05/09/2017

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:00:00. > :00:08.This is Business Live from BBC News with Ben Thompson and Sally Bundock.

:00:09. > :00:13.China calls for closer ties of member states to speed up

:00:14. > :00:34.Live from London, that's our top story on Tuesday 5th September.

:00:35. > :00:36.As the BRICS - that's Brazil, Russia, India,

:00:37. > :00:38.China and South Africa - wrap up their summit,

:00:39. > :00:43.we ask an expert whether these emerging giants are still relevant.

:00:44. > :00:50.the agency is expelled from the UK trade body for the worst breach

:00:51. > :00:57.And investors remain nervous amid expectations North Korea

:00:58. > :00:59.will launch another missile - we'll look at what it

:01:00. > :01:06.means as investors take money out of stocks.

:01:07. > :01:09.And we'll be getting the inside track on a booming tech sector.

:01:10. > :01:12.If you do anything online, from storing photos to buying stuff,

:01:13. > :01:26.We speak to tech boss who explains why its big business.

:01:27. > :01:30.We will speak to the former boss of eBay.

:01:31. > :01:33.Are you worried are about storing precious stuff -

:01:34. > :01:38.from cherished photos to personal data - on the cloud?

:01:39. > :01:56.It's the final day of the summit involving leaders of Brazil, Russia,

:01:57. > :02:03.India, China and South Africa - also known as the BRICS.

:02:04. > :02:06.The group has been quick to condemn North Korea

:02:07. > :02:08.for their nuclear missile tests, but discussions have also centred

:02:09. > :02:13.While the White House is pushing a protectionist trade agenda,

:02:14. > :02:17.President Xi Jinping wants to use this summit

:02:18. > :02:21.to promote what he describes as "an open world economy".

:02:22. > :02:24.Then there's the BRICS bank - a smaller, alternative

:02:25. > :02:27.to the World Bank- used by governments to fund

:02:28. > :02:36.It handed out one and a half billion dollars of loans last year and has

:02:37. > :02:38.pledged 2.5 billion in funding for this year.

:02:39. > :02:41.China itself has pledged 80 million dollars in funding for BRICS

:02:42. > :02:43.projects, including an economic and technology cooperation plan.

:02:44. > :02:45.But there are doubts about whether the BRICS summit

:02:46. > :02:55.Beijing is busy with its own hugely ambitious Belt and Road initiative,

:02:56. > :03:01.pledging $124 billion to expand trade links between

:03:02. > :03:13.Craig Botham, emerging markets economist at Schroders, is with me.

:03:14. > :03:23.Good morning. Ben gave us a little outline and some of those numbers

:03:24. > :03:27.look pretty big. How influential are the BRICS organisation now? Good

:03:28. > :03:33.question. The BRICS concept started largely as a marketing exercise.

:03:34. > :03:36.There was a question about whether it made sense to lump those

:03:37. > :03:39.disparate economies together. They have rarely delivered much of

:03:40. > :03:43.substance, it is usually a statement and a pledge to welcome cooperation

:03:44. > :03:50.and investment etc, probably the most tangible development was the

:03:51. > :03:58.New Investment Bank, all the BRICS Bank. China's economy is tendril in

:03:59. > :04:02.dollars, they pledged $100 billion per year for the road funding. For

:04:03. > :04:07.the BRICS Stutz macro seems small, it looks like a platform to promote

:04:08. > :04:12.a brand rather than getting real business done.

:04:13. > :04:15.So why are they persevering with this? Sony years ago it was the

:04:16. > :04:19.buzzword in business, we were talking about BRICS all the time

:04:20. > :04:23.because each of the components of the BRICS was in a very strong

:04:24. > :04:28.position, emerging markets doing incredibly well and seeing huge

:04:29. > :04:33.growth, but for many, South Africa, Brazil, that is not the case?

:04:34. > :04:36.Only China and India have really strong growth rates and India has

:04:37. > :04:41.taken a bit of a hit in the last couple of quarters. For the other

:04:42. > :04:47.BRICS it is handy to be associated with China and seen as a peer, if

:04:48. > :04:50.you like. For China it is a way to show its global leadership at a time

:04:51. > :04:58.when America seems to be taking a stumble. This has been completely

:04:59. > :05:02.overshadowed by the situation with North Korea, despite china's efforts

:05:03. > :05:06.to keep the BRICS summit on the agenda every single journalist is

:05:07. > :05:10.grilling them about North Korea, particularly China? It is a bit

:05:11. > :05:13.embarrassing for China, it is almost as if North Korea has done the

:05:14. > :05:18.specifically to needle President Xi at a time when he is trying to

:05:19. > :05:22.consolidate his power base. They are still very reluctant to push further

:05:23. > :05:27.sanctions on North Korea. They are North Korea's major trade partner,

:05:28. > :05:33.90% of North Korean trade. Serve anyone has a lever to pull against

:05:34. > :05:38.them it is China, that they seem unwilling to do so.

:05:39. > :05:43.The BRICS summit is kind of wrapping up. Some of the wires are talking

:05:44. > :05:47.about comments from India's Foreign Secretary, who is talking about

:05:48. > :05:50.North Korea to journalists now, basically saying India and China

:05:51. > :05:55.both agree that more effort needs to be done to enhance mutual trust,

:05:56. > :05:57.that is one of the latest lines. We will keep you across that. But I

:05:58. > :06:01.were the main story. The public relations firm

:06:02. > :06:06.Bell Pottinger has been expelled The Public Relations

:06:07. > :06:09.and Communications Association says the company was unethical

:06:10. > :06:11.and unprofessional and brought In an unprecedented move it's

:06:12. > :06:15.expelled Bell Pottinger for 5 years. It follows the firm's media campaign

:06:16. > :06:17.for the wealthy Gupta family of South Africa -

:06:18. > :06:19.which has been heavily criticised for stirring up racial

:06:20. > :06:27.tensions in the country. The Guptas have been

:06:28. > :06:29.accused of benefiting financially from close links

:06:30. > :06:31.to South Africa's President Zuma, and they hired Bell Pottinger

:06:32. > :06:39.to change their image. To do this, Bell Pottinger began

:06:40. > :06:42.a plan to raise awareness of "economic apartheid"

:06:43. > :06:45.in South Africa. They set up a social media campaign,

:06:46. > :06:52.and advised on political messaging and speeches that blamed

:06:53. > :06:54.unemployment and inequality in South Now the UK trade body says that this

:06:55. > :06:59.activity is the worst breach Earlier I spoke to the head

:07:00. > :07:14.of the PRCA, Francis Ingham. We have expelled Bell Pottinger for

:07:15. > :07:18.at least five years. That is unprecedented and what we have done

:07:19. > :07:23.in the past. We did it because their breach of ethics, the work I have

:07:24. > :07:27.seen, is the worst I have seen in my ten years as director general of the

:07:28. > :07:31.PRCA. It is important to show the industry have standards, that is why

:07:32. > :07:35.we expelled Bell Pottinger for at least five years. To James

:07:36. > :07:41.Henderson's decision to carry the can was not enough? It was necessary

:07:42. > :07:44.but not sufficient. The industry needs to make a stand and say that

:07:45. > :07:50.stirring up racial tension and hatred in quite a tense country,

:07:51. > :07:54.quite flattering democracy, in many ways, is unacceptable. That is what

:07:55. > :07:58.we have done, we have expelled them from the PRCA. We have done nothing

:07:59. > :08:02.of this magnitude before, we want to make it very clear that the industry

:08:03. > :08:05.is ethical, have standards and wants to enforce them.

:08:06. > :08:20.Bell Pottinger is very well-established, one of the world's

:08:21. > :08:23.biggest, it has been around for a very long time, how can it get it so

:08:24. > :08:26.wrong? Either they knew what was happening

:08:27. > :08:28.and turned a blind eye, or their internal management processes were

:08:29. > :08:31.so bad that a couple of road people could go off and do these things.

:08:32. > :08:33.Either way it is not acceptable and that is why they are no longer a

:08:34. > :08:36.member of the industry body. The cynical amongst us in journalism

:08:37. > :08:39.were saying that this is how PR operates? It is not, that is why we

:08:40. > :08:44.have expelled them. The vast majority of PRCA members are

:08:45. > :08:48.ethical, professional, run their companies well and care about doing

:08:49. > :08:52.the right thing. That is why we have expelled Bell Pottinger, they did

:08:53. > :08:53.the wrong thing. That was France's Ingham, the

:08:54. > :08:56.director-general of the PRCA. Let's take a look at some of

:08:57. > :08:59.the other stories making the news. US aircraft maker Boeing has won

:09:00. > :09:01.a long-running dispute The World Trade Organization has

:09:02. > :09:04.reversed a ruling that Boeing received some state aid to help

:09:05. > :09:07.build its newest aircraft, the 777. However, Airbus said "the game

:09:08. > :09:10.is far from over" as other complaints over alleged aid

:09:11. > :09:15.are still to be resolved. TalkTalk is exploring an exit

:09:16. > :09:19.from its mobile operations, after opening talks with other

:09:20. > :09:21.providers over the future TalkTalk been talking to rivals

:09:22. > :09:25.Vodafone, O2 and Virgin Media, aiming to strike a deal

:09:26. > :09:27.in the coming weeks. It's all part of a plan to overhaul

:09:28. > :09:30.Talk Talk's business and focus on fixed-line broadband,

:09:31. > :09:33.as it returns to its roots That was not TalkTalk, as you might

:09:34. > :09:45.have noticed. First, Estonian start-up Taxify

:09:46. > :09:47.to go head to head with Uber as it drives into London

:09:48. > :10:04.with its taxi-hailing service today. Stephen, going on at Uber's

:10:05. > :10:10.experience in China, I bet it is worried about the move in London?

:10:11. > :10:16.At the moment people probably think in London Taxify, how can they

:10:17. > :10:22.compete with Uber, Uber has such a massive presence there. I think

:10:23. > :10:28.Taxify is in 25 cities, Uber is in 600. But now Taxify has teamed up

:10:29. > :10:32.with another company. Around the world, in many countries, people

:10:33. > :10:41.will never have heard of them. But they have in China. The company,

:10:42. > :10:47.Didi, has 400 million users here. Didi took on and smashed Uber in

:10:48. > :10:52.China, buying out Uber here. So Taxify has a very big back indeed.

:10:53. > :10:58.To give you an idea of the presence in Didi, there is nobody else on the

:10:59. > :11:02.scene here, it dominates. It has a virtual monopoly position in China

:11:03. > :11:06.so its future is looking pretty rosy unless somebody comes along to

:11:07. > :11:09.somehow challenge them. Thank you very much, Stephen in

:11:10. > :11:11.Beijing. Let me run you through what the

:11:12. > :11:13.markets are doing. Shares in Asia down

:11:14. > :11:15.for the second day after North Korea's nuclear test -

:11:16. > :11:17.with investors watching signs that the country could be preparing

:11:18. > :11:19.another rocket launch, possibly an intercontinental

:11:20. > :11:21.ballistic missile similar to the one But we saw bigger falls

:11:22. > :11:30.on earlier missile tests, some suggesting that this just

:11:31. > :11:36.becomes a new normal, rather than the unease we saw

:11:37. > :11:40.when tensions first escalated yesterday didn't do much to boost

:11:41. > :11:48.confidence either and today it's the turn of service data from Spain,

:11:49. > :11:54.Italy, France and Germany but after a good start to the year

:11:55. > :11:57.and some healthy July numbers we could also see some slight fall

:11:58. > :12:06.off here too. More on that shortly,

:12:07. > :12:08.but first Michelle has the details about what's ahead

:12:09. > :12:12.on Wall Street today. When Wall Street re-opens, no doubt

:12:13. > :12:14.refreshed after the holiday weekend, it will have some economic data

:12:15. > :12:16.and some corporate The Department of Commerce releases

:12:17. > :12:23.factory goods orders for July. Now, the report reflects demands

:12:24. > :12:25.for goods from fridges to cars and even clothing,

:12:26. > :12:28.giving investors a snapshot of the Many are predicting a drop in July

:12:29. > :12:40.after climbing 3% in June. On the corporate front

:12:41. > :12:41.Hewlett Packard Enterprise is expected to report

:12:42. > :12:44.its third quarter results. Revenue at the tech giant could be

:12:45. > :12:47.lower, a drop in sales of servers, networking and also at its data

:12:48. > :12:49.storage equipment The company is led by Meg Whitman

:12:50. > :12:56.who was one of the final three executives in the running to become

:12:57. > :13:07.CEO of Uber. It is all happening. Michelle Fleury

:13:08. > :13:11.is based in New York, of course. Jeremy Stretch is head of currency

:13:12. > :13:19.strategy at CIBC World Markets. Good morning, nice to see you. We

:13:20. > :13:25.had Labour Day in the States, we have had no steer from Wall Street

:13:26. > :13:30.and markets are treading water a bit at the moment? Indeed, they are

:13:31. > :13:33.oscillating a bit. We have the North Korean situation on the one side,

:13:34. > :13:37.and on the other hand we are really seeing how markets are reacting to

:13:38. > :13:41.the presumption about further interest rate moves in a number of

:13:42. > :13:46.markets, a number of central banks making rate decisions this week.

:13:47. > :13:48.There is the Federal reserve in the US, the central bank which dominates

:13:49. > :13:54.everything else. Yesterday we had construction,

:13:55. > :13:58.interesting in a sense that house-building was still doing OK

:13:59. > :14:03.but it was commercial construction still a problem. In some respects

:14:04. > :14:08.not surprising? It is not, but clearly there has

:14:09. > :14:11.been a downdraught in construction sentiment in terms of institutional

:14:12. > :14:15.commercial level, so the sector is back at the lowest level since last

:14:16. > :14:21.August and businesses are certainly waiting for a degree of clarity on

:14:22. > :14:24.the macroeconomic situation beyond just Brexit, it is certainly

:14:25. > :14:30.bearable. That is causing the sector to

:14:31. > :14:33.decelerate. The real kicker as far as sentiment in terms of the UK is

:14:34. > :14:37.how the services sector plays out. It will be fascinating to see how

:14:38. > :14:42.that stands up. And more European data coming out

:14:43. > :14:47.this morning as well? How is the European economy doing? The Eurozone

:14:48. > :14:50.economy is in a pretty good place, I suspect that will be reflected in

:14:51. > :14:53.the language from the European Central Bank when they make their

:14:54. > :14:57.own decision on Thursday, but Europe looks in a far better place. We're

:14:58. > :15:01.not just seeing one economy or Germany leading the way but a much

:15:02. > :15:05.broader economic expansion in the Eurozone which is quite

:15:06. > :15:08.constructive. Strong growth across the piece, that is one of the

:15:09. > :15:17.reasons why markets are looking to see what the European Central Bank

:15:18. > :15:20.will do to start to pull back from its own monetary policy experiment

:15:21. > :15:23.in terms of negative rates and its own quantitative easing. Helpful for

:15:24. > :15:27.Angela Merkel heading to the polls? She looks to be heading to victory,

:15:28. > :15:33.but it is not used who she wins bid to her coalition partner will be. --

:15:34. > :15:34.it is not just if she wins but who her coalition partner will be.

:15:35. > :15:38.Still to come: It's all in the cloud - this growing tech services sector

:15:39. > :15:42.We ask a tech pedigree boss - who used head up eBay -

:15:43. > :15:45.He has his head in the clouds! Definitely.

:15:46. > :15:55.You're with Business Live from BBC News.

:15:56. > :16:02.I love a cup of tea. I have probably had six this morning. That's water

:16:03. > :16:04.in there this morning. We're buying less tea

:16:05. > :16:07.than we were a year ago, but spending more on speciality

:16:08. > :16:10.teas. That's according to industry stats

:16:11. > :16:12.seen by the BBC today. So are we falling out of love

:16:13. > :16:15.with the humble cuppa? Sean Farrington is at one

:16:16. > :16:17.tea manufacturer this So this machine turns out 2,000

:16:18. > :16:28.of these every minute and if you look at one of these big

:16:29. > :16:32.reels, tea bag paper reel, it is not In a whole year, about

:16:33. > :16:38.five billion tea bags are made in this factory,

:16:39. > :16:41.but the bulk of it, just like the industry,

:16:42. > :16:43.itself is original tea. That's what you can see

:16:44. > :16:45.going into the boxes here, but on the whole,

:16:46. > :16:48.that is what is becoming a little bit of a problem for the industry

:16:49. > :16:51.because we're buying fewer back tea bit of a problem for the industry

:16:52. > :16:54.because we're buying fewer black tea It's down about 5% on the year last

:16:55. > :16:59.year which has meant Now, the way the industry has

:17:00. > :17:03.adapted is by branching out because our tastes

:17:04. > :17:05.are changing as well. So also in these figures out today,

:17:06. > :17:08.we can see that sales have changed So you've got a lot more fruit teas,

:17:09. > :17:14.a lot more herbal teas, we're spending more

:17:15. > :17:20.on those and decaf teas which is why the likes of Taylor's

:17:21. > :17:23.will be spending quite a bit of money upgrading this part

:17:24. > :17:25.of the plant as well because they see the value

:17:26. > :17:28.in increasing stuff like this. So it will be very interesting

:17:29. > :17:30.how flavours change Will black tea be

:17:31. > :17:33.able to hold its own? If there is one thing I've

:17:34. > :17:37.learnt over this morning, is that however you make your black

:17:38. > :17:41.tea, I have been told here, You put the water in first and put

:17:42. > :18:03.the milk in afterwards. We were talking to Sean earlier and

:18:04. > :18:10.he is getting a lot of top tea tips! Aveva to mench with Schneider

:18:11. > :18:17.Electric. If you wonder what it does. It is this sort of stuff. It

:18:18. > :18:21.makes 3D diagrams and processors in factories and warehouses. You don't

:18:22. > :18:32.have to draw it by hand. Full details are on the BBC website.

:18:33. > :18:37.You're watching Business Live. Our top story:

:18:38. > :18:42.Rebuilding the bricks nations. China calls for closer ties of member

:18:43. > :18:45.states to speed up economic development.

:18:46. > :18:49.We will keep you across the developments as that bricks summit

:18:50. > :18:51.wraps up and any headlines that come out of that, but let's talk about

:18:52. > :18:53.cloud computing. Photos, videos, documents -

:18:54. > :18:57.that you store on the internet Well, it's a booming market and it's

:18:58. > :19:04.not just for storage. More and more IT services,

:19:05. > :19:07.apps and software are stored New figures show the sector

:19:08. > :19:14.is growing at about 18% a year and will be worth more

:19:15. > :19:21.than $380 billion by 2020. Service Now is one of the world's

:19:22. > :19:23.top ten cloud providers according to Forbes -

:19:24. > :19:26.and it says it's on track to reach It's boss is John Donahoe -

:19:27. > :19:30.who used to be eBay's chief executive, and is also

:19:31. > :19:40.the chair at PayPal. You have sent in some questions.

:19:41. > :19:47.Good morning. Welcome to the programme. Nice to be here. So John,

:19:48. > :19:53.you're now in charge of Service Now. Just explain exactly what it does.

:19:54. > :19:57.Service Now does at work what many of the consumer applications do at

:19:58. > :20:02.home which is simplify our lives and make things easier, easier to work

:20:03. > :20:07.and enhance your quality work. So how does it do that? Take a simple

:20:08. > :20:11.example. One of the most frustrating things that can happen at work is

:20:12. > :20:15.that you can't get into your e-mail. Right. You're on the road. You're at

:20:16. > :20:20.home. You want to get into your e-mail. So you need to reset your

:20:21. > :20:24.password. What would have been required, you would have to call

:20:25. > :20:27.someone from IT and hope to get them on the fond and be put on hold and

:20:28. > :20:33.wait for someone to come back to you. Now using Service Now you can

:20:34. > :20:39.get your password reset. Simply when you need it to be done quickly and

:20:40. > :20:44.easily. So it is simplifying what was complicated so you can have a

:20:45. > :20:47.much better experience. Is this a case of consumer technology

:20:48. > :20:51.overtaking what corporate technology can do? It strikes me in an

:20:52. > :20:57.organisation like the BBC you painted that picture, if I want to

:20:58. > :21:01.change my password, it takes me forever, I have to ring various

:21:02. > :21:09.people and prove who I am. If I want to do it on my phone, it is easy.

:21:10. > :21:12.They have to make sure that people aren't clicking on phishing links

:21:13. > :21:18.and open to fraud and hacking and in an organisation like the BBC, that's

:21:19. > :21:23.a prime target? But it is using the same cloud based technology. PayPal

:21:24. > :21:26.is your personal information. Cloud technology has enabled you to pay,

:21:27. > :21:31.do things like change your password if you need to safely on your mobile

:21:32. > :21:35.phone. The same principles can be applied at work and until now you

:21:36. > :21:39.didn't have software that enabled you to do that. Cloud based

:21:40. > :21:43.platforms like Service Now enable the same kind of user experiences at

:21:44. > :21:47.work as you'd get at home. Why aren't more businesses taking it on?

:21:48. > :21:53.Is it a cost issue? Or a legacy issue? That's what is driving

:21:54. > :21:56.Service Now's growth. That's why it is the fastest growing enterprise

:21:57. > :22:00.company in the world over $1 billion. Companies are taking

:22:01. > :22:04.advantage of cloud based platforms like Service Now to transform how

:22:05. > :22:09.you operate at work starting with IT and HR and security and other areas.

:22:10. > :22:20.Now, you moved from eBay to Service Now, is that right? Yes. You were

:22:21. > :22:24.global Chief Executive, bid you take over from Meg Witman. EBay is a

:22:25. > :22:29.company we have heard of. Service Now not. Why would you move from

:22:30. > :22:40.eBay to Service Now? What's your thinking? I had a wonderful decade

:22:41. > :22:43.at eBay. I took a year off and surveyed the industry, technology

:22:44. > :22:49.landscape and I said where is the action going to be in the next five

:22:50. > :22:53.to ten years. In the next five to ten years, it is applying technology

:22:54. > :22:56.to our lives at work as we've been talking about. Service Now is

:22:57. > :23:02.positioned to lead that transformation, to lead that

:23:03. > :23:06.revolution. How do you feel about starting something brand-new in

:23:07. > :23:11.Silicon Valley, having had a long career and a very, you know, well

:23:12. > :23:15.established career, there is so many new companies coming up in Silicon

:23:16. > :23:21.Valley run by guys in their 20s and 30s and women in their 3020s and

:23:22. > :23:26.30s, do you ever feel, you know, I'm trying to think of the right word,

:23:27. > :23:31.do you feel insecure about that? I doubt you do, but do you know what I

:23:32. > :23:34.mean? Silicon Valley and technology are exciting innovation is happening

:23:35. > :23:38.all the time. My particular focus however is in those technologies

:23:39. > :23:44.that begin to break through. Service Now is one of the very, very few

:23:45. > :23:48.enterprise software companies that have broken through $1 billion and

:23:49. > :23:52.will reach $2 billion and the opportunity is enormous to take that

:23:53. > :23:58.and have Service Now impact our lives at work, the same way eBay or

:23:59. > :24:01.PayPal or Amazon or Google impacted our lives at home and that

:24:02. > :24:05.opportunity exists and Service Now is one of the few enterprise

:24:06. > :24:09.software companies in a world position to really capitalise on

:24:10. > :24:12.that. All right. We will watch with great interest. Thank you John for

:24:13. > :24:21.coming in. Nice to see you, John, thank you very much.

:24:22. > :24:24.Here's a quick reminder of how to get in touch with us.

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:24:27. > :24:28.ahead of all the day's breaking business news.

:24:29. > :24:30.We'll keep you up-to-date with all the latest details,

:24:31. > :24:33.with insight and analysis from the BBC's team of editors

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:24:55. > :24:58.You have been sending you your thoughts.

:24:59. > :25:05.The BBC's Dominic O'Connell is with us.

:25:06. > :25:16.A viewer says, "There is no such thing as a cloud, it is someone

:25:17. > :25:22.else's computer." The really big player in the cloud, not many people

:25:23. > :25:27.know it, is Amazon. Amazon global services division, it is its biggest

:25:28. > :25:33.earner. It is big in the UK. It runs the big cloud operations and not

:25:34. > :25:37.many people know that. Did you speak to Francis Ingham this morning? I

:25:38. > :25:41.haven't. The BBC have been speaking to him at length. He is the head of

:25:42. > :25:45.the trade body... He was on our programme earlier. I found that

:25:46. > :25:49.having read the ruling, this is interesting, normally you expect a

:25:50. > :25:52.ruling from what Dubs the industry regulator, it is just a trade

:25:53. > :25:59.association, it should have evidence in it, but a high-level thing. It

:26:00. > :26:04.says they infringe this guideline and that guideline. No smoking guns

:26:05. > :26:09.in there. Thanks, Dominic. Welds you very soon. Bye-bye.

:26:10. > :26:14.Good morning. We have got heavy rainfall this morning across

:26:15. > :26:16.north-west England and western Wales.