01/06/2017 BBC Business Live


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


Can the European Union and China create their own alliance -


As EU and Chinese leaders meet in Brussels they're looking


to counter President Trump's stance on trade and climate change.


Live from London, that's our top story on Thursday 1st June.


So what would a deal between the EU and China look like -


and what role for India in the middle?


Pakistan's economy rejoins the Emerging Markets Index -


a sign that stability could be returning to the turbulent nation.


And European markets are looking like this at the start of a new


month, but the same worries for them persist.


And divide and rule - we get the inside track


on the business that's split the world up into 57 trillion


three-metre squares, each with its own code...


It's an innovative approach to mapping that's being taken up


by the likes of the Red Cross and Deutsche Bahn.


Don't forget, we always want to hear from you about


anything on the programme - it's easy to get in touch,


Welcome to the programme, stay tuned for that Inside Track, it is


fascinating, this three metres square here has its own unique code,


we will explain that for you later. The EU and China will attempt


to deepen ties at a summit later. There is concern among some about US


President Donald Trump's Chinese Premier Li Keqiang will meet


European Council president Donald Tusk and the head


of the European Commission Chinese Premier Li Keqiang will meet


European Council president They're looking at how they can


counter Donald Trump's policy Trade in goods between the EU


and China is worth well over The EU is China's biggest trading


partner, while China is the EU's second-largest trading partner


after the United States. It all sounds complicated, but


crucial to this negotiation. The EU is worried about industrial


overcapacity in China - China invested four times as much


in the EU last year as European Meanwhile, EU investment


in China fell for the second consecutive year -


to 7.7 billion euros. Chinese and EU leaders are hoping


to agree a joint statement on the Paris climate agreement,


saying it is "an imperative more That of course is widely seen as a


rebuff to the US, as President Trump looks set to announce the US will


withdraw from the deal. With me is Dr Linda Yueh, fellow


in economics at Oxford University. Ben was running through some of the


issues there, if they are looking to do a deal, do you think there is


enough that unites them, enough common ground to override the point


of division? In terms of climate change it would be easy for them to


come to an agreement because they are just affirming what they have


signed up to, the Paris climate change are called, so I think


anything that President Trump looks like he is pulling away from, for


them it is an easy EU China alliance to form because they are giving


nothing else away, they have already signed up to it and Trump is


expected today at 3pm New York time to pull out of the Paris Accord, so


I think that is one area. There are of course areas where it will be


harder for them to come to an agreement, for instance the EU and


China agree and investment treaty, there is an imbalance in terms of


investment, China invests a lot in the EU but China protects it a


economy more than the use of the Europeans don't get to invest as


much there so on those kinds of points they don't quite see I die.


But I should add they are hoping to make a breakthrough there because


that would be the precursor to a trade agreement and if there was a


trade agreement between the EU and China, the biggest trade bloc in the


world and second-biggest economy, it would be the biggest free-trade area


in the world. If China and the EU to reach a joint statement on this in


what some are saying would be a rebuff to Donald Trump against his


plan, as everyone expects, to pull the US out of the Paris climate


deal, would it do any harm to America economically, or do you


think that would be overstating things? I think economically what


Trump is doing, putting America first, is likely to have a global


impact for America, also likely to have an impact around trade if you


starts to hint at the way multinational American businesses do


supply chains, for instance. But I think for the most part things like


where Trump is focusing in terms of trade and protectionism, the feeling


is again with the Chinese and European sat it is harmful and


wouldn't be hard for them to come out with a statement that they


reaffirmed their opposition to protectionism, something which the


American opposition to preclude it from being in the G-7 summit, which


was just about a week ago, so again easy with things where you don't


have to put any money on the table, you can just say, Trump is not


helping the world economy, doing things that we think are not


responsible as the world's biggest economy, so here are some easy ways


to a firm that we will take this forward. Of course it is symbolic


but sometimes in trade and global lines symbolism does matter and I


suspect we will see a lot of that today in stead of a lot of concrete


details. Linda, thank you for that, Dr Yeuh there from Oxford


University. Let's take a look at some


of the other stories China's manufacturing activity


slowed unexpectedly in May Figures show that companies cut more


jobs as demand weakened The findings contrast sharply


with official readings earlier this week which showed steady


manufacturing growth. The controlling shareholder


of the world's largest meat-packing company,


JBS, has agreed to pay a record $3.2 billion fine for its role


in Brazil's corruption scandals. J Investimentos will begin


payments in December and will have The fine exceeds the $2.6 billion


imposed on Brazilian Shareholders in Exxon Mobil have


backed calls demanding the company assesses the risks


from climate change. The plan, proposed by investors,


was supported by over 62% It will mean Exxon has to share more


information about how new technologies and climate change


regulations could impact the business and profits


at the world's largest publicly Uber says its head of


finance, Gautam Gupta, It comes as the taxi firm said


first-quarter losses narrowed substantially from the quarter


before, finally putting it Mr Gupta will leave in July to join


another startup in San Francisco. He's just the latest high-profile


executive to leave Uber. Let's have a look at what is


happening on the BBC Business Live page, lots of news coming in


including this story, as you can see, about Jimmy Choo, I don't have


it in front of me so I can't say what it shows! Here it is, releasing


trading update ahead of the AGM later today. We promise you it is


live, these come in and we see them as you see them. Excellent progress,


telling us there is strong growth with men's shoes the star performer,


also fragrances performing particularly well, that is there at


Jimmy Choo, which has its AGM later today.


Pakistan has become the latest economy to join the MSCI


Emerging Markets Index - putting them alongside economies


This is quite a landmark moment, talk us through the significance of


it? Indeed, the country has long been


known as the basket case of south Asia but now it is being called the


new Asian tiger and, as Ben mentioned, it has rejoined the


Emerging Markets Index, it was kicked out years ago because of all


of the political and terror related issues, and in fact the Pakistani


shares have actually been outperforming the index in recent


years, despite all those troubles, the continuing troubles. It is


basically because of good corporate governance reforms as well as strong


domestic consumption and China for one have been investing billions of


dollars in the country, so definitely a landmark moment for the


country. As always, really good to see you,


thank you so much. Let me show you what the numbers are


doing, you saw the decay at the bottom of the screen, but new month,


same old worries, Trump, Brexit, and the election, Greece's debt worries,


all that on the minds of investors. But ending a four-day losing run. In


the US yesterday, slightly different picture on Wall Street, banking


shares saw the biggest falls over worries the recent economic optimism


in the United States off the back of that Trump pump, as it has been


called, might be fading, more on that shortly. In the UK, the month


of May was decent for the FTSE 100, it saw its best month this year


despite falling commodity prices, and remember it is the weak pound


helping to boost how earnings look on the FTSE 100, that is why it is


doing pretty well. But lots of uncertainty still to come in the


form of elections all over Europe. No-one quite willing to call what


happens next, probably a safe choice. More on that shortly with


our markets guest, who is standing by, but let's head to the US, where


Samir Hussein has an assessment of what we move the market on Wall


Street. US paints and coatings maker PPG


Industries have until Thursday midnight to either file papers


with Dutch regulators detailing its plans to launch


a formal bid for the paint maker Akzo Nobel, or walk away


for at least six months. Those plans will also include


the actual bidding price. Earlier this week Dutch regulators


denied PPG Industries' request The US Commerce Department


will likely report that construction spending is up 0.5% in April


from a 0.2% fall in March. And finally, auto-makers report may


US car and truck sales, with investors watching to see


if the industry can snap A third down month in a row


could put pressure on Detroit auto-makers to order more lay-offs


and production cuts. Simon Derrick, chief markets


strategist at the Bank Nice to see you. All this data from


China, two differing pictures depending on which bit you choose to


go with. And I think the weakening economy story is the central one


here, the latest manufacturing numbers confirm that. Over the


course of the last month or so the Chinese markets have been reacting


very negatively to this, you had seen the equity markets down, Moody


's downgraded China last week. Over the last few days, something curious


has happened, there has been talked about some of the big state banks in


China, some talk about the national team stepping in to support the


equity markets, equities are up, and it feels as though what we are


seeing is an attempt to support markets, an attempt to reconfirm


that they are there to provide stability. Whether that is possible


in the long-term, given the fact that we have this underlying


weakness and underlying concerns in the Chinese market, tough to say,


but clear that the authorities want to try and provide support. Let's


talk about the Fed briefly as well because we also talked about what


happens next and it is interesting if you look at what Trump has been


doing, there was all of that excitement which has faded away and


it is whether they can put a floor under this. Yes, fairly anodyne


reports on the US economy did not sound full throated. The question is


now, are we going to have a second rate hike before the end of the


year? Given what we have heard from the Fed, it suggests maybe it is


open to question. If that is true, we may be talking about that. There


has been talk about it being a done deal but the markets have got ahead


of themselves? From the perspective of June, guidance is so clear it is


hard to argue anything else. The December rate hike, maybe the market


has got ahead of itself although governors have been given that


guidance and I think they will back of it a little bit. Good to see you,


I know you will talk us through some stories later including the climate


change issue that is on everyone's agenda at the moment, whether Trump


and the US will ditch it, so we will talk about that later.


Still to come, mapping out the world, three words at a time. We


will meet the firm that says it can pinpoint anywhere in the world with


just three words. The man behind it is here to explain how it works.


You are with Business Live from BBC News.


We are going to talk house prices. They continued to slow in May,


according to the nationwide. It is the third month in a row that prices


have cooled. Overall prices are rising at 2.1%, the slowest rate of


growth in four years. Robert Gardner is Nationwide's chief


economist and he joins us now. Last time I think I spoke to


somebody about house prices, they said you can't be too much into


month by month. Is this now a trend? If you look at the annual house


prices, things have soft and a little. I would emphasise it is


probably a little bit at this stage. If you look at the annual rate of


house price growth in recent years, it has largely been confined to a


three to 6% band. We have just moved outside that. Only a little below.


Robert, we should discuss the election. All sorts of issues on the


table as we approach the vote next week. Housing is clearly a big issue


for people trying to get on the ladder, but also for people on it.


Your assessment? The key thing is the supply side. If you look at the


stock of homes on the market, it is still close to a 30 year low. In the


last few years we have seen the number of homes being built


consistently lagging behind increasing population. Whoever wins


the election, a key focus has to be how to increase supply on a


sustainable basis. Up or down next? What happens next? We think the


economy will probably slow a little as the squeeze on household budgets


intensifies. There is support for a house prices from low interest rates


and the lack of supply. Overall house price growth will probably


around 2% and activity a little bit weaker from where we are at the


moment. Thank you. Robert Gardner. You can read more about that on the


business life page. Lloyds Banking Group saying it has completed the


acquisition of MBNA, the credit card business. That gives them a share of


26%. Full details on the website. You're watching Business Live -


our top story... Can the EU and China create their


own alliance, cutting out America? There is a lot of concern of late


about Donald Trump's plans to ditch the Paris climate accord. EU and


Chinese leaders are meeting later looking to deal with worries on


Donald Trump's stance on climate change, and trade.


If you live in a city, town or village, your postal address


is probably something you just take for granted.


But millions of people live in communities so remote


or so un-industrialised, that there simply


That's where our next guest comes in.


He runs an alternative mapping company called what3words.


The aim is pretty ambitious - to completely revolutionise


It aims to do this by splitting the globe into 57 trillion


three metre squares, each described by a unique


It's already been taken up by postal services in five countries,


including Mongolia, Djibouti and Ivory Coast.


Emergency services around the world are ALSO using


the system to pinpoint people with no addresses.


Chris Sheldrick, is the founder and boss of what3words


Welcome to the programme. We sort of rent through how it works. You can


probably do a better job at! It all rests on three little words to map


out a small area that is unique to that footprint. I was looking on it


earlier. Depending on where we are in this building... How does it


work? It is a global address system. The idea is to make a fast, simpler


alternative to GPS coordinates, the only other thing available


everywhere. Nobody wants to remember an eight digit Longitude Prize Macca


latitude. We have divided the world into three metre squares. There are


enough combinations of three words. You can go around the world and name


everywhere with something simple. Out there in English? We do this in


14 languages. It means if you live in a country where there just is no


real address system you can use, what will you put when you order


something online? When you call emergency services? You look up your


three word address and you can use it for any of these things. How do


you make money? The what3words app is free. We licensed businesses.


Courier companies, postal services, navigation apps, car companies,


anybody who wants to use three word addresses in bulk to improve their


efficiency, we charge them a licence fee. UPS say that for each mile they


get lost every day, that costs their business 15 billion -- $15 million a


year. If companies can benefit, that is who we charge a licence fee too.


Who would use it? In many developing countries it is vital because there


are some honey parts that don't have an address system. It is also


relevant in developed places. I lived in Dubai for a long time.


Struggling with an address system. I would describe my address to the


postman. That was how people found you. I can see the use it there.


That is exactly it. There are also That is exactly it. There are also


some places you don't think would have a problem. In London, if people


come to our office, you put the postcode in and it takes you to the


40 flyover. People call and say, I can see you down there. If you think


about where we are going with cars which may not have steering wheels,


it is kind of OK, you go, it's a little bit inaccurate but I will


We should have a way to reference We should have a way to reference


anywhere very precisely. No delivery driver should be getting lost trying


to find your business. People are losing so much time and money over


the developed world with this problem that could be so easily


fixed. That is why is three metre square. It is very precise?


Absolutely. We wanted to make squares as small as possible but


make sure we didn't run out of words. How did you get into this?


How did you get started? I used to work on the live music business.


Every day I had to get people to somewhere new in the world, whether


at Wembley or an Italian mountainside. Everybody used to go,


I'm lost! GPS coordinates were a total no-go. I thought, if I can


make this so easy that anybody from a child to a grandparent to a


musician can use this, this would be globally valuable. Thank you for


talking's through it. Really fascinating. Best of luck


with it. That's the tarmac of an airport


in Sri Lanka, which has been dubbed the world's emptiest International


Airport. It cost about $1 billion to build,


funded by loans from China. Our team went there,


to Mattala Rajapaksa This is Sri Lanka's second


International Airport after Colombo. It is in the south of the country


not a whole lot going on here. Let's not a whole lot going on here. Let's


take a look. Flybe is the only airline that


operates. How many passengers do you think? Actually per day we can say


about 50 to seven Beast -- 75% depart from this airport.


What other business stories has the media been


Simon Derrick, Chief Markets Strategist, Bank


of New York Mellon - is joining us again to discuss.


Simon, we have been talking about this climate change change of heart


by Donald Trump. I suppose it was always saying all along... I think


the first thing is, he has always been in there all the way through


his campaign and onwards. That doesn't mean we are going to go


through with this. There have been campaign pledges not carried out.


Remember backing off on China and currency manipulation? It is not


certain he will say something this afternoon. But it looks likely.


There is definite opposition within the White House. We know Rex


Tillerson has obviously got concerns. Ivanka Trump has made


comments as well. What impact does this have on markets? Interesting on


the day that Exxon tells us the -- they need to be more transparent and


look at how climate change affects business. The


there are some easy things that can happen for markets. Maybe it is an


old energy, new energy thing. I think the markets will focus on


isolationism. Is that the real story? Is the US moving towards


that? If it moves towards this idea of the EU and China, is that a


pro-Euro story? That might be interesting. Thank you. Have a good


weekend. Good morning. Today marks the start


of meteorological


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