31/03/2017 BBC Business Live

This is Business Live from BBC News with Rachel Horne

European Council President Donald Tusk will shortly issue draft

guidelines on how the EU intends to negotiate the UK's

Live from London, that's our top story on Friday 31st March.

Terms of disengagement - the EU sets out its stall on Brexit.

We'll hear live from Donald Tusk shortly.

And the bank with half a billion customers -

five banks are to merge with India's largest bank to create a super-bank.

And the markets in Europe have opened, it is a bit muted, we will

follow the figures later in the programme.

And we'll be getting the inside track on Brexit

with our very own economics correspondent, Andrew Walker.

And on that note, this week we've been asking

for your questions about Brexit - we plan to answer them

With Article 50 now triggered, negotiations on the UK's departure

But this is not just about what Britain wants -

the Brexit deal depends significantly on what the EU

In the next few minutes EU Council President Donald Tusk

will present the European guidelines for the Brexit negotiations.

So, what kind of terms can we expect from the EU?

National parliaments of the EU's 27 member

states will have a say in any

future EU-UK free trade deal, plus consent by the

Any future free trade deal between the European Union

and the UK is highly unlikely until the United Kingdom

There are three million EU citizens currently in the UK.

The EU will want them to stay, keep their jobs

In return, the EU is expected to guarantee the same

for the approximately 1 million Britons in EU member states.

Questions remain over what kind of deal the City of London can

At stake are so-called passporting rights that allow banks with a base

in the UK to access customers and financial markets in the EU.

The loss of passporting rights could see US or Japanese

Then there's the issue of whether Britain will pay an exit

One figure that's already been talked about is 60 billion euros -

something that the UK has said it won't sign up to.

Before I introduce our guest, we are getting some lines in from Malta.

EU-UK free-trade deal cannot offer partial single market access and

must prevent physical, social, environmental dumping, these are

some of the EU guidelines we are hearing at the moment. Most

importantly, EU-UK free trade deal cannot offer partial single market

access. Let's get more on all of this.

Claude Moraes MEP is Labour Member of the European

Maria Demertzis is the deputy director of Bruegel,

Hello to both of you. Claude, let's start with this, I guess no matter

what side you are sitting on on this fence, a trade deal needs to be

done. Can it be done in that two-year time frame? No, that is the

simple answer. From the inside, I chair a committee in Parliament, we

have a say in this, a yes or no vote at the end, and we know this is

about the divorce deal first and what you will hear from Donald Tusk

is interesting, that initial leak that you got from Malta indicates

that there will be more on trade than we thought, that is

interesting. It is interesting they are talking about the single market.

What I expected was more on the sequencing, the timetable. Quite

disappointing, drive response to Theresa May's letter, really talking

about the fact that it would be the divorce deal first, 18 months, five

months of messing around preparing for Parliamentary votes, the yes or

no, dealing with all of the ratifications from parliaments

around the EU, but in fact it looks like there will be a little bit more

about what happens to the trade deal after the divorce settlement,

partial access, how we have access to the single market. That is

critical to the United Kingdom because the divorce deal will be

tough and painful, a bit more complicated than people think, but

what will happen afterwards will be this critical thing off, what kind

of deal do we have with the rest of the single market? All this rubbish

before in the referendum about, we will have a trade deal with Germany,

people realise now it is a trade deal with the rest of the EU, that

means the rest of the single market. That will be hugely complex and it

looks like from this initial leak, if you'd like, that there will be

something said about that from Donald Tusk. More lines coming out,

the EU will do all it can to reach a constructive Brexit settlement with

Britain, but will also prepare for a possible failure to reach a deal,

this again is from the draft. Again, very interesting, very interesting.

Looks like it will be a much more frank response than try, because of

course there is a whole spectrum of responses that this could have been.

Donald Tusk has a whole range of emotions, and it looks like it will

be a bit more frank and honest, and that is good because we need to hear

that, because the letter in itself from Theresa May, the tone was a bit

more conciliatory, international security in that letter was probably

unwise for many reasons, we could go into that but probably don't have

the time, but in many ways the response from Donald Tusk needs to

have more information, it seems to have more light. The British public

need to hear more about what the 27th think. Claude, we appreciate

your time. No doubt we will speak to you soon, this is bound to go on!

The deputy director of Bruegel is backed joining us now from Brussels.

We are hearing that the EU wants to do all it can to reach a

constructive settlement but will also prepare for a possible failure

to reach a deal. How realistic do you think it is that we will reach a

deal in two years' time? I think we will reach a deal but two years is

really pushing it. Typically trade deals take longer than that, and

this is a complicated one, and before we even begin to discuss a

trade deal we have to discuss a divorce. As we expected here this

morning, first we will have to discuss the terms of the divorce

before we can begin the long-running relationship between the two. The

relationship needs to be constructed so I think once we go past that

first hurdle, that first hurdle of disappointment that we are doing

this, I think in the longer run logic will prevail and we will

eventually reach a deal. The question is whether we can do it in

two years or not, I think that is difficult but by that time everybody

will see it is in everybody's benefit to arrange a good deal and

prolong the process for as long as it takes. There are two issues at

stake, the exit bill which needs to be negotiated and the trade

agreement the EU and UK will have. The UK wants to negotiate both

concurrently, it has been made clear by EU members that they want to sort

out the exit bill first and trade will come after. Do you think the UK

will get what it wants? I don't think so, the most important hurdle

for that is because France and Germany are now in electoral mode so

the biggest countries are not really engaging in the process. They will

only start engaging and providing more direction on where we are to go

at the end of September when the elections are behind us. Right now I

think the European Commission is really in the driving seat and that

implies they will have to follow the sequential approach which is first

the Brexit Bill and then the future relationship. OK, Maria, thank you

very much for joining us this morning from Brussels.

Are you tired of Brexit already? Never!

I am! Let's look at other headlines from around the world.

South Africa's Finance Minister Pravin Gordhan has been sacked

by President Jacob Zuma after days of speculation that rocked

Mr Gordhan will be replaced by Malusi Gigaba.

Mr Gordhan has been seen as standing up to President Zuma in Cabinet

and has warned against corruption becoming rampant.

HSBC is to let customers choose more non-gender specific titles

Instead of Mr, Mrs, Ms or the gender neutral Mx,

customers can choose from nine titles including "M" and "misc".

The prefixes are designed to give non-binary people more choices

if they don't want to be identified by gender.

Dutch prosecutors have announced they've launched an international

hunt for people seeking to hide assets and evade taxes

after receiving a tip-off about undisclosed accounts

Coordinated raids began on Thursday across Europe.

Millions of euros worth of paintings, gold bars,

cash and other assets had been seized from holders of several

of the 3800 accounts at the Swiss bank,

To Asia now, where there's more evidence China's

Happy Friday! This is interesting, because the several years Beijing

has been working hard to rebalance the economy, not to be the world's

factory floor and sort of become more service driven, but we are

seeing activity, good activity, on both of those sides?

Indeed, factory activity coming did a lot stronger than economists were

expecting, and in recent months we have had strong data from China, all

because of the housing boom that China is seeing, as well as a strong

investment in infrastructure by the Government, that is why we are

seeing a lot of activity not just in factories but also construction, as

you mentioned. But there are major cities implementing cooling measures

to calm the property market because there are concerns that an asset

bubble might be forming, and of course on the export front, the

trade front, the US president, Donald Trump, has been repeatedly

criticising China, overnight he tweeted about it again and head of

his meeting with the Chinese president Shi Jim Payne, so there

are concerns about whether this current growth is sustainable.

Thank you very much. Let's see how the markets have been getting on.

The McKay and the Hang Seng closed down ever so slightly, a bit of a

rally on Wall Street, inspired by better than expected UK economic

growth figures. Asian investors waiting to see what will happen now

at Donald Trump's Summit in China next week.

South Africa's brand plunged after Jacob Zuma sacked his finance

minister. Looking at the European markets, we

should be able to see, I can tell you they are a bit down, some

figures coming out in Europe today, fourth-quarter UK GDP figures, the

last revision for those out, we will be waiting to see those, European

market waiting to hear, like the rest of us, what Donald Tusk has to

say. Dom was laughing at you!

Good to see you. We have just finished the third

period, and what is stonking period it was.

Today is the last day of the quarter, global stock markets will

be up by about 6%, the US stock market, about half of the global

total, is up just a little bit less than that, but it has been a pretty

good quarter, it has ended with people being a bit worried about

delivery in America but fundamentally things are growing

pretty nicely, we expect earnings growth in this first quarter of

about 10% in America, that is twice the earnings growth that we had in

the fourth quarter of last year. Briefly, because I know Rachel wants

to talk about the pound, but is this also a case of people throwing money

into the markets because it has the best returns? I think you are right,

in an environment where interest rates are beginning to edge higher,

fixed income bonds don't look so attractive, cash certainly doesn't

look attractive, where else would you put your money? You are right, I

do want to talk about sterling. A lot of traders this week have said

sterling will be the barometer for Brexit, that is where we look, if

the UK is perceived at getting what it wants, sterling will rise, if not

it will fall, but it has a range at the moment. The currency market is

always where uncertainty emerges, we saw that last summer after the

Brexit vote and throughout the second half of the last year. So I

think the next two years are clearly going to be very uncertain, very

difficult for Britain and for all UK assets, so if you are thinking about

which way does the pound go, it is more likely to fall a bit than rise

a bit, but the announcement, the implementation of article 50 this

week had no effect on the pound at all. It feels like it is in a

range... A bit overdone, do you think? The fundamentals haven't

changed, good economic numbers, the fifth biggest economy in the world.

That is absolutely right, the fundamentals haven't changed but you

ask any economist, they look over the next two years, growth is

probably going to slow, inflation is probably going to rise, that is not

a brilliant environment. We've been looking for your Brexit

questions this week - and our economics correspondent

Andrew Walker will be You're with Business

Live from BBC News. The hospitality sector has warned it

faces a shortfall of 60,000 workers a year if immigration

from the European Union Staff from the EU make up nearly

a quarter of all jobs in the sector. The British Hospitality Association

said that thousands of businesses are facing having to drastically

reduce their dependence Ufi Ibrahim, chief executive

of the British Hospitality Great to have you with us. I was

rather astonished at this, I read a report that 75% of waiters and

waitresses, certainly in London, from the EU?! Yes, actually the

figures show some very important figure is not just for London and

urban environments in the UK but across the country. The dependence

of our industry on EU workers and the contribution they have made a

very significant. Where are the English workers, the

British workers? Is it the type of work that they don't want to do?

Lots of people, especially young, are out of work but not choosing to

go into that sector? We have record levels of low unemployment in the UK

at the competition for what is becoming a scarce resource is

intense. As we go forward as an industry we have said publicly that

we will up our game, rump of all existing efforts. One thing we have

to do in the UK is to tackle the perception of careers in our

industry, which is not necessarily the same as it is in France,

Switzerland, Austria or Germany where hospitality careers are seen

as a career of choice. How can you change those perceptions if people

don't see it as a progressive career path? We will have to focus

particularly on the next generation, talking about going to 11-year-olds,

children. What we want is, when asked, the child to say... As many

times as a child says they want to be a doctor, firemen or teacher, we

want them to say I want to run a bar, I want to be a hotel manager,

restaurant manager or nightclub manager. I am sorry, we are out of

time, Ufi Ibrahim, the chief executive of the British Hospitality

Association. Thank you for your time.

You can't escape it! The EU has published draft guidelines on how it

intends to negotiate Britain's departure from the blog. There is an

indication that the EU was ready to talk to Britain on a future trade

deal before the two sides agree that final terms on Brexit.

It said Britain would have to show sufficient progress on its departure

settlement in a first phase of negotiations and EU states could

launch trade talks in a second phase.

Five Indian banks are to merge with the country's largest bank -

the State Bank of India, or SBI - to create a super-bank.

The government expects the merger to create

But is consolidation the answer for India's

HSBC, Bank of China, BNP Paribas, JP Morgan. They are some of the largest

banks in the world. Now when Indian bank will join their ranks. The

State Bank of India, India's largest public sector banks, is merging with

five subsidiaries to create a mammoth bank with 24,000 branches

and 500 million customers. Banks are often measured by the

value of their assets. This merged bank will have assets worth $550

billion. To put that into perspective, the new merged entity

will be five times bigger than India's next largest bank. The

problem in India if there are lots of small banks. Far too small to

break even, let alone become profitable. For too long many have

been weighed down by not performing assets and bad loans, which has

hampered the banks' ability to give loans to other businesses, which in

turn affects the economy. By coming together, these five smaller banks

will be able to serve customers of the growing economy better. They

will be able to give credit easily while trimming costs and cutting

losses. Consolidation looks like a big option to clean up India's

banking system. There you go.

And now let's get the inside track on Brexit.

This week the UK triggered Article 50, starting the process

Two years now to, as they keep calling it, talk about the divorce.

Negotiate the divorce. Yesterday the British government

outlined how it plans to transfer thousands of pieces

of European Union legislation The Great Repeal Bill

will give Parliament - or the devolved Assemblies -

the power to scrap, Let's get more with our economics

correspondent Andrew Walker. You are all over this?

You will be in a minute! We have the questions we have been asking you

all this week. Let's get straight into these, and thank you for those.

Let's start with David who says what happens if there is no agreement two

years after Article 50 is triggered? One of two things, there is an

option in Article 50 for this two year period to be expanded, it has

to be agreed unanimously by the departing country, Britain, and by

all the remaining ones. If at the end of that stage they think it is

in their interest to extend the negotiations they can do that. What

it would mean would be that, for about what that extension is, the

European treaties would continue to apply to Britain for the extended

period. The other possibility is specified in that article is simply

that the treaties cease to apply and Britain would cease to become a

member. What would that mean in terms of international trade? If

there is no agreement it simply means that Britain falls back on

what is called World Trade Organisation relationship with the

European Union, meaning that British exporters would place exactly the

same kinds of barriers, including tariffs, that are faced by exporters

in the United States, China or whatever -- British exporters would

face. The average EU tariffs is right below but they are pretty high

in some areas, particularly agriculture, dairy produce, meat.

There are some very high terror in meat. And relatively high is the

motor industry, 10% is the figure. There is also the flip side, Europe

would have the terrific as well? Germany would be hit hard? That

would be a decision for the British Government, wooded copy, paste and

applied the same tariffs currently applied to third parties stuff? --

would it copy, paste and apply? But they could charge lower turrets,

which would go down well with third parties but perhaps not so well with

some of the affected businesses in the UK, but it is an option.

Another question from David Wright about access to health care, will

the European health insurance cuts still be valid, post-Brexit? Those

cards we are told to bring with us. This is a theme that comes up in

quite a lot of the questions, it depends on the outcome of the

negotiations. That is certainly something to be looked at in the

course of these talks. I would note that the card currently applies to a

number of non-European Union countries, those in the European

Economic Area, and also Switzerland. I will stick my own personal neck

out and say I would be pretty surprised if it does not end up

providing coverage to British citizens, but you never know. What

about Danish bacon?! Trine from Copenhagen said if there was no

trade deal, no more English breakfast, which was invented to

sell more break in to the UK exclamation mark -- sell more bacon

excavation at the blog there is a British breakfast of which Bacon is

a very important part, the short answer is it will not mean the end

for the British breakfast. But in that scenario of crashing out onto

so-called word -- World Trade Organisation terms, there would

conceivably be a tariff on imports of Danish and, indeed, bacon from

other parts of the EU which might mean that traditional English

breakfast was a touch more expensive.

Filler in Liverpool says Will UK students averages traits to work in

EU countries -- Fionnuala in Liverpool. Again, it depends. One of

the key red lines in these because the Asians is increased control over

the labour market restrictions, tickly on the rights of EU workers

to work here, it would not be surprising if ever corresponding

restrictions -- one of the key red lines in these negotiations. We do

not know until the negotiations are done.

Andrew Walker, thank you. There will be more business news

throughout the day on the BBC Live