14/12/2016 BBC Business Live


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


America's Central Bank prepares to raise the cost of borrowing


We'll assess what a hike would mean for America


Live from London, that's our top story on Wednesday, 14th December.


Markets have factored in the rate rise already -


We'll assess the impact on economies around the globe.


Our Asia business hub will update us on what could be a lucrative


Markets in Europe are headed down slightly today, but traders across


Europe's key financial centres will be looking to Wall Street.


Bringing fast internet to the masses.


That's the promise of 5G connectivity but with many areas


struggling to get just a slow, basic service,


We'll get the inside track from the man charged with speeding


And small businesses say they're "very confident" about next year.


So we want know - are you expecting next year to be


The world's most powerful central bank today makes a decision that


could have reverberations around the globe.


The US Federal Reserve is widely expected to announce that it's


raising interest rates for only the second time in ten years.


It comes amidst signs the US economy is strengthening.


The move would make the cost of borrowing more


expensive for Americans, but will also have an impact


elsewhere especially in developing economies.


Our correspondents around the world explain.


Here in Singapore and around South East Asia, expectations have been


rising that the US will hike interest rates. That's led to money


flowing out of Asia and into the US dollar which has resulted in sharp


declines in Asian currencies. One of the worst affected is Malaysia. It


has seen its currency fall to record lows in recent weeks and this is


coming at a time when many Asian companies have to start paying back


their debts. Much of that is in US dollars and it will be far more


expensive to do that now than it has been in the past.


In Brazil, Brazilians feel any move by the US Fed. Also Brazil relies


heavily on commodities sold in US dollars so the country and its


companies are generating less revenue in real terms. That means a


slower growth and a weaker economy. In India the stock markets have been


volatile ahead of the Fed's meeting. A rate hike in the US could lead to


a cash flight here in India with foreign investors selling off their


stocks and equities and that could weaken the Indian rupee as well, but


compared to other emerging markets, the impact is expected to be


limited. Mike Bell is global


market strategist at JP Morgan Asset Management joins us


in the studio. Mike, why a US rate rise now? The US


economy is heating up. Consumers are feeling better about the outlook and


the number of homes being built is increasing. The US is in a place


where it can with stand a higher rate of interest. Is it too late?


They should have put rates up earlier, but I think they waited and


now they're going to go, I think. What is the danger that if they


don't do it today, what happens to the economy? You talked about the


picture looking good. Unemployment is coming do you think and price


stability on track, what does it mean if they don't do it now, there


is a danger the economy overheats? Precisely. The unemployment rate is


so low that you would expect wages to start picking up. And if they


don't put interest rates up now and in the coming months over next year,


then it could lead to an overheating of the economy which means they


would have to put interest rates up faster later which would be


negative. What about about maybe said following the announcement of


the rate increase, assuming that does happen. Everyone wants to know


what the steer is going to be? It is unlikely that they will give that


much away. They have been saying for sometime now that they will put


interest rates up twice next year. That's in line with our forecast.


Until recently, the market didn't believe them, but you have seen


since the election the markets moving to price in two rate rises


next year. On the issue of the election, are we expecting the Fed


to give us any indication about what they might happen as a result of a


Trump presidency. It maybe not so clear, but could they talk about the


economic impact or what may happen as a result of the Trump presidency?


In a word, no. I think they're unlikely to comment on that. They


will probably talk about the fact that even beside that, the economy


is heating up. You're seeing that prior to any fiscal stimulus from


the Trump administration, but they will want to see what actually gets


passed rather than speculate about what he might do. What is your view


on what the Trump boost maybe like. Some are saying there will be a


short-term boost, but although unemployment is very low, wages are


also remaining very low. People haven't really got that extra bit of


money to spend therefore, the economy won't be boosted much? We


expect wage growth to pick up and the tax cuts to be helpful for the


economy and they could add 0.5% to US GDP next year and the year after


that, but helpful, but not an enormous stimulus. Mike Bell, thank


you. Michelle and Samira will be across


that later on in the United States where they are based.


It is a big day at scandal-hit Mitsubishi Motors.


Shareholders are expected to approve Carlos Ghosn as chairman


He currently runs rivals Nissan and Renault.


They will also vote on whether to triple


the annual pay packages of Mitsubishi Motors'


Mr Ghosn is taking over the reins of Mitsubishi after Nissan


bought a controlling stake earlier this year.


The US bank Wells Fargo has been hit with restrictions


after failing to fix its bankruptcy contingency plan.


Banks labelled "too big to fail" must have a so-called "living will"


that would allow them to close down without the help of public money.


Wells Fargo will be barred from opening international branches


and buying non-bank companies until it satisfies the regulators.


Let's take you to the Business Live page. It makes a change that we're


talking about a firm taking on staff! You will know we're talking


about tech firms particularly laying off staff, but there is a story here


that, ahead of Trump meeting IBM promises a hiring spree. It says it


will hire 25,000 staff in the United States over the next four years.


Quite a few big names in technology are expected to be headed to Trump


Tower to meet the president including the likes of Tim Cook, the


head of Apple and other big tech chiefs. It will be interesting to


see how that set of meetings goes. The golden elevator moment! Trump


has fired warning shots at tech firms recently about where they make


things and their tax arrangements. It would be nice to be a fly on the


wall there, I think! Shares in some of the world's


biggest gambling firms have rallied after the legalisation of casinos


in Japan moved a step closer. Tim, this is an important move


because a lot of people there like gambling, it is fair to say? Yes,


well, I mean, Japan has been traditionally reluctant to go down


this path and opponents in Japan have more or less the same worries


as opponents everywhere, that's gambling addiction and one party in


the Prime Minister's ruling coalition has expressed doubts. So


it is fair to say the Bill is controversial, but casino gambling


is looking likely. Backers hope it will attract billion in new


investment and Japan is already a gambling nation, of course, but not


in casinos, people bet on horse races and it has its home-grown


gaming machines which are popular. Maybe that's why Japan is seen as a


huge untapped market for casino operators. It could be a $40 billion


industry. Foreign casino operators will be keeping a close eye on it.


The news wasn't positive for gambling linked companies which


rallied earlier in the day, but closed lower.


A quick look at how markets are faring.


We are off a little. Yesterday, the markets in Europe closed, some of


them up over a 1% higher. So a little bit of profit taking perhaps


going on in Europe. I don't know if we can show you Asia as well, but


Japan up slightly at the close. Hong Kong was down. Again, some profit


taking going on in Asian markets. We haven't got the figures for you


there. That's Europe again, clearly. But just to say that in Japan, we


had a survey out and news from the Bank of Japan.


Joining us is Mike Amey, managing director and


Let's pick up on the Fed. We've touched on it at rt start of the


programme. A big day? Yes, it is a big day. The last time they raised


rates was December last year. They will be pleased to get this one


through and hopefully get a relatively calm market reaction.


They are trying to make it as clear They are trying to make it as clear


as you can do that they are going to do it and you hope that the event


doesn't create volatility. They want to tell everyone that it is going to


happen, so when it does happen, you get a tame market response, but we


never know and it is a big day. So we will wait and see. Are you with


the other Mike in the programme who says another two rate hikes next


year? That's a reasonable expectation. We probably say two to


three and the Fed has indicated two. So we would say that there is a risk


that they will do more than that. What crucially we don't think is


going to happen is a very sharp rise in interest rates simply because of


fiscal policy and a big pump from Donald Trump. Explain what the Bank


of Japan announced. Because they are in the opposite? The dark art of


banking in Japan. They focussed not just on short-term interest rates,


but longer term interest rates as well. So they've capped out ten year


interest rates at 1% and then if you go out further, longer rates have


been going up and they have been trying to temper that down, they are


trying to manipulate not just short-term interest rates, but every


interest rate that they can. A snapshot of what the UK is doing. We


had inflation data yesterday and unemployment data today? The


inflation tells us tell us that we had low inflation. We think it will


go up next year, probably the high twos because of the effect of


sterling, it will take time for imported goods to go up in price.


The labour data has been good. Employment levels are high, but we


have the problem of wages. People have got a lot of jobs, but they are


not getting paid particularly well and that's really what we would like


to see to get the economy going again.


Mike, we'll return. Thank you, Mike.


The need for speed 5G promises superfast internet on the move


but with many countries still struggling with


We ask who's winning and what needs to be done


You're with Business Live from BBC News.


Train bosses and unions will start formal talks this morning


in an effort to resolve the Southern Rail dispute.


The operator has advised its 300,000 daily passengers not to travel,


after ASLEF and RMT members walked out from midnight yesterday.


Southern Rail and the unions have agreed to meet at the conciliation


service ACAS this morning as services are cancelled


Our reporter Andy Moore is at ACAS this morning.


Well, a lot of people will be pinning their hopes on the talks.


They are due to get under way between the two sides in the dispute


at 10am this morning. We now know there were some informal talks


yesterday, but they are moving to a more formal basis today. We don't


know if there are any new proposals to break the deadlock. There have


been lots of talks in the past here at ACAS in the long running dispute


and they never got anywhere. The dispute is over who operates the


doors on the trains, whether it is the driver or the guard. As you say


we are in the second day of this dispute, 2200 train services


cancelled, more than a third of a million people affected and unless


there is a solution here today, the strike action will go on. There is a


24 hour strike that is planned for Friday. More industrial action


before Christmas and a six day long strike is planned for next year


unless something happens at the talks today.


More detail on that, of course, I want to take you to the business


pages. This net migration story is worth a


read. That's an employers group calling on


the Government to abandon an immigration target which was set by


David Cameron. You will see HSBC closing a quarter of its branches.


You will know if you looked at your local High Street of late that a


number of branches have disappeared. An investigation by Which? Says the


bank closed a quarter of UK branches over the last two years. It adds up


to 1,000 closures altogether. If your high street is look ago little


empty, it maybe because one of those branches has disappeared.


Business Live, all the data you need to know as it comes in to us at the


BBC. The world's most-powerful central


bank today announces The US Federal Reserve is expected


to hike the cost of borrowing. It would be just the second time in


the last decade that it has done that. We will be right across the


story. A new report from the National


Infrastructure Commission says the UK ranks 54th in the world


for 4G connectivity. Yes, according to the league table,


Britain's coverage falls behind country's such as Romania,


Albania and Panama. South Korea is planning to have 5G


rolled out by 2020. The Commission is calling on the UK


to focus its investment on its 5G infrastructure instead,


and get it rolled out seamlessly Lord Adonis is the chair of the


National Infrastructure Commission. There is a lot to talk about. It is


interesting, if you make the comparison with speeds in the UK


against elsewhere, we are lagging behind. But it into context. We were


slow in introducing 4G, slower than the United States, which had a


five-year march. Coverage is poor. We 54th in terms of the quality of


coverage. For a typical user, how much of the time can you get 4G


connectivity, it is barely half the time. We need to make big further


investments to raise our game, and a lot of the infrastructure for 4G can


then be moved across to 5G, which needs to happen as early as possible


so we are not behind. People say if they are struggling to get 4G at the


moment, why are we talking about 5G? The investment we need is in 4G, to


get the current state-of-the-art service. Putting that investment in


place, amongst the worst coverage is on the trunk, train and road


systems, where they are not covered by existing targets. There should be


proper provision in place with highways England and Network Rail


setting a standard and getting the private sector to deliver. And then


that can be transferred across to 5G. This is not either or. Getting


decent quality coverage for today is essential to being ahead of the game


tomorrow. This matters, because we have nearly 2 billion rail users a


year, hundreds of people travelling to work, if they can get on a train,


and they use it as their office. If they can't get connected, it is a


huge productivity problem. When I am not connected and I tried to get


somewhere and I need my 4G to tell me how to get there, I get lost,


because there is no connectivity, so I am following a map and it stops


working. In the Autumn Statement Philip Hammond announced money for


this, ?1 billion to boost the UK digital connectivity. Is that


enough? That is very welcome. It will enable us to do big pilot


rejects for 5G, selecting towns and cities and putting the


infrastructure in place early so you can start looking at applications,


what you can do in terms of connected vehicles are sending data


to people much faster, which will encourage new companies to come in.


But most investment will not come from the Government, it comes from


the private sector, paid for through bills. That will be billions. When


will 5G be reality in the UK? In 2019 the international standards are


likely to be set. Once that starting gun has been fired, the question is


who can move fastest. With 4G we were very slow, the regulator was


behind the curve, which is part of the reason why we are still 54th in


the world. We cannot allow that to happen again this time, and


especially after Brexit, this really matters. When it comes to


priorities, we look at big spending on HS2, the high-speed rail line


from London to the north-west, and says, I live in central London, I


have poor Internet connectivity, why would 5G make a difference? It is


all well and good getting on a train quicker, but if you can work on that


train, it would not matter if it took 20 minutes longer. I started


HS2, the big argument for it is a similar argument for 5G, capacity,


as the population rises, as travel requirements increase, we need


significant extra capacity over and above the Victorian railway lines,


because the lines we depend upon were built 150 years ago. That is


the argument for HS2. If you are going to build these things, you do


it to modern standards, it would be ludicrous to build a new railway


line like the Victorians did. It is about prioritising what is


important. They are both forms of connectivity, it is mobile


connectivity, which is vital, downloading large and stuff, and it


involves getting from a to B and getting goods from a to B. Both are


important. The idea that a modern country can't have both things is


laughable. That is not what they say in the United States or Asia. We


need to get real and prioritise these investments, some will be born


by the taxpayer, some will be born privately. This needs to be worked


out, and done. Best of luck with the project, a lot of people will be


well connected to this story. From the global bosses we talk to,


their frustration when they come here about the fact they are


travelling and they can't stay connected. It is a scandalous


situation, it needs to be sorted out.


In a moment we'll take a look through the business pages,


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


Our web page is where you can stay ahead, but all of the braking


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


with insight and analysis from our team of editors around the world. We


want to hear from you as well, get involved on our web page. We are on


Twitter and Facebook. On TV and online, whenever you need to know.


Joining us is Mike Amey, managing director and


I love this one in the Washington Post, it is rare that we talk about


a business but says it is very confident, these are small


businesses that say 2017 is good for them. It is nice to hear such


positivity. Therein lies one of the reasons why things like American


equities are high. A lot of the policies that Donald Trump is


talking about art pump priming the American economy. That is why do


seeing this positive response. This is American small businesses, to


make that clear. They employ half of the American workforce, which is


pretty significant. We ask viewers to get in touch to say how they are


feeling. Hayden says, we are being -- seeing signs that things are


improving, hopefully it will continue. It will be interested to


see what small and medium-sized businesses thinking here. There are


surveys, they don't necessarily split down between small and large


businesses. So far the Brexit hit has been quite subdued, and people


are looking forward to the future. There is a great story in the


Independent, it says Uber employee 's use the app to spy on people. It


is to do with a version of the app that staff can access. Uber can


track you with the phone, assuming you have the collectivity! If you


don't want to be tracked, go down the trunk roads! Uber has an app,


where they can follow you, if it is that appropriately, so there is an


issue there. But Uber, they want to know where people are going, but it


is about who has access to that information. Uber want to know where


people go so they can optimise where their cars. There is a good business


reason for it, the issue is, who has access? The access may be more


widespread. It was called the godly mode, and they have changed the name


to something else. Heaven view. Both idea. It is one of those... Uber is


growing and growing. I guess you have to think about your HR


policies, that they are in line with the growth, and sometimes they are


way behind. You have to think about the number of people who have access


and the information they have access to. If it is a small company, it is


a different operation.


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