26/01/2017 BBC Business Live


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This is Business Live from BBC News, with Aaron Heslehurst


Tax wars - can Brexit Britain and Trump's United States beat


the likes of Ireland at their own game and lure


back the multinationals and their billions?


Live from London, that's our top story on Thursday 26th January.


Can the President force through the tax cuts he says


will help boost and fuel the world's biggest economy?


Another big fine - Royal Bank of Scotland


says its mis-selling in America's sub-prime crisis will now


It is the Trump pump, the Dow on Wall Street passing through the


20,000 mark on its first time in history. We'll bring you the latest


on the markets. And we'll be getting


the inside track on life in the fast lane with the boss of London's City


Airport. Just how do you grow a business


that's hemmed in on all sides? Scientists say smart devices or is


good at doctors as spotting skin cancer. What would you like your


phone to warn you about? We're talking about


corporate tax cuts. It's a central part


of President Trump's strategy to boost the US economy,


and is on the agenda today at the Republican Party's annual


retreat in Philadelphia. President Trump will be


there to give an address, as will British Prime Minister Theresa May -


a first for a foreign leader. Before winning the election,


Mr Trump promised he'd tax rate from 35% to around 15%


to try and keep more He's targeting the billions


that US multinationals - like Starbucks, Google and Microsoft


- make overseas. Mr Trump says he'll allow


them to repatriate those But Britain's Prime Minister Theresa


May has pledged to deliver the "lowest corporation rate


in the G20," as the UK tries to make itself attractive to big companies


once it leaves the European Union. And next door is Ireland,


which is in the European Union and has successfully attracted


multinationals like Apple, It has corporation


tax of just 12.5%. Did demystify all of this and talk


through the issues I'm joined by a guest.


John Cullinane is Tax Policy Director at the UK's Chartered


Aaron outlining where we are at at the moment. Interesting what Donald


Trump has promised. The question is, can he deliver on those promises? It


is included in the US, isn't it? It is, because the government is not


all powerful, having a majority in parliament. Both houses of Congress


have two agree. Obviously they are all now Republican, but in the


American system they still have very different ideas and proposals as to


how to go about these things. That the key difference. In the UK we


have a budget, they announced tax changes that can come into affect


almost immediately if not the next day. In the US, it's so difficult to


change the tax laws. They just getting to the round the edges.


There hasn't ever been a real reform of the. That's right. 35% is quite


high on wild white terms now. Most countries have a lower tax rate. --


or worldwide terms. They change the rules, the UK is pretty much taking


what it was before in cash terms and it is taking vastly more than it


used to take in the 1970s with a tax rate of 52%, because as it has


driven down the rate it has broadened the base. One of the big


on the US, will they broaden the on the US, will they broaden the


base or will they just use it to pump money in? That is partly the


difference between Congress and President Trump. John, we constantly


hear that if President Trump is successful and get that tax rate


down to around 15% mark, that's always good news for big


corporations. But I'm wondering about, in the US you can imagine


there is millions of them, millions of small to medium-size businesses,


we know that as the bloodline of any economy, does that also benefit the


smaller guys? Well, it can do. In the US, a lot of small businesses,


even if they are incorporated, they look through it for tax purposes,


they are still packs against the individual and the individuals have


higher rates. In the UK it is becoming a problem that does the


Corporation Tax rate is going down, any small business is tempted to


incorporate that it otherwise wouldn't and pay the lower rates. On


an international level, organisations like the OECD and


others are trying to come up with an international tax system to make it


simpler and also to avoid loopholes and tax evasion. If Donald Trump


ploughs ahead with his plans, that will make it more, located, won't


it? If Donald Trump's plans go through, ironically it will be a


very low rate. The UK would arguably already be undercutting it because


we are going to rate of 17%. His of 15% to have the white and state


taxes, when you add on those they would be about 20%. We would be


undercutting Donald Trump and his tax system would not be recognisably


like ours or the rest of the world. Ironically it is the Republican


leadership in Congress that want to change the nature of the tax system


to make it a hybrid between Corporation Tax and VAT, that would


make it a very different system to other countries, opening up the


polls and double tax and so on. It's very complicated and the devil is in


the detail -- opening up loopholes. The other big story that is just


around, and news coming out about it this morning.


Britain's Royal Bank of Scotland says its set aside another further


$3.8 billion to cover fines in the United States.


It's all linked to the mis-selling of financial products linked


to risky mortgages in the build up to the 2008 financial crisis.


Simon Jack is our Business Editor and he's been following the story.


Simon, you were digging out this detail late yesterday, what can you


tell us? This is another big financial body blow for RBS. They


have put in nearly $4 billion to one side. This is just into a kitty they


are putting together to have a monster find they are expecting for


their role in the sub-prime crisis. The kitty is that $9 billion at the


moment. They are saying this is not a settlement and it is not final,


because it's very likely they will have to put more money in this kitty


next year. Now, fine could be anywhere in the region of 10- $20


billion, we just don't know yet. What it means that this charge they


are taking today will guarantee another losing year for RBS. That


will be the ninth year in a row that they have lost money. This is the


bank that the UK public owns 72%. This is another big body blow. Is it


yet? No, it's not. Management hope this is one step closer to the end


of a very dark and very long tunnel. But I think we've got some way to go


yet. Thanks, Simon. More detail on that, website as well. More stories


making headlines all around the world... The broadcaster Sky has


reported a 9% fall in profits, because of the rights of Premier


League football matches. They reported a 9% fall in operating


profits to just a pinch under $18 million. Rupert Murdoch's company


offered to buy up the remaining 61% of the business.


Facebook's push into virtual reality has a new boss.


Hugo Barra's appointment was announced with this


He'll lead the team which includes the Oculus unit


which Mark Zuckerburg's company bought for $2bn some


Barra has formerly worked at Google and Chinese phone maker Xiaomi.


He just left, I think, didn't he? That was the news story. That is for


a quick. -- very quick. Shares of Mattel -


the largest US toymaker - slumped around 9% after its


sales over the holiday period fell well short


of analysts' estimates. Mattel - whose brands include Barbie


dolls and Fisher Price toys - lost the contract to make


Disney Princess figures Meanwhile, the wider toy industry


grew by some 5% in 2016, led by Hasbro's Star Wars toys


franchise. It's all about linking it up, isn't


it, the Tory with the movie franchise. Big bucks. -- that we


eat. Asian markets are keeping


the momentum going after yesterday's record breaking session


on the Dow Jones - hitting 20,000 Closing above it for the first time


in history. History wise, in years... 131 years!


At the moment, the Asian markets are just riding that optimistic wave


coming from Wall Street? Absolutely. And I love some of the headlines


that we're seeing about it. The FT says that the stocks are basking in


the glow of the doubt going above 20,000. -- the Dow Jones. According


to Bloomberg data, we have seen Asian stocks rise the highest level


since 2015. We have seen a very solid earnings season on Wall


Street. Good numbers from companies like Boeing. Of course as you


mentioned, the Donald Trump effect. Some people call it the Trump train.


We have seen stocks rising since November on optimism that his


economic plans are going to be used. -- are going to boost stocks. Asian


stocks are mostly higher today. Australia and India are closed. We


will talk to you soon, thank you. The wow on the Dow from that Trump


pump rippling around the world. Traders in the region telling us


today's excitement not just from the hoorah on Wall Street,


but also people being positive Not much more to say


really except how long can Talking of the US - let's find out


what's in store today. It's a big day, and here


she is - here's Samira. More companies will be


reporting earnings Thursday, including Google's parent company,


Alphabet. Now, Google has been focusing


on improving search advertising. So things like expanded text ads


and little adjustments Microsoft will also be


reporting earnings. And it seems cloud computing will


continue to be a big moneymaker. Especially as more people move


toward cloud services. Analysts will be asking


questions about LinkedIn's That $26 billion deal to purchase


the professional network And finally, the world's largest


coffee chain, Starbucks, Cafes continue to drive sales,


especially in its biggest market, That's Samira Khaleghi who has had a


really busy couple of days. Haven't we all?! OK, OK, you are as busy as


she, it out the! Joining us is Mike Amey


is Managing Director and Portfolio Manager


at the investment Nice to see you, Mike. Let's get


your take on the 20,000 moment, were you popping the champagne or was it


just one of those things? It was a celebratory cup of coffee, to be


honest. Where you were expecting it? We had a couple of cracks at it, at


some point it was going to happen. The two questions as to why we had


such a big rally and how sustainable it is. I think, as you were talking


about earlier, you know, I think tax is broadly the main reason. What you


have done, if you cut Corporation Tax from 35 to 15, then corporate


earnings goes up. So you have got this... It is going to get better as


you get more of the money? If they get more of the money they should


pay more for the stock. They are buying on the room and they can sell


on the news, possibly? That's what we are a bit more worried about. You


have had this big move up in markets and tax, and of course they are


going to be the stimulus package through. And the markets continue to


focus on that. Yesterday was a classic example. You have the tweet


about building the wall, and the stock it's a new high. The markets


get are looking for the good news. At some point you have got to


recognise we are going to get a bubble. But I think it would be


reasonable to be a bit more cautious, given the size of the


movement, 10% last year. Momentum at the moment, maybe going forward just


watch for a bit of... There could be some profit-taking as well, right?


Don't get too carried away, we've had a decent run. Captain cautious!


I like it! Might you are coming back to take us through some of the


papers. We'll see you shortly. You're with Business


Live from BBC News. We are just churning out the cars in


the UK! The number of cars made in the UK


reached a 17-year high last year, according


to the industry's trade body. About 1.7 million cars rolled off


production lines in 2016, Theo Leggett has been


looking at the numbers. He is our internal Motorhead, a


petrol head! Is he a petrol head? He loves it! Before I get in trouble,


let me move on! Sio, we do well. When you're doing well in the UK


making cars, a lot of them, 50 cents, they don't stay here in the


UK, we ship them out, don't we? We ship out about eight out of ten of


all cars made here. If those 1.7 million cars, more than 1.3 million


go to 160 countries around the world. Most of them go to the


European Union. More than half of them go to the European Union. This


is a very successful industry in Britain. Part of the reason is that


we specialise in hiring cars. And we have a very efficient manufacturing


process for those cars -- hi end cars. This is not entirely a


positive story. The Society of motor Manufacturers and radar putting the


story out today, they are pointing out that investment in cars, new


production lines and so on, went down to ?1.7 billion last year. They


say that this high level of production, 17 year high level of


production and record exports, is due to decisions that were taken a


few years ago. It's very emphatic that this is not any sort of a


Brexit bounce. And they are making the point here that what they want


to see is the Government having a fairly soft attitude towards its


negotiations with the EU, making sure that the car industry at least


has some kind of access to the EU's Single Market and that tariffs are


not paid either on cars that we export of the European Union or the


parts that they are made of, a lot of which come the other way, because


it says that if that happens it could be severely damaging for what


is at the moment a rather successful industry.


What do you drive? I drive a 1972 nanograms. From the great age of


motoring. Wow! As US Republican party leaders lay


out plans for tax cuts, will the big multinationals bring their profits


back on shore, or can Brexit Britain A quick look at how


markets are faring... Everything in green again, coming


from the big jump, over 20,000 for the first time in history, the Dow


Jones. And that ripple effect circulating around the world.


Let's get the inside track on the airport at the heart


of Canary Wharf which plays a vital role in bringing business leaders


This year London City Airport is marking it's 30th anniversary.


It currently handles 4.5m passengers a year flying to 48 destinations.


71% of the flights link to a European Union destination -


something which may change once the UK leaves the EU


As with Heathrow, it's bigger rival on the other side of London,


City Airport is looking to expand with more room for aircraft


We have Declan collier with us. We just talked about the fact that you


are planning to expand, but how do you do that given where you are? You


are completely surrounded, so you can't add runways or anything of


that nature. We have just received planning permission for doing that


and we are about to spend ?350 million... A runway or a taxiway? We


are building a parallel taxiway, make the runway more efficient in


getting aircraft up and down. We are building more and bigger parking


stands to take the next generation of jets. We were talking about the


number of destinations. The people around the world watching, you have


a limited size of runway because it is surrounded by skyscrapers, so you


can only use a certain size of aircraft. 95% of your


destinations... When Brexit came along, did you hold your breath?


Once the UK does leave, and if there are travel restrictions or you need


visas and passports, could that impact you, the airport, people


travelling? I don't think so. Look, we say we are the only London


airport actually in London. We are three miles from Canary Wharf, six


miles from the City of London. We can and will develop, and you are


right - we are focused today on Europe. 95% of our destinations are


into Europe. With this development plan, we get the new generation of


aircraft coming in with longer range, so we will open up


destinations beyond Europe, to the Middle East and the Gulf, into


India, Africa and hopefully expanding the destinations in


America. How soon? If you look at Heathrow and what will happen now,


the go-ahead there will take at least till 2030 before you see


anything happening with increased capacity. We can increase our


capacity in the next two, three years. What might you are Irish. I


want to know - what is it with the Irish and aviation? Willie Walsh,


Michael O'Leary, the boss of the biggest airline in the world in


terms of bums on seats. Is it in your blood?


I think we woke up one day and realised we are a small island off


another island off the shores of Europe and the only way we can get


around is to fly. We have been doing it for a long time. The invention of


Irish coffee was at Shannon airport in the 1940s. We had the growth of


duty-free coming out of the same place. And then in aircraft leasing,


Ireland is the home for the vast bulk of the war's aviation fleets


because of the financing. It must be in the blood. Must be! Thank you for


coming in. Alcoholic drinks,


talking of the Irish! - giant Diageo has


just released results The maker of Smirnoff Vodka,


Johnnie Walker whisky and Guinness stout says net sales were up more


than 14 per cent, and operating The company says its spirits


business in the US is doing much better, and in particular


its scotch whiskey brands. The chief executive of Diageo,


Ivan Menezes, spoke to us earlier. Our performance across


the US, Latin America, Europe, Africa and Asia


was And our categories and


brands performed well. Johnnie Walker, our


biggest brand, was up Our whisky brands in North America,


like Crown Royal and The business is healthy, and it's


a function of the strategy we been implementing in the last few years


is really paying off. People around the world


are drinking better, and Diageo does better when that


happens, because our brand of premium, and we benefit


from the trade up that happens I spoke to Ivan Minev is earlier. He


is on our website. -- Menezes. I am wondering what he is drinking there.


Martini. I should have asked what his


favourite tipple is. I like beer and wine.


I like champagne. I am an Aussie but I am not a big


beer drinker. Shall we start on the newspapers.


Our viewers have sent us tweets about the story in The Times about


the smartphone. Doctors are saying it is as good if not better at


detecting skin cancer than perhaps going to your GP. Amazing, isn't it?


As we were saying earlier, one does not think about detection of cancer


with smartphones. The clear thing is the computing power of smartphones


is becoming phenomenal, and the number of things you can do is


growing ever higher. And the demand for that kind of thing. When it


comes to applications and wearable technology, a lot of it is to do


with health, isn't it? Making us healthier or figuring out what is


wrong, that sort of stuff. Can you go over your body with it?


One in three people in Australia get melanoma.


Let's hear what you had to say about this.


One viewer says colon I would like my phone to tell me if I am getting


too stressed and to calm me down. Colleagues can do that!


We have had some CEOs start-ups who are coming up with wearable


technology. We will cover that. We have got twice the supply is


compared to what we will use in the next 40 years, so the price


shouldn't go up much. The price of $100 a barrel that we saw in 2014


will not come back? No. It will stay around the level it is at now. Spot


on, mate. Thanks for joining us. Wrap it up, Sal.


Cold is the theme through the day-to-day. Particularly so when you


factor in the wind, which is quite a bitter wind. That is coming in from


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