19/05/2017 BBC Business Live


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This is Business Live from BBC News with Aaron Heslehurst


France gets ready for Macron economics.


But does the new president have the right formula to bring


Live from London, that's our top story on Friday 19th May.


Never mind 100 days - how about 100 hours?


French president Emmanuel Macron has been in the job for five days,


but he's already got his work cut out ahead of the parliamentary


We take a look at what he hopes to achieve.


Tense times for Mexico as its two-decade-old trade deal


And, as always, we bring you the latest action on the markets -


we'll find out why the markets have pushed aside, for now,


And we look back at the past week in business, when US


markets had their worst day since November,


and the economy was the main focus in the UK election.


That's all with our business editor, Simon Jack.


It's easy to get in touch with the programme -


It is Friday, we have got that Friday feeling.


We start in France - where the new President,


Emmanuel Macron, says he expects no honeymoon from the public


He now has to try and win a majority in next month's


parliamentary elections - and implement the economic policy


So what is Macron economics - and can it solve France's problems?


Macron calls himself 'neither right nor left',


he's a centrist, and, sure enough, the team he announced on Wednesday


is a diverse mix of figures from the left, right and centre.


He says his economic policy is based on the Nordic model.


Basically, it mixes spending cuts on the one hand


He plans to cut spending by 60 billion euros over


The civil service will be hit hard - 120,000 jobs will go.


But over the same period he has pledged 50 billion euros worth


That includes cutting the corporate tax rate from 33% to 25%


and lowering the tax burden on households.


It's a similar story with free trade.


As a former banker, he's broadly for it.


But he's also talked about creating a "protective Europe".


You know how we hear Trump saying, by American, by American? Will he


wants us to buy European. He wants to stop non-EU companies


taking over key industries. France's jobless rate is almost


double that of Germany's at 9.6%. Many employers blame strict labour


laws, like the 35-hour working week. But they are fiercely


defended by unions. You've guessed it,


somewhere in-between. He wants to keep the 35-hour work


week, but change the way the law is applied to make it


easier to hire and fire. Jean Pierre Lambert is a managing


director at the investment bank KBW. He has to act fast, doesn't he? Do


you think the team he has assembled around him will help him crack that


really difficult problem of reforming France's labour laws?


Plenty of other administrations have failed. He has an excellent economic


minister, a Budget minister who is a rising star in the Republican Party,


and he has got 18 that is ready to and he has got 18 that is ready to


fight. The first bite will be the parliament in the elections which


are going to take place, will he get the majority? So far the polls


indicate he may get the majority, which would be an achievement.


Incredible, given this party was only set up just over a year ago!


Absolutely. Not everything in France is decided in Parliament, as you


alluded. Do you think the timing here is crucial, because if he gets


it through in the summer plenty of people will be on holiday and less


inclined to strike? A good point! Yes, a good point, and


he has to be prepared to take hard action and face the repercussions if


people are fighting, he has to take a hard stance and he is a good


character to do that. This is what I don't understand, France runs a


deficit, for the uninitiated, that means France spends more than it


earns from tax, right? He wants to make these big tax cuts, so they


already spend more than they make in tax, can they afford that? He has a


balancing act to implement. Critical for him is to gain credibility again


with Germany and because previous administrations have tried to


deliver, including Francois Hollande, but did not deliver


reform, if he wants the support of Germany he needs to be the first to


put his house in order, which includes respecting the budgetary


rules said added European level, the 3% deficit, and he wants also to


unemployment because he wants to give more to the young people, 25%


unemployment is fairly high. How do you think is planned to buy European


will go down with Angela Merkel? Germany has concerns about


non-European companies buying critical industries so this issue, I


don't think she was that much opposed, it is a subject for


discussion, it may happen. Thank you very much for coming to talk to us.


Let's take a look at some of the other stories


Greece's parliament has approved a new package of austerity measures


needed to release the next instalment of its


Protesters clashed with police in central Athens as MPs voted


on the tax rises and further cuts to pensions.


Eurozone finance ministers meet on Monday to decide if Greece has


done enough to receive a E7.5 billion loan plus debt relief.


Brazil's stock market has plunged amid corruption allegations


The main Ibovespa index closed down more than 8.8% -


trading was briefly halted earlier in the day after losses of more


than 10% prompted circuit breakers to kick in.


President Temer was forced to deny a newspaper report that he had given


consent to paying off a witness in a huge corruption scandal.


The Supreme Court has authorised an investigation


Leaders from the APEC group of Asia Pacific nations are gathered


They are pushing to save the Trans-Pacific Partnership trade


Pulling out of it was of course the first action of President Trump.


Good to see you. This is the 11 nation is now going, you know what?


Maybe we can do this without the United States!


Yes, it will be an interesting meeting because on the one hand you


have the countries hoping to be part of the TPB originally now scrambling


to salvage it in some way, shape or form, and on the other hand the US


trade representative who will represent the president, as you


mentioned, who seems to have far more protectionist impulses than his


predecessors. Many ministers will try to get face time with him to see


if there is wiggle room with his America first policies and to seek a


bit more clarity about what they mean, but it seems pretty unlikely


might see coming out of this meeting might see coming out of this meeting


but we at least might get a sense of whether the TPP is completely dead


or maybe just a little bit alive, and there will also be discussions


on the sidelines of the regional economic comprehensive partnership,


China's competitive to the TPP. Even Nafta might come up given that


Canada and Mexico will be there as well so a lot of the agenda will be


keeping a close eye and we will be interested to see what comes out of


it. We will talk to use them, have a


great weekend! Let's quickly stay with the markets.


That was the Dow yesterday closing on Wall Street, Asian market


slightly higher. This is pretty much of the back of the better


performance we saw overnight on Wall Street. A moderate recovery. If we


look at Europe, following suit at the moment, but let's not forget the


Trump slump has not fully gone away because the scandal surrounding the


President's Administration is still pretty much in the headlines.


On Thursday, the Trump administration notified Congress


that it will start talks to renegotiate the North America


Free Trade Agreement "as soon as practicable".


President Trump has called the 1990s Nafta deal with Canada and Mexico


a 'killer' of US jobs, and made shaking it


It's a big worry for Mexico's huge auto industry and the global


car-makers that have invested heavily there,


The auto industry here has been booming for more than 20 years.


The country is now the fourth largest car exporter in the world.


It was meant to be a shining example of free trade, but today it's


a monument to Donald Trump's brand of protectionism.


These steel beams are all that's left of a $1.6 billion investment


that Ford was making to build a plant here.


Jose Puebla Ortiz shows me the deed to the land he sold to Ford.


With the money, he bought a truck to work on the Ford plant.


For a while, life was good - but it didn't last.


TRANSLATION: Some people came to the plant and sent us home.


They said there was no entry any more.


The trucks couldn't go in any more, it all collapsed.


Not just for the truckers but for everyone.


Ford is keen to emphasise the market forces which drove the decision


to abandon its plant in San Luis Potosi, but CEO


Mark Fields admits presidential rhetoric is also a factor.


At the end of the day, we have to do what's right


for our business and of course the administration and the Congress,


they have the ability to look at tax policy,


trade policy etc, and that's the business


And now Donald Trump has set about renegotiating the entire


North American Free Trade Agreement, or Nafta, but a more protectionist


US administration could undoubtedly do great harm to many livelihoods


Michelle Fleury, BBC News, San Luis Potosi.


Joining us is Lucy MacDonald, CIO, Global Equities


Thank you for coming in. Let's talk about the Trump slump that we have


seen this week. There has been some reversal in the markets, why is


that? Two reasons, one is that the level of cash is still quite high,


around 5%, so there is cash available and I think the second


reason is corporate profits are still quite strong so the earnings


season is coming through, broadly across the world we have seen


companies upon earnings but also on sales. Those two things mean there


are some fundamental underlying strengths, despite the fact that you


do have relatively high valuations in the US in particular and the


prospect of liquidity being taken out of markets by the Fed. So it is


going to be between those two factors, in the meantime volatility


was very low, we have had increasing spikes of volatility and I think we


will get more of that. I noticed yesterday we saw a lot of the


emerging market currencies go... I asked an expert, why are they


dropping? He said, the US. Emerging economies rely on US growth, if the


US isn't growing, they are not growing. That is right, yesterday


the trigger was Brazil, and when there is a concern things tend to


correlate, you get the rising volatility and a rise population and


that is what we saw, so all emerging markets behaved as if they were


Brazil, so in the long term you are right, they depend for their growth


on the US. You are going to come back later?


We will be talking about some of President Trump's policies,


including perhaps paid maternity and paternity leave for families in the


US. We will have to see. We look back at the past


week in business, when US markets had their worst day


since the presidential election, and the economy was the main


focus in the UK election. That's all ahead with our business


editor, Simon Jack. You're with Business


Live from BBC News. One of Britain's airports


is moving its control tower around 100 miles away


from the actual runway. London City Airport is to become


the first in Britain to abandon its bird's-eye view


of the runway and use digital technology to


monitor planes remotely. They say it will make managing


the planes safer and more efficient. Theo Leggett can tell us


more about whether this Yes, that is what they are saying.


At the moment at London City Airport as with many others, the controller


is looking after the aircraft when it are on the ground, their


movements had to be choreographed carefully as you can imagine and it


is done by people looking out of the window basically. What the British


air traffic control people are trying to do is, instead of having


that tower with people looking out of the window, you have a whole


range of high definition cameras and the images from them will be beamed


onto a large screened against the wall in this remote controlled


centre. These are not small screens like with CCTV monitoring stations,


they are big things that look like Windows and they are piping in sound


as well so for the controllers it is as if they are there themselves. And


on those screens, they will be able to put up radar data and things like


that to make their life easier. What they are saying is that this will be


a better solution than having people in a control tower at London City


Airport looking out of the window. We have seen what cyber attacks, the


havoc they can wreak on services, so what about air traffic control, is


there not a risk of blackout? This is the obvious concern when you do


anything remotely but the people in charge of this say that it is proven


technology, it has been used in Sweden since 2015, and they say they


have a lot of redundant system so if one part, if it goes down, another


can take over and they say it will be absolutely safe. Obviously safe.


Thank you. Lyon, the healthy fast food chain,


wants to take on the US. They are helping to fund expansion with a ?25


million investment of cash? We will see if it works.


France gets ready for Macron economics.


But does the new president have the right formula to bring


The S 500 and the Dow saw their biggest one-day


fall since September, this week, as investor hopes for tax


cuts and other pro-business policies faded after reports that US


President Donald Trump tried to interfere with a federal


investigation, setting off alarm bells on Wall Street.


And here in the UK, the Conservatives launched


their election manifesto, with social care shake-up as one


With all parties having pledged their election manifestos,


what do they mean for people and the economy?


Well, let's find out with our business editor Simon Jack.


We have dragged Simon in on a Friday. I'm always here on a Friday!


Before we talk about the UK manifestos, let's touch on the Trump


slump. I was interested in what Lucy had to say, we should put it in


context, there was the worst one-day fall for many months on Wednesday,


down 373 points, but it has been on a hell of a tear them up 16% since


the election. When you have had a run like that, people look for


moments to take some chips off the table and bank some profit. We have


also had incredibly low volatility which is unusual. People got


skittish about it. What matters is what you mentioned about a tax


reform, if people think that is in jeopardy, that has been driving the


market, yes, corporate earnings, but the idea that the burden on


businesses will be reduced by major tax reform. Everybody seems to agree


in the US that that needs to happen. Even though Donald Trump might be


having his troubles with his FBI director and what have you, if you


thought the tax reform plan was in danger you would see some falls in


the stock market. It looks pretty well valued and a lot of people


think it looks a bit hot. And looking ahead to possible


interest-rate rises by the Fed next month, still likely that will


happen. The market are figuring 70, 80% probability of that happening


and also, as bonds begin to fall at interest rates go up, some people


are thinking that one of these days, the great rotation from buying


bonds, people say it has been a good market for a while, this is


government debt. As interest rates go up and inflation begins to pick


up, stocks are more attractive because you get a bit of inflation


protection because the goods and services companies sell go up in


line with rising prices. It is a much more inflation safe investment.


A better return at the end of the day. Quickly switching gears, the UK


political parties, their manifestos are out, the election pledges. On


this menu of options, some strong flavours compared to previous years.


You have the Labour Party wanting to nationalise the railways and


renationalise the Royal Mail and get involved in the energy companies. A


very left-wing agenda from the Labour Party. What you would expect


from Jeremy Corbyn who has been setting that store ad for some time


but what is perhaps more contract that swagger more surprising, the


Conservatives used to say, the markets get on with it -- what is


more surprising. A massive change in tone, they are saying Babel capped


energy prices and get involved in markets, have a close look at any


takeovers make sure they are any public interest. Much more of a


lurch to the left the right if you like. I have family visiting from


Australia, and they were saying, they were stunned. If they are


watching, they are lefties, labour, but they are saying that the Tory


manifesto is something like the Labour Party. It could read like an


old Labour Party manifesto and the interesting thing is, businesses I


have been talking to chief executives and getting their


reaction, and they say at the moment they feel pretty friendless, being


duffed up from the left and the right! Nobody wants or needs


business endorsement at the moment. The political climate has changed


and hanging out with the most rich and powerful people, the tourist


used to be relaxed about it but they may have realised it does not go


down well also -- the Tories used to be relaxed. The business community


is feeling a bit worried that their interests are not being noted. Thank


you very much. In a moment we'll take a look


through the business pages, but first here's a quick reminder


of how to get in touch with us. The businesslike page is where you


can stay ahead with all the breaking business news -- the Business Live


page. We will have analysis from all of our editors around the world. And


we want to hear from you as well, get involved on our web page on the


BBC website. We are on Twitter and you can find us on Facebook.


Business Live on TV and online whenever you need to know.


What other business stories has the media been


Lucy MacDonald, CIO, Global Equities at Allianz Global Investors


Thank you for coming back, you have been going through the pages and the


interesting stories in the Washington Post is that the US could


get the first family benefit under President, but will we see this


given the spotlight on the federal investigation? Will this be a policy


he can push through? It would be quite radical. Will any of them get


through?! The tax reform is most important, but this is catching up


with the rest of the civilised world. 21st-century America. Getting


a bit more support for working parents really. That is what we have


in Europe. And we can see that it is entirely compatible with business


working well. And it has come at a point where there are a lot of other


federal cuts going on across-the-board and it seems like


it is Ivanka Trump that is pushing this through. That is what is said


and it's not ridiculous. For the uninitiated who might not know the


American system, they get two weeks, a mother gets two weeks of maternity


and paternity probably doesn't exist. It really is not very


civilised. Compared to what is in Europe. What have you chosen for the


second story? This is a fizzy drink that is taking Australia by storm!


Have you heard of this? It is a new fizzy drink that is low sugar and it


is giving Coca-Cola run its money. There is real opportunity here.


There is and you can see it across the food and factoring areas with a


trend towards healthy food and drink. That is not surprising. I


haven't actually had any myself so I can't comment. I will have to ask my


Australian family, I have never heard of it. It is green the base.


It is seems like the healthy eating market is the way to go. It is a


clear trend. In all consumer markets, it is a very long


structural trend and it doesn't surprise me. Have a great weekend,


we did not even talk about the painting. 110 million!


Aaron is launching his new show in the afternoon soon, it is his last


day today. Goodbye! The last half year or so across the


UK the weather has


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