:00:09. > :00:11.This is Business Live from BBC News with Tanya Beckett and Rachel Horne.
:00:12. > :00:12.Zooming exports and crumbling classrooms.
:00:13. > :00:14.The paradox of Germany's lopsided economy.
:00:15. > :00:16.Live from London, that's our top story
:00:17. > :00:39.Growth accelerates in Europe's biggest economy but is Germany
:00:40. > :00:48.Has Donald Trump opened the door to trade with China?
:00:49. > :00:51.Beijing gives the green light to certain US exports.
:00:52. > :00:59.We'll cross live to Asia for the latest reaction.
:01:00. > :01:03.It is a flat start on the markets for Europe. Oil prices remaining
:01:04. > :01:06.relatively firm of course. We'll hear from the young tech
:01:07. > :01:10.entrepreneur behind the UK's It's been a long week for Barclays'
:01:11. > :01:15.CEO Jes Staley and it ends with him fooled into replying
:01:16. > :01:17.to an email he thought was sent by the bank's Chairman
:01:18. > :01:20.but was actually from a prankster. We'll tell you what he wrote later,
:01:21. > :01:23.but first we want to know have you ever sent an email
:01:24. > :01:26.to the wrong person? We start in Europe's
:01:27. > :01:44.economic powerhouse, because in the last half hour
:01:45. > :01:48.Germany has released GDP figures for the first
:01:49. > :01:52.three months of the year, and they show an economy
:01:53. > :01:55.that's accelerating. It grew 0.6% on the
:01:56. > :02:04.previous quarter. That translates to an
:02:05. > :02:06.annual rate of 1.7%. It's being fuelled by global demand
:02:07. > :02:08.for the country's exports, But it's not all cause
:02:09. > :02:11.for celebration. Last year Germany clocked
:02:12. > :02:20.up its biggest ever trade surplus, that's how much more it
:02:21. > :02:24.exports than it imports. At $275 billion, Germany has one
:02:25. > :02:26.of the biggest trade It's a source of tension
:02:27. > :02:33.with its neighbours and allies. Look at how much more Germany sells
:02:34. > :02:35.to these top economies The US in particular has accused
:02:36. > :02:48.Germany of exploiting an undervalued euro to get an unfair
:02:49. > :02:51.trade advantage. An over-reliance on exports
:02:52. > :02:56.isn't the only problem. The European Commission says
:02:57. > :02:58.Germany is just too frugal. It is saving too much,
:02:59. > :03:00.and investing too little. It wants to see some of that cash
:03:01. > :03:03.invested in the region's Paul Kavanagh, Director
:03:04. > :03:18.of Patronus Partners, is with me. Growth of 0.6% for the first three
:03:19. > :03:24.month we were expecting, sounds not bad, so why is there so much
:03:25. > :03:29.criticism of Germany? It is to do with the imbalances within the
:03:30. > :03:35.economy. Germany taxes its popular very highly, around 40% of GDP is
:03:36. > :03:39.made up of taxes. As we approach the elections in September there is a
:03:40. > :03:43.lot of pressure on trying to release some of these taxes that are being
:03:44. > :03:47.imposed, to bring more euros back and to allow people to spend, and if
:03:48. > :03:54.they spend, will be spend on things they need to import? To rebalance
:03:55. > :03:58.this import export argument creating tensions particularly with the US.
:03:59. > :04:04.There is also the issue over the euro. Explain that. Germany has a
:04:05. > :04:09.very strong economy not only domestically but it is the strongest
:04:10. > :04:15.in terms of exports. Normally if you were alone as a country with that
:04:16. > :04:19.sort of thing you would have a very strong currency but they are
:04:20. > :04:24.benefiting from the weak economy of France and Spain and others and so
:04:25. > :04:30.they have had a very good year on the export front. The difficulty is,
:04:31. > :04:35.my issue with looking at a trade surplus, is it is a gross figure, it
:04:36. > :04:39.does not look at margins, profits, you could be selling something that
:04:40. > :04:44.had a very small margin, Germany is not, but it is a pretty crude way of
:04:45. > :04:50.assessing whether there is an imbalance. Absolutely. What happens
:04:51. > :04:55.around the world, this relationship between economies and currencies is
:04:56. > :04:59.becoming more tense and impacts on China and Japan and particularly the
:05:00. > :05:03.US at the moment because the manifesto from Donald Trump has been
:05:04. > :05:08.about protecting the US. It's feeling is that the US has been
:05:09. > :05:12.subsidising the world with a strong dollar and weaker currencies against
:05:13. > :05:16.the weaker yen and euro and when you look at the trade surplus numbers
:05:17. > :05:21.and the strong balance sheet of Germany at the moment, which is not
:05:22. > :05:25.being used to create new investment in schools, construction, and giving
:05:26. > :05:29.more money back to the popular to buy consumable goods, there is a
:05:30. > :05:30.feeling there is imbalance and you are benefiting from the weak
:05:31. > :05:34.currency. Thank you. Let's take a look at some of
:05:35. > :05:38.the other stories making the news. Shares in Macy's have plunged
:05:39. > :05:42.after the US department store owner Rivals Kohls and JC Penney
:05:43. > :05:51.were also down sharply, amid fears about the health
:05:52. > :05:55.of the traditional US retail sector. The rise in online shopping has seen
:05:56. > :05:58.US department stores shed more than 32,000 jobs in the past year,
:05:59. > :06:01.according to US The South Korean government has
:06:02. > :06:08.ordered carmakers Hyundai and Kia Motors to recall
:06:09. > :06:10.about 240,000 cars, after a tip off The ex-Hyundai employee raised
:06:11. > :06:15.concern about defects which affected It is the first time the country's
:06:16. > :06:19.government has issued Kia is an affiliate of Hyundai,
:06:20. > :06:24.and officials are asking the country's prosecutor to look
:06:25. > :06:27.for any evidence of a cover To Asia now, and since US
:06:28. > :06:40.President Donald Trump and Chinese President Xi Jinping met
:06:41. > :06:43.in Florida last month, the two countries have been
:06:44. > :06:45.in talks to try and reduce Well, it looks like those talks are
:06:46. > :06:52.beginning to yield results. Our reporter is in Singapore
:06:53. > :07:02.and can tell us more. They have unveiled a 10.8 package,
:07:03. > :07:06.quite a meaty deal. China is resuming imports of US beef after 13
:07:07. > :07:11.years and in return the US is allowing Chinese cooked chicken back
:07:12. > :07:16.into their market. Other points of this deal include the entry of
:07:17. > :07:21.Chinese banks into the US and for China they are opening the market to
:07:22. > :07:25.US natural gas and financial services firms and credit rating
:07:26. > :07:29.services. The US commerce secretary says that this deal should actually
:07:30. > :07:36.reduce china's trade surplus with America by the end of the year. On
:07:37. > :07:44.the campaign trail President Trump did a lot of sabre rattling when it
:07:45. > :07:50.did to China. He has not did what he threatened. After the meeting with
:07:51. > :07:55.the president in Florida it seemed like the situation is you scratch my
:07:56. > :08:01.back and I will scratch yours. Thank you. Interesting mix of politics and
:08:02. > :08:18.economics there. There is not a secular driving force
:08:19. > :08:25.in the markets at the moment. -- particular. We know the US central
:08:26. > :08:30.bank says it is ready to hike interest rates. The UK central bank
:08:31. > :08:33.takes a different view about the UK economy which is predicted to grow
:08:34. > :08:39.faster than the German economy this year. This is what is happening in
:08:40. > :08:50.Europe so far. In percentage terms not much movement. This is France,
:08:51. > :08:55.Merck on redefining the relationship between France and Germany. We have
:08:56. > :09:01.the details on what has been going on in Wall Street. Two bits of
:09:02. > :09:06.economic news, the consumer price index and retail sales. Economists
:09:07. > :09:15.estimate that the CBI will increase by 0.2% in April after a fall of
:09:16. > :09:19.0.3% in March. It seems it may be the same story for sales, the
:09:20. > :09:27.expectation is they will be up by 0.6% after falling by 0.2% in March.
:09:28. > :09:31.Speaking of retail sales JCPenney will be reporting earnings. The
:09:32. > :09:37.company is looking to cut costs as sales continue to slide. They said
:09:38. > :09:42.back in February they would close 130-140 underperforming stores over
:09:43. > :09:43.the next few months and they will offer voluntary retirement for about
:09:44. > :09:50.6000 employees. Joining us is Nandini Ramakrishnan,
:09:51. > :09:59.Global Market Strategist at JP Yesterday we had the Bank of England
:10:00. > :10:02.giving their inflation report and their inflation forecast has
:10:03. > :10:08.increased but no sign of an interest rate move. Yes, a combination of
:10:09. > :10:13.higher inflation expected and lower growth, which is making the Bank of
:10:14. > :10:16.England remain on hold. A lot of commentary about the strength of the
:10:17. > :10:20.UK consumer, a little bit of weakness coming from that consumer
:10:21. > :10:26.but other parts of the economy such as exports and potential investment
:10:27. > :10:30.from abroad should balance that. Things get complicated, the impact
:10:31. > :10:35.of the Brexit vote and the potential for inflation to rise and growth to
:10:36. > :10:43.stagnate at the same time, soft data comes in handy. Yes. This is
:10:44. > :10:47.happening globally. Survey data coming out quite strong that we want
:10:48. > :10:52.to see the GDP numbers, some of which we have been seeing coming out
:10:53. > :10:56.quite strong, but we want to see the hard data come out strong as well to
:10:57. > :11:01.support it which is what the Bank of England and lots of central banks
:11:02. > :11:07.around the world are hoping for. Looking at the markets we have had
:11:08. > :11:11.strong US earnings, resolution to the French presidential elections,
:11:12. > :11:15.we are in the middle of the European earnings season, how are the markets
:11:16. > :11:20.feeling? There's a bit of a positive breath after the French elections
:11:21. > :11:25.and we had strong US jobs data last week. Nothing too big on the horizon
:11:26. > :11:30.today or the early parts of next week that should shock the markets.
:11:31. > :11:35.We will see as the data comes out. You will be back in a few minutes to
:11:36. > :11:39.talk through the papers and to let us know if you have ever emailed the
:11:40. > :11:42.wrong person. Let us know if you have done that. I have done that. It
:11:43. > :11:46.was not nice! We'll hear from the young tech
:11:47. > :11:49.entrepreneur behind the UK's You're with Business
:11:50. > :11:59.Live from BBC News. Businesses in all parts of the UK,
:12:00. > :12:05.particularly rural areas, are experiencing full or partial
:12:06. > :12:12.not-spots in their mobile coverage according to the British
:12:13. > :12:14.Chambers of Commerce. The survey shows that 70%
:12:15. > :12:17.of firms experience mobile non-spots, areas of no mobile
:12:18. > :12:21.coverage by any operator, or partial not-spots,
:12:22. > :12:23.where there is some coverage but not from all networks,
:12:24. > :12:34.in their local area. This is a survey put out by the
:12:35. > :12:39.British Chambers of Commerce who have interviewed 1400 companies
:12:40. > :12:43.around the country, many of them small businesses. Mobile phone and
:12:44. > :12:47.internet access is but a clean important for small businesses
:12:48. > :12:54.because often able running them are on the move that they have to keep
:12:55. > :12:58.in touch with clients. 70% of these businesses report that they are
:12:59. > :13:03.experiencing either not spots where they cannot get any 4G coverage or
:13:04. > :13:08.partial not sports were one mobile provider might have coverage but
:13:09. > :13:14.others do not, and it is particularly acute in rural areas.
:13:15. > :13:17.It is a fairly small survey that echoes the national report last year
:13:18. > :13:25.on preparation for five G coverage where it said that 4G, Britain was
:13:26. > :13:28.56th in the world for 4G coverage, simply not good enough. The British
:13:29. > :13:34.Chambers of Commerce are trying to turn this into an election issue.
:13:35. > :13:40.What do they want to be done? What can you do? Surely operators will
:13:41. > :13:44.already have done what they can do. One of the things the British
:13:45. > :13:48.Chambers of Commerce is calling for is easing of planning laws to allow
:13:49. > :13:53.for taller masts because if you are in a rural area that might improve
:13:54. > :13:58.your coverage. The other point is that Ofcom it says must do more to
:13:59. > :14:03.hold providers to account for the service advertised to customers, in
:14:04. > :14:07.other words making sure that if it is advertised people get it.
:14:08. > :14:13.Customers not getting a good service at all. Some rely on 3G but 60% are
:14:14. > :14:27.only getting two G, which is not internet. Not good enough. Have you
:14:28. > :14:38.watched paper pig? ?47 million of extra costs, shares down 2%.
:14:39. > :14:42.Just because you're a tech startup doesn't mean
:14:43. > :14:45.Instead, London-based virtual reality firm, Improbable,
:14:46. > :14:47.has has raised $500 million in a landmark deal
:14:48. > :14:50.Japan's Softbank is backing Improbable in a funding
:14:51. > :14:52.round that values the business at more than $1 billion.
:14:53. > :15:03.Well let's get more on this with Rory Cellan-Jones.
:15:04. > :15:11.We should start with what Improbable dolls. And Improbable story. Founded
:15:12. > :15:24.to Maggie years ago by two Cambridge University computer science
:15:25. > :15:28.graduates. -- founded by two Cambridge University computer
:15:29. > :15:34.science graduates two years ago. The gaming businesses don't make much
:15:35. > :15:40.money. This is an early-stage company. It hasn't got a lot of
:15:41. > :15:47.revenue. It has a huge vision. I've been speaking to one of the
:15:48. > :15:52.co-founders, and I was asking why gaming was quite important. Where
:15:53. > :15:56.they are going somewhere very exciting. It is when people stop
:15:57. > :16:00.seeing games as a distraction and start seeing them as a source of
:16:01. > :16:03.meaningful experience. The generation coming up, when they go
:16:04. > :16:06.into the experience, which we are hopefully able to power, the
:16:07. > :16:11.relationship with that medium will be different. Especially when it
:16:12. > :16:16.comes to time spent and engagement with it. Seeing the technology, the
:16:17. > :16:24.powers, that enables us to build a massive scale in the real world.
:16:25. > :16:30.Those problems tend to converge with the technological path we are on.
:16:31. > :16:35.From SoftBank's perspective, that whole spectrum of problems... How
:16:36. > :16:40.significant is this that the UK Tech centre? This makes Improbable one of
:16:41. > :16:43.the first unicorns. A unicorn is a company valued at more than $1
:16:44. > :16:49.billion before it comes to the market. Let's stress what a huge bet
:16:50. > :16:55.this is by SoftBank. SoftBank has a lot of money. It is spreading it
:16:56. > :16:59.around the world. It bought the chip designer last year from the UK at a
:17:00. > :17:04.huge premium. It is a bet. It shows that in the UK there is a lot of
:17:05. > :17:08.great tech coming out. Particularly from universities. From the
:17:09. > :17:11.artificial intelligence field, virtual reality field, and the
:17:12. > :17:15.interesting thing about this is this company is staying independent. It
:17:16. > :17:20.is not being bought. It is a minority stake. They have said they
:17:21. > :17:24.want to stay British. That is a relief. Because we see so many
:17:25. > :17:34.companies build to a certain size in the UK and then go. I am thinking
:17:35. > :17:37.about Deepmind. Yes, they were unknown, it was bought by Google a
:17:38. > :17:43.number of years ago for the same amount of money, roughly, as what is
:17:44. > :17:48.being paid for a stake in Improbable. Difference there, Google
:17:49. > :17:53.bought control of Deepmind, which has turned out to be fantastic, in
:17:54. > :17:55.terms of reputation and a leader in artificial intelligence. Whereas
:17:56. > :18:00.SoftBank just have a stake in this company. Snap gave their
:18:01. > :18:05.first-quarter figures this week. Did not get a great result in the
:18:06. > :18:08.markets, did they? They increased users, but 2 million fewer than
:18:09. > :18:14.expected. They are not making a profit. The market share dropped by
:18:15. > :18:18.more than 20%. Interesting parallels with Improbable. A huge bet being
:18:19. > :18:26.placed on Improbable but at a much earlier stage. Equally, enormous bet
:18:27. > :18:30.being made by investors on Snap, that that will be a communications
:18:31. > :18:36.platform of the future. It is growing rapidly. The key thing is it
:18:37. > :18:40.isn't growing as rapidly as investors bet. And it needs to grow
:18:41. > :18:47.at a rate to justify that huge valuation. Question is, will this
:18:48. > :18:53.follow the trajectory of Facebook, confound it... Or can Facebook
:18:54. > :19:00.follow the trajectory of Snap? Exactly. On Twitter, which is
:19:01. > :19:04.disappointingly struggling. The problem is, it isn't Facebook, and
:19:05. > :19:08.it is being attacked by Facebook. Every time it comes up with an
:19:09. > :19:11.innovation, Facebook, which is bigger and more powerful, imitate
:19:12. > :19:21.it. That will weigh on their shares for a long time. The smaller social
:19:22. > :19:28.media companies... The users is 166 million for snap chat, for Facebook
:19:29. > :19:32.it is about 2 million. Do we assume they have to have the same number of
:19:33. > :19:37.subscribers in order to be viable? No, that is where I think investors
:19:38. > :19:41.are making a potential mistake. These companies can survive pretty
:19:42. > :19:45.well and be useful. Twitter is a useful platform for its users. For
:19:46. > :19:49.users like Donald Trump. Snap chat is loved by the young audience. But
:19:50. > :19:54.that doesn't mean it will grow forever and is going to be quite the
:19:55. > :20:01.moneyspinner investors bet it will be. Thank you so much for coming in.
:20:02. > :20:05.Do you Snap? When I'm on this programme with rabbit ears, the
:20:06. > :20:11.whole lot yet. I want to see that. You will see it later. The fact that
:20:12. > :20:14.she knows what it is is pretty good. As for reality, why do you want more
:20:15. > :20:20.of it? That is why we have rabbit ears.
:20:21. > :20:23.Let's move on. OK, we are also looking at Iran
:20:24. > :20:26.which holds its presidential election next week.
:20:27. > :20:29.It will be closely watched by hundreds of companies worldwide
:20:30. > :20:32.The current president, Hassan Rouhani, has opened up Iran
:20:33. > :20:35.to foreign investment and has attracted some of the
:20:36. > :20:38.But conservative challengers have said they would reverse his policy.
:20:39. > :20:40.Later today the candidates hold the last in a series
:20:41. > :20:42.of presidential debates, which will focus on business
:20:43. > :20:59.Two years ago jubilation on the streets of Tehran. World powers
:21:00. > :21:05.promised to lift sanctions on Iran after President Rouhani's government
:21:06. > :21:10.promised to scale back its nuclear programme. Its economy, which was
:21:11. > :21:17.close to collapse, is now growing at over 7% per year. Mr Rouhani says
:21:18. > :21:24.foreign trade and investment are vital for future growth. They have
:21:25. > :21:28.struck deals with Total and Shell. It has ordered new aircraft from
:21:29. > :21:37.Airbus and Boeing. Renault and Peugeot are back in around again to
:21:38. > :21:39.make cars. But Mr Rouhani's main conservative challenger says the
:21:40. > :21:43.failing. One in eight Iranians is failing. One in eight Iranians is
:21:44. > :21:47.unemployed. The wealth gap is widening. He wants to give Iranians
:21:48. > :21:52.firms the lead in rebuilding the economy. And rather than dealing
:21:53. > :21:58.with the West, he wants more trade links with countries like China,
:21:59. > :22:01.Russia. He also promises to create millions of new jobs for young
:22:02. > :22:09.Iranians, but he has not yet said how.
:22:10. > :22:11.Nandini Ramakrishnan, Global Market Strategist at JP
:22:12. > :22:15.Morgan Asset Management is joining us again to discuss.
:22:16. > :22:19.The chief executive of Barclays Bank was sent an e-mail, which he
:22:20. > :22:29.believed was from the chairman, after that, he replied to it. He
:22:30. > :22:32.replied to a prankster. He said you have a sense of what is right, a
:22:33. > :22:39.sense of theatre, you mix humour with grit, thank you, my respect for
:22:40. > :22:43.your guile, one day I want to see an ad lib guitar solo in the ilk of
:22:44. > :22:49.Eric Clapton. Cringe. But he sent it to somebody
:22:50. > :22:53.who was not in fact the chairman. So it is awkward.
:22:54. > :22:58.Have you ever done it? Not to him. I have sent text messages to
:22:59. > :23:05.somebody I was with, and then maybe intended to send it to somebody
:23:06. > :23:09.else, but sent it to them instead. Fortunately not offensive. The worst
:23:10. > :23:14.thing I have done is I have picked up the phone to make a phone call,
:23:15. > :23:18.and the phone rang at exactly the same time, and I happened to talk
:23:19. > :23:22.quite badly about that person.
:23:23. > :23:28.What did they say? There were very good about it. --
:23:29. > :23:36.they were very good about it. How about you? Sometimes AutoCorrect
:23:37. > :23:40.has allowed me to reply to the wrong person. What a way to end the week.
:23:41. > :23:45.A difficult week. He just wants the week and to start, I imagine.
:23:46. > :23:47.The background as the controversy over the whistle-blower. He
:23:48. > :23:49.reversed out of that because it reversed out of that because it
:23:50. > :23:55.appears he was trying to, maybe you should explain it better, control
:23:56. > :23:59.what the whistle-blower's interaction was with the bank.
:24:00. > :24:05.That's right, isn't it? Yes. Let's talk about...
:24:06. > :24:07.The City of London. In the context of Brexit. There is a lot of debate
:24:08. > :24:15.wane. Two arguments. One, certain wane. Two arguments. One, certain
:24:16. > :24:19.deals cannot be done in the UK if it isn't part of the Eurozone. Another
:24:20. > :24:22.argument is that it has a critical mass, so therefore that size is a
:24:23. > :24:27.market and a market works best when you have all of it going on in the
:24:28. > :24:30.same place. What is your prediction for the first couple of years? It'll
:24:31. > :24:36.be interesting. London is infrastructure. The city, Canary
:24:37. > :24:39.Wharf, built to handle that kind of volume of services and financial
:24:40. > :24:44.services London provides. It has the benefit of being in the middle of
:24:45. > :24:48.the time zone geographically. But you have these issues where if you
:24:49. > :24:49.are settling trades, having collateral movements through certain
:24:50. > :24:52.institutions, and it is based on institutions, and it is based on
:24:53. > :24:57.euros, it must be in the EU for certain aspects of that. That is the
:24:58. > :25:01.real challenge. All businesses move to other European cities? That is a
:25:02. > :25:02.big argument. But also there is a fear from Europeans in general that
:25:03. > :25:06.a lot of businesses go to New York a lot of businesses go to New York
:25:07. > :25:10.or other big financial sectors outside of this region. It would be
:25:11. > :25:16.based on the negotiations which come through with Theresa May and Brexit.
:25:17. > :25:19.We have this image from the article from the New York Times, talking
:25:20. > :25:21.about how nearly one fifth of the wild's banking transactions go
:25:22. > :25:26.through the UK, mostly through London. They have another
:25:27. > :25:28.interesting thing, saying the biggest cross-border banking
:25:29. > :25:32.sectors, why New York is largely centred on the American markets,
:25:33. > :25:39.London is more focused on the world, and we have $4.6 trillion moving
:25:40. > :25:44.through London. It is staggering. It is a huge part of the UK economy.
:25:45. > :25:47.Markets, not just investors, but global citizens will be watching.
:25:48. > :25:50.Thank you very much for your time. Have a lovely weekend.