26/07/2017 BBC Business Live


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


After the disappointing growth outlook the UK received


from the IMF earlier this week, today we get some real numbers


Live from London, that's our top story on Wednesday, 26th July.


Economists predict UK growth will have picked up slightly -


as consumer spending comes under pressure from rising prices.


Also in the programme, Japan's Nintendo returns to profit,


thanks to bumper sales for its new Switch console.


Markets in Europe have opened. They are in the green. All eyes are on


the States where the Federal Reserve meet.


We'll be talking to one of Europe's largest online train ticket


retailers which is trying to break into some of Asia's biggest markets.


bland and boring, today we want to know, what's the best


In just under an hour, the UK will unveil its latest growth


numbers for the three months to the end of June.


Earlier this week the International Monetary Fund warned that weaker


economic activity means both the US and UK will expand more slowly


However, in the numbers due out this morning,


economists are expecting the UK's growth rate will have risen slightly


Following the Brexit vote, the pound fell.


This put pressure on prices and last month inflation stayed


above the Bank of England's 2% target rate.


And higher prices - partly from imported goods -


are having an impact on consumer spending.


Now according to Visa - household expenditure


fell 0.3% last month - the lowest figure


But government figures suggest uncertainty isn't


The UK continues to be the top investment location in Europe


with more than 2,200 new foreign direct investment projects


announced in the last year and that's 2% up on the year before.


And on Tuesday, BMW announced it had chosen Oxford


as the location of where it will build its new


Joseph Sternberg, Editorial-Page Editor


at the Wall Street Journal is with me.


Welcome to Business Live. Nice to see you. So if we get the growth


that they're expecting, it will be very much as tends to be the case in


the UK driven by consumers? Right. I think that one of the interesting


stories here is that coming into the Brexit referendum last year the


economy was already in a very healthy condition and very


resilient. So the fact that the growth is still positive even with


all the uncertainty surrounding Brexit is a good sign that that


resilience is working, but there are a lot of head winds, consumer


spending is taking the hit from the falling pound that should be causing


concern even if the numbers are in the black. The weak pound was,


especially after the Brexit vote, was said to be, what was going to


boost exporting which would give manufacturing a new lease of life


and that it would rebalance the UK's economy away from consumerism and


more to boost exports. We haven't really seen that happen. I think one


of the stories to arise from that and this is something you would hope


that policy makers would be paying attention to in Westminster as they


negotiate Brexit. The economy is more complicated than it used to be.


You know maybe price and the exchange rate is less important than


it once was. More focus on the quality and the productivity.


Joseph, if we get this 0.3% that many are expecting. It is an


increasing it will be something like the 16th or 18th quarter in a row


where we have seen an increase. Which sounds good, but if we put it


in context, this increase compared to the 0.6% increase that we were


seeing a year ago, it is not great for the UK, is it? Right. When you


look at the falling consumption worries about real income inflation


adjusted, wages are not keeping up. I think that there is a lot of


reason for concern. Concern about how investment will perform with the


uncertainty of the outcome of the Brexit process. We were saying that


some figures show that the UK is still open for business. Lots of


business investment. Is that somewhere where we should be look to


go seek comfort? Yes, I think that one of Britain's advantages has been


that it is so open to investment and it is a relatively liberal economy


compared to the rest of Europe. The Brexit challenge is to expand on


that benefit instead of assuming that the economy can just coast. OK.


Joseph, thank you very much. Let's take a look at some of


the other stories making the news. President Trump says Apple's chief


executive, Tim Cook, is committed to building three


plants in the US. Such an investment would help


the administration follow through on a big campaign promise,


reviving the country's When asked, Apple


declined to comment. Britain is hitting the brakes


on new petrol and diesel vehicles. The Government plans to ban


new cars and vans powered Government officials are expected


to unveil a $332 million fund to help cut down on pollution


to improve air quality. The reported move follows a similar


announcement earlier this month The South Korean car-maker Hyundai


has posted a 51% drop It blamed the poor performance


on a slowdown in US sales, Chinese consumers bought 64% less


Hyundai cars compared It's part of retaliation by Chinese


authorities who object to the installation of a new US


defence system known as THAAD. More stories updated throughout the


day on the Business Live page online. On there right now, VW a


dime letter face accusations of running a cartel. The two firms have


denied, that's Volkswagen and Daimler denied the allegations. This


plays into the diesel emissions scandal. You can read more about


that online. It's just announced a return


to profit on strong demand Give us the numbers. Well, Rachel


the company has managed to make about $115 million in the three


months between April and June and as you mentioned the company's


basically back in the black after losing money last year. It is still


nothing compared to its heyday though. About a decade ago when its


very popular wii console was turning consumers into gamers. The company


has been betting on this new console, Switch, which was launched


in March. In the first month the company managed to sell about three


million units worldwide which is about the same as its rival Xbox as


well as PlayStation 4 and the company hopes to sell ten million


more Switches in this financial year which analysts think is quite


conservative, but the company has been having production issues to


catch up with very strong demand. So, it's very good news for


Nintendo. Thanks for that. It was a good day for markets in


the States on Tuesday, with strong results from Caterpillar


and McDonald's boosting the S 500 The Nikkei is up 0.5%. The hang sang


up a third of a percent. Europe have opened up. We're in the green. Like


markets in the States, markets in Europe are waiting for the outcome


of the Federal Reserve's two day meeting. Investors will be looking


for more information on how the Fed plans to start reducing its balance


sheet. With that and more Michelle Fleury


has the details about what's ahead Well, some big tech names making big


waves this Wednesday. Investors will want to hear more


about Apple's US plans. That's after Donald Trump told


the Wall Street Journal that Tim Cook, the boss of the tech


giant, had committed to building three


manufacturing plants in America. And Facebook reports second-quarter


earnings after the market closed. Profits at the social media giant


are likely to get a boost from its fast growing mobile ad


business, but how Wall Street wants to know


what progress Mark Zuckerberg and company are making developing


new advertising features. Meanwhile, a day after General


Motors reported a drop in profits, Ford is due to publish its first set


of quarterly results that is since Jim Hackett


became Chief Executive and America's Central Bank wraps up


a two-day monetary policy meeting. No change though expected


to US interest rates. Joining us is Jeremy Cook,


Chief Economist, World First. We heard Michelle talking about the


Fed meeting. They are not expected to change the rate, but it is always


watched closely? We are watching the language that's coming out of the


Federal Reserve the more about the balance sheet, the $4.5 billion


worth of assets that are sat on the Federal Reserve balance sheet which


they bought as part of their quantitative easing plan. We will be


looking to see how they plan on reducing that and whether they give


any markers as to when that's going to happen. In the policy statement


which comes out at about 7pm British Summer Time tonight. So why are


investors interested in that? Explain to us how the way that they


choose to reduce the balance sheet could impact on the markets? While


the Federal Reserve raised interest rates three times in the past nine


months and people are saying we're starting to get to a point where the


US economy can be meaningfully creating growth and creating


inflation, ?4.5 trillion worth of mortgage assets were bought by the


Federal Reserve. The way they sell those back is very interesting for


economists and markets because we have to wonder who buys them? Who


feels ready to take the assets off the Federal Reserve and what that


means for growth in the global economy as well? You can't just


destroy them. You can't just say the Fed is going to let go of them, so


where does that money flow to is the really interesting thing? Keeping


the focus on the US, Facebook announcing it's quarter results.


Everyone's favourite app. So it seems in the sense of the growth


that they have enjoyed, quarter on quarter, on quarter. Something like


16 quarters and 1.2 billion users, not just of Facebook, but of their


messenger app, and they own whatsapp. The key thing that a lot


of people are talking about is they own Instagram and Instagram is


starting to become the tip of the sphere for Facebook in taking on


people like Snapchat, the instant stories and the use of filters and


stickers on, I don't do this, but some people, some do! Rumbles. But


it is all about how that advertising revenue is coming through from that.


Facebook Live is very interesting. Whether we start to see adverts as


part of Facebook Live moving forward. Google reported, Alphabet


reported at the beginning of the week. Ad revenues hit lower, hit by


the EU fine. Jeremy Cooke, you will be joining us at the end of the


programme to go through the papers. I will.


We'll be talking to one of Europe's largest online


train ticket retailers which is trying to break into some


You're with Business Live from BBC News.


The UK Government is set to announce today that new diesel and petrol


cars and vans will be banned in the UK from 2040 in a bid


The Government is also due to publish its court-mandated


It sounds like a huge move, but is it?


Let's get the answer from our business


How big a move is this then? Well, it is an admirable goal, but it is a


long way off and the car industry is already moving in that direction.


The chances are that within a few years, you won't see many pure


diesel and petrol cars on the road anyway. They will be hybrids and


electric because of emissions regulations being brought in


particularly in Europe which mean that car makers are having to invest


money in electrification technologies and if they are


investing that money they will want us to buy electric cars and they


will be trying to persuade us to buy them. So market forces will take us


in this direction. In order to have a complete ban on petrol and diesel


cars by 2040 a lot will need to change. Particularly charging


infrastructure. It won't be enough to have a few fast charging stations


up and down the M1, there need to be comprehensive charging


infrastructure, not just on main roads, but rural areas. You might


say particularly in rural areas so people can get around. That


infrastructure doesn't exist yet. It will need comprehensive investment.


The question is where does that money come from and who pays? We


have got a plan for that better infrastructure for charging electric


cars, but what other measures are on the table? There is 100 million for


charging electric cars which may not seem much, but there is an onus on


local authorities to develop their plans and Michael Gove said this


morning he would look at any plans drawn up by local areas for example


to introduce highly localised scrappage schemes. It was thought


there might be some national scrappage scheme for diesel cars


because they are seen as being the main source of the problem in terms


of air quality. That hasn't happened. The onus will be on local


authorities and they can get money for things like retro fitting buses.


Thank you very much for that. Plenty on the Business Live page. We


have a team of correspondents across the UK. There are three months left


to spend, save or donate your old ?1 coins and the cost of changing those


is costing small firms thousands and thousands of pounds.


Check your kids' piggy banks for those ?1 coins!


In just under an hour, the UK will unveil its latest growth


numbers for the three months to the end of June.


Economists are expecting the UK's growth rate will have


Let's take a look at how the markets are faring.


And now let's get the inside track on rail travel.


1.7 billion rail journeys were made in the UK in the past 12 months.


This is a record high, with passenger numbers


more than doubling over the last two decades.


Advance ticket journeys increased nearly 10% over the last year,


but sales of season tickets fell by 2.9%.


Trainline says it is the world's biggest independent


It operates across 24 countries, helping passengers


to find the quickest and most cost-effective routes.


Clare Gilmartin is chief executive at Trainline and joins us now.


Good to see you. Welcome to the programme. This move towards advance


tickets, E tickets, but still on some routes you can't do it, you


can't get the best bargains because they are still doing paper tickets.


URI. We have been on a mission to bring the world's rail into one


simple app and website. We operate across 24 different countries now


and our mission is to help people see all their options, all the


different prices for their journey, so they can get the best price and,


increasingly, to get mobile tickets to people so that they never have to


queue in a train station, because the net result of all that is people


take the train more. Will it ever happen? It sounds like a noble


ambition but no queues, completely ticketed? We've really got the bit


between our teeth on this. We started in 2014 in the UK when there


were hardly any mobile ticketed roots and today we are nearly 50%


and I hope by the end of next year, we're partnering with the industry,


the real companies on the Government so by the end of 2018, hopefully the


full rail network in the UK will be eat ticketed. You are operating


across Europe and make inroads into Asia. How do you collect up all


those train lines, as trains crossed different borders, legal rules on


cultural issues. What sort of challenges have you faced? It is


complex and we are the leading global player in this at the moment.


We have brought together nearly 90 different rail carriers into one


app. There are 35,000 train stations in Europe, competitive as airports,


so it is a complex job but we are making it easy for customers, easy


to find the best price for your journey, easy to get a mobile ticket


and increasingly we are using data to give people better real-time


travel information on their journey. The big push for the company, the


big untapped market, seems to be Asia. What are you doing to break


that? When I said 70% of rail still bought off-line, people queueing in


stations, that is a global number. Japan is a huge market, all off-line


today, all people queueing in train stations, so we are looking to early


next year start in Japan by selling train tickets. We have the Olympics


coming up in a few years. Today it is very hard for foreign travellers


to buy a train ticket in Japan and we wish to make that much easier but


we're also looking beyond that to the US. Before you came to Trainline


you were vice president at eBay. Did you see many comparisons between the


two countries where companies? To survive spent 15 years working in


companies that use technologies to make life a bit better. At Trainline


we are on a mission, we want to make train travel accessible to everybody


and make it easy, we want to take the hassle away, take the anxiety of


getting the best price away and make it simple, easy and transparent. As


a company, you are very reliant on tech talent and people with the


know-how and skills. What are you doing as an organisation to nurture


that and protect the tech talent of the future? We employ over 40


different nationalities and that's the lifeblood of any global


high-growth tech company. So we take recruitment, hiring and developing


our people really seriously. We host a whole load of tech events in our


offices. We have a very vibrant tech and creative culture. We have been


hiring a lot in technology and data science and it is exciting work for


people. It is bringing artificial intelligence to rail for the first


time, which tells customers in their journeys. Do you have a favourite


train journey? I love the journey along the $ to call more. It is


beautiful. -- along with Dawlish Coast to Cornwall.


Volkswagen will hold an emergency board meeting later today,


regarding allegations that the car-maker operated


a cartel alongside Audi, Porsche, Mercedes and BMW,


If true, the reports would be a further blow


to the German car industry, which is trying to recover after


Damien McGuinness reports from Berlin.


Volkswagen, BMW, Daimler, Audi, Porsche, all German car brands


accused of collusion. The allegation is that since the 1990s they


regularly held talks to agree costs, either for parts or for technology.


The aim was allegedly to block competition. All five car companies


deny the claims, all refused to comment, and it is possible that the


talks were legal, held simply to discuss how to standardise


technology across the industry. But the news has rattled investors. When


German media first published on the reports last Friday, VW shares fell


by 4.9%, while shares for BMW and Daimler dropped by more than three


percentage rock the European Commission and the German cartel


office have not yet launched an official probe but are looking into


the allegations. Folks like and Daimler have declined


to comment on the allegations. -- folks via and Daimler.


What other business stories has the media been


Jeremy Cook, Chief Economist, World First, is joining


One of the big stories the Financial Times Greece to raise euros of the


first bomb selfie years but let's not breathe a sigh of relief? Nobody


should be popping such champagne corks over this. This is an


incremental step awards Greece being back. We are talking about UK GDP


this morning, the Q1 GDP increase was positive, we're starting to see


green shoots of recovery, but when you look at the fundamentals of the


economy, still very poor, 180% jet to GDP ratio. Whilst this increases


the amount of debt that Greece eventually owes, it has been


financed at a lesser interest rate than most of the other debt that it


has. Its last bond issue was three years ago and was about 4.9%, this


is 4.5, 4.6. So incrementally getting a bit better. What is


interesting is this bond sale to Dublin was a kickback for some of


the people buying the bonds. A lot of people still hold Greek debt and


hold that previous debt which expires in 2019 so what has now


happened is that some holders of that debt, which was due to expire


in 2019, have been offered this new debt and if they took up this new


debt, which expires further in the future, they get a windfall back


from the Greek government, which equates in total to about 1400


euros. That kind of makes this return to the bond market not as


positive as it sounds? It is a financing issue. Is that a normal


thing that can happen? Companies will -- countries will try and


elongate the amount of time they have to pay until they have to pay


it back but this just seems to be a very, very short-term way of doing


it. The other element that is interesting is that with interest


rates that are persistently low, stubbornly low, investors are


perhaps turning to these countries that they may not have wanted to


touch in the past, where they can get a bit of a decent return.


Investors are not there for yield, they are there to make money. You


look at US Treasury debt or gilts in the UK, they are not getting the


return that they would want so they have to go to the countries which


are paying a bit more money but for an elevated amount of risk.


Argentina last month launched a 100 year bond. You give me your money


now, I will pay you back in 100 years and you will get a %. 8% as


previously used to happen and Argentina has a history of default


so would you put your money and it? Did you? No. Let's touch on this


story in the Times. Bland, dull and boring, they have teamed up,


Scotland, Australia and the United States, to try and boost tourist


numbers and draw attention. Hopefully a little village called


Snore can get involved does well and we can have a commonwealth of boring


cities. These are nice little village is getting together and


hopefully it can continue. Where did you recently holiday near? I was in


Tuscany with some friends and this was... The town we were near was


twinned with a place in Belgium called 76 -- called Silly. It made


me giggle. That it. Bland, dull and boring. Not us! More business news


throughout the day. Good morning. While eastern areas of


the UK start off on a relatively dry note, further west


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