04/08/2017 BBC Business Live


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04/08/2017

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Sunday, the ridge of high pressure building from the south-west but

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this next weather front approaching brings outbreaks of showery rain so

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it will be a fairly fresh start to the day on Sunday, plenty of

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brightness across England and Wales first thing, one or two isolated

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showers not out of the question, outbreaks of rain feeding from the

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West into the afternoon with highs of 21 Celsius.

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This is Business Live from BBC News with Ben Bland and Jamie Robertson.

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Getting caught in the traffic - Toyota's profits are down

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as the Japanese car-maker fights to get back into pole position.

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Live from London, that's our top story on Friday 4th August.

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Toyota's finances are hit by a huge drive to catch up with its rivals

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on electric and autonomous cars, so can it be

:00:38.:00:41.

The ride-hailing company admits it should have acted quick to fix

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overheating parts on cars it gave its drivers.

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A softer open across the main European indices, softer start to

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the trading day. However, across the water in the US, the Dow has hit yet

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another record high. We will look at what is going on a little later in

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the programme. And we'll be getting

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the inside track on Germany's diesel problems and Fairtrade chocolate

:01:14.:01:16.

as we discuss all the big stories of the week with our business

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correspondent Jonty Bloom. Using water to way down washing

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machines instead of using concrete? Simple. But what a simple solutions

:01:34.:01:36.

have you found to everyday problems. We have already had a tweet, David

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saying, if I share my ideas, will you go 50/50? Smart man!

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Toyota was once the company that sold the world more

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And as it struggles to reclaim that number one spot,

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As it released its latest number, the company behind the best-selling

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car the world has ever seen, the Corolla, says its spending more

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on what is called the "crucial" areas of self-driving cars

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Toyota has reported a sharp fall in operating profits

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It made $5.2 billion, a drop of 10.6% on the same period last year.

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That's partly because of a big increase in research

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Last year, despite "dieselgate", Volkswagen sold more cars,

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and in the first half of this year they were both

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overtaken by Renault-Nissan, after it added Mitsubishi

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So Toyota is spending big to attract new customers.

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Last month it committed another $100 million to develop

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That is on top of the $1 billion it's already spending to develop

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self-driving cars and other tech at a new research centre in the US.

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But all of that research needs top engineers and scientists.

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And to try and save on Silicon Valley's pricey talent, Toyota

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recently launched a recruitment campaign on Tokyo's Nambu railway

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line, along which many of the country's tech

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James Batchelor, editor-at-large for Auto Express and Car

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The picture there and has painted is of a company where profits are down

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but for a very good reason, spending huge amounts of money on RMT. Is it

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spending it in the right places? What kind of things is its spending

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on? It needs to spend more money on R because Toyota fears of being

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left behind by big tech companies, companies like Tesla, for example,

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producing autonomous cars, so Toyota is spending the money in the right

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area, because it has to. Has it been left behind, do you think? They all

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are, in a way. They had the previous, which was a byword for the

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next big thing, and now it is historic. It is not being left

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behind at the moment, but the Prius is 20 years old, they have sold 3.5

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million of them since 1997. Toyota is spending a lot of money in terms

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of the hydrogen fuel cell car as well. If that's the future? It is

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not what everybody else has been talking about recently, is it? It is

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one way to the future. We are all looking at electric cars and hybrids

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at the moment. Hydrogen fuel cell car could be a

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step far because it involves huge amounts in terms of infrastructure.

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What about in terms of Electric, is it going down that route? Toyota is

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going down the hybrid route, they have always gone... Not pure

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electric? Not at the moment, they championed the hybrid because they

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see that is the technology most people want to buy and especially as

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we look at the 2040 ban on petrol cars, hybrid seems to be the best

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way out for most customers. There is some talk of a merger with the

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company, possibly muster, eight press release due in a couple of

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hours? There definitely seems to be a tie-up looming between Mazda and

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Toyota, probably to build a new factory in America because a lot of

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car companies are having to tie up with each other to try to get ahead

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of their competitors. So that is the way the industry is going, these

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alliances between like we have with Nissan and Renault? Absolutely, that

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is the only way a lot of car companies can spread cost in terms

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of platforms and new technology. OK, we will cover that when we hear what

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happens with that press conference. James, thank you very much indeed.

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

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The Royal Bank of Scotland has made its first half-year profit in three

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years. The bank, which is majority owned by the British taxpayer, made

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$1.23 billion in the period. It has said it will relocate some stuff to

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Amsterdam after Brexit as it looks to maintain European operations.

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The cost of damage from a cyclone which hit Australia in March is one

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of the main reasons profits are down at Swiss Re.

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It cost the world's second largest re-insurer $360 million.

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The company says it made $1.2 billion in the first

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that's a third less than the same time last year.

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It's seeking to move into new areas to grow its business.

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A British computer expert credited with helping to shut down

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a world-wide cyber attack earlier this year has been arrested

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Marcus Hutchins stopped the WannaCry virus

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from spreading further, after it affected thousands

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The arrest is not linked to that attack.

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There is more to that story than meets the eye!

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We should follow it. Let's go to Asia now,

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where there is more It says it has taken action to fix

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cars it was using in Singapore A spokesman has told the BBC that

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the company could have done more to fix the problem with these SUV 's in

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Singapore. The Wall Street Journal reported that the company got

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100,000 Honda Vezels even though they had been recalled due to

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overheating. One of the drivers explained an incident where flames

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burst out of the dashboard, melted the interior and cracked a hole in

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the windshield. Luckily no one was hurt. This is a challenging time for

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the company, it is also in the midst of battling sexual harassment claims

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in the US and dealing with an exodus of executives. Earlier this summer

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its chief executive resigned and is now on the hunt for a new CEO.

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OK, thank you very much, Monica Miller there for us.

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Let's look at the markets, that is a picture on the Asian markets, Tokyo

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closing low on Friday with exporters pulling it downwards as the yen

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strengthened against the dollar. A weakened dollar against the yen

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makes Japan's exporters less competitive. The dollar weakened

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after the new report on the probe into the Trump administration's

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alleged ties with Russia and also a survey which showed growth in the

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American services sector slowed sharply in July, so analysts are not

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expecting the US jobs and wages data out later to offer much relief. On

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Wall Street, although the tech focused Nasdaq, it has just

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disappeared, edged to a record high for the second straight day. Here is

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how the European market started the day, opened in the red but the FTSE

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100 picking up, as we mentioned a moment ago, feeling a downward pull

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from Swiss Re after it missed its profits estimate. Benefiting a bit

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on the RBS share price which has gone up after it announced its

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profits. And Samira Hussain has

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the details about what's ahead It is the first Friday

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in a new month and here in the US it can only mean one

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thing, jobs numbers. The Labor Department will release

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the latest employment figures Back in June, the US

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economy added 222,000 jobs. Analysts are expecting non-form

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payrolls to decrease They are also expecting to see

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the unemployment rate fall to 4.3%. This number will be closely watched

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by the Federal Reserve, America's central bank,

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as it considers the next rise Now, there has been a flurry

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of earnings coming up this week and those earnings helped push US

:10:11.:10:19.

markets to record-breaking highs. Before the week comes to an end,

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there are still a few more companies that will report,

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including health insurers, Cigna, and Newell Brands,

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the maker of Sharpie pens. Joining us is Mike Bell,

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global market strategist 22,000 is terribly impressive,

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should we be impressed or is it just another number? If you look in the

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Dow there are lots of tech companies, some parts of the tech

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market are pretty expensive at the moment so we would favour rotating

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into some of the cheaper parts of the market, particularly the

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financials, which should do well. But the financials are boosted

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because everyone is expecting regulatory reform, basically taking

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away the regulations, but is that going to happen? We have seen since

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the start of the year a lot of that has been priced out of the

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financials. The market is expecting the Fed to put rates up, that would

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be a positive background. You don't get worried about the market at

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22,000? Bits of the market look expensive, but the key for your

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return is what you pay in terms of the multiple and if you look at some

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tech stock trading at over 30 times, that is risky, we would favour 12 to

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13. Jobs data due out later, not expecting great things? About

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180,000 jobs added in the month, anything over 150,000 will be enough

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for the Fed to announce in September they will reduce the balance sheet.

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Why not put your money into the European stock markets? That is

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where the growth is at the moment Europe as a continent is growing

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faster than the United States, prices are undervalued, we have seen

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a fall away in some stock prices over the last three or four months,

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that is where you will get value? I agree with that. There is more

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upside here, we have had a bit of a pull-back, quite an attractive

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buying opportunity because the Eurozone economy is quite broadly

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across the economy growing quite strongly at somewhere around 2.5%,

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Spain close to three. Any particular countries? Don't mention Germany

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because we always talked about Germany, but places interesting in

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terms of growth prospects? What is interesting is nearly every economy

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in the year resident is doing well. Even Greece?! Crease less so! We

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have seen survey data improving in the last month suggesting even Italy

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is showing signs of acceleration. You mentioned Spain, particularly

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attractive at the moment? Spain is leading the great story with growth

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of 3% whereas the rest of the economies are more like 2% so Spain

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looks pretty positive. And what about the poor old UK? The UK is

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really the LANguard... Is it really, in a European context? The rest of

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Europe is growing about twice as fast as the UK, 2.5% in Europe,

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about 1.2 in the UK, so uncertainty around Brexit really is hurting the

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UK economy. Thanks very much indeed. We will discuss all of the big

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stories of the week with our business correspondence including

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Germany's diesel problems and fair trade chocolate.

:13:40.:13:40.

You're with Business Live from BBC News.

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Royal Bank of Scotland sees its first half-year

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It earned ?939 million - that's compared with a ?2 billion

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Theo Leggett is in our business newsroom.

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Looking through the numbers, what do you make of it?

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They are very strong numbers for the first top of this year and I think

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that reflects what RBS has been doing, which is consolidating its

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attention on its UK and Ireland -based retail and corporate banking.

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Trying to focus more on its core businesses. The comparison with last

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year is a bit misleading because last year, for example, RBS made its

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final dividend payment to the UK Government, which was more than ?1

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billion. It also had a big amount of money set aside

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for payment protection insurance payment and so on. So there were a

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lot of one-off items that made the figures seem worse than they were.

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It is moving its headquarters? It is talking about moving them if it

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loses its European passport rights of the Brexiter. It already has a

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Dutch banking licence acquired as its legacy of another purchase in

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2007. That was the deal that pushed RBS into such trouble and

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necessitated, eventually a bailout from the UK Government. It wouldn't

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be radical in terms of jobs, it would mean about 150 jobs would need

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to be set up in Amsterdam and some would be moved over from London. But

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in symbolic terms, it would be important. Thank you very much

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indeed. On the business live page, it is updated throughout the day.

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There is a story on there now about the Institute of directors, one of

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the UK's biggest business lobby groups urging the Cabinet to stop

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bouncing around the edges of Brexit. It is because of the arguments

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within the Cabinet, apparently had within the Cabinet, about how to

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smooth the move from the EU two out of the EU, which is commonly known

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as I understand is Brexit? Indeed, you are not wrong.

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

:16:31.:16:34.

Toyota has seen a sharp fall in profits. Partly thanks to big

:16:35.:16:42.

spending on self driving cars and also technology which it hopes will

:16:43.:16:47.

make it the world's bestselling car brand, which is what it used to be.

:16:48.:16:58.

A quick look at how markets are faring...

:16:59.:17:03.

That is what the pound will get you against the dollar.

:17:04.:17:10.

And now let's get the inside track: This week German carmakers have

:17:11.:17:12.

agreed with top politicians to cut harmful emissions by

:17:13.:17:15.

updating software in five million diesel vehicles.

:17:16.:17:16.

And Sterling has fallen sharply against the Dollar and the Euro

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after The Bank of England downgraded the UK growth forecast

:17:20.:17:21.

for this year and next, warning that the economy

:17:22.:17:23.

Let's get more with our business correspondent Jonty Bloom.

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Let's start with the Bank of England. A huge amount of

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information yesterday. Some it all up, what have we learned? We have

:17:47.:17:53.

just heard we want the Cabinet to introduce a transitional arrangement

:17:54.:17:56.

for leaving the EU. The Bank of England was talking about much the

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same thing, it is Brexit and the uncertainty about Brexit which is

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damaging the British economy at the moment. That is what the Bank of

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England is saying. It is happening at the moment? It is saying

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businesses are not investing at the rate they would expect and it is a

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benign area. You would expecting companies to be investing more and

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they art and and it says it is down to uncertainty. The other end, it is

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looking like less moving towards any rate rises soon, the split is not as

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sharp as it was? We had one person in favour has just left on the new

:18:37.:18:43.

person who has joined isn't interested in increasing interest

:18:44.:18:49.

rates. Compare that with the rest of the Western world, the ECB is

:18:50.:18:54.

talking about easing off on bond purchases and we're expecting the

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Fed to do something about that in September. It is already putting

:18:58.:19:02.

interest rate up. But the Bank of England is kicking the can down the

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road because it is worried about the underlying strength of the economy,

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it is seen growth, which it says is sluggish and has downgraded the

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forecast for this year and next. Let's move on cars. They have their

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backs to the wall and they have to do something about their emissions,

:19:20.:19:23.

but a lot of people saying they are not doing enough? People are

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comparing it to Nokia. Remember the phone company that dominated the

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market and was virtually annihilated by the iPhone and new developments.

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It was the leading company. Mobile phones, everybody wanted a new one

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every six months every year, every two years and it couldn't keep up

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and was overtaken by technology. Some said the German car industry is

:19:46.:19:50.

like that. They backed the wrong horse, they went green by backing

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diesel and then they fiddled the tests to make it look greener and

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now they have talks with the government out they will crack that.

:19:58.:20:00.

And the new cars we were talking about our electric cards or hybrids.

:20:01.:20:06.

BMW is heavily, all its products will have a electric elements within

:20:07.:20:12.

them? Which is why I think the analogy is wrong, cars last longer

:20:13.:20:15.

and they have put a lot of money and research into this and they will

:20:16.:20:19.

have time. People are still buying petrol and diesel cars, it is not

:20:20.:20:23.

like everyone is going electric. Only 5% of cars are hybrid or

:20:24.:20:27.

electric in the UK at the moment, so they have time to turn it around.

:20:28.:20:32.

Writing of the German car industry is a huge mistake. Want to talk

:20:33.:20:36.

about chocolate, Green Black's dropping the Fairtrade? Yes, big

:20:37.:20:45.

companies often by specialist labels, which are organic fair trade

:20:46.:20:50.

or environmentally friendly, ethical. You have to ask, why do

:20:51.:20:54.

they do that, they have to pay a premium. Look at what has happened

:20:55.:20:59.

now. Green Black's was taken over by Cadburys, that was taken over by

:21:00.:21:05.

craft and now are dropping the Fairtrade label. They had brought

:21:06.:21:12.

their own in, Cocoa life. Yes, it is not Fairtrade but it is ethical. You

:21:13.:21:16.

are paying a premium for something you bought because it is ethical and

:21:17.:21:20.

the brand that built itself up saying it is unlikely. You are

:21:21.:21:25.

taking it over and undermining it. Be pushing the Cocoa life brand to

:21:26.:21:30.

all of the Cadbury stuff. Very large companies think we are being

:21:31.:21:33.

outmanoeuvred by these ethical companies so they buy them at a

:21:34.:21:38.

great price, and people say, it is not ethical any more because it is

:21:39.:21:43.

owned by you. Ben and Jerry 's is like that. Body shop is another one.

:21:44.:21:48.

I didn't know you were quite the Cocoa connoisseur. I wrote the story

:21:49.:21:49.

on the website. Good to see you. Last day, but all eyes were on Rio

:21:50.:22:16.

but some of the real estate they bought remains unsolved.

:22:17.:23:53.

What other business stories? We kick off with washing machines. Instead

:23:54.:23:59.

of using concrete, put them in place and fill the base with water, it

:24:00.:24:05.

seems so obvious? And the top. Because water isn't as heavy as

:24:06.:24:13.

hungry. This is why I work in news and not construction. It is a

:24:14.:24:18.

no-brainer? They will have to be a bit bigger and whether that will be

:24:19.:24:21.

desirable from a consumer perspective. Every invention comes

:24:22.:24:25.

along and it seems obvious in retrospect, but self-service

:24:26.:24:28.

shopping only came around in the last 150 years, prior to that you

:24:29.:24:34.

had to be served by someone. It is a real, why didn't I think of that,

:24:35.:24:38.

story. We have asked people to come up with their own suggestions. One

:24:39.:24:42.

tweet says used shipping containers turning them into affordable homes.

:24:43.:24:54.

Solar power power, if I want to live in a shipping container. Put a bit

:24:55.:24:57.

of air conditioning in, and the window. But the other story which we

:24:58.:25:11.

have, can you get it on the screen. Making Germany environmentally

:25:12.:25:14.

friendly reducing carbon emissions by 80%. 1.4 euros trillion, how will

:25:15.:25:20.

be a fallback? That sounds like a lot, but it is spread out over the

:25:21.:25:26.

next 32 years so it is only 40 billion a year, if you compare that

:25:27.:25:32.

to the German economy, it is about 1.5% of overall GDP, so it is pretty

:25:33.:25:37.

affordable and for the future of the planet, it is money well spent. It

:25:38.:25:43.

is not a black hole, it is being spent, people get it for doing

:25:44.:25:48.

stuff. People will be employed and it will provide some stimulus. I

:25:49.:25:51.

think it is money well spent. Thank you very much.

:25:52.:25:54.

There will be more business news throughout the day

:25:55.:25:58.

on the BBC live webpage and on World Business Report.

:25:59.:26:10.

Hello, good morning and another day of sunny spells and showers is

:26:11.:26:16.

thanks to this area of low pressure which has been

:26:17.:26:17.