17/01/2017 BBC Business Live

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

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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