07/10/2016 BBC Business Live


07/10/2016

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airlines between 1.5 billion and 6.2 billion in 2025 each and every year.

:00:00.:00:07.

This deal is voluntary. It is very important to remember. It does

:00:08.:00:10.

become compulsory not until 2027, with some countries with the airline

:00:11.:00:13.

sectors. Let's stay with this. Femke de Jong, the EU policy

:00:14.:00:18.

Director at Carbon Market Watch, Great to have you with us. This has

:00:19.:00:30.

been a long time coming, right? So many will say. When you look at the

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grand scheme of it all, the bigger picture, 2%, that is what airlines

:00:36.:00:41.

contribute, 2% the man-made CO2 emissions, that doesn't sound like a

:00:42.:00:46.

lot, does it? Well, it depends on how you look at it. At this moment,

:00:47.:00:51.

the aviation sector is one of the top ten global carbon polluters,

:00:52.:00:59.

emitting more CO2 per year than the 129 lowest emitting countries. Its

:01:00.:01:03.

emissions are set to quadruple in the coming decades, so it is a

:01:04.:01:06.

problem that needs to be tackled, and we need... OK, great, but this

:01:07.:01:16.

deal, is it the right deal, it is interesting. At the moment it is

:01:17.:01:21.

only voluntary up until 2027, then it becomes mandatory. But correct me

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if I'm wrong, it says it becomes mandatory for the countries with the

:01:26.:01:29.

big airline sectors. What does that mean, a country with a big airline

:01:30.:01:35.

sector? Well, it means that from the year 2021, up to over 60 countries

:01:36.:01:45.

have committed to take part in this deal to curb aviation's climate

:01:46.:01:50.

impact. This includes countries like the UK, the United States, but also

:01:51.:01:56.

China, for example. What it does not do is represent a global scheme. So

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it started off carbon neutral for 2020, it will not be reached because

:02:03.:02:07.

it only covers 80% of aviation's emissions growth. What about

:02:08.:02:11.

shipping? The shipping industry. Is there a similar deal in place? I

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mean, talks about the shipping industry, all of those cargo ships

:02:17.:02:22.

and carriers an uproarious, apparently, for emissions and

:02:23.:02:26.

polluting -- note aureus. It is true that the emissions industry is one

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of the sectors which have not been faced with binding carbon cuts, and

:02:32.:02:37.

the same applies indeed to aviation. So far, aviation's emissions have

:02:38.:02:40.

not been tackled by any global deal. The aviation sector operates in a

:02:41.:02:47.

world where they do not pay fuel taxes, it is good that we start

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addressing this problem and the deal yesterday is just the first step in

:02:52.:02:55.

effect in order for us to limit global warming to levels that are

:02:56.:03:00.

safe much more needs to be done. Thank you very much, we appreciate

:03:01.:03:04.

your time, thank you for joining us from Brussels. Good to see that the

:03:05.:03:09.

airline industry has got together and done something, maybe the

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shipping industry needs to do the same, that's all I'm saying.

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Voluntary until 2027, that's all I'm saying.

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Shortly after currency markets opened in Asia on Friday,

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the pound lost as much as 6.1% in two minutes.

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It was the currency's lowest level since May 1985,

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and the biggest intraday drop against the dollar since its plunge

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in the wake of the UK's vote to leave the EU.

:03:28.:03:30.

They are talking about a flash crash. What happened over there

:03:31.:03:45.

during this trading session? Was it big fat thumbs? I'm not sure. That

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was the initial guess among the traders here, and that is back

:03:52.:03:56.

around 7am local time, just after midnight local time, the Stirling

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started the plunge, they wondered if it was just a human error, also

:04:00.:04:03.

known as a fat finger, because there was no obvious reason it could have

:04:04.:04:07.

triggered a sell-off. But then it seemed like the plunge started

:04:08.:04:12.

shortly after the Financial Times published an online article about

:04:13.:04:15.

the French president talking about tough negotiations ahead of Brexit.

:04:16.:04:19.

What happened was, a lot of banks have their computers set up to react

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to certain keywords, and it seems like this FT article has triggered a

:04:25.:04:30.

sell-off. It came as a huge surprise to many traders here in Asia. Thank

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you, we appreciate the update, we will talk to you soon. We are asking

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her if she can talk to the traders and get the pound up, I want it at a

:04:45.:04:49.

record high! We will have more on that story a little later on with

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our guest. Samsung Electronics says its third

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quarter profits will be better than expected,

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despite the damaging recall of its flagship Note 7 smartphones

:04:55.:05:01.

over exploding batteries. Samsung says it probably made

:05:02.:05:03.

profits of $7 billion in the three It releases full results

:05:04.:05:06.

at the end of the month. Twitter shares have continued

:05:07.:05:09.

to plunge after a report cast doubt The tech website Recode reported

:05:10.:05:13.

that Google and Disney would not bid for the social network -

:05:14.:05:22.

and that Apple was unlikely Cloud software maker Sales Force has

:05:23.:05:25.

also been named, but has yet And the photo-sharing app Snapchat's

:05:26.:05:35.

parent company is working on an initial public offering that

:05:36.:05:42.

could value the company The Wall Street Journal is reporting

:05:43.:05:46.

that Snap Inc is looking to sell What a success story. It's for the

:05:47.:06:04.

young ones, actually! Let's be frank, let's be frank Viktoria

:06:05.:06:07.

Komova on. At least I have an account! You've got to learn how to

:06:08.:06:15.

use it now. Check out the Business Live page, a great site updated all

:06:16.:06:21.

the time. Another reminder of Deutsche Bank, we have been talking

:06:22.:06:24.

about but the past couple of weeks, a lot of worries, the IMF and global

:06:25.:06:29.

organisations are saying it is the most dangerous bank in the world,

:06:30.:06:33.

but we are saying there is no Lehmann Brothers moment. The

:06:34.:06:39.

officials are trying to reduce that $14 billion fine, talking about

:06:40.:06:44.

going down to about 5 million. -- 5 billion. But Jean-Claude Junker says

:06:45.:06:51.

that Germany is not going to let this bank fail, it is too big to

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fail and Beowulf Dublin. It's worth saying that the share price has

:06:56.:07:03.

recovered yet again. We saw some big falls last week, it is recovered,

:07:04.:07:09.

there is confident it is being shored up, although there are

:07:10.:07:16.

rumours swirling. Let checking with the stock markets. The pound briefly

:07:17.:07:24.

and mysteriously plummeted to fresh lows in early trading. Amid this,

:07:25.:07:28.

persistent concerns about Britain's exit from the EU. The McKay in Japan

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is down about 39 points at the end of the session, it followed a

:07:35.:07:37.

turbulence session on Wall Street as well. European trade has been open

:07:38.:07:42.

about 40 minutes, and of course everyone is keeping an eye on the

:07:43.:07:45.

pound and seeing what is going on, the pound versus the dollar. We have

:07:46.:07:50.

got some tweets, too. I will cover them during the rest of the

:07:51.:07:54.

programme, keep tweeting. Let's talk to the bloke with the red races. --

:07:55.:08:00.

red braces. Joining us is Justin

:08:01.:08:01.

Urquhart-Stewart, co-founder and director of Seven Investment

:08:02.:08:03.

Management. We normally talk about markets, can

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we talk about a flash crash, this being in Asian trade with the pound

:08:11.:08:15.

dropping. Let's explain to those who don't typically follow it, how does

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this work? You have got various levels of foreign exchange trading,

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a lot of it is done manually with individuals carrying out raids, but

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the majority of these is carried out automatically, so they will have

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programme trades operating foreign exchange, they will have

:08:32.:08:33.

institutions doing their trading, there is a lot of background noise

:08:34.:08:37.

going on. And as you were hearing just now, some of those trades will

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react automatically, sometimes the words being said, the numbers being

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breached, and an automatic trigger. In this case, it might be a French

:08:47.:08:52.

swearword coming out and somebody reacts to what the French are saying

:08:53.:08:57.

about the British and that reacts on the pound, that can happen, but

:08:58.:09:01.

these should have brakes on them as well, they can only go so far. It

:09:02.:09:06.

shouldn't have eight trigger effect like dominoes. Where we actually do

:09:07.:09:10.

find out what happened here, it will be interesting, wasn't a human

:09:11.:09:14.

reaction, a fat finger, somebody got the trade romcom or was it an

:09:15.:09:17.

automated trade that carried on other automated trades with it. It

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is worth saying that any automated system is being initially inputted

:09:27.:09:30.

by people, and so what are the trigger points, for example, that

:09:31.:09:34.

could trigger an automatic system to keep falling down? Are they looking

:09:35.:09:38.

for words in the media, for example? Could it be our full but we are

:09:39.:09:42.

talking about Brexit? We could actually be talking it down, is that

:09:43.:09:47.

possible? What you do is you build an algorithm and that will be built

:09:48.:09:50.

to react to certain things, normally it will be numbers coming through.

:09:51.:09:56.

But it particular figures, if it goes below a certain level, but now

:09:57.:10:02.

developments are going on, it react to news and particular words. The

:10:03.:10:06.

markets are changing so rapidly now. It is not just mathematical, you

:10:07.:10:10.

have designed it so it is reacting not quite do emotions but there are

:10:11.:10:14.

keywords coming up it will have an impact. Smart machines, interesting.

:10:15.:10:19.

So if I read that the UK economy would grow 10% next year, would that

:10:20.:10:29.

help the pound go up? No. Still to come...

:10:30.:10:31.

Our economics correspondent Andrew Walker will be here to talk

:10:32.:10:34.

Could this be the data that cements the timing of the next rate

:10:35.:10:38.

You're with Business Live from BBC News.

:10:39.:10:42.

The reason we ask is because confidence among UK

:10:43.:10:47.

businesses has returned to pretty much the level it was at before

:10:48.:10:50.

the decision to leave the European Union.

:10:51.:10:51.

Why did you say it like that? To keep them interested here in the UK!

:10:52.:10:58.

And it's having a big impact on the number of staff that firms

:10:59.:11:01.

But what about how much they're prepared to pay them?

:11:02.:11:05.

Our business correspondent Theo Leggett has the answers.

:11:06.:11:16.

The recruitment and employment in the Reg on have put out a report

:11:17.:11:20.

saying that in September the number of permanent and temporary staff

:11:21.:11:23.

taken on by companies have increased for the second successive month.

:11:24.:11:28.

Back in June and July there was a dip around the time of the

:11:29.:11:31.

referendum, now it is picking up again. Demand for Stav continues to

:11:32.:11:35.

rise, biggest in the engineering sector. For permanent and temporary

:11:36.:11:40.

staff it was in the hotel and catering sector and the

:11:41.:11:44.

Confederation says it shows that businesses are getting over the

:11:45.:11:47.

initial shock of the referendum result, shrugging it off. But there

:11:48.:11:53.

are some important caveats. For a start, permanent hiring has not

:11:54.:11:56.

increased in London and the Confederation says it is probably

:11:57.:12:00.

because of concerns over what the EU result will mean for the financial

:12:01.:12:04.

sector in particular, whether Pat Sporting rights are kept and whether

:12:05.:12:08.

any business will move abroad. It says the number of people available

:12:09.:12:11.

to fill roles is going down, which is a point of concern.

:12:12.:12:13.

Britain looks like it is looking at a hard exit

:12:14.:12:28.

from the EU, Theresa May not looking bad she will accept the free

:12:29.:12:30.

movement of Labour. Could the immigration crackdown, if

:12:31.:12:32.

we see one, lead to staff shortages? The recruitment and employment

:12:33.:12:34.

Confederation seems to think it is a concern, they say, we urge the

:12:35.:12:37.

Government to be mindful of talent shortages faced by many UK employee

:12:38.:12:42.

is. Despite some of the rhetoric at the Conservative Party conference,

:12:43.:12:46.

we will continue to need workers from overseas in a range of sectors

:12:47.:12:49.

from engineering to health care. It says they need a rational debate

:12:50.:12:54.

between business and Government about a sensible immigration policy.

:12:55.:13:01.

Thank you very much. Can we quickly get on the screen the Business Live

:13:02.:13:07.

page? Look at that, incredible, from the Bloomberg terminal, it shows the

:13:08.:13:12.

drop, the fall off the cliff of the value of the pound during that Asian

:13:13.:13:13.

trading session. The world's first aviation

:13:14.:13:17.

pollution agreement has been approved

:13:18.:13:34.

by the UN agency, ICAO. The deal is expected to limit

:13:35.:13:35.

the growth of emissions A quick look at how

:13:36.:13:38.

markets are faring. The European trading session has

:13:39.:13:45.

opened and unsurprisingly the FTSE 100 rising yet again. Remember about

:13:46.:13:51.

75% of the companies listed on the FTSE 100 are pretty international in

:13:52.:13:55.

focus which means any fall in the value of sterling improves their

:13:56.:13:58.

profit margins for anything coming in from America or Europe, anything

:13:59.:14:04.

that they make abroad. That is why we often see this inverse

:14:05.:14:07.

relationship between the value of the FTSE 100 going up and the value

:14:08.:14:11.

of sterling going down, particularly against the dollar.

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It's been a terrible week for sterling -

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Globalisation has been on the agenda too this week,

:14:19.:14:25.

with discussions about how increasing amounts of international

:14:26.:14:28.

economic integration have affected incomes around the world.

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Plus there's much to talk about on US jobs,

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Let's get the Inside Track on all this with our economics

:14:35.:14:39.

Good to see you. Happy Friday!

:14:40.:14:50.

Let's start with the US jobs. Again, leaning towards whether we will get

:14:51.:14:55.

an interest rate rise, will display into that?

:14:56.:14:59.

Absolutely, we are expecting a figure of around 170,000 additional

:15:00.:15:04.

jobs created in the last month in the United States economy. It has a

:15:05.:15:08.

growing Labour force so you need to have a certain number of new jobs

:15:09.:15:12.

created just to keep up with that but 170,000 would be better than

:15:13.:15:20.

that keeping up level. So, yes, it would tend to play into the

:15:21.:15:25.

possibility of bringing a rate rise, perhaps in December, which is what

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most people in the financial world seemed to be expecting. Worth

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remembering the other element is inflation, we have really low

:15:34.:15:36.

inflation in the UK but the US is still below the fed's target but

:15:37.:15:41.

still significantly higher at if you take out a volatile food and energy

:15:42.:15:46.

prices it is getting towards the 2% target, 1.7% of the most recent

:15:47.:15:52.

figure. The Fed has eye on inflationary pressures than the Bank

:15:53.:15:55.

of England or the ECB. Not bad given what we are seeing in

:15:56.:15:59.

Europe and here, and inflation rate closer to 2%, the ideal mark.

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In the bulk of the developed world, inflation is seen as too low. In the

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UK, the Eurozone and Japan. So, yes, I imagine we are going to move on to

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talk about sterling doctor-macro I see what you are doing there!

:16:15.:16:23.

Aren't you supposed to do that bit?! We will share some of these tweets,

:16:24.:16:27.

what is the impact? It highlights the pros and cons of the week are

:16:28.:16:34.

valued currency. Emil Sorheim, with an upcoming trip to the UK to

:16:35.:16:37.

celebrate my birthday at the Royal Opera House, the weak pound is a

:16:38.:16:41.

wonderful birthday gift! In terms of the link with inflation,

:16:42.:16:47.

likely to see a boost in inflation if sterling remains weak.

:16:48.:16:54.

First of all, happy birthday a meal! Normally a depreciation in the

:16:55.:16:57.

currency is something you welcome on some grounds but worry about the

:16:58.:17:00.

inflationary impact but these are not normal times as we have said so

:17:01.:17:05.

many times. For the Bank of England, yes, there is that welcome aspect

:17:06.:17:09.

which means it will push inflation up somewhere. There is a possibility

:17:10.:17:13.

that if it is a very large ball and it has been substantial already, it

:17:14.:17:17.

might push it up too far, through the Bank of England's target, and

:17:18.:17:22.

the forecast from the International monetary fund this week suggested it

:17:23.:17:26.

could get as high as 2.5%, which would be above the Bank of England's

:17:27.:17:31.

target but not so much to be a huge problem in itself. The issues would

:17:32.:17:43.

be if it went much further and obviously the question of whether

:17:44.:17:45.

pay will keep up with any surge in inflation and whether it will affect

:17:46.:17:47.

people's real incomes after inflation at first it.

:17:48.:17:49.

Another treat here from Joe Richards who is talking about the impact in

:17:50.:17:53.

terms of what they have to buy in stock, the goods that they need to

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use and where they come from, and it has a big effect there.

:17:59.:18:02.

For businesses that are importing a lot of components, raw materials,

:18:03.:18:06.

surprise, yes, there is a direct affect on them. It will either be

:18:07.:18:11.

reflected in what they charge their consumers, they may pass it on, or

:18:12.:18:15.

maybe absorb it in lower profit margins, it is a decision they will

:18:16.:18:19.

have to take. Some businesses I think will look at the situation of

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demand for their goods and services and think, maybe we had better take

:18:25.:18:28.

the hit in the margins and hope we will be able to recover the profit

:18:29.:18:30.

later on. Bobby was around the world, -- for

:18:31.:18:38.

viewers around the world, the UK imports more than it exports?

:18:39.:18:42.

We have quite a large deficit in international trade, and one of the

:18:43.:18:48.

hopes is the depreciation of sterling will make imports less

:18:49.:18:51.

competitive, exports more competitive, and might reduce the

:18:52.:18:54.

deficit over time. We will have to start making more

:18:55.:18:58.

stuff! Manufacturers in particular are

:18:59.:19:01.

sensitive to changes in the exchange rate so it may be helpful for them.

:19:02.:19:05.

Andrew, always a pleasure, have a great weekend.

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

:19:08.:19:10.

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

:19:11.:19:13.

The Business Live page is where you can stay

:19:14.:19:15.

ahead with all the day's breaking business news.

:19:16.:19:17.

We'll keep you up-to-date with all the latest details,

:19:18.:19:19.

with insight and anaylsis from the BBC's team of editors

:19:20.:19:22.

Get involved on the BBC Business Live webpage,

:19:23.:19:29.

On Twitter we're @BBCBusiness, and you can find us on Facebook

:19:30.:19:34.

Business Live on TV and online - whenever you need to know.

:19:35.:19:51.

Justin Urquhart-Stewart is joining us again.

:19:52.:19:54.

You liked this story, do you drink a lot of bottled water?

:19:55.:20:00.

I don't, because I think it is wasteful and we have good sanitation

:20:01.:20:04.

here, but not many people agree with me!

:20:05.:20:07.

But London water is supposed to pass through the body of about nine

:20:08.:20:10.

people! So long as they keep testing...

:20:11.:20:17.

Tell us about the story? An article in the Guardian which takes the

:20:18.:20:26.

industry, worth $157 billion, they reckon by 2020 it will grow to 280

:20:27.:20:31.

billion, bottled water. All the different types, the different

:20:32.:20:40.

names, there is one called Ugly, but some of the descriptions they come

:20:41.:20:47.

up with, Coca-Cola's Smart Water, it just comes from Northumberland! Do

:20:48.:20:56.

you remember Peckham Spring in Only Fools And Horses? It was a spoof on

:20:57.:21:00.

bottled water, they made it up as coming from Peckham. But the idea of

:21:01.:21:08.

this Smart Water, it is vapour distilled and Coca Cola says it is

:21:09.:21:19.

inspired by clouds! You can get water from Fiji, or

:21:20.:21:23.

Peckham Spring is! This started with our fixation in

:21:24.:21:30.

the continent with Perrier, everyone wanted it but at least it had

:21:31.:21:37.

bubbles, the still waters are all virtually the same but you pay a

:21:38.:21:41.

premium price. Because it is Friday, can we skip

:21:42.:21:46.

the president Obama thing and go with Indigo airlines, a Budget

:21:47.:21:52.

carrier based in India, and it is the first time we have heard about

:21:53.:21:59.

an airline doing this, childfree zones? You have kids, did you fly

:22:00.:22:02.

with them? No!

:22:03.:22:07.

Like the Royal family, you don't fly together!

:22:08.:22:11.

It is a lovely idea, why hasn't anyone done it before? Does it mean

:22:12.:22:15.

on the plane you are separated from the child, or you have to leave the

:22:16.:22:18.

child behind?! You leave the child on the plane but

:22:19.:22:25.

it is only a few rows behind! Those trolleys with the food in, you

:22:26.:22:29.

could get several children on those trolleys, they would be wheeled back

:22:30.:22:33.

down as you leave the plane! Your child, Sir?

:22:34.:22:39.

Airlines, are you listening to this?!

:22:40.:22:45.

As long as you get the right one on the way out!

:22:46.:22:47.

Hello, cloud amounts may vary from one day to the next but the general

:22:48.:23:03.

weather pattern really isn't going to change much in the next few days.

:23:04.:23:07.

Most of the thick rain bearing cloud comes from the Atlantic but it just

:23:08.:23:12.

stops to the west of us, it is getting blocked by a huge area of

:23:13.:23:16.

high pressure centred over Scandinavia which is influencing our

:23:17.:23:20.

weather. We are drawing in an easterly breeze, perhaps not as

:23:21.:23:24.

strong as it has been, a lot of cloud on that breeze, maybe more

:23:25.:23:34.

sunshine as we head into the afternoon but equally one or two

:23:35.:23:36.

showers as well. After a frosty start with patchy fog, the best of

:23:37.:23:39.

the sunshine across northern Scotland. It will be rather cloudy

:23:40.:23:41.

for Northern Ireland, as it will be for southern Scotland, but for most

:23:42.:23:44.

of England and Wales and little sunshine at times, the best of that

:23:45.:23:49.

perhaps across north-west England and north-west Wales. One or two

:23:50.:23:53.

showers dotted about, especially in eastern England. The easterly breeze

:23:54.:24:01.

eases overnight, we could see more breaks in the crowd, showers across

:24:02.:24:05.

East Anglia and the south-east of England, which could be on the sharp

:24:06.:24:09.

side by the coast by the end of the night. Most places double figured,

:24:10.:24:13.

Scotland standing out as being somewhat colder with patchy across

:24:14.:24:18.

in the countryside. Early mist and fog lifting, then a little more

:24:19.:24:21.

sunshine on offer on Saturday, cloud coming and going, most of the

:24:22.:24:26.

showers across East Anglia and the south-east of England, where the

:24:27.:24:29.

breeze will be fresher. But otherwise temperature is very

:24:30.:24:33.

similar to date. In the sunshine, not feeling too bad. Similar on

:24:34.:24:37.

Sunday, not much changing, showers chiefly for East Anglia and the

:24:38.:24:42.

south-east of England, a lot of dry weather and sunshine at times. Much

:24:43.:24:45.

more dangerous weather, though, on the other side of the Atlantic. This

:24:46.:24:50.

is Hurricane Matthew, Haiti at the beginning of the week moving

:24:51.:24:56.

northwards, a direct hit at Freeport in the Bahamas, now sitting just off

:24:57.:25:02.

the coast of Florida. Slightly but still a major hurricane, category

:25:03.:25:06.

three. A lot of rain with it, eight to 12 inches of rain, storm surge

:25:07.:25:11.

and hurricane force winds across the coast of Florida, eventually heading

:25:12.:25:13.

towards the Carolinas by the weekend.

:25:14.:25:17.

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