31/03/2017 BBC Business Live


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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


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