17/01/2017 BBC Business Live


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This is Business Live from BBC News with Sally Bundock and Rachel Horne.


Hard Brexit ahead for HMS Britannia - The UK's PM will today say she's


prepared to take Britain out of the single market


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


That's the message from Theresa May to Brussels.


The Prime Minister's speech will set out 12 priorities for the EU exit


deal that she hopes to strike, but is she wishful thinking?


Also in the programme, Rolls-Royce on the rack,


the aerospace giant agrees to pay $800 million fine to settle bribery


and corruption cases in overseas markets.


It is steady for now but how will markets react once Theresa May


Later we'll be live in Davos where for the first time


in the history of the event a Chinese President will attend.


We'll be getting the inside track on what this tells us about China's


And it's being reported that flying cars could be


Today we want to know what sci fi technology


you would like to see becoming a reality?


Good to have you with us. A warm welcome.


Theresa May will today deliver a highly-anticipated speech


on the UK's future outside the European Union.


The speech will focus on global Britain and how the UK can be


an outward-facing nation as it seeks new post-Brexit relations


Reports over the weekend suggest the British Prime Minister will use


today's speech to signal the UK will pull out of the EU single


market, although Downing Street described this as speculation.


It was all over the papers on the weekend, various leaks of what her


speech will reveal. This has had a huge impact on the value of the


pound. On Monday, the pound


hit its lowest level for more than three months on the reports -


sterling dropping more than 1% to below $1.20 before


recovering slightly. The EU single market guarantees


the free movement of goods, capital, services, and people but the UK


Government has indicated they will want to limit the movement


of people as part of any After months of pressure to tell us


more about her Brexit plan, Theresa May will strike


an optimistic note, telling us she wants a truly global Britain,


which gets out into the world. The Prime Minister may not be


explicit but she will again signal that she's ready to take Britain out


of the European Single Market, and perhaps the customs union, too,


in order to gain control of immigration and freedom


from European law. I think it's highly likely we'll be


coming out of the formal structures of the customs union and the single


market, just because that's the way we can really grasp the golden


opportunities that Brexit presents, not just for controlling immigration


but also free trade opportunities. ..But she'll say she wants a new and


equal partnership, declaring... Donald Trump's offer of a quick,


fair trade deal with the UK got the thumbs up from leading


Brexiteers, but whilst the President-elect said the UK


was so smart to vote for Brexit, those who disagree want


Britain to fight to stay I think the Prime Minister must not


wave the white flag and give up on our membership of the single


market if she cares If she's going to fight for Britain


and fight our corner, then she needs to fight to be


in the single market She also needs to indicate


that the final deal will be put Theresa May will set out 12


priorities for a deal. But she faces two years of hard


bargaining with 27 members determined to safeguard the future


of the EU without Britain. General Motors is set to announce


plans to invest about $1 billion in its US factories,


according to the The move is aimed at helping


the firm create or retain more than 1000 jobs -


it follows recent criticism of the company


by President-elect Donald Trump. In Venezuela new larger denomination


bank notes have been issued against a backdrop


of spiralling inflation. The largest of the first three


new notes is a 20,000 bolivar note. They were meant to be released


in December and the delays have caused chaos as people queued


for days to exchange A South Korean court will decide


on Wednesday whether the boss of Samsung should be arrested


on bribery charges. Lee Jae Yong is accused of paying


around $36 million to organisations controlled by a friend


of the South Korean President. It's alleged that the de facto


leader of Samsung received favours that helped him gain control


of the company. Two things are dominating business


today, Theresa May's speech and what is going on in Davos. It is a big


day there for other reasons but you found this story quite amusing,


coming out of the Swiss ski resort. Yes, somebody has decided to cash in


on the low temperatures, they are given away free hats, seen as a good


marketing tactic. I hope the hats have a nice bobble on the top, that


is the trend. Also on the Businesslike page, lots


of information on what is happening with the ?. -- on the Business Live


page. Soon we will be speaking with the


markets expert. Rolls Royce is paying more


than $800 million to settle a bribery probe with UK,


US and Brazilian authorities. The British engineering group


was accused of paying to win contracts in Indonesia,


China, Brazil and other markets. Let's get the low-down from Mariko


Oyella are Asia business hub. Such a well-known brand name, some people


are finding it shocking that they are finding it shocking that they


are paying such an enormous pine for dodgy behaviour?


Critics have already come out to say that this deal shows that the UK


Government is not exactly serious about tackling bribery and


corruption, but as you mentioned the agreements have been reached between


the company and authorities in the UK and US. You mention China and


Indonesia, according to a joint investigation by the BBC at the


Guardian last year it identified last year that at least a dozen


countries were identified where Rolls-Royce had allegedly hired


commercial agents to help secure high-value contracts. The UK


authorities started looking into this in 2012 with some deals dating


back more than a decade. Now with these agreements it means that the


suspension over prosecution, provided that the company fulfils


certain requirements. Thank you, Mariko. Rolls-Royce


making all the news for the wrong reasons last night and today.


Japan had a tough time today, mainly because the yen has strengthened


quite significantly for six days in a row versus the US dollar.


Safe havens are in favour, the price of gold has gone up, as has the yen,


that has hit exporters trading in Tokyo.


The Dow is down. Will the FTSE 100 react when Theresa


May speaks? We will discuss that in a moment. We have UK inflation data


coming out today which is very interesting given that lad Mark


Carney's speech last night, the governor of the Bank of England. --


given that we had Mark Carney's speech.


Let's look ahead to the day on Wall Street.


It is a shortened week in the US as Monday was a market holiday. On


Tuesday Morgan Stanley will report earnings and like US banks it is


expected to have benefited from the volatile US markets around the


presidential elections. The same thing will likely play out


on Wednesday when we hear from Goldman Sachs. We will also hear


from Citigroup on Wednesday, the most international of the big US


banks. People will be asking about the prospects for global trade


during the presidency of Donald Trump, who has said that he will


rework trade agreements. IBM's fortunes seem to be rising from its


cloud and data analytics businesses, but we will know for sure on


Thursday when they report. The weekends with the inauguration of


Donald Trump as the next president of the United States.


Thank you. Joining us is Nandini Ramakrishnan,


global market strategist at JP Thank you for coming in this


morning. Sally was talking about sterling dollar, Stirling had quite


a sharp fall against the dollar yesterday, it is up slightly this


morning, what factors are in play? The reality of Brexiters coming


forward with Theresa May's speech today, there is nervousness and


jitters in the market about what it means with the UK 's nation ship


with the EU under the parts of the world. Trade is such an important


part of the marketeer, currency is the way that the markets play out


that nervousness. The Governor of the Bank of England,


Mark Carney, spoke last night about what the Bank of England might do in


terms of interest rates, which is hard to gauge. We will have the


inflation numbers out in about 50 minutes. Your thoughts? A bit of a


mixed bag, the high inflation is you would expect Mark Carney and the


Bank of England to tighten rates, then you have the other factor of


Brexit on the table weakening the pound, that inflation in the UK is


1.2% at the latest region, expectations are for slightly


higher. Factors in play are higher oil prices, a lower pound, that


feeds into the British economy. He said the next move could be up or


down, I read that and I thought it was not helpful, trying to plan


ahead. It is difficult for businesses and consumers? Towards


the end of the year because of how high inflation might get, when you


look at some of what Mark Carney said, there is a lot of strength in


the UK consumer and the consumption numbers are quite strong, people are


still buying on the high street, ordering online and that kind of


commerce is still going on. The next move for the Bank of


England should be up, but later in the year. Do you think we will stick


at no point to 5%, which it is currently? Yes, and then maybe


towards the ends of the year it might get higher. -- do you think we


might stick at 0.25%. Remember that the Bank of England can reduce


quantitive easing and interest rates, it is watching the whole mix


of things this year. Nandini, you will be doing the


papers with is that the end of the programme, thank you.


China takes Davos spotlight - President Xi Jinping will today


become the first Chinese leader to address the annual


World Economic Forum in the Swiss resort.


We're going to be discussing the country's global


You're with Business Live from BBC News.


First news of a big deal in the tobacco industry.


British American Tobacco has agreed the terms of a ?40 billion deal


for control of US rival Reynolds, creating the largest


The UK company has been in talks with Reynolds for months


about buying the 57.8% stake it does not already own.


Theo Leggett is in the business newsroom.


Give us some more details? As you say, this deal has been in the thing


for several months now and it is pretty easy to see why British


American Tobacco is so clean on getting hold of Reynolds, which is


the maker of Camel cigarettes -- is so keen on. Reynolds provides a good


large chunk of British American Tobacco's annual profits, around


20%, so taking over the company as a whole, that is likely to go up. The


United States remains the second most profitable tobacco market in


the world after China, that sounds like good business as well. The


reason the companies from other countries have been reluctant to


take control of American tobacco makers is pretty clear, because


there were litigation risks. A number of US companies were facing


very large legal bills for their past record of how they marketed


cigarettes. That seems to have gone away, to a certain extent. Then


there is the e-cigarette market, electronic cigarettes are becoming


much more popular as governments start to clamp down on other types


of smoking and snuff etc. So vaping is becoming more popular, that is


another potential advantage of the deer. Investors are not quite sure


what to make a bit, shares were up yesterday evening, down at the


opening this morning and now creeping back up again -- that is


another potential advantage of the deal.


Thank you, Theo Leggett from the business unit.


I will play a quick word satiate a game with you, I say sausage rolls,


you say... Greggs. -- word association. Greggs


has reported a strong end to the financial year, expecting full


profits to be slightly ahead of expectations. You will remember last


you that they opened 145 shops but they are a bit more cautious about


the outlook for next year. Like many other retailers they are talking


about an increase in prices in imports and concerns about


inflation. You did that so well. The latest on


Greggs on business life, it is all that, regardless of the story. See


you soon. Our top story, the British Prime


Minister, Theresa May, will give a long-awaited speech


later today setting out her In the speech she is expected to say


she wants a full break from the European Union rather


than a deal that leaves Britain A quick look at how


markets are faring. For London and for currency traders


it is very much threading water at this point. The pound has gone up


versus the dollar compared to this time yesterday, but it will be


interesting to see what happens in the next few hours when she starts


her speech which is take place here in London.


The leader of the world's second biggest economy is getting


ready for a star turn at the World Economic


It's the first time that Xi Jinping or any Chinese president has


addressed the global gathering and what he says about growth


The country is keen to move away from heavy industry and sees tech


It has launched an ambitious five year programme to boost


There are around 780 government-backed


venture funds designed to boost innovation.


Latest estimates suggest those funds have raised around $231 billion


Dr Kai-Fu Lee is a former vice-president


at Google and now runs a venture capital firm Sinovation


which invests in start ups in China and the US.


Welcome to Business Live. Thank you for joining us from Davos. So,


speaking soon, what are you shope speaking soon, what are you


he'll say? Well, I think with he'll say? Well, I think with


Trump's election and Brexit, the world is looking for leadership that


will bring back globalisation and multilateralism and I don't know the


content of President Xi Jinping's speech, but the fact that he is


coming gives us hope that there will be strong leadership that will help


globalisation continue rather than become stalled. China coming on to


the world stage, just as this protectionist president-elect is


starting his new job in America at the end of the week and as we're


negotiating Brexit, do you think that gives China an upper hand?


Well, it is an interesting opportunity because China is now


ready as very fast growing economy as well as a very strong tech


sector. We at Sinovation Have invested in some of the world's best


technology company and they are based in China and they are doing


face recognition and we believe that tech readiness gives China an


opportunity to take on a greater role worldwide. You, as a company,


are focussed on China or the US when it comes to start-ups and where


you're investing. Are you concerned if president-elect Trump does turn


out to be fairly protectionist and anti-China and how that will affect


your business? Well, our investments are 95% in China. Only 5% in the US.


So we think our exposure is fairly small. But nevertheless, we have, we


bring a lot of positive benefits to China. Sorry, we bring a lot of


benefits to the US. For example, one of our investments VIP Kid will


bring 30 to 50,000 American teachers with additional income by teaching


Chinese kids. So we think there can be still win-win, if there is


growing protectionism on the US side. If you have got 95% of your


start-ups are in China, 5% in the US, is there a reason why you're not


investing in Europe? I would love to learn more about the opportunities.


There should be a lot of great tech companies. We know that for example


in the UK, artificial intelligence is very advanced and it is we would


be interested in looking at. What do you look for when you invest in a


tech start-up? I looked at your portfolio and the companies you have


invested in and they are extremely diverse. It is not a specific type


of product from what I can see, is it about leadership? Is it about


that kind of thing? It's first and fore most about people because we


invest in the very early stage. When we go in, a company maybe worth only


$5 million and when we exit hopefully it is $5 billion so those


are the companies we target. First and fore most, the founders have to


be very strong. They have to be great leaders. They have to have


great ideas and also great in execution. Secondly, we want to


invest in areas that are rapidly growing. Trends that are not yet


recognised, but will become much bigger. So we don't want to invest


in companies to take more share from a known existing pie, but in areas


that are not well understood, but have massive opportunity, autonomous


vehicles would be a good example of that today. And what would be your


advice to someone who is in a start-up world as it were, we


interview a lot of company bosses on this programme, they are quite small


companies, innovative companies, what's your advice to them and just


to say advice to you, watch our show if you want to know about good


European tech start-ups! Well, I think for any start-up,


having a big market is important. That's why US and China have some


unique advantages. If we look at the greatest markets in the world, it is


really the English speaking market and the mainland China market


because they are large enough for any company to snowball and increase


their venture capital intake by showing that the market opportunity


and potential is there. So from Europe, if it is from the UK, I


would suggest look at English speaking markets as a way to boot


strap your company. If it's from smaller countries or non English


speaking countries, I think it is focus on a core technology that can


easily go into the US market or the China market. Thank you very much


for your time this morning. The Chinese premier will be speaking in


20 minutes P go and get your seat! Some breaking news. This is comments


from the Austrian Finance Minister saying it will take five years for


Britain to fully negotiate its exit from the European Union rather than


the two years more than That is more often cited. This is the Austrian


Finance Minister who said this earlier today. He said nobody knows


how exactly it will happen. It's not clear what Article 50 means. It's


not clear if it is possible to negotiate in parallel, the exit and


the new contract or not. So really saying there is a lack of clarity.


That's a direct quote from him. It just brings to the fore again,


doesn't it, that there is a lot of uncertainty about how this process


will actually take place despite the fact that Theresa May may well be


delivering her speech with her 12 key points. There is a lot going on


in term of the legality across Europe, but also here in the UK with


our own Parliament. 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. The Business Live page


is where you can stay ahead with all the day's


breaking business news. We'll keep you up-to-date


with all the latest details with insight and analysis


from the BBC's team of editors around the world and we want


to hear from you too. Get involved on the BBC


Business Live web page. On Twitter we're at BBC business


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


whenever you need to know. There you go. You have got no


excuse! We have got a fun story in the


business pages. Do you remember Chilly chilly bang, bang. Airbus CEO


says flying car prototype will be ready by the end of the year.


Chitty-Chitty Bang Bang, you remember that. It should alleviate


traffic and congestion in cities. From a macroeconomic prospect this


is a cool manifestation this infrastructure theme. People putting


money and time into developing new products that help the consumer and


the urban dweller. If it works, it should be exciting. I'd like to take


a ride in one. We asked for tweets, what would you like to see as a


sci-fi thing come real, what would you? A flying car would be cool.


Maybe like a James Bond can sneak up on your traffic and enemies. I'd


like a cape like Harry Potter has so I can be invisible. A-viewer says,


"Jet packs so I can fly." We have got one for teleportation


technology. A viewer says, "I waited 50 years


since James Bond and they still haven't arrived." I would like time


travel. Just press pause so I'd get more sleep! A hover board. We have


got hover boards. They overheat. Moving on. We have got... We were


talking about Mark Carney, weren't we? We were talking about it earlier


and how difficult it is? A bit of a tightrope. The key message for him


was that there are a lot of good parts of the UK economy, some of the


things we track as I was mentioning earlier is the consumer and one of


the positives is that more consumer debt has come out and that looks a


bit, at face value maybe scary, but that's the payment on the debt is a


smaller percentage of income from consumers. It is a type of inflation


as well. It is not the right type, is it? Or is it the right type? What


I mean by that, it is just energy prices going up? It is that kind of


thing. It is not everything going up because of demand? That's a huge


part of the inflation dynamic at the moment. You would, ideally like


prices to go up because people are willing to pay more. Businesses are


willing to pay more. Is it actually more, it costs more because the


pound is so low and oil prices are so high? These are the things that


we will have to wait and see in the reports that come out this year.


Thank you very much for joining us this morning. Thank you too, for


your time. It has been good fun today. Wells you tomorrow. Join us


for more Business Live. I'm sure we'll been in Davos tomorrow as


well. See you soon. Good morning to you.


The weather is very quiet on the weather front today. Just a lot of


cloud across the UK and that's how it's going to stay through most of


the day and much of this week. The


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