21/07/2017 BBC Business Live


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This is Business Live from BBC News with Rachel Horne


The European boss of Goldman Sachs warns


that the City of London needs a Brexit transition deal


Live from London, that's our top story on Friday 21st July.


Theresa May moves to reassure businesses, but the Chief Executive


of Goldman Sachs International says that the uncertainty


Also in the programme: Taking stock of Trumponomics.


Markets have surged but, six months on, and the President


is yet to deliver on growth, tax cuts or major reforms.


How long will Wall Street's patience last?


These are the European markets... Europe is strong and the dollar is


weak, we will bring you the figures. And a big week for China, the inside


track with our economic schoolroom Andrew Walker. -- economic specs


but. Today, the top story on the BBC


website tells of how Britain's skies are choc-a-bloc and if nothing's


done about it, delays So our question -


what would you do to make flying The man in charge of Goldman Sachs'


European operations has urged the UK Government to agree a transition


deal as soon as possible. The City of London faces


a potential cliff edge if it leaves the European Union


without a formal agreement. Goldman Sachs employs 6,500 people


in the UK and its Brexit contingency plans involve adding hundreds


of staff to their other Richard Gnodde is the head


of Goldman Sachs International. He sat down with the BBC's


business editor, Simon Jack. I'm spending money every single day


to make sure that, come March 2019, Obviously, as each month goes by,


I've spent more of that money. So, certainty becomes less


useful for me as we go If I knew today that we would have


a significant transition period, I could stop spending that money,


taking out that insurance. Because I'd know I would always have


time to transition my business. If they tell me in February


of 2019 there will be a transition period,


well, I've already spent all that At that point, the transition period


doesn't really help. So, the sooner we know the answer,


will there will not be significant transition period,


it is obvious to helpful to us. Ideally, in an ideal world,


you would need to know this year? Joining us is Nandini Ramakrishnan,


Global Market Strategist at JP Are they going to get a deal? Is the


Government listening? That is the big question for financial services


and businesses in the UK. We expect a transitional agreement because of


how much a priority protecting business and making sure business


can function in the UK is. We're always hearing about the business,


the banks, financial services. This goes beyond that industry? Across


the UK, businesses in services and goods, the production and


manufacturing intentions have plummeted since Brexit, the


referendum result. They have recovered since, but there is still


uncertainty, we will see those intentions and ideas for new


businesses and Greg prospects get weaker again. How long do you think


they have got? You cannot put a date on it, but it is not quite the end


of the year, when have they got to come up with a solution? When 2018


begins is a nice time to reconsider and make sure we do have something


because just how important the UK's exports in goods and services is to


the rest of the UK is the opposite almost of UK GDP going from the UK


to the EU, so a large percentage and important the priority is there. You


work in the city of London, what is the feeling? Is there a feeling it


is too late and businesses have started putting contingency plans


into place and we still do not know how it will happen and when and if


there will be a transitional deal? There are tonnes of teams across


various businesses in the city and Canary Wharf in the financial


centres of the UK, focusing on this. But it is also important to remember


that within the financial services, there are different facets. Asset


management, trade management, banking, different elements


filtering through, so still a diverse place in terms of thinking


and not all doom and gloom. People do not feel worried about moving to


Paris? Frankfurt? Where is the favourite place? It is a fun pastime


to think where one might want to move but it is not a reality by any


means on the floor, at least with me. Thank you so much.


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


US authorities have fined Exxon Mobil $2m for violating


sanctions against Russia while Secretary of State Rex


Exxon dealt with Igor Sechin, the president of Russian oil giant


Rosneft, who was blacklisted, the US Treasury Department said.


Exxon has challenged the finding, calling it "fundamentally unfair".


Microsoft says quarterly profit almost doubled


to over $6.5 billion - thanks to strong growth


Microsoft is hoping to be the first choice for businesses


relying on cloud computing, as the industry moves away


But it faces stiff competition from Amazon and Google -


all three are investing heavily in artificial intelligence.


Let's stick with the theme of Brexit.


UK Foreign Secretary Boris Johnson is in Japan to discuss trade


relations, ahead of Britain's departure from the European Union.


Hello. What is the feeling of that, what is Boris Johnson trying to


achieve? Well, the Japanese are looking for clarity on what


Britain's relations with the EU will be after Brexit and what that means


for business. Mr Johnson is not directly involved in Brexit


negotiations but as a senior official, it is important for him to


reassure Japan's leaders because of the important trading relationship.


Japanese companies have invested more than $50 billion in the UK and


the UK is the second-biggest destination for Japanese foreign


direct investment. To give you more numbers, more than 1,000 Japanese


firms operate in Britain, including Toyota Nissan, factories employing


thousands of workers across the country. What is interesting,


Japanese foreign direct investment spiked after the Brexit referendum


last year. According to data from capital economic is. That shows


continued confidence. But that sentiment could change depending on


whether we see a hard Brexit or a soft Brexit. There is the question


of whether the UK and Japan could sign a free trade deal after Brexit


given Japan's assigned one with the EU not long ago. Thank you very much


for that. President Donald Trump has been


in office for six months. He made some big promises on the US


economy - inspiring a wave But most of them are still


just that, promises. And some are now questioning


the reality of Trumponomics - or to use the new catchphrase,


MAGAnomics - as in Make The Dow Jones index surged


on Mr Trump's election in November and it has continued its upwards


march after breaking through the 20,000 mark


at the start of the year. It's up 3,200 points,


or 17%, since the election. But political divisions


are beginning to see the Trump Take his flagship policy,


replacing the Affordable He's struggling to get fellow


Republicans to agree One senior figure in the party


is now warning it may take as long That has raised doubts


over political support for some of his other plans,


the ones that got Wall Street so excited, cutting regulation


in the energy and banking sectors, and the big one - his highly


anticipated overhaul of the tax system that would see big cuts


for business and middle So what about the broader


economy itself? President Trump promised to raise


the GDP growth rate to 3%, a level it hasn't sustained


since the 1990s. But six months in, that goal


still looks a long way off. In the first three


months of this year - despite being revised up -


the figure's less than half of that. And the rate for April to June


is expected to be better, With me is Leslie Vinjamuri,


Associate Fellow, US The Americas Programme,


at Chatham House. What is strange with those figures,


the economy seems to be doing well and the market is doing well, but he


has achieved nothing, I am right when I say that? He has not achieved


very much, especially in light of what he aims to achieve. His two big


achievements are paper achievements, pulling the US out of the


Trans-Pacific Partnership and has taken the US out of Paris. What his


corporate base wanted is to see, as we have seen, tax reform, his base


is interested in the repeal of the Affordable Care Act, and those


things are not happening. Repealing the Affordable Care Act essential


for funding tax reform. There is not only no success on the stage for


that, but there was also no clear detail and for tax reform. This is a


President who has not been very interested in working with Congress


and building the coalitions that were necessary to push any of these


legislative policies drew in large part because he is very distracted


by what is going on with the Russian investigations. What is stopping him


from getting legislation through? He has a majority. It was a


satisfactory election for him. Why is he not achieving change that he


promised? That is right, there are many things going on. First, he does


not seem to have the temperament to focus on the details to build


political coalitions. There has been distraction as a result of remember


one of the core things he wanted to do was to reset the relationship


between the United States and Russia and this has become one of the most


difficult things because he is being investigated and those around him


for their ties to Russia so tremendous focus within the White


House just simply and trying to deal with this crisis. He is also at the


level of governance failing to put forward well over 4,000 400 names


subject to Senate confirmation. If you look at the bureaucracy, they


are not functioning at the level they need to take on his


deregulatory agenda. A bit of crystal ball gazing, is this going


to come to a head, is there going to be a crisis, or is this going to be


a slow, really unpleasant grinding for -- four years and it is going to


get worse? This is the big question, with many wondering, will there be


impeachment? That is very far away I think, as long as the Republicans


control both houses. But whether it is grinding, his approval ratings


are still hovering around 36%. How does that compare? That is not


great. It is very low for a President. And even lower if you


consider his strong approval ratings are down to 20%, that is very low.


Remember that politics does not operate in a vacuum and there is no


obvious alternative challenging, there is no vision or obvious


alternative, so I think we are likely to see grinding along and a


series of the bomb calls along the way.


Thank you very much. -- and a series of problems along the way.


A big week for China, the inside track with our economic specs but.


You're with Business Live from BBC News.


Vodafone says that it is seeing good momentum in Europe, with robust


The world's second largest mobile operator saw sales up 2.2%


Matthew Howett, Telecoms Analyst at Ovum joins us now.


How have they been doing in the UK? They have had problems in the UK


with customer service. Well-publicised problems with


customer service have been going on a couple of years. There is a


recovery under way. The changes they are making to improve the service


for customers is getting noticed and things like the net promoter,


whether Vodafone get recommended to other people, is getting better so


the turnaround is working. What about elsewhere? They have done


quite well in Southern Europe with challenges in India, is that


correct? Yes, Southern Europe is looking good, they have seen a lot


of revenue growth because the price has been going up. India is a lot


more challenging, a new competitor has come into the marketplace which


has challenged the existing by almost giving away data and Vodafone


has struggled in particular. Why strip -- Weiss Southern Europe? The


economy is not known for being strong. A couple of reasons.


Initially, they have successfully increased the amount consumers pay


each month so the revenues have gone up. In Spain, they have been able to


sell across the portfolio of products and not just mobile phones,


things like broadband to consumers. What is next for Vodafone?


Ultimately, Vodafone has to look at its position in the UK. It is a


British company and it needs to be number one, it is number three. It


wants to turn that around two leading position and it needs to


focus on how it will do that by thinking what is next. Things like


five G, for example. Thank you very much for your time. Left and look at


what is going on in business. We have Michael Gove talking to farmers


today. He seems to be coming out as quite a green Environment Secretary.


He is using a speech in Surrey to save farmers will continue to


receive funding after the UK leaves the EU, but only if they agree to


protect the environment and rural life. Another story on the website


is all about the UK skies. It is potentially the busiest day for


flying in the UK. We want you to get in touch and let us know what he


would do to improve airport travel. That is your report? But my name is


not on at! Sad! Our top story - the man in charge


of Goldman Sachs' European operations has urged the UK


government to agree a transition Goldman Sachs employs 6,500 people


in the UK and its Brexit contingency plans involve adding hundreds


of staff to their other Let's look at how the markets have


been getting on this morning. You can see the FTSE is up ever so


slightly. On the currency markets we have a very strong euro. The dollar


continues to be weak. Yes, after the meeting of the European Central


Bank. Dropped a hint saying there might be some tough monetary policy.


We are not going to talk about that. We are going to get the inside track


on the other big economic news of the week, China. They have been in


the spotlight after announcing growth figures. That's right. So,


give us the figures. What was the reaction? 6.9%, the second quarter


compared with the same period a year earlier. It was a little better than


most people expected. I think most thought that the fact the Chinese


authorities had been taking a bit of a clamp-down on financial risks,


concerns about the growth of debt, very strong housing markets, there


were concerns that they might conceivably be the foundations for


future financial instability. The clamp-down has not been reflected in


growth figures, that did hold up better than some people expected.


Maybe we shouldn't attach too much weight to a tenth of a percentage


point here or there. And Chinese figures? That's my point. Capital


Economics, the London consultancy, say they doubt it is the official


growth figures. Implausibly stable growth over recent years, they say.


But they do also take the view that what we saw in the latest figures,


particularly if you look at June, it does seem to be holding up quite


well. They do think, and I think there is good reason for thinking


this, that the clamp-down on financial risks is likely to take a


little bit of the steam out of the economy. We have the Congress coming


up as well, the political side of it? It is good to have these


figures? That is true. It is worth taking a step back and thinking


about the longer-term context, which is China's attempt to manage a


transition to a slower pace of growth. It was an average of 10% a


year in the three decades after 2010, to something that is more


sustainable, lest riven by investment, less driven by exports


and with a bigger role for the Chinese consumer. You mentioned


exports, that is the other story we had out of China. On Tuesday, the


meeting with the US over trade. President Trump set 100 days to try


to start doing more China- US trade. They couldn't even agree on how to


word what they disagreed about? Indeed, they didn't hold press


conferences. We got news during the day that those had been cancelled.


That can often be a sign of just how difficult negotiations are. At an


earlier stage in the process, a couple of months earlier, they


managed to agree on improved access for American beef to China, credit


rating agencies and Chinese cooked chicken. That is really low level


stuff. It does indicate that it is going to be difficult. Resident


Trump wants to see a major reduction in the bilateral deficit. Frankly, a


lot of economists would tell you that what really drives trade


balances is not so much this kind of minutiae of trade policy, but the


level of savings. America is a relatively low save the economy,


China is a very high saving economy. Away from China, Greece, the IMF has


decided to join the party, lending money. Has there been dancing in the


streets in Greece this week? I think not. IMF is only provisionally


joining the party. They have agreed a programme of 1.6 billion euros in


the context of a bailout from the eurozone that is up to 86. It is a


small contribution, moving towards the IMF result of some of the doubts


that it has about the programme. They are also saying they are not


actually going to handle money over until they have more assurances


about debt relief for the future. Nonetheless, Christine Lagarde,


going to her board and saying I think we should make this commitment


in principle and board has said yes. That represents the IMF's member


countries. Let us know when they hand it over.


Now it is time for the next in our series of million-dollar ideas. Now


we look at the family favourite, the Frisbee.


Summer is here! Get to the beach! Queue the sun and the Frisbee! Who


came up with the idea? 1938... Walter Morrison and his wife were on


a beach in California, tossing a metal cake pan to and fro. People


offered to buy it for five times more than they paid for it in the


shop. Easy money. Guess what? Was made into business. After the war,


he made better flying versions out of plastic and sold the design to


the toy company Wham-O. They called it the... Well, the boss had heard


about students who had tossed around empty pie trays from the Frisbee


baking company. So he took the name, changed the I 4-iron E and the brand


was born. They got it involved in sports like Frisbee golf. The world


record throw was 338 metres. There you go!


He is not safe to be let out. Alan Haselhurst, if you didn't realise.


Let's see what the media has been taking an interest in.


Nandini Ramakrishnan, Global Market Strategist at JP


Morgan Asset Management, is joining us again to discuss.


The Fed, fining Exxon $2 million? It is all to do with Rex Tillerson?


There were business deals done when there were sanctions on Russia.


Exxon is claiming there is a line where it was not specified between


the personal and business sanctions in place. Overall, it's not great


news for some of that is very much in the spotlight politically in the


US, in the Trump administration. Doesn't tie into the rush


administration, it just doesn't look good? Two separate issues and


streams going on. Again, as it comes out in the media, it is not great


for the Trump administration and the general sense of keeping things in


Russia clean. Not that $2 million is anything to Exxon? No, they are


contending they didn't necessarily know. Saying it is unfair? Exactly.


At the start of the programme, we mentioned the story on the BBC


website, UK air traffic controllers warning of overcrowded skies. They


say today could be one of the busiest days for travel in the UK.


Jamie wrote this story, but it doesn't have his byline! We will


give him credit. It's staggering, 8800 flights expected today. It


marks the beginning of a doubling of the size and Manchester Airport. All


airports are seeing growth in air traffic. The problem is, the place


is just crammed with aeroplanes. They've got to reorganise everything


in order to be able to make it work. It's interesting, taking a step


back. The airline industry is always in the news in terms of profits,


because it is such a high difficulty area of making profits, getting


price competition between different airlines. As these guys get busier


and is the airports get busier, it put even more pressure on them for


delivering that service. The other side of the story, actually, the


whole thing coincides, there are a lot of things happening today to do


with aviation. There is the consultation paper being put out by


the UK Government. They are looking up the entire industry, everything


from drones, the way you do baggage handling, the way you fly from one


airport to another. It is the whole lot. There is a consultation paper


going out, any people with ideas on how to improve it, write to the


government. The first ideas are coming in as we speak. James says


that air travel is where we wanted it to be 15 years ago, I would say


stop moaning and get used to it. Chris says that it has changed for


the worst, so undignified for wheelchair users. He says airlines


are refusing to adapt. For 100 years, they refused to adapt. One


other story, an interesting one. The Wall Street Journal. Low income


earners are getting the fastest wage growth. This is what happens when


you get full employment? In the US imply that rate -- and implement


rate, it is below 5%, it is a tight labour market. It gives people that


are looking for jobs a bit more power. It is the low in the The


Income bracket that is able to do it. Could it happen here? We are


behind in terms of the tightness of the labour market, but if jobs keep


getting taken up, there is the power of negotiation they can have. Thank


you very much for your time this morning. That is it from us. We have


come to the end of Business Live. You will get more business news


throughout the day on the web page. Have a great weekend and we will see


you again next week. Good morning. I think it is going to


be fair to say that for some of us today it is not going to be a very


nice July day at all. A deep area of low pressure


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