16/06/2017 BBC Business Live


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This is Business Live from BBC News with Alice Baxter and Rachel Horne.


Greece gets more bailout money to stop it defaulting


Live from London, that's our top story on Friday the 16th of June.


There's still no clear agreement on debt relief for now.


So is the Greek government right to call it light


at the end of the tunnel? Also in the programme...


After the biggest recall in the history of the car industry,


could faulty airbag maker Takata be about to file for bankruptcy?


We will keep across all market movements for you.


European shares open on a positive note


And we'll be getting the inside track on a tumultuous


week for the UK's Brexit negotiations and look


at where the new government goes from here with our Business Editor,


Simon Jack. We usually ask you a twitter


question, but today the founder of Amazon has one for you -


what should he do with all his money?


Jeff Bezos has posted a request for ideas from the public


for philanthropy inspiration - what advice would you give?


Good to have you with us on Business Live.


We start in Greece, which has edged back from the brink of financial


Late on Thursday - after months of wrangling -


European finance ministers, together with the International


Monetary Fund, finally agreed to give Athens its latest slice


And there's a hint it could get some relief from its crippling


Greece will finally get this - 8.5 billion euros -


part of an 86 billion euro bailout plan agreed in 2015.


It will come just in time, as Greece faces 7.3 billion


euros of debt repayments, due next month, which it wouldn't


Its total debt now stands at more than 337 billion euros.


To put that in perspective, have a look at this.


The red is Greece's debt level over the past decade.


The grey is the size of the economy, everything the country produces.


The debt is currently some 180% of GDP one of the highest


levels in the world, and a number Athens


That's why Greece has been insisting on debt relief, which may


IMF boss Christine Lagarde says a write-off is the only way Greece


will ever get back on its feet, and has been refusing to get


German Finance Minister Wolfgang Schaeuble has been amongst those


insisting the debt must eventually be repaid in full.


The chairman of the Eurozone finance ministers' group is optimistic


there could soon be an end in sight.


Overall I think this is a major step forward,


I commend the euro group institutions, the Greek authorities


and foremost of course the Greek people for their intense


We are now going into the last year of the financial support


programme of Greece, we will prepare an exit strategy


going forward to enable Greece to stand on his own feet again over


Thanos Vamvakidis of Bank of America Merrill Lynch warns


that the details of the deal are still vague.


I think the agreement is a compromise, which is the best that


we could have hoped for given all the constraints. But it is not the


final solution. There is a broad understanding that debt relief could


be required, but it is another kick of the can down the road. So you do


not think we will see agreement for a haircut, for a chunk of debt to be


written off? You think it is more extending the payments? This is


exactly what they are discussing, depending on the physical


performance and economic growth. They have to agreed to maturity


extension to allow Greece to eventually repay this debt. We are


talking about maturity extension for between Zoo Road to 15 years, this


is the discussion. -- zero to 15 years. A lot of it depends on your


long-term growth assumption, this will affect the numbers. What will


be the assumption on the interest rate you will be paying on these


loans also. This is what they are discussing, not a haircut. It still


has to be approved by a number of European Parliaments? I don't expect


any problems. They require the participation of the IMF. Some good


news from the deal is that the IMF will participate with a so-called


stand-by arrangement, which does not include any money before a final


deal on the debt. Do you feel there has been softening of the stance


towards Greece because of Brexit? Seeing the UK leaving has perhaps


made your finance ministers think that we do not want another country


to leave? Not really. I think, rightly so, they have kept these


issues separate. If anything, I think the creditors were tough on


Greece, who were to approve measures for the next five years and Quy on


fiscal targets for the next few decades without actually getting a


final answer on debt relief. This is completely separate. That was a


representative from the bank of American Merrill Lynch.


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


Tesco, which is one of the world's biggest supermarket companies,


appears to be cementing its recovery here in its home market


of the UK after sales growth beat expectations.


In the three months to the end of May -


The firm will face shareholders later today,


who are expected to query a pay deal awarded to the firm's


The Chinese bike-sharing start up Mobike says it has raised


$600 million to help fund its overseas expansion.


Since its launch last year, the firm has rolled out


its brightly coloured bikes in China and Singapore.


It hopes to be in 200 cities by the end of the year.


US authorities are moving to seize a Picasso painting,


an apartment in Manhattan, and rights to a film as part


The US alleges high-level Malaysian officials stole more


than $4.5 billion from the country's economic development fund.


The Japanese company behind the biggest recall in the history


of the car industry appears to be on the verge of bankruptcy.


About 100 million Takata airbags have been recalled


Most major car-makers have used them at some point.


Ruppert, tell us what is the latest? We have heard that shares have been


suspended on the stock markets, could it be the end for the company?


It certainly looks like the end for the company in its present form. It


has been reported from several different sources that Takata will


file for protective bankruptcy both here in Japan and in the United


States sometime next week. That would pave the way for it to be


taken over by an American company, Key Safety Systems,, the preferred


bidder for Takata. This is the end of a very long-running saga dating


back to 2008 when these records began because of faulty inflator is


inside Takata made airbags. The recall has grown and grown and grown


and, with it, potential liabilities for Takata have ballooned to an


extraordinary extent, 100 million records, perhaps 8 billion US


dollars worth of products that they will have to May, essentially, for


free, which is driving the company into bankruptcy.


Let's stay in the region where Asian stocks were mixed,


with shares in Japan advancing, the Nikkei rose to a


We also saw the yen remain near a two-week low


against the dollar after the Bank of Japan left monetary policy


unchanged as expected even as the Federal Reserve


And that more hawkish tone meant we saw treasuries fall and gold


So overall a steady performance in Asia on Friday -


stocks seemingly taking the resumption of the US tech rout


overnight in their stride Meanwhile here in Europe shares open


on a positive note following Thursday's losses.


The FTSE 100 in London is currently up to 0.36%.


And Michelle Fleury has the details about what's ahead


President Trump is expected to announce a shift in US policy


towards Cuba, possibly as soon as this Friday. Watch out for curves on


American companies doing business with the Cuban military -- watch out


for curbs. And also tighter rules on travel to the island. It will be


interesting to see how US businesses react. Since Obama loosened the


embargo on Cuba, several US airlines have daily flights there. Will this


dampened demand? The CEO of the Marriot hotel group has said it


would be exceedingly disappointing to see progress made in the last two


years between the US and Cuba halted and reversed. Meanwhile US


agricultural businesses may be disappointed as they had hoped to


export more American agricultural and food products to the country. On


the economic front, watch out for the latest survey on consumer


sentiment from the University of Michigan and housing starts from the


month of May. Joining us is Jane Foley, senior


currency strategist at Rabobank. Thank you for coming in. We will


start with interest rates, lots of big decisions this week. Let's look


at the UK. It has held them, but three members of the eight voted to


increase? They did. That is interesting given the economic data


we have had recently? It was a surprise for the market. Looking at


what the market is implying, yesterday the market had suggested


that the Bank of England would not hike interest rates to perhaps 2019.


So to suddenly have three committee members voting for an interest rate


hike took the market by surprise. My view, and I am an effect strategist,


is that this might be about the pound. Looking at what the Bank of


England has said for a few months, the inflation that has been coming


through in the UK economy, which is very high, 2.9% each year, has been


because of the weakness of sterling, which fell quite dramatically on the


back of the referendum result last June. And because sterling has been


weak, prices of goods such as food and energy, almost anything to


nominated in another currency, has been going up and driving our


inflation. The bank shot across the bows, which should mean that if the


market is beginning to think the bank could hike interest rates,


there might be less selling pressure.


Given those inflationary pressures you describe, if you look into your


crystal ball, what do you see happening with regards to rates? One


of the most hawkish members of these eight people that decide whether or


not the bank will raise rates, Kristin Forbes, is due to leave


soon, she has been pushing bits for a while? She is due to leave at the


end of the month and there will be two seats left on the committee. We


don't know who will take them and whether they will be biased towards


making change, or increasing rates. Why the market thinks the banks will


not hike interest rates for a few years is because of the type of


inflation we have seen. As I have described, it is not the sort of


inflation that is because we are all rich and demanding more, that is the


sort of inflation we would like. Unfortunately wage inflation is very


low, wages are rising a lot less than inflation, meaning we are


poorer. We have seen very poor results in retail sales, meaning


economic growth will be great as a consequence. Inflation we have seen


is acting in the same way as a tack site. If you saw an interest rate


hike it would make is even pleura. ... Acting in the same way as a tax


hike. We do not think they will hike but they want to stabilise the plan.


In the US, interest rates increased as expected but it still surprise


the markets? Yes, the US central bank has adjusted for a while they


would hike interest rates in June, and they did, but similar to the UK,


wage inflation is relatively low. Again, meaning that demand type of


inflation is not necessarily there, it is very moderate. What the market


thought the Federal Reserve would do is hike interest rates because they


said they would but then maybe signal they would do less further


out, but they did not, they set out from the same area as before and


said we will hike interest rates again, probably at the end of this


year and maybe three times next year. The market was surprised by


that. Jane, you will take us through


papers in a little while. Thank you, Jane.


We'll get the Inside Track on the big business


stories of the week - inlcuding the UK's Brexit plan -


You're with Business Live from BBC News.


In an effort to help businesses grow, HSBC has today launched


a ?10 billion fund to support small and medium sized businesses


Joining us from the London Stock Exchange


is Ian Stuart, Chief Executive of HSBC UK.


Many thanks for joining us. Tog us through the aim of this? This is the


fourth fund that we have launched. ?10 million which we hope SMEs will


take advantage of. It is not just for HSBC customers. It is for all


small and medium-sized businesses, spread regionally. For every corner


of the UK there is a fund to access. We genuinely hope it will give


businesses the oxygen to grow and hopefully do more overseas with


export as well. This is a good time for businesses to borrow money when


interest rates are low. But we were just speaking to Jane a moment ago


about Bank of England committee members possibly trying to move


towards an interest rate hike at some point in the near future. Might


that mean less demand for these loans? I just caught the end of that


interview. What was coming across is, is there a genuine interest for


interest rate rises now? There will be very little chance of a rate


increase this year. I think it is still a great time to be borrowing


money. I think money is as cheap as it ever has been. We help small


businesses will take advantage of it and keep pushing forward and help


the UK economy. No doubt SMEs are the backbone of the UK economy. This


is really important to support them through what is unchartered waters


over the coming weeks and months. You talk about unchartered waters.


In this post Brexit environment, do small and medium-sized businesses


need extra handholding? We are here to help take advantage of the


opportunities. A lot of customers talking about exporting, who maybe


have not exported in the past. We understand that taking that first


step is a big step. Our job is to try to help customers take advantage


of some of the markets, especially outside the EU, where there are


genuine opportunities. Many thanks, Iain Stewart.


You're watching Business Live - our top story...


Finance ministers from the eurozone and the IMF had a -- have agreed to


give Greece another multibillion-dollar bailout. There


was no clear answer about whether Athens will get debt relief.


A quick look at how markets are faring...


They have been open for a fair while. In Europe, we can see they


are closing the week on a positive note after the losses we saw on


Thursday. The FTSE 100 index in London still up 0.34%. That follows


the positive trend in Asia overnight.


And now let's get the inside track on all the big business


It was the first week of Britian's new government and there have been


several developments about the impact of the UK's


And on the other side of the Atlantic the US


Federal Reserve increased the cost of borrowing.


Our business editor Simon Jack is here to pick over it all.


Morning. Let's start with the UK and Brexit. We were expecting to hear


Philip Hammond speaking last night in the Mansion house but that was


cancelled because of the dreadful tower fire in London. What were we


expecting to hear from him? It is a week since the UK election. That


election was called so that the Prime Minister Theresa May could get


a mandate, strengthen your position, to deliver the kind of Brexit she


had promised. We are out of the single market, the Customs Union, no


deal is better than a bad deal, that is what she said. She fell short of


a majority and has to go into talks with the DUP, the Northern Irish


party, to try to get a majority. Are we going to get that kind of


approach now when the Brexit negotiations start on Monday? In a


way it was a shame we didn't hear from Philip Hammond. Of course, we


completely understand why he cancelled it. He is thought to


favour a softer, if you like, soft and hard, not useful but we


understand what they mean, he favours a more conciliatory approach


to Europe, a more collaborative approach, and possibly looking at


things like reopening questions, is there a way we can stay in the


Customs Union? That will be interesting because the Northern


Ireland party, that border would cause a lot of friction going to and


from macro if you had to open every Vaniteuk customs checks. That would


be a big problem. We are trying to figure out what kind of approach we


are going to get from this government. Negotiations start on


Monday. It is not a brilliant position to start from. We don't


know what our starting position is and what our objectives are. The


clock is ticking to that is the thing. You trigger Article 50, then


call an election which you think you're going to win, and is a bit


like going to the front door, ring the buzzer and runaway! Brussels are


waiting for us to come back around the corner. One of the areas of the


economy there are questions over is euro clearing. What is it and why is


it so important? This is one of the bits of plumbing of the financial


system. Buyers and sellers by derivatives. Financial insurance. It


is a massive business. There is 900 billion euros worth trading day.


Some people say it supports up to 85,000 jobs directly and indirectly.


The Europeans, the European Union, have always wanted this huge


business the nominated in Europe to be done inside Europe. This is too


big an industry for us. It is too big for us to be conducted outside


the EU bloc, they said. If they decide the matter trading is


systemically important, which it is, they either want direct oversight of


it, have their monitors monitoring it, or they will force it back into


the European Union. That is what they came to have a look at. None of


the customers that use this clearing house want this to happen. You get a


big economy of scale if you have this deep pool of trading. You have


to put up less margin. A bit in the kitty of something goes wrong. The


bigger the pool, the less margin as a percentage of the business you do.


They say it with drive up costs. It is one of the big titans of city


trading, Sir Michael Spencer, he said it was a political land grab,


dressed up as concerns about financial stability. Not holding


back at all. Bear in mind of course that this also happens in New York.


A lot of people think of the EU and the UK start taking lumps out of


each other, it would be mutually destructive and many big traders


will just move to New York. That doesn't sound good. We will


leave it there. Simon Jack, thank you.


The Duke of York has told the BBC that UK businesses face several


years of uncertainty and upheaval due to Brexit.


But Prince Andrew, a former UK trade on by, said businesses should make


the most of new international opportunities. The Prince has been


in Singapore to attend a conference. He was also hosting pitch the


Palace, a programme he started to support. Entrepreneurs from the UK


and all around the world. We have been concentrating on 27


countries. If you take that as an internal market, there is an


external market that is a lot bigger. And many businesses haven't


got over that garden fence, to some extent. And in my experience


recently, businesses that look over the garden fence have gone, the


grass is not quite as dark and unforgiving as you might expect, and


actually getting over the fence, there might be some fresh grass out


there. What other business


stories has the media been Jane has returned. At the top of the


programme we usually give out our Twitter question. This time we give


you Jeff Bezos's Twitter question. 6 billion short of being the world's


richest man. He has tweeted asking people what he should do in terms of


philanthropy. What Tweets have we got? We have had


a a few. Jeff Bezos seven best in independent film-making. The studios


are churning out cartoons and creativity is indy. Another one


here, give it to the people of Grenfell Tower and help them rebuild


their lives. A reference to that tower in west London that burnt


down. In respect of that last response,


that rings a tune with what Jeff Bezos himself has said. He is


looking in the longer term. What he indicated is in respect of


philanthropy, you would perhaps like to look at the urgency. When Picchu


-- people really urgently need help. That rings true with the last tweet.


When there are disasters, people want to respond immediately. That is


when they will. It is having the organisation and structure in place


to ensure donations go to the right place and I used best? It is


interesting. This newspaper article says he is less than 6 billion away


from being the world's richest man. Just a mere 6 billion! There is a


lot of pressure within America for a very rich people to setup bodies, to


read a script -- to redistribute their wealth. Bill Gates, Warren


Buffet, the top five billionaires, giving away a lot of their money.


If he is going to give away his money, you don't want him to give it


to bitcoin, do you?! Bitcoin has had a bad week. The worst week since


January 20 15. There are a number of factors. I'm sure your viewers are


aware that this has been a very difficult week for a technological


stocks. That has probably contributed to some of the pressure


on here Macron bitcoin as well. Other factors, a bill through


parliament saying they need more regulation. That could take away


some of the advantages will stop I'm going to have to pause that and what


it back in slow motion. Thank you. That is it.


Have a great weekend.


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