21/07/2017 BBC Business Live

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