03/10/2016 BBC Business Live


03/10/2016

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This is Business Live from BBC News with Sally Bundock

:00:07.:00:12.

A make or break week for Deutsche Bank -

:00:13.:00:20.

it's boss John Cryan is expected to negotiate deals on job losses

:00:21.:00:23.

in Germany as well as try to negotiate a much smaller legal

:00:24.:00:26.

Live from London, that's our top story on Monday 3 October.

:00:27.:00:40.

Leading German firms have rushed to defend Deutsche Bank

:00:41.:00:42.

amid concerns over the troubled lender's financial health.

:00:43.:00:44.

Executives from Siemens, Daimler, Munich Re and BASF all say

:00:45.:00:47.

The UK's Chancellor, Philip Hammond, is expected to say

:00:48.:01:02.

at the Conservative party conference today that he will manage

:01:03.:01:05.

the economy in a different way to his predecessor,

:01:06.:01:07.

Markets today, a public holiday in Germany. Elsewhere at a slight

:01:08.:01:16.

uptake but sterling has been falling. We will tell you why.

:01:17.:01:22.

We will be getting the inside track on how a Japanese fashion brand is

:01:23.:01:26.

hoping not to get lost in translation, as it makes a move into

:01:27.:01:32.

Europe. And it used to be a British tradition to put the kettle on for a

:01:33.:01:35.

cup of tea during the break of your favourite TV shows, but not any more

:01:36.:01:38.

according to the main energy supplies. People say more people use

:01:39.:01:43.

on demand and catch up services to watch television. So we want to know

:01:44.:01:47.

from you, how much live television do you watch? Maybe you are watching

:01:48.:01:49.

now. Use the hashtag BBC live. A warm welcome to the programme. I

:01:50.:02:05.

hope you have your cup of tea or coffee latte or whatever you are

:02:06.:02:09.

drinking right now. We have a packed programme with plenty to discuss. We

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are starting with the fact it is another pivotal seven days for

:02:14.:02:14.

Deutsche Bank following a week in which shares

:02:15.:02:16.

in the German lender fell Deutsche is in the process

:02:17.:02:19.

of negotiating a 14 billion dollar fine in the US for mis-selling

:02:20.:02:23.

mortgage-backed bonds in the lead up Over the weekend, German business

:02:24.:02:26.

leaders have come out These include the engineering

:02:27.:02:30.

conglomerate Siemens and the parent company of Mercedes-Benz,

:02:31.:02:37.

Daimler. Last week, Deutsche's chief

:02:38.:02:38.

executive John Cryan moved to reassure staff

:02:39.:02:43.

about the bank's financial position, stating that the fall in share price

:02:44.:02:45.

was due to what he called Following reports that Deutsche

:02:46.:02:48.

could reach a far smaller settlement with US authorities,

:02:49.:02:58.

the company's New-York listed shares It's also reported he's poised

:02:59.:03:00.

to reach a deal with labour unions in Germany this week paving the way

:03:01.:03:06.

for job cuts in its home market. He is Senior Analyst,

:03:07.:03:16.

Lafferty Ratings. welcome to the programme, good to

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have you with us. Just before we get into the nuts and bolts, can you

:03:27.:03:29.

remind people around the world watching, Deutsche Bank, a

:03:30.:03:36.

relatively small bank in a global scale, but everyone seems to think

:03:37.:03:39.

it is the most dangerous bank in the world. Can you explain why? I think

:03:40.:03:44.

it is probably to do with its derivatives book. It does have a

:03:45.:03:48.

large amount of derivatives on it. That means their linkage is between

:03:49.:03:54.

lots of different banks, so lots of banks would be counterparties. If

:03:55.:03:58.

something happened to Deutsche there would be a knock-on effect? Yes, it

:03:59.:04:02.

could injure the system. It probably has a bigger systemic risk. On

:04:03.:04:12.

Friday they wrote an e-mail to the staff saying it's speculation. That

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it was rumours, but that is not the case, this is a bank in trouble?

:04:20.:04:26.

Well, the investors have only been willing to pay 30 cents for every

:04:27.:04:30.

euro worth of up value on Deutsche Bank's books. They are certainly

:04:31.:04:34.

worried about something. Whether they are worried about short-term or

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long-term... I'm not saying, my worries are more in the long term,

:04:41.:04:44.

that I worry about Deutsche Bank's strategy and culture and whether it

:04:45.:04:50.

has a business model that can earn decent returns over the long-term.

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Many share your worries about the outlook of Deutscher. But the recent

:04:56.:05:03.

appointment of the boss at the bank... Do you think he will pull

:05:04.:05:07.

off the renegotiated deal with the Department of Justice? We're looking

:05:08.:05:10.

at a five point for your rope bill instead of a 14 year and -- your row

:05:11.:05:19.

bill. I don't know. A very political times this, isn't it? Yes. It does

:05:20.:05:25.

look good he will get that figure down significantly from the original

:05:26.:05:29.

14 billion or something. That is much more manageable for Deutsche

:05:30.:05:34.

Bank's books, going forward. Deutsche is still a bank... You are

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telling us something very interesting before we came an hour.

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You said your research shows that smaller banks in Europe, around the

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world, operate much better than the big banks because Deutsche Bank is

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still, I would say, one of those banks that is too big to fail. They

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can't let this bank fail? No, it's not going to fail, but in the long

:05:58.:06:04.

term I would... We are seeing some excellence from smaller banks and

:06:05.:06:09.

banks that are decentralised, like the bank in Sweden. It operates on a

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decentralised basis, so it's like a series of smaller banks. There is

:06:15.:06:17.

some real excellence there. In the long term that is a threat to

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Deutsche because they are outperforming Deutsche. They do

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outperform the bigger banks. We appreciate your time, thank you for

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joining us. We will keep an eye on that and any

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news coming out of Deutsche about job losses or any deal with the

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United States and we will fill you in.

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The electric carmaker Tesla, says deliveries more than doubled

:06:46.:06:48.

in the three months to October compared to a year ago.

:06:49.:06:51.

Tesla is yet to make a profit and is facing criticism

:06:52.:06:53.

after its autopilot system was linked to several accidents.

:06:54.:06:57.

The autopilot feature makes the vehicles automatically change

:06:58.:06:59.

lanes and react to traffic, but it is not a fully-fledged

:07:00.:07:02.

India has ratified the Paris Climate Change Agreement by committing

:07:03.:07:07.

to produce at least 40% of its electricity from non-fossil

:07:08.:07:09.

Last December, countries agreed to cut emissions in a bid to keep

:07:10.:07:22.

the global rise in temperatures below two degrees Celcius.

:07:23.:07:24.

India is one of the biggest emitters of greenhouse gasses in the world.

:07:25.:07:33.

I got stuck with the tablet today. Keep taking the pills, Aaron!

:07:34.:07:39.

What pills? Tablets!

:07:40.:07:45.

That went straight over my head. IMG, job cuts. We were talking about

:07:46.:07:51.

Deutsche Bank... There may be 1000 jobs going at

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Deutsche in its IT section. Up to 9000 in total at Deutsche That is

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what the speculation is. IMG are talking about 1800. This is all part

:08:06.:08:08.

of the plan to save about 900 million euros by 2021.

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So lots of jobs going across Europe, I would say. Let's talk about what's

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been going on on financial markets around the world.

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First, Karishma Vaswani is in Singapore and Sterling

:08:27.:08:31.

is down in Asian trading after Prime Minister Theresa May set

:08:32.:08:34.

a date for starting the formal Brexit negotiation process.

:08:35.:08:36.

This is in reaction to what has been happening in Birmingham, at the Tory

:08:37.:08:42.

conference. Investors not liking it, the strength of the pound? That is

:08:43.:08:47.

absolutely right. The British pound has been falling in Asian trade down

:08:48.:08:51.

about half a percent after those comments from the British Prime

:08:52.:08:56.

Minister that the timeline for the process of the separation from the

:08:57.:09:00.

European Union. You would think given that there is more

:09:01.:09:04.

transparency, a bit more detail about when this is supposed to

:09:05.:09:08.

happen, that what Asian investors have been clamouring for, more

:09:09.:09:13.

details, more of a timeline as to when the timeline would happen that

:09:14.:09:17.

they would be a bit more optimism in Asian markets today but that hasn't

:09:18.:09:20.

happened. Even though the falls in the pound were not as dramatic as

:09:21.:09:24.

what we saw back in June, many in Asia are telling me that's because

:09:25.:09:28.

there is still a lack of confidence in how the UK is going to handle

:09:29.:09:33.

this transition, in particular access to the single market. That is

:09:34.:09:36.

key for many Asian businesses who are looking to continue doing

:09:37.:09:41.

business in the West. OK, thank you so much. Good to see you.

:09:42.:09:48.

We can see the markets have. In Hong Kong the Hang Seng was pushed higher

:09:49.:09:57.

by gambling figures, lifting casino operators. In Japan talking about

:09:58.:10:02.

that confidence survey and not moving, stagnant among the big

:10:03.:10:07.

manufacturers in Japan. China manufacturing data out, slightly

:10:08.:10:10.

better than expected in September. Let's have a look at markets in

:10:11.:10:14.

Europe trending right now. All of them apart from Germany, who are

:10:15.:10:18.

shut for a public holiday today. We no movement on Deutsche shares, we

:10:19.:10:24.

will see how that affects estates later. France up a tiny better.

:10:25.:10:28.

We'll talk more about Europe in a moment or two.

:10:29.:10:30.

And Samira Hussain has the details about what's ahead

:10:31.:10:32.

It is a new week and a busy one. Auto-makers will be reporting sales

:10:33.:10:40.

numbers for the month of September. Stay tuned for details on how well

:10:41.:10:45.

car-makers have fared in the world's largest economy. In the US election

:10:46.:10:53.

news, vice presidential nominee Mr p and Tim Kane well hold their only

:10:54.:10:57.

debate in the state of Virginia. The International monetary fund will be

:10:58.:11:02.

holding their annual meetings in Washington this week. And at the end

:11:03.:11:08.

of the week, we get a look at the health of the labour market when the

:11:09.:11:12.

latest jobs report is released. US jobs, always important!

:11:13.:11:14.

Jeremy Stretch, head of currency strategy for CIBC World Markets.

:11:15.:11:20.

Let's start with this. Let's start with the pound react reacting in

:11:21.:11:30.

Asia to what's happening in Birmingham today. Philip Hammond,

:11:31.:11:33.

the UK's new wish Chancellor will speak. There were comments over the

:11:34.:11:40.

weekend about how he is going to present a very different style to

:11:41.:11:46.

George Osborne. What do you think that will do... Will that keep the

:11:47.:11:55.

pound as it is all adds strength? There is some uncertainty regarding

:11:56.:11:58.

the fiscal strategy the government. The main plank of the Osborne

:11:59.:12:04.

Chancery has been removed. Hammond has been saying on BBC radio this

:12:05.:12:08.

morning about the changing environment that the UK finds itself

:12:09.:12:13.

in. That is the reason, justification, to change fiscal

:12:14.:12:16.

strategy. Markets will be watching for the nuances today and also into

:12:17.:12:21.

that Autumn Statement on November 23, to see if there will be any

:12:22.:12:25.

fiscal spending plans that will be brought forward to try and provide a

:12:26.:12:30.

benefit to the UK economy into 2017, because we are continuing to see

:12:31.:12:33.

these headwinds about business investment, which will potentially

:12:34.:12:37.

mitigate growth targets for next year. The government has to

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potentially step in, to try and limit the damage. It's interesting,

:12:43.:12:46.

with sterling. We heard about the day in Asia today. Sterling is going

:12:47.:12:53.

to be so sensitive until the summer of 2019, surely? Yes, sterling will

:12:54.:12:59.

be inherently sensitive. The talk over the weekend about the Prime

:13:00.:13:04.

Minister talking a about this reform in 2017, it sets up a difficulty in

:13:05.:13:08.

parliament in terms of pushing through that. That is the sort of

:13:09.:13:11.

environment that doesn't play well with International investors. They

:13:12.:13:17.

don't like uncertainty, which will be amplified by political skirmishes

:13:18.:13:21.

in the House of Commons and House of Lords. And in Brussels. Yes, indeed.

:13:22.:13:25.

There will be plenty of opportunity as we move forward to the triggering

:13:26.:13:30.

of Article 50 for investors to be scared away and that sterling

:13:31.:13:35.

rallies will be short lived. That will be bad news for most people

:13:36.:13:41.

accept exporters. Yes. There is always a small silver lining.

:13:42.:13:45.

Exporters will get a benefit, but if they are importing in order to make

:13:46.:13:51.

the export there will be quid pro quo. You will take this through some

:13:52.:13:52.

of shortly. Until then, thank you. Still to come, how

:13:53.:13:56.

to move your business We get the inside track

:13:57.:13:58.

on a Japanese fashion brand This is business live on BBC News.

:13:59.:14:08.

First, let's talk about the Conservative Party conference

:14:09.:14:10.

underway in Birmingham. The Chancellor Philip Hammond is the man

:14:11.:14:16.

taking all the attention today, promising a new plan for the new

:14:17.:14:19.

circumstances Britain is facing after the Brexit vote.

:14:20.:14:20.

Figures from the Office for National Statistics last week

:14:21.:14:22.

showed the services sector grew faster than expected.

:14:23.:14:24.

So was Phillip Hammond, a key figure of the remain campaign,

:14:25.:14:28.

wrong to warn of financial cases if we voted to leave?

:14:29.:14:31.

He was speaking to the BBC this morning.

:14:32.:14:38.

First of all I am delighted the economy has proved as resilient as

:14:39.:14:44.

it has. But look, we are going through a process, we haven't served

:14:45.:14:49.

the article 15 notice yet. We must expect some turbulence as they go

:14:50.:14:53.

through this negotiating process and there will be a period of a couple

:14:54.:14:57.

of years, or perhaps even longer, when businesses are uncertain about

:14:58.:15:01.

the final state of our relationship with the European Union. During that

:15:02.:15:06.

period we need to support the economy, to make sure consumer

:15:07.:15:09.

confidence remains, to make sure business confidence is stable, so

:15:10.:15:14.

that we get the investment that keeps the jobs, that keeps Britain

:15:15.:15:20.

growing. That's my challenge as we go through this period.

:15:21.:15:23.

Hammond is also expected to announce a boost for ?5 billion

:15:24.:15:25.

house-building stimulus package today funded through borrowing.

:15:26.:15:30.

Former Chancellor, George Osbourne, had promised a budget

:15:31.:15:32.

It was the right approach for that time. But on 23rd June, the decision

:15:33.:15:57.

the British people made changed our economic circumstances. We're going

:15:58.:16:00.

to go through a period as I have said when there will be some

:16:01.:16:03.

turbulence and uncertainty in the economy and it is right that the

:16:04.:16:06.

Government has the flexibility to be able to support the economy, to

:16:07.:16:11.

support jobs, to support economic growth during that period. And that

:16:12.:16:16.

means that we have to reset our expectation about when we can reach

:16:17.:16:20.

that point of sustainable public finances. George Osborne had set the

:16:21.:16:25.

date at the end of this Parliament, 2019/2020, what we have said is that

:16:26.:16:31.

we will not aim for a surplus in 2019/2020, but that doesn't mean

:16:32.:16:34.

that we are abandoning fiscal discipline.

:16:35.:16:42.

Philip Hammond there. More on our website.

:16:43.:16:51.

Leading German firms have rushed to defend Deutsche Bank

:16:52.:16:55.

amid concerns over the troubled lender's financial health.

:16:56.:16:57.

Executives from Siemens, Daimler, Munich Re and BASF have

:16:58.:16:59.

The Goldman Sachs is closed. It is a public holiday.

:17:00.:17:16.

-- DAX. And now let's get the inside track

:17:17.:17:24.

on the Japanese fashion brand Kemi. It is a well-known brand in Japan

:17:25.:17:27.

which is now hoping to become The brand was founded by Junko Kemi,

:17:28.:17:33.

a businesswoman who struggled to find clothes that worked

:17:34.:17:38.

with her busy professional life In a moment we'll talk

:17:39.:17:40.

to her about her journey from the rather restrained

:17:41.:17:45.

Japanese corporate world Kemi now has five shops in Japan

:17:46.:17:48.

and a thriving online business too. The business employs

:17:49.:17:56.

around 30 people. Kemi selected London as their first

:17:57.:17:59.

international territory due The company's international

:18:00.:18:05.

expansion plans include other financial hubs like Singapore,

:18:06.:18:08.

Frankfurt and New York. Junko Kemi, founder and lead

:18:09.:18:15.

designer of Kemi joins me now. Welcome. Good morning. Welcome to

:18:16.:18:29.

the programme. Can I start? I'm interested. You came from a very,

:18:30.:18:35.

the Japanese corporate world, right and let's be frank, that's a very

:18:36.:18:41.

serious, rigid, corporate world. And it is male dominated. Yes, male

:18:42.:18:45.

dominated and you have gone from that into this free flowing fashion

:18:46.:18:51.

industry. How did you make that transfer? I was born in Japan and my

:18:52.:19:03.

grandmother owned a shop. I grew up seeing her business and she was my

:19:04.:19:13.

role model. She enjoyed her role and the responsibility and she made her

:19:14.:19:21.

customers so happy. Ever since I was 16 years old, I dreamt that I would

:19:22.:19:29.

own my own company. After that I joined a big management consultancy,

:19:30.:19:33.

a corporate strategy company as a management consultant and after

:19:34.:19:39.

that, I started my own marketing companies and for three years I

:19:40.:19:44.

worked so hard as a consultant and after that when Japan suffered a big

:19:45.:19:53.

earthquake in 2011, I thought that life is short and I want to support

:19:54.:19:58.

the business women like my grandmother. So I started Kemi. How

:19:59.:20:06.

easy was it to start? You're very established if Japan. You have got

:20:07.:20:10.

high-profile clients wearing your clothes, some are on television,

:20:11.:20:13.

some are celebrities. How did you get to that point? So basically, we

:20:14.:20:24.

are a very small company. So we are using social media and the customers

:20:25.:20:43.

friends and friends of friends saw a TV anchor. And tell us about your

:20:44.:20:48.

dresses. They are not cheap in the UK. Can I hold one up. The point is

:20:49.:20:57.

they're hand-made in Japan. This is silk, isn't it? This is silk. They

:20:58.:21:07.

are washable. So I can put this in a washing machine? Yes, everything,

:21:08.:21:11.

the jacket and the suit and these dresses, we can wash. They would

:21:12.:21:16.

look good on you Aaron. I'm thinking Saturday night! I washed over ten

:21:17.:21:24.

times. Wow. That's amazing. London, I mean, was that an easy decision to

:21:25.:21:28.

decide London is going to be the first? Yeah. Yeah. Yeah. I love

:21:29.:21:38.

London and the multi-cultural and the professional services are big

:21:39.:21:42.

here. But how do you plan to stand out? It is such a competitive market

:21:43.:21:45.

in London? There are so many places to go and buy things like this. As

:21:46.:21:54.

we did already in Japan, so we focus on professional busy women and they

:21:55.:22:01.

are using an online shop first and we are planning to have a physical

:22:02.:22:07.

shop in the City area of London and in Canary Wharf in one year. Canary

:22:08.:22:14.

Wharf watch out! Thank you very much for joining us. Good luck with your

:22:15.:22:26.

launch here in London. Shthis is how to stay in touch. The

:22:27.:22:31.

Business Live page is where you can stay ahead with the day's breaking

:22:32.:22:34.

business news. We will keep you up-to-date with the latest details

:22:35.:22:38.

with insight and analysis from the BBC's team of editors right around

:22:39.:22:41.

the world and we want to hear from you too. Get involved on the BBC

:22:42.:22:48.

Business Live web page at: On Twitter, we're at:

:22:49.:22:53.

And you can find us on Facebook at. . Business Live on TV and online

:22:54.:23:00.

whenever you need to know. So you have got no excuses.

:23:01.:23:04.

As you can see, Jeremy is back. On demand TV switches off, National

:23:05.:23:16.

Grid power strike for a cuppa. This is National Grid where it would see

:23:17.:23:20.

a massive surge when the kettle goes on in the old days, the commercial

:23:21.:23:25.

break. It is the old days. The idea that we all watch a programme

:23:26.:23:28.

collectively and we get to the end of the programme or an ad break and

:23:29.:23:32.

everybody would make a cup of tea ready for the next part. Clearly,

:23:33.:23:35.

there are more and more people who watch on demand. I watch virtually

:23:36.:23:40.

no TV live. I watch all of it on demand or recorded. These issues and

:23:41.:23:44.

it is interesting for advertisers as well, of course, because I don't

:23:45.:23:48.

watch any advertising breaks. We just whiz through it. One of the

:23:49.:23:53.

structural changes. It is the main screen or the second screen if you

:23:54.:23:58.

will second screen being the tablet. One viewer says, "I watch live TV as

:23:59.:24:04.

long as time is available." Does he make the tea? This viewer says I

:24:05.:24:12.

only watch Business Live. The list goes on. Due it busy schedule. News

:24:13.:24:18.

bulletins, if you want to watch those live, but again, you can watch

:24:19.:24:21.

up with news on the internet or with other media sources. There is the

:24:22.:24:26.

pause button. You don't have to wait for the commercials. Right. Other

:24:27.:24:36.

stories... The Chinese. UK shops looking to Chinese tourists for a

:24:37.:24:42.

golden week. There is a flip side about the Brexit story because we

:24:43.:24:47.

find as consumers if we're going abroad the pound goes not as far as

:24:48.:24:52.

it did pre-Brexit. But for those visitors coming to the UK, whose

:24:53.:24:56.

currencies have appreciated they can get what they perceive to be bar

:24:57.:25:00.

gains. In the context of Chinese shoppers who are keen spenders it

:25:01.:25:04.

maybe the case that as we see another influx of Chinese visitors

:25:05.:25:08.

during the golden week period that could be good news for retailers.

:25:09.:25:11.

Have we got any evidence that this is happening or is this the hope

:25:12.:25:15.

from the point of view from retailers? There is a lot of

:25:16.:25:19.

anecdotal and the foot fall data is variable on occasion. So I think

:25:20.:25:23.

what we're seeing is domestic consumers are being more reticent in

:25:24.:25:27.

terms of spending and we are hoping that we're going to get the foreign

:25:28.:25:29.

visitors who are going to fill the gap, but you have to debate where

:25:30.:25:34.

the foreign visitors come to. In London, we will see evidence that

:25:35.:25:38.

through their foot fall in the high street. In regional centres, perhaps

:25:39.:25:45.

less so. We keep saying it is the flip side, but even property is 10%,

:25:46.:25:50.

15% cheaper. There is a competitive advantage if you're prepared to take

:25:51.:25:53.

the risks which maybe associated with the next two or three years.

:25:54.:25:56.

Jeremy, thank you very much. It is a long haul flight. That's for

:25:57.:25:59.

sure. That's Business Live for today. We will see you again

:26:00.:26:00.

tomorrow. Bye-bye. Hello there. Good morning. We saw

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some big improvements in the weather over the weekend and it is a very

:26:12.:26:16.

quiet week ahead as well. This was the Weather

:26:17.:26:17.

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