26/05/2017 BBC Business Live


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This is Business Live from BBC News with Jamie Robertson and Ben Bland.


Can the other G7 leaders keep the US President on side over


Live from London, that's our top story on Friday 26th May.


The US President has withdrawn from the Trans-Pacific Partnership


and he's also attempting to renegotiate NAFTA.


We'll ask an expert whether a new era of protectionism


Canada's trade minister tells us why he's optimistic on the future


And it's been a big week for crude - the world's oil-producing


countries agree a deal to extend production cuts.


Markets have been heading downwards on the last few days. The FTSE just


starting up a little bit. We'll take a look at what this means


for prices at the pump. And following the vice


like grip of the handshake between Presidents Trump and Macron,


we're getting to grips with the perfect greeting


and asking how important Yesterday it was NATO,


today it's the G7. A different place, Sicily this time,


a different combination of world Let's take a look at


why it's important. These seven countries account


for getting on for half But many of them are struggling with


comparatively stagnant economies. The International Monetary Fund


is forecasting the world's economy will grow by 3.5% this year,


but just 1.9% in the G7. Also high on the list of worries -


the rise of trade protectionism after President Trump came to power


promising to put "America First". The other G7 members will be


pushing him to soften this position. Then there's the environment -


the future of the 2015 Paris President Trump has threatened


to pull the US out of the deal. His fellow G7 leaders


will try to convince him otherwise. The hosts, Italy, are at


the forefront of the migrant crisis. They will be pushing plans


to strengthen Africa's economies - to try and cut the number


of migrants leaving - and to promote food security


for developing countries. Geoffrey Yu, head of


Investment Office UK at UBS at UBS Wealth Management,


is with me. Plenty on the agenda, what do you


think will be the main priorities that they will be focusing on first?


Probably trade and where Donald Trump stands, is he going to follow


up with certain threats made during the election campaign to basically


through protection arisen -- protectionism around the US,


particularly with what happened with the Trans-Pacific Partnership, and


this could be a very interesting dialogue. What about Teater, the


American European agreement? Donald Trump of the nail in that coughing,


is there any chance of it coming back? -- what about TTIP. At this


point it would really be quite a U-turn, after moving away from the


TTIP to embrace a new partnership. But they will try to convince him


otherwise of the benefits and the business lobby in the US will be


pushing for something as well. Climate is a big issue, there is the


Paris agreement that Trump has threatened to pull the US out of, is


that realistic or just his starting position for negotiations to try and


make it more favourable to the US? I would say it is a starting position,


there are ways to preserve the framework or domestically targeting


certain industries that may struggle a bit with this agreement, so trying


to provide benefits for injections around those, but he has a domestic


audience and he is going to play to that. He rode to power almost on the


coal industry, those old rust belt industries. That is very important


for him as part of his core constituency. Having said that, he


is not going to lose that constituency but he needs to show


after the bad news domestically of late, he needs to deliver some


results. The other interesting aspect is what they are going to do


to help African economies. The host, Italy, is at the forefront of the


migrant crisis, people coming to their shores in the hope of a better


life. What realistically can they do to help support Africa's economies


and reduce the need for people to leave? The most important thing is


to not apply a broad brush to all North African economies at this


point, there are differences between Morocco, Libya is the issue right


now, former colonial power, they need to make sure there is stability


from the failed state and with the tragic events in Manchester that has


come to the forefront as well so that should be the starting point,


combat institutional structures, failures and make sure terrorism is


contained. Jeffri, many thanks.


Let's cross to Canada, where -- to Singapore, where Canada's Trade


Minister is on a visit. Donald Trump talked about the trade


deal, he said it was a disaster costing millions of American jobs.


He has talked about withdrawing from it completely if he cannot get


better deals with Canada and Mexico. So Canada has been looking further


afield, to Asia, in fact, to sign some new deals. This week the


Canadian Trade Minister has been touring Asia, Vietnam, Singapore,


South Korea and Japan. We spoke to him today and he told us that Nafta


has been extremely beneficial, not just for Canada but for the US as


well. This agreement has provided millions of good middle-class jobs


on the boat side, 9 million jobs in the US depend on Canada but what


makes it different is the relationship is unique, because we


don't sell to each other, we make things together. Look at a car, for


example, a typical car would often cross the border seven times before


reaching the consumer so this agreement has been good, provided


millions of middle-class jobs, and by the way this has been done two


decades ago, it has been amended 11 times already so obviously we are


proactive, we are confident, we will put things on the table, the US will


do so, and it has to be in the interest of all three parties.


The Canadian Trade Minister speaking to the BBC a little earlier today,


trade is a major theme for Asia with Donald Trump having pulled out of


the TPP, as you were saying earlier, lots of countries in this part of


the world are looking for new partners in the wake of that


withdrawal and are looking to redraw the trade map, so one to watch for


years to come. Thank you very much indeed.


Let's have a quick look at the market, the McKay down a touch,


three quarters of a percent, the Dow ended yesterday at an all-time high,


Surrey, the Dow a little bit of the all-time high. The European markets


have just started, not a huge amount of movement but all down and key to


that is the oil price, we will be talking about that in a second.


Samira Hussain has the details about what's ahead on Wall Street today.


It's the Friday before a long weekend in the United States.


Monday is Memorial Day and a federal holiday which means US


It is also the unofficial kick-off to the summer,


but before we fire up the barbecues, some economic news to get through.


The second reading of the US GDP, the gross domestic product growth,


in the first quarter is expected to be revised up 0.9%


Also happening on Friday, the Commerce Department will release


durable goods data which is likely to have dropped 1.2% in April.


Finally, the University of Michigan's survey of consumers


releases its final May consumer sentiment index.


This is important given two thirds of the US economy depends


The more confident Americans feel, the more they will spend.


Joining us is Mike Amey, managing director and


Good to see you. The oil price down sharply, is there a sense among


investors that oil producing companies did the bare minimum of


what was expected and no more? Exactly, coming into the meeting


there was an expectation we would cease production cuts, guided that


way by the Saudis and the Russians, and really what they did was exactly


what they said they would do. I think there was a little bit of hope


and expectation that maybe you would get more than just the Saudis and


the Russians, so a few more oil-producing would join the


production cuts, that not happen, they did what they said they would


do but the markets got ahead of themselves and we saw on the day a


big move, 5% down is a big day limu. I have this picture in my mind of


the Saudis, the Russians, Opec, trying to cut production is the


price goes up, and the Americans on the other hand throwing oil in as


fast as they can from the shale oil producers, trying to make as much


money as possible and push the price down. There is an element of truth


to that. Saudi and Russia, Government revenues are so dependent


on oil revenues, they want to keep prices as high as possible.


Unfortunately other producers over in the States, where the cost of


production is around these kinds of metals, so unfortunately it is hard


to get the price much above this because then you get this big supply


from the US, so you have these two competing forces, which is why daily


moves can be quite big but in the long-term the oil price looks like


it'll be pretty stable, inbred towns around $50 a barrel. At the pump,


which is what a lot of people care about, we would expect prices to be


stable for the next year or two. The US markets DD again, the SNP and the


Nasdaq both at record highs. What is going? The move is seen to be quite


sharp at the moment. It is impressive, you get this impressive


regular stock markets, most of them up 10% this year, we are only in


May, and you get this continued rise. We get bouts of uncertainty


but broadly speaking most economies are doing well, unemployment rates


are coming down, earnings are holding well and if earnings hold


well when people look for places to put their money, deposit rates are


low, they look elsewhere and that is why the stock market is doing well.


From your point of view, I would have thought the states are a bit


risky at the moment? We have a preference for European stocks


because the European stock market economy is a couple of years behind


the US on the recovery so we would agree that the US looks like it is


ahead of the cycle... And too expensive, do you think? We would


say fair to a little bit expensive. Thank you, you will be back to talk


through some of the paper stories with us.


Stay with us on Business Live. We'll get the Inside Track on this


week's big economic stories. It's been an important week


for Greece and China - You're with Business


Live from BBC News. House prices in London are predicted


to fall in real terms across 2017 - marking the first time this has


happened since 2011. Hometrack's latest report shows


annual house price growth in London is already running at less


than a third of the levels Theo Leggett has more


from the Business newsroom. This is a survey of house prices in


cities up and down the UK, exclusively cities, and it seems


there is a north-south divide, or rather it comes in at the Midlands,


because if you look at the southern cities, growing very rapidly in


terms of house prices over the last few years, not just London but


Bristol, Oxford, places like that, the rate of growth has gone down


quite significantly from double figures to single figures, as you


said in London we are looking at house price growth falling below the


rate of inflation and therefore real terms falls for the first time since


2011. But if you go to the Midlands,


Birmingham and beyond, you see pretty big increases. In Manchester,


house price growth last year was about 6.3%, it is now 8.4%.


Leicester, Nottingham, Birmingham, also Edinburgh, all of the city


showing an increase in price growth and the


reason is that in the southern cities where growth has been strong


up to now, there is an affordability problem, people are being priced out


of the market. There is also a question of investors becoming less


keen on buy to let property because of changes to the stamp duty regime,


so you have this real difference between London, the Home Counties,


the South of England, and the rest of the United Kingdom.


OK, thank you very much indeed for that.


Let's see what is on the Business Live page. The biggest UK tech


flotation for two years, a British software developer valued at nearly


?1 billion, which would make it the biggest UK tech firm. It is called


Alfa Financial Software. Software for the financial industry, I don't


quite understand it! This is quite a good job, professor


of play, sponsored by Lego, Paul Brown John Downey.


A ?4 million grant to help fund that.


It pays for a lot of Lego bricks! You are watching business life.


Greece failed to secure to unable to get an extra in Stormont for its


bailout. Our economics correspondent Andrew Walker joins us now. We have


been here before. We may well be here again. Yet again we have a


Greek debt repayment deadline looming, money owed to investors and


the European Central Bank coming in July and Greece needs the next


bailout payment which has been delayed for many months in order to


meet that debt obligation. We have been there before as well. On one


occasion Greece missed a payment deadline to the International


Monetary Fund by a short time. But what has been happening is Greece


has now made reform commitments to satisfy the rest of the eurozone.


They have also got the commendation of the International Monetary Fund,


but some of the rest of the eurozone who would be making this payment


indirectly through a eurozone agency, particularly Germany, wants


to see the IMF sign off on the programme is being credible and the


IMF is not prepared to do that. It thinks the projections for the Greek


government finances and economic growth are not credible, they are


too optimistic. They also think Greece needs some commitment to debt


relief. There have been some narrowing of differences. There is a


chance they will sign it of in mid-June when they meet, but they


are not there yet. Regardless of all the details, a former Treasury


Secretary says it does not make sense, there is a big hole in it.


What is going on is the Donald Trump Administration has come up with a


budget that includes proposals for cutting taxes and a central part of


their economic strategy is the idea that tax cuts and deregulation will


stimulate stronger economic growth, give incentives to businesses to


invest, people to work more, and also the idea is that by cutting tax


rates you eliminate or reduce the incentive to avoid taxes. So they


are saying that the stronger economic growth will both offset the


tax cuts by generating a larger taxpayers, but they also say it will


help them close the budget deficit completely and eliminated by the end


of a 10-year period. You can do one but not the other. That is what


Larry Summers has suggested, but the Trump administration rejects this.


But a whole load of people are joining in on the criticism. Another


point critics have made is the assumption is in these budget


projections is the US economy will grow at 3% per year over this


10-year period. Many regard that as unrealistic. Yes, the US has done


that in the past but productivity growth has been slow recently and


the population is ageing, so a lot of people will be retiring and not


generating that economic growth. One of the other big stories, Moody 's,


the ratings agency downgrading China for the first time in almost 30


years. It is worth emphasising the credit rating is still comfortably


in investment-grade territory. We are talking nothing like a


downgraded to junk status, but it is still striking. It reflects a


slowdown in economic growth in China which we have talked about a lot in


the last few years, plus Moody's assessment of the way in which China


is responding to it. China wants to make this slowdown carefully managed


and not too sharp. There has been quite a lot of stimulus coming from


the Chinese government to ensure that is the case. Because Moody's


have concerns, they are more likely to put the burden of any stimulus on


fiscal policy, so more government borrowing and concerns about


increasing debt amongst some of the state-owned enterprises and local


government which makes them think the debt situation combined with


slower economic growth means it is not as strong as it was. Is it a


real problem, debt? Not an immediate problem but across the economy as a


whole. We are talking about 30-50% of GDP, which compared to Greece is


very small! But there is household debt, local government and state


owned enterprises, all of these add up to the burden which is quite


large for a country at that stage of economic development, but not an


immediate catastrophe. Andrew, thank you very much. A quick reminder of


how to get in touch with us. The business live page is where you can


stay ahead with all the day's breaking business news. We will keep


you up-to-date with all the details with analysis from the BBC's editors


right around write around the world. We want to hear from you as well.


Get involved on the BBC business live web page. We are also on


Twitter and Facebook. Business live on TV and online, whenever you need


to know. Let's see what other


stories are being talked We were talking about the handshake


between the two presidents. It was a battle of the grips, rather than a


greeting. Quite vice like. How important is the handshake? Is it


still important? I think it is. Unfortunately these two people have


not met each other before and the first time they do it is in front of


the world's cameras and they have both got a point to make. Who won


it? The bookies' conclusion is that Emmanuel Macron might have just got


this one. It will be interesting next time and every time they meet


because people will be looking to see what happens. I think now, yes,


absolutely, the next few times they meet that is what we will look for.


There are videos of Donald Trump's embarrassing handshakes and there


are a whole mass of them. He wants to make a point. Presentation is


very important to him and one of the ways you try and get an early score


is this. It is testosterone. That was our Twitter question, how


important is handshake? James says, it is a file one. Ryan says for some


reason people do not give a firm handshake back. He is wondering what


is going on. It was a bit aggressive. Thank you


for those tweets. What else was in the papers? We were talking about


the World Bank and this is interesting. It is about clarity of


language and keeping things nice and simple. One of their economists has


been attacked for saying that he wants a limit on the number of the


word and in a report. Izzy on to something or is he being pedantic? I


think he is. If you have been lucky to see one of these reports, and the


IMF and the World Bank produce dense documents, and his point is can we


get the punch line out early and tighten up the language?


They need journalists. We do not tend to go on at length and may


question is longer than they need to be and carry on and go on and on. I


labour the point, but there you go. We are all guilty of this, but it is


that aim for brevity. He says he wants to reduce the


number of ands down to 2.6%. You can get carried away with the statistics


which economists do. But he has got a fair point because these reporters


are dense and quite long and if you have a point to make, make it early


on and then have the rest of the document to back it up. There is


another one we wanted to talk about, the age of retirement. The World


Economic Forum saying that maybe we should look at retiring at 70 to


avoid a pensions crisis. Indeed. This is the UK.


If the UK does it, everyone else will have to. If one Western country


goes that way, there will be a momentum and in a year everyone will


do it or nobody will do it. The challenge is as we are all lucky to


see our life expectancy rise, we need to pay for that somehow.


Working longer is one of the best way to do it. I take exception to


this, this is the World Economic Forum. This is the elite, all of


whom could retire at 30 and they are telling us we have to keep working


until 70. I had a tweet earlier saying it is


difficult for people in heavy industries. Maybe for news


presenters it is fine, but not for everyone.


This is heavy industry, mate! I am saying nothing! That is it.


There will be more business news throughout the day. Have a good


weekend, goodbye. Good morning. If you have plans for


the bank holiday weekend it


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