24/07/2017 BBC Business Live


24/07/2017

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This is Business Live from BBC News with Ben Bland

:00:00.:00:09.

The Uk's International Trade Secretary meets his US

:00:10.:00:15.

Live from London, that's our top story on Monday the 24th of July.

:00:16.:00:39.

A deal between the US and UK could boost trade by tens

:00:40.:00:42.

of billions of dollars - but can't be struck until after

:00:43.:00:45.

The International Monetary Fund cuts the growth prospects

:00:46.:00:50.

for the UK and US - while boosting its forecasts

:00:51.:00:54.

And how did this thing change the world?

:00:55.:01:07.

I sit down with the man who invented the USB Memory stick.

:01:08.:01:12.

He sold the firm for $1.6 billion but describes it as one

:01:13.:01:17.

And as lab-grown diamonds become more popular,

:01:18.:01:25.

today we want to know, would you mind if the diamond

:01:26.:01:38.

in your engagement ring was man-made.

:01:39.:01:39.

Later today the UK's trade secretary Liam Fox will be in Washington

:01:40.:01:52.

to discuss a preliminary trade deal ahead of Britain's departure

:01:53.:01:58.

A final trade agreement cannot be ratified until the UK

:01:59.:02:07.

formally leaves the EU, but the two nations are keen to lay

:02:08.:02:11.

the foundations for what the US President expects to be,

:02:12.:02:13.

In an interview with the BBC, Mr Fox said that UK-US

:02:14.:02:21.

trade is currently worth nearly $220 billion.

:02:22.:02:25.

But this could increase by as much as $52 billion if trade barriers

:02:26.:02:31.

For now though the process cannot begin in earnest because the UK

:02:32.:02:40.

is not permitted to hold formal trade talks with non-EU

:02:41.:02:43.

countries until it has left the European customs union.

:02:44.:02:47.

To complicate matters, the UK's trade secretary has

:02:48.:02:52.

welcomed a transition agreement with the EU which could potentially

:02:53.:02:57.

last up until the next scheduled general election in 2022.

:02:58.:03:00.

Although this would prevent the UK dropping off a cliff-edge in 2019,

:03:01.:03:05.

it is currently unclear whether the UK would be able

:03:06.:03:10.

to start negotiating with non-EU trading partners

:03:11.:03:13.

while the transition deal is active.

:03:14.:03:15.

Marianne Schneider-Petsinger is Geo-economics fellow with the US

:03:16.:03:19.

and Americas Programme at Chatham House.

:03:20.:03:24.

Good morning. Welcome to the programme. Ben running through some

:03:25.:03:32.

of the issues there. Ifs, buts and maybes and preliminary deals, can't

:03:33.:03:35.

strike a deal until we leave the European Union. I suppose the first

:03:36.:03:38.

question is, how likely is it that this will get done? I think at some

:03:39.:03:44.

point it will be, but for these talks, the focus is very much laying

:03:45.:03:49.

the ground work, scoping an exercise of where the trade deals might be

:03:50.:03:53.

done. Also providing continuity and certainty to US and UK businesses.

:03:54.:03:57.

There are a number of regulatory and technical agreements that could be

:03:58.:04:02.

part of the discussions, whether it's with regards to data flows and

:04:03.:04:06.

also air transport for example. We talk there about what needs to be

:04:07.:04:10.

done, certainly business wants some certainty. What is likely to be the

:04:11.:04:17.

sticking blocks? If you take a look at the trade negotiations that have

:04:18.:04:25.

been going on since 2013, lots of sticking points will likely emerge,

:04:26.:04:33.

so concerns about the importing of US chlorinated chicken, beef and

:04:34.:04:37.

also the question about financial services regulation I think could

:04:38.:04:41.

likely resurface. So where do you think the areas of perhaps easiest

:04:42.:04:46.

agreement are likely to be and where are they most likely to strike a

:04:47.:04:54.

deal? I think if you have an agreement that covers these things,

:04:55.:04:58.

that could be low-hanging fruits. There could be issues about

:04:59.:05:02.

standards, that is where the challenges will be. With the

:05:03.:05:06.

transition period, as you pointed out, the implications of a US trade

:05:07.:05:11.

deal, sorry the UK EU trade negotiations will have implications

:05:12.:05:14.

for the negotiations between the United Kingdom and the United

:05:15.:05:18.

States. If it came down to a choice between having a transitional deal

:05:19.:05:23.

with the EU or getting a US UK trade deal in place, which do you think

:05:24.:05:27.

would be the most important? Obviously the UK trade negotiations

:05:28.:05:32.

with the EU have priority trade. It's four times larger than anything

:05:33.:05:36.

else with the US, so that is where the key priority will be. It also

:05:37.:05:40.

strikes me then, all of this, we are talking about this cliff edge, that

:05:41.:05:43.

time is running out whether we like it or not and a deal has to be done

:05:44.:05:48.

at some point. That cliff edge is a real possibility that no deal will

:05:49.:05:54.

be done in any scenario and the UK falls off the cliff en? Yes and if

:05:55.:05:58.

you have an agreement in place, again what this future relationship

:05:59.:06:03.

might be has implications for any negotiations with the United States

:06:04.:06:07.

and don't forget that negotiations in general take a lot of time. For

:06:08.:06:13.

the United States on average it's like three-and-a-half years now to

:06:14.:06:17.

have an agreement from the start of negotiations to the implementation

:06:18.:06:17.

phase so it will be a long time. We may have to talk about this again

:06:18.:06:28.

in the future. For now, thank you very much.

:06:29.:06:30.

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

:06:31.:06:33.

Irish low-cost airline RyanAir, has reported a 55% rise in profits

:06:34.:06:35.

The airline says passenger numbers grew by 12 percent to 35 million -

:06:36.:06:41.

But it admitted the figures were distorted by the timing

:06:42.:06:48.

Australia's consumer watchdog agency is investigating the recall

:06:49.:06:54.

of Takata airbags after a driver's death earlier this month could be

:06:55.:06:59.

If proven, it would be the 18th fatality related to faulty

:07:00.:07:05.

The oil-producing companies are meeting in Russia today. The

:07:06.:07:23.

ministers from the Organisation of Petroleum Exporting Countries OPEC,

:07:24.:07:27.

as well as other oil producers, with dealing with the oversupply of oil.

:07:28.:07:31.

Earlier this year they came up with a plan to try to curb production in

:07:32.:07:37.

order to stop crude oil prices from falling.

:07:38.:07:55.

This news in about Uber Grab. They are calling it the biggest round of

:07:56.:08:09.

investment. A real power play for these firms around the world, some

:08:10.:08:16.

of course in some countries uber- is banned, others like Lift and Grab

:08:17.:08:19.

managing to enter the market as a result. Grab operating in seven

:08:20.:08:26.

countries, east Asia's most popular ride-sharing firm.

:08:27.:08:31.

The IMF has released the latest world economic outlook

:08:32.:08:34.

and while there's good news for China, Japan and the Eurozone

:08:35.:08:36.

there's bad news for the US and the UK Karishma Vaswani

:08:37.:08:39.

Tell us more? China, the eurozone and Japan have been a slight bump

:08:40.:08:51.

upwards. The US and UK are expecting to Cee Loer rates mainly because of

:08:52.:08:56.

the weak first quarter. The IMF says the UK will grow 1.7%, compared with

:08:57.:09:01.

the previous 2% it was forecasting, but to be honest it doesn't clarify

:09:02.:09:06.

why. I've looked through the report and it doesn't say much more than

:09:07.:09:10.

that. The funds said meanwhile that the US would grow by just 1.2% in

:09:11.:09:16.

comparison to the 2.3% it previously forecast down to of course the fact

:09:17.:09:20.

that fiscal stimulus in the US isn't going the way everyone expected

:09:21.:09:24.

because the Trump administration seems preoccupied, to be frank, at

:09:25.:09:27.

the moment. Let's take a look at China. It got a slight bump up.

:09:28.:09:33.

Growth rates in 2017 expected to come in at 6.7%. Next year at 6.4%.

:09:34.:09:40.

Both figures are slightly higher than what the IMF previously

:09:41.:09:43.

forecast. As we have been talking about over and over again, all the

:09:44.:09:49.

comes at a hefty price tag. The IMF says Beijing, in order to achieve

:09:50.:09:52.

the growth rates will be focussing on Government spending. That might

:09:53.:09:57.

mean a delay of much-needed financial reforms and more debt to

:09:58.:10:00.

its already ballooning debt pile. That's a massive problem for the

:10:01.:10:06.

Chinese. The IMF says that if China doesn't address the risks in the

:10:07.:10:09.

long-term, that could result in a slowdown in growth.

:10:10.:10:11.

Japanese stocks dropped to more than two-week lows

:10:12.:10:24.

on Monday after Wall Street retreated on Friday.

:10:25.:10:27.

A stronger yen dampened sentiment, while investors looked

:10:28.:10:30.

for opportunities to buy small and mid-size stocks.

:10:31.:10:33.

A strong yen drags on exporters' shares.

:10:34.:10:36.

The dollar suffered fresh losses at the start of the week on lower

:10:37.:10:40.

expectations for under-fire Donald Trump's ability to push

:10:41.:10:42.

Let us take a look at the European markets. Earnings reports from

:10:43.:11:08.

Alphabet which owns Google, also Am zok and Facebook will come out with

:11:09.:11:11.

their figures. Samira act head joins us now.

:11:12.:11:22.

Investors expect to see a rise in revenue and profit helped by

:11:23.:11:26.

advertising sales on video content and mobile devices. The company's

:11:27.:11:30.

cloud computing business is doing well, which has long been trailing

:11:31.:11:35.

behind Amazon and Microsoft. It managed to win some major deals for

:11:36.:11:39.

it cloud business but investors are worried about how much Google

:11:40.:11:44.

depends on searches. Any update on its plans to beef up its cloud

:11:45.:11:47.

business will be interesting to watch. Finally, the second largest

:11:48.:11:56.

toy maker in the US, Hasbro, will be reporting earnings. Based on

:11:57.:12:13.

Spider-Man, Hasbro and other products, will be very much the

:12:14.:12:15.

reason why they'll be up. Joining us is Jessica Ground, UK

:12:16.:12:17.

equities fund manager at Schroders. Nice new glasses, I approve, by the

:12:18.:12:24.

way. What is happening? They are talking

:12:25.:12:28.

about the same level of growth, still not back to pre-crisis levels.

:12:29.:12:33.

Still quite vulnerable. But within that, downgrades for the US, because

:12:34.:12:38.

we haven't seen the tax reforms that people had hoped for and downgrades

:12:39.:12:42.

for us in the UK because we have had a slow start to the year and

:12:43.:12:47.

uncertainty of the election won't have helped either. I was talking

:12:48.:12:52.

about the downgrades for the US and the UK there, but it's a different

:12:53.:12:56.

picture around the world and it shows that diverging view of some

:12:57.:13:00.

economies managing to weather the storm better than others?

:13:01.:13:03.

Definitely. What is really encouraging is that there is better

:13:04.:13:06.

news for some of the European economies and the Japanese economies

:13:07.:13:10.

which have had a really tough longer term outlook. Their growth is

:13:11.:13:15.

starting to come back. That's good. China looking reasonably stable and

:13:16.:13:19.

again some of the other emerging economies sort of being a bit

:13:20.:13:25.

stronger. So almost like a sort of two-speed thing. As mentioned a

:13:26.:13:32.

moment ago, lot of corporate results out this week, which are the ones

:13:33.:13:36.

analysts will be watching closely? US tech's had a phenomenal run,

:13:37.:13:40.

that's been because there is this environment where growth's been

:13:41.:13:44.

harder to come by. People have been looking for the tech stocks to

:13:45.:13:49.

deliver that. Google, Alphabet, what they're doing in terms of

:13:50.:13:51.

advertising will be really interesting. Similarly some of the

:13:52.:13:55.

results from the European companies are going to be interesting.

:13:56.:14:00.

Europe's been rerated by investors partly because they now see growth

:14:01.:14:05.

returning. Is that happening in the bottom line of the companies, that

:14:06.:14:10.

will be interesting. As far as the potential trade negotiations with

:14:11.:14:14.

the US, as we heard at the start of the programme, it's vital but there

:14:15.:14:17.

are so many question marks over whether it will get done because

:14:18.:14:20.

frankly we can't do anything until we leave the European Union anyway?

:14:21.:14:25.

These things are really complex. As you have already talked about,

:14:26.:14:28.

geographically, we have trade deals with people physically close to you,

:14:29.:14:33.

so yes the US will be great and yes Boris Johnson going off to Australia

:14:34.:14:39.

and New Zealand is fantastic. But getting the transitional trade deals

:14:40.:14:42.

with Europe will be really important.

:14:43.:14:46.

Thank you for talking to us about that. Still to come:

:14:47.:14:54.

I meet the man who invented the humble USB memory stick.

:14:55.:14:59.

It changed the way we use computers and share data

:15:00.:15:01.

but why does he describe selling the firm as his biggest regret?

:15:02.:15:04.

You're with Business Live from BBC News.

:15:05.:15:17.

Here in the UK, lots of stories including Ryanair, which we will get

:15:18.:15:23.

into in a moment. Profits up substantially. But let's go to the

:15:24.:15:30.

live page once again. B shares, the discount retailer. Asda could be

:15:31.:15:39.

looking to make a bid for it. It would be ?4.4 billion if it is

:15:40.:15:43.

confirmed. There is a huge debate about the value of these low cost

:15:44.:15:47.

retailers in the UK. They often do well when incomes are squeezed. B

:15:48.:15:52.

is one of the biggest success stories of late and Asda are

:15:53.:15:58.

potentially wanting a slice. Why? For access to that network of

:15:59.:16:01.

stores. The Sunday Times reporting on that early stage of assessing the

:16:02.:16:05.

bid for B Plenty more on the website for you as well, including

:16:06.:16:11.

news from Ryanair this morning. They are reporting that their shares have

:16:12.:16:16.

fallen by 5%. This is after the airline announced they expect fares

:16:17.:16:21.

to fall in the six months to the end of September and even further in the

:16:22.:16:26.

months to the end of March next year, despite them reporting

:16:27.:16:30.

positive results, saying that the profits soared 55% in the three

:16:31.:16:38.

months to the end... I've lost where I am! To the end of June! I tell you

:16:39.:16:46.

someone who know exactly which man is involved! That is the chief

:16:47.:16:50.

financial officer of Ryanair, who spoke to me earlier. A very strong

:16:51.:16:54.

airline. We saw our unit costs excluding fuel drop by 6% at a time

:16:55.:16:59.

in the cost of our competitors are rising. We are looking at savings on

:17:00.:17:04.

a full-year basis. The airline is in good shape. We did see a benefit

:17:05.:17:08.

from east in April of this year in the same quarter last year. The

:17:09.:17:13.

fares will be down in the region of about 5% in the first half of the

:17:14.:17:16.

year and we are sticking to that that we see no reason to change that

:17:17.:17:22.

guidance. We are looking at fares down approximately 8% this winter.

:17:23.:17:26.

Very good value for the customers at the moment. The chief financial

:17:27.:17:30.

officer of Ryanair speaking to me earlier today. Another story that

:17:31.:17:36.

caught my attention on the website. The electricity shake-up that could

:17:37.:17:41.

save consumers up to ?40 billion. This is by our environment analyst,

:17:42.:17:46.

Roger. This is about how electricity is generated and stored and whether

:17:47.:17:50.

people generating their own power using solar power could sell it to

:17:51.:17:56.

the national grid. the UK's trade secretary, Liam Fox,

:17:57.:18:00.

will be in Washington But a final trade agreement cannot

:18:01.:18:06.

be ratified until the UK formally As you would expect, a lot of

:18:07.:18:18.

uncertainty about what could happen and crucially what it will mean for

:18:19.:18:21.

business. We will be discussing that at the start of the programme. A

:18:22.:18:26.

quick look at how the markets are faring. This is how they looked at

:18:27.:18:29.

the start of the trading day, the start of the trading week, across

:18:30.:18:35.

Europe. All just into the red, down just a shade. That is what the pound

:18:36.:18:37.

will buy you against the dollar. It revolutionised the way

:18:38.:18:40.

we save documents and you can carry it around

:18:41.:18:45.

in your pocket. And it was invented

:18:46.:18:50.

by an Israeli entrepreneur. In fact, outside of California's

:18:51.:18:59.

Silicon Valley, one of the most exciting places for tech start-ups

:19:00.:19:02.

and innovation is Israel. The country has a record

:19:03.:19:04.

of attracting big In the last three

:19:05.:19:06.

years 195 companies, together worth just over

:19:07.:19:10.

$35 billion, were either bought out or floated

:19:11.:19:12.

on the stock market. This year saw Israel's biggest ever

:19:13.:19:14.

takeover when technology firm MobileEye - a pioneer

:19:15.:19:21.

of driverless car technology - was bought by Intel

:19:22.:19:25.

for $15.3 billion. We spoke to Intel about that deal on

:19:26.:19:30.

the programme. The big money deals

:19:31.:19:33.

are nothing new though. In 2006 M-Systems was bought

:19:34.:19:36.

by SanDisk for $1.6 billion. M-Systems

:19:37.:19:39.

was founded by Israeli entrepreneur and inventor Dov Moran,

:19:40.:19:41.

also known as the man I sat down with him to hear

:19:42.:19:43.

how he turned his big We were going to a conference in

:19:44.:20:01.

Israel, and at the end of the conference, I said, guys, I have

:20:02.:20:06.

this amazing device that we are going to launch very soon. Here it

:20:07.:20:10.

is. It is the first time you'll get to see it. The USB flash drive. And

:20:11.:20:16.

people didn't like it. There were many questions. Like, why should I

:20:17.:20:21.

use this? There are floppy disks, they are cheaper, what is the price

:20:22.:20:26.

of that? Only eight megabytes? What is that? Nothing is obvious, nothing

:20:27.:20:34.

is clear. What was the secret of the success? First of all because it is

:20:35.:20:41.

in your pocket, you see. That's one. It is easy, in your pocket. It is

:20:42.:20:48.

very simple to use. Everybody could use it. You didn't have to study

:20:49.:20:51.

anything, you didn't have to learn anything. There are no problems, it

:20:52.:20:56.

just works like a hard drive. Then fast forward to 2006, and you sold

:20:57.:21:01.

the company that you had created for a lot of money. Tell me about that.

:21:02.:21:08.

In 2006 I sold the company, $1.6 billion. Not so bad. Not so great!

:21:09.:21:17.

Interesting that you say that. On one hand, you have described that

:21:18.:21:20.

sale as your biggest excess, but on the other, one of your biggest

:21:21.:21:24.

regrets. Why is that? -- biggest success. I don't regret it. You

:21:25.:21:30.

can't save you regret selling a company for $1.6 billion but I

:21:31.:21:34.

wasn't happy to sell. It wasn't my dream. The reality is that the CEO

:21:35.:21:52.

of Sandisc try to approach me to acquire the company and I said no

:21:53.:21:58.

until I broke down. I said yes. It wasn't really because I wanted to

:21:59.:22:02.

sell the company. There was a situation which I won't go into, but

:22:03.:22:08.

I was not happy with my board and the way they treated the company and

:22:09.:22:14.

acted. Tell me about signing on the dotted line. You had committed

:22:15.:22:17.

yourself to selling the company. What was going through your head?

:22:18.:22:24.

Mixed feelings. For a long time I had a very heavy bad feeling of

:22:25.:22:29.

disappointment. I saw it as a failure, not a success story. It

:22:30.:22:35.

took me time to accept that this was sort of success. You sold the

:22:36.:22:40.

company but it is like you retired. You have been doing a lot since

:22:41.:22:44.

then. I know you are very active in tech start-ups, especially in

:22:45.:22:50.

Israel. Tell me about the way that the country lurches start-ups.

:22:51.:22:56.

Israel is an amazing place. Lots of start-ups. But very few investors

:22:57.:22:59.

are investing in the really difficult stuff. I feel that this is

:23:00.:23:05.

required and it is what I am doing these days. You have had a lot of

:23:06.:23:09.

failures but also a lot of successes. What advice would you

:23:10.:23:15.

have for people who want to emulate that success? A relatively simple

:23:16.:23:19.

idea and you turned it into a huge business. You have got to learn a

:23:20.:23:23.

lot and really understand the market very well. My advice to people is go

:23:24.:23:28.

study. Understand technology very, very well. Understand the market.

:23:29.:23:35.

Pick market. Go very deeply into this market to see what is going on,

:23:36.:23:39.

what other and requirements. Then come up with an invention. -- what

:23:40.:23:48.

are the needs and requirements. A fascinating interview about new

:23:49.:23:52.

technology being nurtured in Israel. Of course you can forget the memory

:23:53.:23:59.

stick and leave it in the computer. Or not know which way up it goes!

:24:00.:24:06.

You always have to try three times. Now, the IMF. The latest army of

:24:07.:24:10.

forecasters holding the headlines. They put it out every quarter and

:24:11.:24:14.

they have downgraded the UK's economy. They thought it would grow

:24:15.:24:20.

by 2% and now they say 1.7% this year. Similar downgrade for America

:24:21.:24:23.

this year and next year. The IMF has been wrong about the UK economy

:24:24.:24:27.

quite a few times in the recent past but it does provide a good snapshot

:24:28.:24:31.

of what is happening in the world. UK slowing down, the eurozone doing

:24:32.:24:37.

better, the USA stuttering. Let's turn our attention to something very

:24:38.:24:42.

different. This is the Washington Post, man-made diamonds.

:24:43.:24:45.

Traditionally diamonds are dug out of the ground at great cost.

:24:46.:24:52.

Man-made diamonds in a lab. Industrial diamonds have been around

:24:53.:24:57.

for a long time. You start with a sliver of diamond and you stick

:24:58.:25:01.

carbon around it and apply heat and pressure and eventually you get a

:25:02.:25:05.

man-made diamond. Many they have been used for industrial diamonds

:25:06.:25:08.

but now getting bigger and bigger and bigger and they are being used

:25:09.:25:11.

in fashion and jewellery like traditional diamonds. There is

:25:12.:25:14.

competition for the ones that are dug out of the ground. Some people

:25:15.:25:20.

might prefer a man might diamond. Our viewers do. David says he

:25:21.:25:24.

doesn't mind the long as it is cheaper than a real rock. Joe says

:25:25.:25:28.

her engagement ring is man-made and she loves it. And hopefully it puts

:25:29.:25:36.

an end to child labour and poverty still needs to be addressed. The

:25:37.:25:43.

trick is not to tell her! Maybe you can tell if you are an absolute

:25:44.:25:47.

expert but they are indistinct or from the real thing because they are

:25:48.:25:51.

real, just created using chemicals. Nice to see you, Dominic. There will

:25:52.:25:56.

be more business news today and throughout the week. We will see you

:25:57.:25:58.

soon. Goodbye. Hello. It was quite worked for many

:25:59.:26:12.

of us over the weekend. Heavy showers and longer spells of rain.

:26:13.:26:16.

Through

:26:17.:26:18.

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