds, this could be something to allow a new channel about to open


up. Would it work for you? If you knew you had a driverless car at the


front, would you like another drink? If I trusted the car, I might do.


That is the problem. Only joking. Short and sweet. Sorry about that.


We will be back the same time and same place tomorrow. Goodbye.


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