:00:00. > :00:00.This is Business Live from BBC News
:00:00. > :00:10.with Aaron Heslehurst and Rachel Horne.
:00:11. > :00:12.Trading with Trump, Britain's Prime Minister becomes
:00:13. > :00:15.the first foreign leader to meet the new US President,
:00:16. > :00:17.but can she strike a bargain with the world's biggest economy?
:00:18. > :00:22.Live from London, that's our top story on Friday the 26th of January.
:00:23. > :00:33.Live from London, that's our top story on Friday the 27th of January.
:00:34. > :00:37.As Britian leaves the European Union, we'll ask which side
:00:38. > :00:41.of the special relationship has more to gain from a boost
:00:42. > :00:49.And when is a $5.3 billion profit in three months just not enough?
:00:50. > :00:54.We'll tell you why investors are not happy with Google and also find out
:00:55. > :01:03.if its parent company Alphabet's other bets will pay off?
:01:04. > :01:08.And the markets still loving President Trumps pro-growth
:01:09. > :01:10.drive of tax cuts, big spending and deregulation.
:01:11. > :01:12.And as the head of BT Europe resigns over an accounting scandal,
:01:13. > :01:15.we'll be getting the inside track from our business editor,
:01:16. > :01:18.Simon Jack, on that and all the rest of the stories he's been
:01:19. > :01:24.After ten years of almost constant growth, the sales of soft sugary
:01:25. > :01:29.drinks in Australian supermarkets has fallen by more than $60 million.
:01:30. > :01:31.We want to know - are you more aware of sugar,
:01:32. > :01:53.We start in the US, where, as you have been hearing,
:01:54. > :01:56.UK Prime Minister Theresa May will become the first world leader
:01:57. > :02:03.to meet President Trump when they hold talks later today.
:02:04. > :02:06.Mrs May has called on the President to renew the special relationship
:02:07. > :02:15.She is keen to show Britain can prosper outside the European Union,
:02:16. > :02:18.so lining up a post-Brexit trade deal is high on her agenda.
:02:19. > :02:26.But is it really a priority for the US?
:02:27. > :02:30.In terms of individual countries, the United States is the UK's
:02:31. > :02:37.Britain sold goods and services worth
:02:38. > :02:43.Taken together, though, the European Union is by far
:02:44. > :02:46.Britain's top export market, worth $280 billion, 44%
:02:47. > :02:55.Any drop in those exports as a result of Brexit could see
:02:56. > :03:06.Britain is far less important to the US than the US is to Britain.
:03:07. > :03:10.America sold $65 billion of goods and services here in 2015,
:03:11. > :03:14.half the amount that went the other way.
:03:15. > :03:19.And to put that in the context of the vast US economy,
:03:20. > :03:23.that is little more than 4% of total US exports - and less
:03:24. > :03:33.So putting aside the warm words, will this really be a priority
:03:34. > :03:39.Dr Brian Klass, fellow in comparative politics
:03:40. > :03:44.at London School of Economics is with me.
:03:45. > :03:51.Thank you for coming in. Let's go to the figures we were talking about.
:03:52. > :03:55.It looks like the UK on paper is far more dependent on the US than the
:03:56. > :04:00.other way around. Why is Donald Trump making such positive noises?
:04:01. > :04:03.For both politicians this is about an early political whim for people
:04:04. > :04:06.trying to transform their countries and trading relationships with the
:04:07. > :04:11.world. I think Trump needs to say he has dealt with a global power and
:04:12. > :04:15.come away with a deal. He makes himself out to be a deal-maker and
:04:16. > :04:18.wants to show results. It's much more important for Theresa May who
:04:19. > :04:22.wants to show there will be a soft landing from Brexit and this US
:04:23. > :04:26.trade deal is one way this can be achieved. In the UK its headline
:04:27. > :04:30.news, but how aware are people in the United States of this meeting
:04:31. > :04:34.happening? I don't think they are aware at all. It's in the New York
:04:35. > :04:39.Times and Washington post. It's not on the New York Times right now. Is
:04:40. > :04:43.the 35th story on the Washington post. It's not headline news for
:04:44. > :04:49.Americans, who are much more concerned with things like the
:04:50. > :04:55.Mexican War. Trump was not chanting about trade deals with the UK. A
:04:56. > :05:01.little bit of a problem that I believe the UK faces. All well and
:05:02. > :05:05.good that the Prime Minister and President will be talking. But they
:05:06. > :05:10.are not the ones who really do the negotiating. It's the teams behind
:05:11. > :05:13.them. Apparently the UK lacks trade negotiators where America has some
:05:14. > :05:20.of the best in the world who will wipe the floor, so I hear. That's
:05:21. > :05:23.right, the UK hasn't negotiated trade deals independently for a long
:05:24. > :05:27.time and they only developed a new office last summer. They are getting
:05:28. > :05:34.up to speed to the US has done for a long time. Combine that with the
:05:35. > :05:40.leveraged the US saw the ball is in the US's court. Both politicians
:05:41. > :05:44.looking for an early win. What sort of headlines tomorrow will give that
:05:45. > :05:49.impact? I think they will commit to working on a trade deal and try to
:05:50. > :05:52.have one in place, a framework, to be in fermented as soon as the UK
:05:53. > :05:56.leaves the EU. Those are the headlines. What's not clear is
:05:57. > :06:00.whether they can battle the deregulation concerns that make the
:06:01. > :06:04.trade deal difficult to hash out and whether it will be a good deal for
:06:05. > :06:07.Britain in the end. Thank you for joining us, really interesting.
:06:08. > :06:10.When is $5.3 billion profit in three months just not enough?
:06:11. > :06:21.The parent company of the internet giant saw its shares fall
:06:22. > :06:23.in after-hours trade after its quarterly results
:06:24. > :06:28.As Dave Lee reports from San Francisco,
:06:29. > :06:34.there are concerns about a slowdown in the growth of online
:06:35. > :06:36.advertising and just how future-proof the company may be.
:06:37. > :06:41.The final three months of 2016 were important for Google -
:06:42. > :06:44.it launched a new smartphone range, the Pixel, and went big
:06:45. > :06:47.with its voice activated assistant, Google Home.
:06:48. > :06:50.The company didn't break out the numbers for those new devices,
:06:51. > :06:54.so it's hard to know exactly how they have performed, but Google's
:06:55. > :06:57.chief executive, Sundar Pichai, said he was "comfortable"
:06:58. > :07:00.with the direction things were going with the new products.
:07:01. > :07:07.Alphabet's revenues, which are up 22% on this time last year,
:07:08. > :07:10.still rely heavily on earning money through Google's advertising.
:07:11. > :07:12.As even more of us turn to mobile computer in,
:07:13. > :07:15.people are clicking - or rather tapping -
:07:16. > :07:19.on Google ads more than they used to, but advertisers are paying less
:07:20. > :07:26.Aside from Google, Alphabet has what it calls its other bets -
:07:27. > :07:28.things like superfast broadband, smart thermostats
:07:29. > :07:33.The revenues of these other bets has doubled compared
:07:34. > :07:36.to this time last year, but overall in the past three months
:07:37. > :07:38.those bets collectively lost the company $1.1 billion.
:07:39. > :07:48.Toshiba has said it will split off its operation that makes memory
:07:49. > :07:51.chips for smartphones and computers and will sell a stake
:07:52. > :07:57.The Japanese company needs to raise funds after revealing a heavy
:07:58. > :08:00.one-off loss at its US nuclear power business.
:08:01. > :08:02.Toshiba will unveil the size of the writedown next month,
:08:03. > :08:06.but some estimate it could be around $6 billion.
:08:07. > :08:14.Swiss banking giant UBS beat expectations in the last three
:08:15. > :08:17.months of 2016 to post a pre-tax profit of $847 million.
:08:18. > :08:20.It said that rising interest rates and stocks boosted the US wealth
:08:21. > :08:22.management and securities units, whilst the bank also put less money
:08:23. > :08:28.UBS is among the few European banks still facing a US probe into sales
:08:29. > :09:00.The bank has $3.2 billion in reserve for legal matters.
:09:01. > :09:07.Always good to see you. Happy Friday. Ali Bacher doing it again.
:09:08. > :09:14.Didn't they recently buy something in the states?
:09:15. > :09:19.They are making a big push in the States, but the country we are
:09:20. > :09:37.talking about today, the affiliate is called Ant Financial. They are
:09:38. > :09:41.buying Moneygram. Ant is China's biggest online payments company, and
:09:42. > :09:45.it's one third owed by the boss of Eilidh Barbour. It's an interesting
:09:46. > :09:52.deal. The business of international payments is a really tough one. It
:09:53. > :09:57.looks quite counterintuitive given that the world is deep globalising.
:09:58. > :10:02.Ultimately, this is what Ant financial get through this purchase
:10:03. > :10:04.of Moneygram, a big brand name and network in America as well as
:10:05. > :10:15.immediate expansion of the global remittances business. How do you say
:10:16. > :10:17.happy New Year in China? ... Right back at you. Chinese New Year
:10:18. > :10:19.tomorrow. The Dow on Wall Street continued
:10:20. > :10:29.extending those gains after breaking And that rebound continues rippling
:10:30. > :10:34.around the world markets. The third straight rise
:10:35. > :10:36.for Japan's Nikkei, banks and exporters
:10:37. > :10:42.leading the charge today. Europe is expected to follow
:10:43. > :10:49.that optimistic wave, because despite President Trump's
:10:50. > :10:54.words toward trade protectionism, investors are betting the new US
:10:55. > :11:00.President will embark on a pro-growth drive of tax cuts,
:11:01. > :11:02.big spending and deregulation. So let's find out what'll be making
:11:03. > :11:09.the headlines in the US today. The end of the week has finally
:11:10. > :11:16.come, and what a week it was! But before we look to the weekend,
:11:17. > :11:20.there are still a few bits Now, investors here will be focused
:11:21. > :11:25.on the fourth-quarter GDP estimate, Now, the US economy grew by 3.5%
:11:26. > :11:30.in the previous quarter. Now, economists are not
:11:31. > :11:33.expecting anything that high, but they will be closely
:11:34. > :11:37.watching this metric. Also happening on Friday,
:11:38. > :11:41.durable goods orders. Now, that is really looked
:11:42. > :11:44.as a proxy for how businesses Now, after seeing a drop
:11:45. > :11:49.in the month of November, analysts are expecting to see
:11:50. > :11:51.an increase for the And finally, in earnings news,
:11:52. > :11:56.American Airlines will be reporting. Now, it is the number-one airline
:11:57. > :12:00.by passenger traffic, but that may not be reflected
:12:01. > :12:02.in their earnings. Cheap airfares and higher wage
:12:03. > :12:04.costs have really hurt Joining us is Jane Foley, Senior
:12:05. > :12:22.Currency Strategist at Rabobank Thank you for coming in. Let's start
:12:23. > :12:26.with currencies. Sterling is on a much firmer footing this week. It
:12:27. > :12:29.is. It's off the highest levels of the week but if you go back to the
:12:30. > :12:34.beginning of last week, it's much stronger. A lot of this is to do
:12:35. > :12:38.with UK politics. Theresa May's speech last week, what the market
:12:39. > :12:43.liked was the idea that the government in the UK has a plan, and
:12:44. > :12:47.not only that it has a plan on Brexit, but Theresa May has been
:12:48. > :12:52.busy filling up her agenda. She has a busy to do list. She's talking
:12:53. > :12:56.about trade with the US. That will garner positive headlines for both.
:12:57. > :13:01.That will give sterling a bit more a boost? It'll be in the press.
:13:02. > :13:06.Sterling coming off its highest levels, so what the market often
:13:07. > :13:10.does is price in, wait for the news and see if it matches expectations.
:13:11. > :13:14.Theresa May has talked about industrial policy this week and says
:13:15. > :13:19.she's lining up talks with China about trade there. She's trying to
:13:20. > :13:24.firm up this belief that the UK does have a strong outlook post Brexit.
:13:25. > :13:30.But Brexit talks haven't yet begun. So we still have a volatile ride for
:13:31. > :13:35.sterling for the rest of the year. Going to the US dollar, which has
:13:36. > :13:39.had a ride recently. We are getting US GDP growth numbers out today.
:13:40. > :13:44.It's a funny old game because President Trump doesn't want a
:13:45. > :13:50.strong dollar. Others do, though, in the US. The US Treasury, is in
:13:51. > :13:53.charge of dollar policy, not the central bank. For years the US
:13:54. > :13:57.Treasury has been saying they've had a strong dollar policy but we
:13:58. > :14:00.haven't heard much about it recently, because if you have slow
:14:01. > :14:07.growth and inflation, you don't want a strong currency. They kept quiet
:14:08. > :14:10.about it. The Treasury Secretary said yes they wanted a stronger
:14:11. > :14:14.dollar but he has backed down again. Donald Trump wants to export more,
:14:15. > :14:18.import less, and if you want to export more, you want a weak dollar.
:14:19. > :14:23.So products are cheaper for us around the world? Precisely. You're
:14:24. > :14:27.coming back to take us through the papers. We will see you shortly.
:14:28. > :14:29.Still to come, we'll get the inside track on the big
:14:30. > :14:45.business stories of the week from our business editor, Simon Jack.
:14:46. > :14:48.Tesco has agreed to buy UK's biggest food wholesaler, Booker Group,
:14:49. > :14:51.The companies said the deal would create
:14:52. > :14:54.The joint announcement also said the deal would bring
:14:55. > :14:55.benefits for "consumers, independent retailers,
:14:56. > :14:56.caterers, small businesses, suppliers, and colleagues,
:14:57. > :14:58.as well as delivering significant value to shareholders".
:14:59. > :15:00.Our business correspondent, Theo Leggett,
:15:01. > :15:23.This is really a boost for consumers? Isn't this just Tesco,
:15:24. > :15:28.which is a whopper as it is, just getting bigger? Certainly, there may
:15:29. > :15:31.be concerns that Tesco is gaining an even bigger slice of the UK food
:15:32. > :15:35.market than it already controls, and some analysts are saying that
:15:36. > :15:39.competition regulators may want to look into it carefully. Tesco says,
:15:40. > :15:43.we're not buying any more big stores, so there is no reason for
:15:44. > :15:49.competition regulators to get involved, but that is a discussion
:15:50. > :15:53.for the future. Tesco says it is looking to broaden its business, so
:15:54. > :15:57.the supermarket business itself, which is its core business, is very
:15:58. > :16:04.competitive, dominated by a small number of large players, very hard
:16:05. > :16:07.to gain market share, hard to grow your business and expand revenues or
:16:08. > :16:12.cut costs in that way. So it is taking on a different part of the
:16:13. > :16:17.food business, making itself bigger in that way, expanding what it has
:16:18. > :16:22.to offer. It says it is particularly interested in what it calls the out
:16:23. > :16:25.of home offering, so people who go to supermarkets, prepare at home,
:16:26. > :16:31.that is traditional business for them. But restaurants, catering,
:16:32. > :16:37.convenience stores, that is another part of what it is looking at here.
:16:38. > :16:40.Tesco says this is not about refining its supermarket business
:16:41. > :16:44.and making that cheaper, it is about expanding its business and
:16:45. > :16:48.increasing its offer into new areas. OK, great stuff, enjoy your MG! On
:16:49. > :16:59.the weekend, I meant! It is the Chinese New Year, it is
:17:00. > :17:07.going to be the year of the Rooster, give me your Friday fact. President
:17:08. > :17:12.Trump and the Chinese leader were all born in the year of the Rooster.
:17:13. > :17:19.Were you? No idea! Let's look into it!
:17:20. > :17:21.Welcome back for our international viewers, you are watching Business
:17:22. > :17:23.Live! Britain's Prime Minister
:17:24. > :17:24.says she's delighted that new American President
:17:25. > :17:25.Donald Trump's has made a trade deal between
:17:26. > :17:28.their countries a top priority. Theresa May is set to discuss it
:17:29. > :17:42.when she becomes the first foreign They are going to do that in the
:17:43. > :17:45.Oval Office in a few hours' time. Let's have a look at how the markets
:17:46. > :17:51.are getting on, just up ever so slightly in London, a bit of
:17:52. > :17:54.profit-taking on the DAX and the CAC 40.
:17:55. > :17:59.on some of the big business stories of the past few days.
:18:00. > :18:04.is the growing accounting scandal at BT's Italian operation.
:18:05. > :18:08.It's now being reported by Reuters that
:18:09. > :18:10.BT's head of continental Europe, Corrado Sciolla,
:18:11. > :18:13.is to leave the company as a result of the crisis.
:18:14. > :18:23.Simon, you broke this story earlier in the week, it is your baby!
:18:24. > :18:30.Well, no, the boss of BT Europe, I was told, was leaving several days
:18:31. > :18:34.ago, he has taken a long time to write his resignation letter, he is
:18:35. > :18:40.leaving today! This scandal broke at the end of last year, back in
:18:41. > :18:45.October, they said, we have a ?140 million poll in their Italian
:18:46. > :18:49.division, but it turns out to be much worse than they previously
:18:50. > :18:54.thought, more than ?500 million, a whopping black hole for a business
:18:55. > :18:58.which is a tiny part of BT's total revenues. So something has gone
:18:59. > :19:05.seriously wrong. What has happened is that employees and customers have
:19:06. > :19:11.been colluding to pad out invoices, hitting profits targets. It was
:19:12. > :19:15.missed by the external auditors, PwC, and I am told that BT is
:19:16. > :19:19.reviewing whether it even wants to have a subsidiary in Italy anymore.
:19:20. > :19:24.A couple of interesting things, it is the one country where when you do
:19:25. > :19:30.a forensic investigation like this, personal e-mails of employees do not
:19:31. > :19:34.have to be handed over. And the authorities' approach to this is
:19:35. > :19:38.generally to find against the company, the company did wrong, not
:19:39. > :19:45.the individuals. So if you put that together, you have the potential for
:19:46. > :19:48.scandals like this to happen. BT, a big worldwide company, it is facing
:19:49. > :19:55.challenges and a number of fronts, it has a whopping pension deficit,
:19:56. > :19:57.it has got a stagnation in its core revenue, some of its biggest
:19:58. > :20:02.customers are not spending money, and that is worrying for the wider
:20:03. > :20:06.economy. When a company as big as BT sees customers holding off, some
:20:07. > :20:09.people say it is to do with Brexit, then they have a problem, and
:20:10. > :20:13.Moody's downgraded them the other night, saying that things look
:20:14. > :20:21.pretty rough for the company. I know we will keep across that. The US, we
:20:22. > :20:26.get growth numbers, and there is... 1:30 UK time, 2.2% is the consensus,
:20:27. > :20:31.which is not brilliant but not bad. They have been adding jobs pretty
:20:32. > :20:36.well. Better than Europe! But not quite as good as the UK, actually.
:20:37. > :20:42.The interesting about this, we have this term animal spirits knocking
:20:43. > :20:47.around, basically the Trump traders that he has been talking about, he
:20:48. > :20:50.has a couple of big plans, cutting corporate and individual taxes, and
:20:51. > :20:57.the other is spending big on infrastructure, including a wall.
:20:58. > :21:01.That does two things, people think it will stimulate growth, because,
:21:02. > :21:05.briefly, if you cut corporate taxes, they get to keep more money, spend
:21:06. > :21:09.more of it, shares are worth more, so you have seen that trade. So a
:21:10. > :21:14.strengthening of the dollar, the Dow Jones going through 20,000. People
:21:15. > :21:19.are just wondering now, where do we go from here? As you say, some of
:21:20. > :21:22.these protectionist talk about trade makes people think, is ego to throw
:21:23. > :21:27.sand in the engine of the global economy? -- is he going to. Could it
:21:28. > :21:32.reverberate around the world? It would be a damp and on global
:21:33. > :21:37.growth. It is till the world's biggest economy. It will be
:21:38. > :21:41.interesting to see how the dollar reacts to this number. We have to
:21:42. > :21:45.wrap it up, but interesting out Trump is trying to talk down the
:21:46. > :21:47.dollar in some ways, he once a weaker dollar. Correct. Have a great
:21:48. > :21:49.weekend, Simon Jack. US car giant Ford has
:21:50. > :21:52.made its second-best annual pre-tax profit to date of $10.4
:21:53. > :21:55.billion according to its But what effect could President
:21:56. > :22:09.Trump have on the auto industry? They have revealed they are
:22:10. > :22:18.cancelling a planned new plant in Mexico, it has cost $200 million.
:22:19. > :22:23.Earlier I sat down and spoke to Jim Farley, their boss for Europe, the
:22:24. > :22:24.Middle East and Africa, and he explained why free trade was very
:22:25. > :22:26.important to them. Our industry is based
:22:27. > :22:28.on free trade, you know, a good example is here in Europe -
:22:29. > :22:31.we build all of our engines in the UK, we export them to Europe,
:22:32. > :22:34.put them in cars, We are the number-one brand
:22:35. > :22:39.here in the UK, so you know, this model of free trade
:22:40. > :22:47.is the basis for our business. But that could change, couldn't it?
:22:48. > :22:50.President Trump is talking about 20%, your cars, whatever party make
:22:51. > :22:56.in Mexico to bring to the States, you may have to pay 20% on those. It
:22:57. > :23:00.is early days, we don't really know, so we will see, but it seems like a
:23:01. > :23:06.lot of his policies are friendly to business. He is talking about trade,
:23:07. > :23:07.currency manipulation, talking about data driven regulations. We will see
:23:08. > :23:14.what happens. Really wait and see, everyone is
:23:15. > :23:19.saying wait and see, Jane is back, are we going to start with my neck
:23:20. > :23:28.of the woods? We are, do you buy sugary drinks? Not that we are
:23:29. > :23:33.allowed to, but I love a Diet Coke once in a while! Other drinks are
:23:34. > :23:42.out there! But that has got no sugar in it. Anyway, consumer backlash
:23:43. > :23:45.being reported here in the Sydney Morning Herald, Australian
:23:46. > :23:53.supermarket is seeing a huge fall in the sales of sugary drinks. 2.2%
:23:54. > :23:57.down year on year, and they are talking about $80 million in lost
:23:58. > :24:00.sales, a fifth of their revenues, because of these sales not going
:24:01. > :24:05.through. And of course what they are talking about is the studies done on
:24:06. > :24:10.obesity, particularly sugar. So there is the possibility of a tax on
:24:11. > :24:13.that, and we have heard of this in other developed countries, but one
:24:14. > :24:18.thing about this is that there is a lot of lobbying from some of these
:24:19. > :24:22.big companies, and of course now we also have companies coming up with
:24:23. > :24:26.natural sugar alternatives too. So the industry is quite complex, but I
:24:27. > :24:31.think there is a movement by some of these big manufacturers, instead of
:24:32. > :24:36.selling sugary drinks, to get hold of branded waters. Is it that the
:24:37. > :24:40.money has gone out of the market, or is it being spent on alternatives?
:24:41. > :24:44.It is switching, all of the big drinks companies, over the last ten
:24:45. > :24:48.years or so, have been rushing to buy up those smaller branded water
:24:49. > :24:52.companies, and generally they are owned by bigger companies.
:24:53. > :24:56.Certainly, if you go back 20 years, we all know that the amount of water
:24:57. > :25:06.is sold in a supermarket has grown considerably. A huge market. That
:25:07. > :25:11.coconut water, 1 billion just in the UK! I hated! We saw that luxury
:25:12. > :25:16.goods do very well in China, then Beijing had a corporate crackdown
:25:17. > :25:21.and things, luxury sales dropped in China, but they are coming back. If
:25:22. > :25:24.you go back to 2015, you will remember the terrible stock market
:25:25. > :25:30.crash, it caused a lot of consumers to backtrack. Last year, really
:25:31. > :25:35.since February onwards, a lot of confidence in the outlook for China,
:25:36. > :25:46.although we are very cautious. That has brought some consumers back, and
:25:47. > :25:52.now they are doing things in duty is to encourage spending. Jane Foley,
:25:53. > :26:05.thanks very much for coming in. That is Business Live, bye!
:26:06. > :26:10.It's a cold and frosty start for central and eastern parts
:26:11. > :26:13.of the UK with patches of freezing fog and in East Anglia
:26:14. > :26:15.and the south-east of England there is the risk of some icy
:26:16. > :26:18.patches on untreated surfaces from this area of cloud