17/01/2017 BBC Business Live


17/01/2017

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

:00:00.:00:00.

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

:00:07.:00:09.

prepared to take Britain out of the single market

:00:10.:00:11.

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

:00:12.:00:15.

That's the message from Theresa May to Brussels.

:00:16.:00:34.

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

:00:35.:00:38.

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

:00:39.:00:44.

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

:00:45.:00:46.

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

:00:47.:00:50.

and corruption cases in overseas markets.

:00:51.:00:55.

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

:00:56.:01:00.

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

:01:01.:01:11.

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

:01:12.:01:13.

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

:01:14.:01:16.

And it's being reported that flying cars could be

:01:17.:01:22.

Today we want to know what sci fi technology

:01:23.:01:26.

you would like to see becoming a reality?

:01:27.:01:28.

Good to have you with us. A warm welcome.

:01:29.:01:48.

Theresa May will today deliver a highly-anticipated speech

:01:49.:01:50.

on the UK's future outside the European Union.

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

:01:53.:01:57.

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

:01:58.:01:59.

Reports over the weekend suggest the British Prime Minister will use

:02:00.:02:05.

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

:02:06.:02:09.

market, although Downing Street described this as speculation.

:02:10.:02:17.

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

:02:18.:02:24.

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

:02:25.:02:25.

pound. On Monday, the pound

:02:26.:02:32.

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

:02:33.:02:34.

sterling dropping more than 1% to below $1.20 before

:02:35.:02:37.

recovering slightly. The EU single market guarantees

:02:38.:02:39.

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

:02:40.:02:42.

Government has indicated they will want to limit the movement

:02:43.:02:45.

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

:02:46.:02:48.

more about her Brexit plan, Theresa May will strike

:02:49.:03:10.

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

:03:11.:03:12.

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

:03:13.:03:15.

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

:03:16.:03:18.

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

:03:19.:03:21.

in order to gain control of immigration and freedom

:03:22.:03:23.

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

:03:24.:03:25.

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

:03:26.:03:28.

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

:03:29.:03:31.

opportunities that Brexit presents, not just for controlling immigration

:03:32.:03:34.

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

:03:35.:03:36.

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

:03:37.:03:52.

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

:03:53.:03:55.

Brexiteers, but whilst the President-elect said the UK

:03:56.:03:58.

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

:03:59.:04:02.

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

:04:03.:04:04.

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

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

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

:04:15.:04:18.

in the single market She also needs to indicate

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

:04:22.:04:27.

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

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bargaining with 27 members determined to safeguard the future

:04:33.:04:36.

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

:04:37.:04:48.

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

:04:49.:04:51.

according to the The move is aimed at helping

:04:52.:04:53.

the firm create or retain more than 1000 jobs -

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it follows recent criticism of the company

:04:57.:04:58.

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

:04:59.:05:03.

bank notes have been issued against a backdrop

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of spiralling inflation. The largest of the first three

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

:05:09.:05:13.

in December and the delays have caused chaos as people queued

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for days to exchange A South Korean court will decide

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on Wednesday whether the boss of Samsung should be arrested

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on bribery charges. Lee Jae Yong is accused of paying

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around $36 million to organisations controlled by a friend

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

:05:30.:05:34.

leader of Samsung received favours that helped him gain control

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of the company. Two things are dominating business

:05:38.:05:51.

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

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

:05:57.:06:01.

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

:06:02.:06:06.

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

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

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is the trend. Also on the Businesslike page, lots

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

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page. Soon we will be speaking with the

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markets expert. Rolls Royce is paying more

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

:06:30.:06:32.

US and Brazilian authorities. The British engineering group

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was accused of paying to win contracts in Indonesia,

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

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

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

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are paying such an enormous pine for dodgy behaviour?

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

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Government is not exactly serious about tackling bribery and

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

:07:14.:07:18.

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

:07:19.:07:23.

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

:07:24.:07:26.

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

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countries were identified where Rolls-Royce had allegedly hired

:07:33.:07:36.

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

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authorities started looking into this in 2012 with some deals dating

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

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suspension over prosecution, provided that the company fulfils

:07:52.:07:56.

certain requirements. Thank you, Mariko. Rolls-Royce

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

:08:00.:08:04.

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

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

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

:08:16.:08:22.

that has hit exporters trading in Tokyo.

:08:23.:08:27.

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

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

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coming out today which is very interesting given that lad Mark

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

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given that we had Mark Carney's speech.

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

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

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

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expected to have benefited from the volatile US markets around the

:09:00.:09:03.

presidential elections. The same thing will likely play out

:09:04.:09:06.

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

:09:07.:09:12.

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

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

:09:16.:09:19.

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

:09:20.:09:24.

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

:09:25.:09:29.

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

:09:30.:09:33.

Thursday when they report. The weekends with the inauguration of

:09:34.:09:36.

Donald Trump as the next president of the United States.

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Thank you. Joining us is Nandini Ramakrishnan,

:09:40.:09:40.

global market strategist at JP Thank you for coming in this

:09:41.:09:49.

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

:09:50.:09:53.

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

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

:09:58.:10:01.

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

:10:02.:10:04.

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

:10:05.:10:10.

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

:10:11.:10:14.

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

:10:15.:10:17.

that nervousness. The Governor of the Bank of England,

:10:18.:10:21.

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

:10:22.:10:25.

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

:10:26.:10:30.

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

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

:10:36.:10:38.

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

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

:10:43.:10:48.

1.2% at the latest region, expectations are for slightly

:10:49.:10:51.

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

:10:52.:10:59.

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

:11:00.:11:03.

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

:11:04.:11:09.

ahead. It is difficult for businesses and consumers? Towards

:11:10.:11:12.

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

:11:13.:11:15.

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

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

:11:21.:11:23.

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

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

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

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

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

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

:11:48.:11:52.

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

:11:53.:11:56.

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

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

:12:00.:12:00.

China takes Davos spotlight - President Xi Jinping will today

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become the first Chinese leader to address the annual

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World Economic Forum in the Swiss resort.

:12:07.:12:08.

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

:12:09.:12:10.

You're with Business Live from BBC News.

:12:11.:12:23.

First news of a big deal in the tobacco industry.

:12:24.:12:25.

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

:12:26.:12:28.

for control of US rival Reynolds, creating the largest

:12:29.:12:30.

The UK company has been in talks with Reynolds for months

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

:12:37.:12:40.

Theo Leggett is in the business newsroom.

:12:41.:12:48.

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

:12:49.:12:55.

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

:12:56.:12:58.

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

:12:59.:13:02.

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

:13:03.:13:07.

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

:13:08.:13:11.

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

:13:12.:13:16.

United States remains the second most profitable tobacco market in

:13:17.:13:23.

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

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reason the companies from other countries have been reluctant to

:13:26.:13:28.

take control of American tobacco makers is pretty clear, because

:13:29.:13:32.

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

:13:33.:13:35.

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

:13:36.:13:40.

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

:13:41.:13:44.

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

:13:45.:13:48.

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

:13:49.:13:54.

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

:13:55.:13:58.

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

:13:59.:14:03.

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

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

:14:06.:14:09.

another potential advantage of the deal.

:14:10.:14:11.

Thank you, Theo Leggett from the business unit.

:14:12.:14:17.

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

:14:18.:14:23.

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

:14:24.:14:31.

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

:14:32.:14:34.

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

:14:35.:14:38.

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

:14:39.:14:42.

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

:14:43.:14:46.

about an increase in prices in imports and concerns about

:14:47.:14:49.

inflation. You did that so well. The latest on

:14:50.:14:54.

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

:14:55.:14:55.

you soon. Our top story, the British Prime

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

:14:59.:15:06.

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

:15:07.:15:08.

she wants a full break from the European Union rather

:15:09.:15:13.

than a deal that leaves Britain A quick look at how

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markets are faring. For London and for currency traders

:15:17.:15:28.

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

:15:29.:15:33.

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

:15:34.:15:35.

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

:15:36.:15:39.

her speech which is take place here in London.

:15:40.:15:42.

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

:15:43.:15:44.

ready for a star turn at the World Economic

:15:45.:15:47.

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

:15:48.:15:51.

addressed the global gathering and what he says about growth

:15:52.:15:53.

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

:15:54.:15:58.

It has launched an ambitious five year programme to boost

:15:59.:16:02.

There are around 780 government-backed

:16:03.:16:08.

venture funds designed to boost innovation.

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Latest estimates suggest those funds have raised around $231 billion

:16:11.:16:12.

Dr Kai-Fu Lee is a former vice-president

:16:13.:16:20.

at Google and now runs a venture capital firm Sinovation

:16:21.:16:23.

which invests in start ups in China and the US.

:16:24.:16:32.

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

:16:33.:16:38.

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

:16:39.:16:39.

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

:16:40.:16:47.

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

:16:48.:16:52.

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

:16:53.:16:56.

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

:16:57.:17:00.

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

:17:01.:17:04.

globalisation continue rather than become stalled. China coming on to

:17:05.:17:10.

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

:17:11.:17:13.

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

:17:14.:17:16.

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

:17:17.:17:22.

Well, it is an interesting opportunity because China is now

:17:23.:17:27.

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

:17:28.:17:35.

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

:17:36.:17:39.

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

:17:40.:17:44.

face recognition and we believe that tech readiness gives China an

:17:45.:17:48.

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

:17:49.:17:52.

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

:17:53.:17:58.

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

:17:59.:18:02.

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

:18:03.:18:08.

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

:18:09.:18:13.

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

:18:14.:18:18.

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

:18:19.:18:23.

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

:18:24.:18:29.

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

:18:30.:18:33.

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

:18:34.:18:37.

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

:18:38.:18:40.

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

:18:41.:18:47.

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

:18:48.:18:51.

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

:18:52.:18:56.

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

:18:57.:19:02.

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

:19:03.:19:06.

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

:19:07.:19:09.

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

:19:10.:19:13.

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

:19:14.:19:19.

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

:19:20.:19:23.

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

:19:24.:19:27.

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

:19:28.:19:32.

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

:19:33.:19:36.

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

:19:37.:19:39.

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

:19:40.:19:42.

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

:19:43.:19:47.

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

:19:48.:19:51.

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

:19:52.:19:57.

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

:19:58.:20:00.

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

:20:01.:20:04.

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

:20:05.:20:08.

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

:20:09.:20:11.

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

:20:12.:20:15.

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

:20:16.:20:20.

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

:20:21.:20:24.

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

:20:25.:20:28.

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

:20:29.:20:33.

really the English speaking market and the mainland China market

:20:34.:20:36.

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

:20:37.:20:41.

their venture capital intake by showing that the market opportunity

:20:42.:20:45.

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

:20:46.:20:50.

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

:20:51.:20:54.

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

:20:55.:20:57.

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

:20:58.:21:02.

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

:21:03.:21:08.

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

:21:09.:21:10.

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

:21:11.:21:21.

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

:21:22.:21:25.

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

:21:26.:21:29.

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

:21:30.:21:34.

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

:21:35.:21:39.

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

:21:40.:21:43.

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

:21:44.:21:46.

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

:21:47.:21:50.

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

:21:51.:21:54.

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

:21:55.:21:57.

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

:21:58.:22:01.

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

:22:02.:22:05.

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

:22:06.:22:07.

our own Parliament. In a moment we'll take a look

:22:08.:22:10.

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

:22:11.:22:13.

to get in touch with us. The Business Live page

:22:14.:22:16.

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

:22:17.:22:18.

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

:22:19.:22:20.

with all the latest details with insight and analysis

:22:21.:22:22.

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

:22:23.:22:26.

to hear from you too. Get involved on the BBC

:22:27.:22:29.

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

:22:30.:22:34.

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

:22:35.:22:37.

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

:22:38.:22:56.

excuse! We have got a fun story in the

:22:57.:23:04.

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

:23:05.:23:15.

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

:23:16.:23:27.

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

:23:28.:23:33.

traffic and congestion in cities. From a macroeconomic prospect this

:23:34.:23:39.

is a cool manifestation this infrastructure theme. People putting

:23:40.:23:42.

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

:23:43.:23:47.

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

:23:48.:23:51.

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

:23:52.:23:55.

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

:23:56.:24:02.

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

:24:03.:24:07.

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

:24:08.:24:16.

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

:24:17.:24:22.

technology. A viewer says, "I waited 50 years

:24:23.:24:27.

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

:24:28.:24:32.

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

:24:33.:24:38.

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

:24:39.:24:49.

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

:24:50.:24:54.

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

:24:55.:24:58.

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

:24:59.:25:02.

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

:25:03.:25:06.

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

:25:07.:25:11.

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

:25:12.:25:15.

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

:25:16.:25:19.

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

:25:20.:25:24.

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

:25:25.:25:28.

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

:25:29.:25:31.

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

:25:32.:25:36.

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

:25:37.:25:39.

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

:25:40.:25:42.

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

:25:43.:25:45.

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

:25:46.:25:48.

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

:25:49.:25:52.

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

:25:53.:25:58.

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

:25:59.:25:59.

well. See you soon. Good morning to you.

:26:00.:26:11.

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

:26:12.:26:15.

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

:26:16.:26:18.

the day and much of this week. The

:26:19.:26:20.

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