12/12/2016 BBC Business Live


12/12/2016

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

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Oil prices surge after producing nations agree a cut in output.

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

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It's taken a while, but both Opec and non-Opec nations have finally

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They're hoping to end more than two years of low oil prices.

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Spanning the globe in a single leap.

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Now travellers can fly non-stop from Australia to the UK.

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We'll get the details from our Asia business hub.

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And after more record rises on global stock markets -

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that rise in crude prices has also pushed the numbers higher.

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And we'll be getting the Inside Track on an energy

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company that's electrifying African homes and businesses with a little

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We'll be telling you how a little later.

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It's being reported that Amazon workers have been sleeping in tents

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close to the company's warehouse in Scotland.

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Today we want to know what lengths have you gone to to be close

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to your workplace in order to save time and money?

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A very warm welcome to the programme. We are starting with oil.

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Oil prices have surged in overnight trading.

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Brent crude rose as high as $57.89 per barrel,

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It has fallen back a little since then and a short while ago

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it was trading at $56.64, still up 4%.

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Well, the rise in prices comes after an historic deal was brokered

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over the weekend at the Opec HQ in Vienna.

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Opec of course is the cartel of oil-producing nations -

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Saudi Arabia, the world's biggest oil exporter,

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has committed to cuts of almost 500,000 barrels

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In response, other non-Opec members - including Russia -

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also agreed to cut their output in order to boost prices.

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They are pledging to slash output by 558,000 barrels per day.

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Also there were producers representing Azerbaijan,

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Oman, Mexico, Malaysia, Sudan, South Sudan and Bahrain.

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The moves come after more than two years of low oil prices, which have

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The deal marks the first global pact for 15 years.

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Manouchehr Takin, International oil and energy consultant is with me.

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As Ben says, this is key, because you have Opec and non-OPEC members

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agreeing. Yes, we have to remember that from January onwards they will

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start cutting gradually, so they haven't reduced yet, but the market

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despite sceptic and negative commentators, the market has reacted

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positively. My feeling was that Opec would agree, and now they and

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non-OPEC are agreeing. As you say, there are sceptics out there about

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whether these countries would deliver on the promise in the New

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Year. What makes you think they will do this time? Because it has taken

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two years, the stand-off, who is going to blink first, and they have

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all blinked together. Because they are all losing, so the amount of

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reduction of volume they do compared with the increase in price, the

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total revenue will be higher for all of them. And just to say that try to

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counter that scepticism, Opec are saying we are having a meeting in

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Vienna in May next year to review how it is all going. Yes, they are

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setting up a steering committee. They had this before on previous

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occasions, but they are serious. All these mechanisms are there, but they

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will have change, if one country over produces, it will be seen in

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the statistics. Mostly they have all suffered, even Saudi Arabia, the

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richest country, has gone to loans and debt, so they are all cutting, a

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little bit of price going up, it is worth their while. Just briefly,

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Manouchehr, when this all kicks in on the production cuts take effect,

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what are we looking at? That is the million dollar question, but they

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are definitely up, we go to $60, $70. I don't think it will go much

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higher. Opec is hoping for something about $60 or a little bit more,

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because shale oil and other producers have come back a little,

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and they will increase supply, and that will cap the price. The price

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cannot go up that much. Manouchehr, thank you viewer time. Many energy

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stocks higher, the likes of BP and Shelter trading higher today.

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The Venezuelan government has announced it will replace

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the country's highest denomination bank notes - the 100-bolivar note -

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It hopes the move will combat smuggling and tackle

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the chronic shortage of food and other basic items.

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President Nicolas Maduro says smuggling gangs that operate

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in border areas won't have time to repatriate the money.

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A similar move in India recently caused chaos.

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State carrier Iran Air has signed a deal to buy 80 passenger planes

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It is the biggest US-Iran deal since the 1979 Islamic revolution.

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Boeing says the deal is worth $16.6 billion

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at current list prices, and had been approved

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The first planes are scheduled for delivery in 2018.

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It's being reported that Italy is ready to pump capital into Monte

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dei Paschi di Siena, if the ailing bank fails to raise

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the money it needs from investors to remain in business.

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A source at the Italian Treasury is quoted as saying that "The bank's

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existence and its clients' savings will be preserved under

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On Sunday the bank had announced it would go ahead with plans to seek

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It is a brand-new week, and we are struggling with technology. They

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might not notice! We are just trying to find the live page, and we have a

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new iPad, you may notice. We can't get the pictures to load on the

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website. I have got it! But there are no pictures, for some reason.

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Guys in the office, can you sort the pictures out, please? There we go!

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We have a picture! You can tell it is a Monday morning, can't you? Some

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of the stories they are covering, Italy is the story of the day,

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because as we just mentioned there, Monte dei Paschi will be preserved,

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that is crucial because that is the one that is most at risk as far as

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debts are concerned in Italy. And shares are up in Italy on that

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story. Australia is to build

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a new airport in Sydney, PM Malcolm Turnbull gave the project

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the green light just hours after it was confirmed that

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new direct flights are to be launched between

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Australia and the UK. It is quite phenomenal where we are

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today given that in the 1930s when they first tried to get from London

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to Australia by plane. That's right, but the deal to build Sydney's

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second airport comes after seven decades of political squabbling, so

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it is also big deal. It will be built at Badger's Creek, and the

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first runway will open in 2020, and will take about a quarter of

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Sydney's current capacity. Qantas announced plans to fly nonstop

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between London and Australia, the 17 hour flight will start in March 2018

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from London to Perth. This is just about boosting visitor numbers. The

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new airport is central to Prime Minister Malcolm Turnbull's drive to

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keep the economy turning over after the end of the money drive. Think

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about how many films you will be able to watch in 17 hours on that

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flight! Let me show you the market numbers. That is what has happened

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in Asia, heading higher as a result of the stronger oil price. And that

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is what you need to know as far as oil is concerned. A similar picture

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we should savour Brent Crude listed in the UK. But let's take you to

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Europe. We will keep a watch on events, markets tending to be

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looking towards the US about what happens as far as Donald Trump is

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concerned, that business friendly rhetoric we have heard from him, and

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whether that comes to fruition, we will find out in the New Year. Let's

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head stateside. Michelle Fleury has

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the details about what's ahead The main focus for Wall Street is

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this week's Federal reserve meeting. The bank is expected to raise

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interest rates by a quarter point for the first time in 12 months. It

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is a move that has been widely telegraphed, but what investors want

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to know now is the size and frequency of future rate hikes.

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Given the potential boost to the economy from a Trump administration

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that has focused on tax cuts and stimulus spending. And Mr Trump was

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my own business interest will be under the microscope this week. He

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would announce his plans to avoid conflict-of-interest while he is in

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office. For those looking for a diversion, Oracle launched its

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second quarter earnings on Thursday, and how much longer will the

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post-election rally last? They are keeping a night on the Jones

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industrial average, which is surging towards 20,000 points.

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That was Michelle Fleury. Joining us is Kathleen Brooks,

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research director at City Index. Nice to see you. All of us touching

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on lots of issues to talk about. Michelle talks about the Fed in

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midweek, although everybody seems to agree on what is going to happen,

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but it is a big deal? It is, not because of what they are going to

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do, which is 100% likely that they will hike interest rates, but it is

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what they say about next year, the year after. Will we Mbaye, rate hike

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cycle in the US? Trump has lifted the market, his expectations,

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wanting to boost inflation, but will the punch bowl be taken away before

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the party has begun by the Fed signalling rate hikes? And if you

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add that to oil prices rising, that will mean more inflation and higher

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interest rates. And that will also be an issue for other inflation

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targeting central banks like ours, like the ECB, so I think we could be

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in the deathknell of the low interest-rate environment. Alex has

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tweeted to say he likes how I pronounce Monte dei Paschi, so I

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will say it again! So about this cash injection, reports say they

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will bear it out at all costs, because they have to protect

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investors? Yes it looks like they are going to get ready to bail it

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out, but it is still banking on potentially Qataris coming in with

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private capital. And surely the state isn't allowed to bailout the

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bank according to rules set by Brussels. What they will do with

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Monte dei Paschi is that will determine whether or not banking

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union can go ahead. The banking union tried to split the impact of

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banking risk and what goes on on a sovereign balance sheet, but they

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may not be able to do it this time because it is too painful to let a

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bank go to the wall. Too big to fail. Kathleen, good to see you,

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have a good week. Why buying electricity in the UK

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could help power parts of Kenya. We speak to the energy firm helping

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thousands of Kenyan villages You're with Business

:13:42.:13:44.

Live from BBC News. The British Chambers of Commerce has

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upgraded its forecast It now believes GDP will grow

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by 2.1% in 2016 up from 1.8%. But the long-term picture

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isn't looking so rosy - it's now lowered forecasts

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for 2018 to 1% from 1.4%. The Director General

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of the BCC is Dr Adam Marshall Good morning. Talk us through these

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numbers, because it strikes me given all this uncertainty we have seen

:14:21.:14:24.

big predictions, up, down, left, right, for what the economy is going

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to do. How confident are you that you have got these numbers right? We

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always forecast steady growth in 2016, and we have raised it or not,

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because we have seen a lot of firms adopting a business as usual

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attitude, and cracking on doing deals through the course of this

:14:42.:14:45.

year. But we do think it will come off the boil next year, we are

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predicting 1.1% for next year and 1.4% for 2018, and the main factor

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is inflation following the devaluation of sterling. Businesses

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and consumers will be hit with inflation, and that will affect

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their decisions. And what about Brexit? That is what prompted the

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rise in inflation, and that devaluation of sterling as well, so

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it is one of many factors. Luckily we are not looking at a recession,

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nor are we looking at a spike in unemployment. We are just looking at

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less inspiring growth over the couple of years to come. So what are

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you saying to your members in the light of that? What do they need to

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do to counter the falling growth? The first thing to do is make sure

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your company is ready for change and uncertainty, and IAC businesses day

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in and day out who say they are not just ready for it but looking

:15:42.:15:45.

forward to it. At a micro level, you have a lot of firms out there who

:15:46.:15:50.

are seen disruption and change as an opportunity to grab new markets and

:15:51.:15:53.

grow and look at new places around the world they can export to. That

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is fantastic. The economy as a whole other macro level doesn't feel quite

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as confident, there is still uncertainty out there, so businesses

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need to get ready and the Government needs to back up. Good to talk to

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you, Dr Adam Marshall. Thank you very much indeed. Let's take you to

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the live page, Asos is hiring 1500 staff and will put them in its

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London HQ, this coming at a time where conditions were described as

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exploitative. You're watching Business Live.

:16:23.:16:30.

Our top story: Oil prices have surged after both

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Opec and non-Opec nations The agreement comes after more

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than two years of depressed prices. We are seeing the oil price surging.

:16:35.:16:52.

You can see the markets in Europe fairly mixed, but the ones that are

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winning today are the big oil majors, Total, BP, Shell, those

:16:57.:16:59.

companies are pushing up the main indexes in Europe today.

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Now, chances are you don't much think about your power provider.

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You might shop around for a cheaper deal, but that's about it.

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Well, now one firm says as well as offering cheaper prices,

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Brighter World Energy says it can undercut the big six energy

:17:13.:17:17.

providers in the UK and at the same time help areas in Africa

:17:18.:17:20.

that don't yet have an electricity infrastructure.

:17:21.:17:24.

The company says that for every 20,000 customers in the UK who sign

:17:25.:17:29.

up, it will install a solar power rig in, an African

:17:30.:17:34.

village that doesn't currently have any electricity.

:17:35.:17:35.

The first solar powered micro-grid is expected to start operating

:17:36.:17:38.

The company was founded just this year by 33-year-old former

:17:39.:17:46.

journalist Cheryl Latham and hopes to invest ?1.4 million in Africa

:17:47.:17:48.

I want to clarify, it is 2,000 customers, isn't it? For every 2,000

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customers. Not 20,000! Just so we get that right because

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20,000 is a big goal for you to achieve and you think you will hit

:18:05.:18:08.

your 2,000 in the New Year, your first 2,000? Yeah, we do. We think

:18:09.:18:13.

that people in the UK really under estimate the pour we are of their

:18:14.:18:17.

purchase. Here in the UK we under estimate pour we are in general,

:18:18.:18:19.

that's the power running to our homes, but the power that we've got

:18:20.:18:24.

to talk about the world we want to live in and doing something

:18:25.:18:27.

differently. We are being told that in the UK that the big six are

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keeping prices higher. And we should be switching and we are not

:18:32.:18:35.

switching as much as the regulators are telling us to and some companies

:18:36.:18:41.

have gone bust in the meantime? Yeah, well GB Energy went bust

:18:42.:18:46.

because it was selling energy too cheaply and we are here to inspire

:18:47.:18:49.

customers, the majority of customers who are sitting on the expensive

:18:50.:18:54.

standard tariffs to come over to our's and give back while they

:18:55.:18:57.

switch on the lights at home. You will be making a profit and you will

:18:58.:19:00.

be staying in business? We are a procht for purpose company. We are

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backed by a not-for-profit energy Ofgem relayed supplier. It is a

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very, very secure business model, so we cut out comparison sites and

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don't pay inflated salaries and we want to ensure that UK customers can

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give back to the world around them as well as make sure that they've

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got the best presents under their own Christmas tree this year. Let's

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talk about what you're doing internationally then. How does that

:19:30.:19:34.

translate? If I'm a customer of yours, how does my money get used in

:19:35.:19:45.

Africa? Energy equals opportunity. So if we can put down some solar

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power grid where the sun is in abundance, children can study into

:19:52.:19:55.

the evening, vaccines can be stored safely, streets and homes can be lit

:19:56.:20:00.

at night. It sounds wonderful, but in terms of the logistics of it,

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what have you had to do in terms of working with the authorities to make

:20:05.:20:09.

sure this does happen. Do you have a team out there that install these

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things? We have got a team out in of a rick rick and we have been out to

:20:14.:20:20.

Africa on numerous occasions, we have spoken to the World Bank and

:20:21.:20:23.

Government officials and there is a huge appetite because I think many

:20:24.:20:28.

African nations know that rolling out grid infrastructure is

:20:29.:20:32.

particularly extensive and reaching the most remote, the last mile

:20:33.:20:35.

communities will be difficult and you have got to include the private

:20:36.:20:39.

sector. What does it cost you as a company to put out one of the grids?

:20:40.:20:46.

Between $70,000 and $100,000. US dollars? That's why it is a

:20:47.:20:50.

community of people here in the UK switching on a community over in

:20:51.:20:57.

Africa. It costs $70 for every customer to switch. If we cut that

:20:58.:21:03.

out, we can use that to give back to people elsewhere. You are a former

:21:04.:21:07.

journalist... Yes. Now you are running the company and heavily

:21:08.:21:10.

involved in the work in Africa. How do you make the leap from there to

:21:11.:21:14.

there? Well, this was the kind of company that I wanted to buy from

:21:15.:21:18.

and it didn't exist and there is a whole new generation of people out

:21:19.:21:21.

there that want it do good with their money and care about where

:21:22.:21:24.

their money goes. I was a business editor on a national newspaper and I

:21:25.:21:28.

was looking, I realised that businesses had a huge opportunity it

:21:29.:21:31.

do some fundamental good in the world. So I ditched my career at 30,

:21:32.:21:37.

I went and studied an M BA, I got involved in merge, in clean

:21:38.:21:40.

technology and I built the business over the last two years and raised

:21:41.:21:44.

investment and launched last month. Well, all the best. Thanks. Good

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luck. I look forward to your switch! We will keep an eye on you, that's

:21:51.:21:52.

for sure. In a moment we'll take a look

:21:53.:21:55.

through the Business Pages but first here's a quick reminder of how

:21:56.:21:58.

to get in touch with us. The Business Live page is where you

:21:59.:22:03.

can stay ahead with all the day's breaking business news. We'll keep

:22:04.:22:07.

you up-to-date with all the latest details with insight and analysis

:22:08.:22:11.

from the BBC's team of editors right around the world. And we want to

:22:12.:22:16.

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

:22:17.:22:22.

And on Twitter we're at: You can find us on Facebook at:

:22:23.:22:28.

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

:22:29.:22:34.

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

:22:35.:22:42.

What lengths have you gone to to get to work on time or save money? Let's

:22:43.:22:49.

talk about the massive Italian bank to start with. Sources from the

:22:50.:22:52.

Treasury are saying a rescue is in place. What do you know? Yes, I

:22:53.:22:56.

don't know if it is completely done and dusted. Overnight the third

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largest lender in Italy, it is very old, it is the oldest continuously

:23:02.:23:08.

trading bank in the world, it has a long track record, but it trying to

:23:09.:23:22.

stay afloat. If it is going to do the rescue deal, it will have to

:23:23.:23:26.

bail-in its lenders. Some of the lenders are ordinary retail

:23:27.:23:33.

investors. So you can imagine the Government coming to power, saying,

:23:34.:23:37.

"You have to foot the bill for a banking collapse." Where is this

:23:38.:23:41.

money coming from? The cornerstone was meant to be the state of Qatar.

:23:42.:23:47.

Between the two of them you get to five billion. Whether it will

:23:48.:23:53.

happen, without the Italian state having to intervene against Europe's

:23:54.:23:56.

rules and you have another clash between the Italian national

:23:57.:23:59.

Government and Brussels, the whole thing is not done and dusted yet. It

:24:00.:24:05.

is very, I think, this has a long way to run. Dominic, an astonishing

:24:06.:24:16.

story. Amazon workers in Scotland sleeping near the warehouse in

:24:17.:24:23.

tents. That picture really is damning,

:24:24.:24:27.

isn't it? It is actually. There have been a number of investigations into

:24:28.:24:32.

Amazon's workplace practises and some of them uncovered some

:24:33.:24:36.

unhealthy and unsavoury tactics. It is part of the whole two-speed

:24:37.:24:41.

economy. Asos said it was going higher another 1500 people in --

:24:42.:24:47.

hire people in London. These are in IT and marketing and planning. You

:24:48.:24:51.

have this idea that in London and around the M25, highly skilled well

:24:52.:24:56.

paid workers. Outside the M25, working for the same company,am

:24:57.:25:00.

sorngs aso, you're not so secure and not so highly paid.

:25:01.:25:04.

It is not just about Amazon, but it is the delivery people. There was

:25:05.:25:08.

concern about the different smaller courier companies and the people who

:25:09.:25:13.

work for them? Amazon, of course, subcontracts the delivery and a lot

:25:14.:25:17.

of the delivery firms are subcontracted so they don't have

:25:18.:25:20.

responsibility for the employment. Who are these people really working

:25:21.:25:24.

for? We were discussing that, the crux of this is they have to pay ?10

:25:25.:25:28.

to get on the bus to travel there because there is no other public

:25:29.:25:32.

transport, but that takes a big chunk out of their money, but we

:25:33.:25:36.

have to pay to get to work, is it fair this is a particular problem

:25:37.:25:42.

for Amazon? It is wrong to decry Amazon, this is one example a few

:25:43.:25:48.

people. We need to talk to the workforce, do they enjoy their job?

:25:49.:25:52.

What would they be doing if they didn't have Amazon?

:25:53.:25:56.

Thank you for your time. We're back tomorrow. Fingers crossed the tech

:25:57.:25:58.

will work. See you soon. Bye-bye. Good morning. It has been a rather

:25:59.:26:14.

grey start to the day. We've got a lot of low cloud around and

:26:15.:26:15.

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