05/12/2016 BBC Business Live


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This is Business Live from BBC News, with Ben Thompson and Sally Bundock.


A loss in the Italian referendum triggers the resignation


The euro has sunk even further as nationalism sweeps the continent.


Live from London, that's our top story on Monday 5th December.


Italy votes No in the referendum and as promised,


Prime Minister Renzi quits - the euro is now at 20-month


We assess what's at stake for the Eurozone's third


Also in the programme....The new connection between the Hong Kong


and Shenzhen stock exchanges is now live - giving international


investors access to hundreds of Chinese companies for the first


time - we'll take you there for the latest.


markets are looking like this after that referendum. We will assess what


it means for the future of the Eurozone.


From LED disco balls and Christmas lights through to 3D mascara...


Later in the programme, we'll get the Inside Track


on the changing face of advertising with the boss of


JML are famous for their household gadgets, so we want to know


what household gadget can you not live without?


Get in touch - just use the hashtag #BBCBizLive.


My favourite gadget with a toastie maker.


So as you've been hearing, Italy has voted a resounding No,


rejecting the electoral reforms proposed by Prime


He's now announced his intention to resign.


The result has ushered in a fresh crisis for the Eurozone,


with one of the founder members of the European project mired


Here's a look at some of the problems facing the country.


Italy has been stuck in a rut: the economy has barely grown over


the last eight years, and is likely to remain


Meanwhile, public debt is around 130% of GDP -


in other words, the economy doesn't sell and produce enough goods


Unemployment stands at 11.6%, that's about 2%


above the eurozone average and youth unemployment is at breaking point -


nearly 39% of young people are out of work.


The IMF says Italian banks are holding around


$400 billion worth of non-performing loans.


This amounts to about one third of all bad loans in the euro area.


More than 75% of these are loans to companies.


Now that we have a No vote, some analysts warn we could see


the failure of up to eight Italian banks and the Prime Minister's


bank bailout programme could well be scrapped.


Francesco Guerrera is Chief Financial Correspondent


It sounds like a real mess. Talk us through what is at stake here. All


attention is on these big banks in Italy that could be left high and


dry. Yes, the stakes are much higher for the Italian banking sector and


European banking sector than for the Eurozone as a whole. The most


important thing now is to see whether Italy's third largest bank,


Europe's oldest bank, will be able to pull off a 5 billion euros


recapitalisation programme, which is badly needed and has been an


important measure of how investors feel about Italy. The no vote throws


that into a huge amount of doubt. It could make it fail. I understand


that the plan was to have private investors come in and rescue that


back, and some other banks as well. Why use the overnight results


calling that into question? Because investors don't like to write checks


during a period of political uncertainty, especially for a


country like Italy, which has made a big brand out of political


uncertainty and has had repeated moments of political uncertainty. $5


billion for a bank like this is a lot of money. So a lot of investors


this morning are already rethinking their stance towards that bank. But


what are the other options? The Italian government cannot bail out


these banks because of rules stated by the fact that it is part of the


Eurozone. Exactly, so a state bailout is ruled out under Brussels


rules. The other options are for a recapitalisation that hits the small


investors in Italy bulges politically unpalatable. What does


this mean for the economy as a whole, with Italy in political


turmoil once again? Italy is used to this. Italy is used to turmoil, but


this is different. Italy has more bank branches than pizzerias, so


this was a chance to reduce the amount of inefficiency in the fiscal


sector. That chance might be missed now. We are keeping a close eye on


this story as it unfolds and how it has played out in markets around the


world. More on that later. The Royal Bank of Scotland says it


will pay just over a billion dollars to settle compensation claims linked


to a rights issue in 2008. At the time, it was acquiring


the Dutch bank ABN Amro - but that ultimately led to it


seeking a bailout from The agreement is with three


of the five shareholder groups Venezuela's central bank says six


new denominations of banknotes will come into circulation


on December 15th. Soaring inflation amid an economic


crisis means that the largest 100 bolivar banknote is only


worth about two US cents and people often have to use bags


full of money to make payments. The new bills range from 500


to 20,000 bolivars. The central bank says they will make


payments more efficient. The business life page is dominated


by events in Italy. Shares for that bank that we were talking about,


Monte dei Paschi, are down. A lot of pressure is on Italy's biggest


banks. Much more on the website. Hong Kong has launched


its second stock-trading link It means foreign investors will get


greater access to more than 800 companies listed


on the Shenzhen exchange. Helier Cheung is at the Hong Kong


Stock Exchange for us. Will foreign investors be


interested? It is the end of the trading day in Hong Kong now, and


has been exciting day because for the first time, international


investors have access to nearly 900 pubs of stocks in the Shen and


exchange. It is the second busiest stock exchange in the world and has


access to nearly $3 trillion worth of stocks. The types of stocks are


also interesting, because these are technology shares. The fifth of the


shares available in Shenzhen from the technology sector, which is


viewed as part of China's future, so a lot of investors will be


interested in that. China wants to internationalise its markets, and


this is seen as part of that. As far as the markets are concerned, the


main story is Italy. Worries over political


stability in Europe - in the wake of that Italian vote -


weighing on Asian markets - but it's in Europe where we'll see


the first real impact. Here's what it's looking


like across the continent right now. Austria's vote didn t deliver


a shock, the far-right leader failing to gain enough votes,


but it's the impending resignation of Matteo Renzi that now throws


Italy into a new era The most pressing question,


as we've been discussing, is how to save the country's third


largest bank, Monte dei Paschi. The euro has stabilised


at $1.06 after falling We'll talk more on that


a little later. But first, Samira has


the details about what's ahead We can expect some little bits of


economic data and company earnings coming our way this week. On Monday,


the ISM survey is out. This looks at the strength of a variety of sectors


outside of manufacturing, and it gives investors an idea of how


different parts of the economy are faring. The wholesale retailer


Costco will be reporting earnings on Wednesday. Falling prices for


groceries have likely hurt sales, and traffic to Costco stores was


slightly lower in the first two weeks of November ahead of the US


presidential elections. Investors will be looking for comments on the


upcoming holiday season. Finally, Friday is when we see how strong


consumer sentiment is in the US. Remember, for an economy that relies


heavily on consumer spending, it is important to see how confident


people are feeling and how that will influence how much they spend.


Joining us is Jeremy Stretch, head of G10 FX strategy at CIBC.


Looking at markets in Europe, they are all headed up. That was not the


reaction we were expecting, or worldly? Perhaps this result was


priced in. For once, the opinion polls have proved to be correct. In


essence, we had already been anticipating that, so the was


already under pressure into the event. So the bosses are higher,


although you have not got the Italian one there. But the currency


markets were largely discounting the result. Yes, Asia is often a more


volatile session as we saw in the aftermath of the US election, but


people have been saying, what is the Italian situation going to be now?


Are we going to have a caretaker government until 2018? That seems


the most likely scenario. The pressure point is what will keep us


on our toes, because this is where we have to get into detail. It is


one thing saying they have to save the banks, but how is a different


thing. Indeed. We have been working on plans to try and provide


liquidity and capitalisation to the banks, but those plans are now very


much up in the air. That is a uncertainty that investors will not


like. And the political risk in Europe is setting the tone for next


year to a great degree. It is, because if we had the worst case


scenario playing out in Italy that we have early elections, which are


brought forward to next spring, that would add another layer of political


uncertainty into a year of political uncertainty as we know, with the


elections coming up in France, the Netherlands and Germany. So there is


European political uncertainty. The central institutions will do what


they can to provide liquidity, and that will be the theme that comes


out of the decision on Thursday, but the politics is the other big


variable. That is what has been driving the markets throughout 2016,


as we have seen with Brexit and Trump. I can just picture Mark


Carney and the other heads of central institutions with their


superhero cape is on, coming to the rescue. Well, I don't want to be in


your mind, but it is down to the institutions to try and save the


world and provide time for the politicians to do what is necessary.


Can't you see them swooping in with a cape on? Well, their ability to go


sweeping in has come mitigated over time. No one wants to be in Sally's


head. Still to come, from LED disco balls


and Christmas lights Later in the programme,


we'll get the Inside Track on the changing face of advertising


with the boss of Gadgets, gizmos and the things you


cannot live without. You're with Business


Live from BBC News. In the UK, the online estate agent


Purple Bricks has been hoping to shake up the housing market


by offering low-cost estate They've promised to be


in profit by their third anniversary this spring,


but this morning they published results for the six months


to October and it shows they've The chief executive


Michael Bruce joins us now Congratulations on hitting that


target, but I am interested in how you have done it, given everything


we have heard about the housing market. Yes, there is a seismic


change happening in the estate agency market. Purple Brix has


demonstrated that it can deliver for customers as a credible alternative


to the high street. We have seen enormous growth in our business as


people move away from the very expensive rigs and mortar commission


based fee structure to something that is fixed. They can take more of


that money and put that in their pocket to spend on their families.


At the same time, they are getting a better service than they would


ordinarily have got. That is what Purple Bricks is the most positively


reviewed estate agent possibly in the world, certainly in the UK, in


an industry that is often dogged by criticism about the service it


provides. How do you plan to keep the momentum


up? We are eating away every day at the market share as more and more


people decide to move away from the high street and we're confident that


wherever the head winds are in the particular industry, the sector or


the economy that Purple Bricks will certainly capitalise on what's in


market and available to us and that's been demonstrated by the


results we announced today. All right. We will keep an eye, that's


for sure, see if you can deliver next time. Thank you very much


indeed for your time. This is the news from whirlpool of


the serious house fires. The company committed to reducing the waiting


time for repairs or replacements to ten days, but an investigation has


found that could take between six and 12 weeks. Many people are told


it is safe to use them, but only to use them if you're in the who is and


keep an eye on them. But the picture there of a big fire in West London


caused by that tumble drier. You're watching Business Live.


Our top story: Italy votes


"no" in a referendum As promised, the Italian Prime


Minister Matteo Renzi has resigned, causing the euro to sink


against the dollar. A quick look at how


markets are faring. We are seeing that markets are


rising. Until there is any certainty about how Italy intends to deal with


its debts or the problems at some of its largest banks.


Now let's get the inside track on the lucrative business


JML sells everything from cat toys to copper-stone frying pans and has


a unique business model - pretty much every product it


The incredible air powered disc that's perfect for indoor sport. The


compact torch and toolkit you can take anywhere. Simply plug it in at


home and watch your party come to life!


JML is migrating towards online sales. The company markets its


products in over 70 countries. They make those ads that you just saw in


27 different languages! JML has a turnover of close to ?100 million.


They sell 15 million products every year around the world.


Ken Daly is the Chief Executive of JML and has been


Good to see you. Welcome to the programme. Good morning. We were


giggling after the back of the little short clips because they are


the kind of adverts that drive you around the twist and yet you watch


them and think, "They must be selling that stuff." Yes, I can


assure you that we are selling that stuff. We are having a record


Christmas and in fact seven out of ten homes in the UK have a JML


product. The reason you have to have the ads is because your products are


products that need to be demonstrated? Absolutely. They are


the kind of gadgets that we need to know how to work them? That's our


USP. We develop and market products that need some kind of explanation


for the consumer to understand the features and benefits, but when they


do, they really, really want to buy them. Is it about convincing buyers


that they actually need it? Some of them are really useful products.


They are things we use every day. Some maybe less so, they maybe more


aspirational gifts. Talk us through why the ideas come from? The ideas


come from all over the world. Our mission is to make consumers lives


easier. Some of them are more quirky at Christmas because we are trying


to make gifting more easy at Christmas and the ideas come from


inventors, trade shows, some of them, we develop ourselves and come


up with the ideas ourselves. Sometimes factories that we work


with develop the ideas. So it is a whole range of sources. The weirdest


product? Oh, the weirdest, possibly the light that illuminates your


toilet bowl lend you enter the bathroom! A weird one, I guess...


Did gu with it? It is something that we will be developing, yes. Ah,


watch this space. You can't wait for that advert!


Just in terms of the amount of stuff you're selling, how much, how many


products have you got, you know, that you're selling at the moment


and how do you keep across it all in terms of where it is coming from and


quality and supply? Sure. We focus on key products and sell very, very


large volumes of the key products the ones we're advertising on


television. In terms of quality, absolutely it is our number one


priority. We don't want to have anything like the tumble drier


scenario that you just reported. You joined as a salesman, didn't you,


initial? Initially? You came up with a lot of new ideas as to how the


sell these things. What's the most important way of selling? Is it TV


adverts or the JML shopping channel? Well, we want to reach the consumer


whichever way they want to buy, but actually retail is still, believe it


or not, despite the challenges in retail, retail is still the biggest


avenue for us. It is 75% of our turnover is retail distribution. A


quick word on cost. We have been talking about the imported inflation


that we will get as a result of Brexit and the fall in the value of


the pound. What does that mean for you? I imagine a lot of your stuff


is sold here, but made abroad? Our attitude is we are a consumer


product company and we have to protect the consumer. So at the


moment we're absorbing the costs pretty much. How long can you do


that before prices have to go up? With the dollar at 120, we can


probably absorb the costs, but if it falls any lower than that, then we


might to start looking at increasing some of the retail prices, but at


the moment, that's not been the case and pretty much all of our price


have remained the same. There is so much more we could discuss, but time


has got the better of us. Ken, thank you very much for coming in. Make


sure you bring us that light on the toilet the next time you come in. Do


you need it then? It is always useful!


Improve aim! Let's see what other


stories are being talked The Business Live pages is where you


can stay ahead with the day's breaking business news. We want to


hear from you too. Get involved on the BBC Business Live web page at:


On Twitter, we're at: You can find us on Facebook.


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


The BBC's Dominic O'Connell is with us.


Hello. Just the software, not the car, and the first time they have


confirmed? It is the worst kept secret in Silicon Valley this. Is


Project Titan. Software and hardware as well, I think, but in filing with


the US regulators they have admitted they were interested in this. If you


think about it, under Steve Jobs they could have done anything they


wanted. They went from personal computers into mobile phones


seamlessly. Tim Cook is not Steve Jobs. If he goes into this field,


which I'm sure, they will, it will be the first time, and he will have


to make a success of it. It is Detroit versus the West Coast where


all the fun stuff is coming out about driverless cars. Let's look at


a story of Brussels and perhaps a free trade deal with Japan. Talk us


through that one? They have been talking for a long time about it and


it illustrates how Brussels and the European Union is forging away,


throwing its weight around on the global scale and it illustrates the


scale of the task. This is almost certainly going to happen. There are


some issues around it, but it has been a long time in the works. It is


going to come soon. It is quite interesting with the United States


as well and the fact that the euro trade deal maybe off the boil


because of president-elect Donald Trump, so Brussels looking


elsewhere? Brussels looking to Asia and China is keen on free trade


because it suits its domestic policies and the Trans-Pacific trade


partnership, America and China has been looking shaky recently. The


European Union now is the one that's making the running. The


Trans-Pacific Partnership is America and Asia, but not China? Not China


at the moment. China has been thinking of doing its own thing.


There are conflicting agendas, each nation is trying to promote its


domestic agenda through foreign policies. Let's talk about Donald


Trump. He persuaded Carrier air conditioning to keep jobs. Now he


has a company that was planning to move staff into Mexico. He has been


saying, tweeting overnight, saying he could level 35% tariffs against


products that are manufactured by jobs that are taken out of the


American homeland. What's your most useful gadget in your home would you


say? Well, everybody has the boring answer of the iPhone. I think


probably the iment phone is pretty powerful. Householdy, not tech? I'm


not gooden a hairdryer, I must say! We had the boss of JML on. So


miracle warrior, whoever he was, "My hand-held vac." Another viewer says,


"I need my small mobile phone." Another viewer says he needs his


juice blender. Mine is my toasty maker. Too many. That light for the


toilet! Have a good day. Bye-bye.


Good morning. It has ban really cold and frosty start for many of us this


morning. Not much fog around. This is as cold as it is


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