10/01/2018 BBC Business Live


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10/01/2018

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This is Business Live

from BBC News with

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Samantha Simmonds and Tim Willcox.

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All systems go -

the World Bank says the global

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economy is set accelerate this year.

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But will everyone feel the benefit?

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Live from London, that's our top

story on Wednesday, 10th January.

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It's being predicted the global

economy will operate at close

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to full potential for the first time

since the financial crisis of 2008.

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We'll assess what impact that

will have on real prosperity.

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Also in the programme:

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Airbus seals a huge deal

with China to supply 184 jets.

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We'll assess what this

means for the company.

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Here is how the markets are looking.

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Today we're bringing

the sparkle to Business Live

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we'll be talking Swarovski crystals

with the great, great granddaughter

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of the company's founder.

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As always, do get in

touch with your thoughts

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on any of the stories

we're covering the show.

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Just use the #BBCBizLive.

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Hello and welcome to Business Live.

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Now, after a decade of hardship and

austerity, things are looking up.

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The World Bank says global economic

growth is likely to strengthen this

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year and that it will be the first

year since the 2008 crisis when the

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world will be operating close to its

full potential. Overall global

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economic growth is expected to edge

up to 3.1%. That's after a much

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stronger than expected 2017.

Advanced economies will be around

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2.2%. Emerging economies are likely

to grow by 4.5%. Generally this is

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because of increased investment in,

improved confidence and a rebound in

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commodity prices. This last one is

especially important for developing

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economies. Well the World Bank says

the focus should turn to the

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policies needed to boost potential

growth and living standards.

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Dean Turner is an Economist

at UBS Wealth Management.

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Thank you very much for joining us

on the programme. Any surprises

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here, do we think or not?

The

overall message in terms of global

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growth holding up at levels similar

to what we saw last year, there has

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been an upgrade, but there is not

much change. It is not a surprise,

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but it is an encouraging story.

In

terms of inflation, looking at the

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China figures?

In terms of

inflation, clearly we have been

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through a period of extraordinary

low inflation. It seems that as we

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are moving into 2018 the process of

normalisation will continue. In

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terms of what we have seen in China

today, I mean, the numbers are

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pretty much in line with what the

markets were expecting.

1%, 1.5%?

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Numbers around 1.8% for CPI in China

which is what the markets was

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expecting, but it is important to

remember with inflation in China, it

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is driven by housing costs and food

price inflation so it can be

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volatile in the short-term.

I was

talking to the author of the report

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earlier and she was saying that it

is cyclical and this is to be

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expected and it is about time

really, but also to be expected will

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be a downturn, she said, what needs

to happen now, everyone needs to

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manage their economy to say make

sure that doesn't happen and learn

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the lessons of the past, what does

the global economy need to do to

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keep this going?

I think what we

have seen so far in this cycle, we

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have seen the beginning of monetary

policy, normalisation, we are likely

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to see further normalisation take

place this year within Europe. We

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are likely to see the quantitative

easing programme slowing, but

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perhaps coming to an end this year

as well. The message to take away

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from this is we are entering a

period of normality, normal

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identitiesation and that can only be

a good thing.

And what about who is

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making the money, who is getting the

benefits of the growth, is it the

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richer getting richer?

One of the

bigger economies that we have seen

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throughout this whole cycle is what

is happening to real wage growth. It

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is not just in the UK, but globally

and we have got very tight labour

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markets, not just in the UK, but the

US as well and there are signs that

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we're getting tight labour markets

in the eurozone as well. We're not

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saying wage growth come through yet

and that's going to be the key thing

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to focus on this year and that's

going to be the key thing that

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improves living standards.

All

right, Dean good to see you as ever,

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thank you for coming in, thank you.

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Let's take a look at some of

the other stories making the news.

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French officials say China has

placed an order for a 184

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Airbus A320 airliners

on the final day

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of President Emmanuel Macron's

visit to the country.

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Final details of the deal

are in the process of being worked

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out with the Chinese authorities.

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Boeing says it delivered a record

763 jetliners last year -

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which means it's likely

to retain its title as the world's

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biggest plane-maker.

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The firm says it also

received more than 900 net

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new aircraft orders last

year worth $135 billion.

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Shares in Kodak soared nearly 120%

after it revealed plans

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to mint its own crypto-currency.

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The US firm says it will be working

with Wenn Media Group

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to launch the Kodak Coin.

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It has also given details of a plan

to install rows of Bitcoin mining

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rigs at its headquarters in the US.

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Apple has announced that its iCloud

services in mainland China will be

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operated by Chinese company GCBD,

from next month.

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It says the partnership will allow

Apple to "improve the speed

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and reliability" of iCloud services.

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But there are concerns that the step

will give Beijing more opportunity

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to monitor its citizens and others

living in the country.

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Our China correspondent,

Robin Brant, joins us from Shanghai.

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Robin, what can you tell us?

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Well, it's another sign of how

important China is to Apple's

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strategy. Going forward as it tries

to strengthen even further. We had

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confirmation today of an

announcement in the middle of last

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year that Apple's iCloud services in

mainland China will be essentially

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handed over to a company linked to

the Government down in the south of

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China and this company GCBD will run

Apple's iCloud services in China and

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that means there is going to be new

terms and conditions. In an e-mail

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sent out to iCloud users in China,

those who have Chinese accounts, it

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warned them that they should look at

the terms and conditions and said

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photographs, documents and any

back-ups will be subject to

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different terms and conditions by

the end of February and it said

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anyone who might not be happy with

that, could deactivate their account

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or change it to a different country.

This is just the latest sign of

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Apple having to comply, it says,

with Chinese regulations and the key

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regulation here is that any firm

wishing to provide cloud computing

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services must have the servers based

in China and they will be subject to

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Chinese laws and rules, laws and

rules which some critics say are

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different to regulations say in the

European Union or in the United

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States.

What do we know about GCBD?

Well,

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GCBD is a partnership, Apple

describes. It is owned by the

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Government. It is a place that wants

to become the big data centre of

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this country, but the issue for many

critics this is an entighty of the

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Chinese government, the Communist

Party as well and they think it is a

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particularly sinister turn of

events.

Robin, thanks.

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Another record close in the US,

for the Dow, S&P and Nasdaq.

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But that hasn't carried

through to everywhere in Asia

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where many markets are slightly down

except for Hong Kong

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which has risen slightly,

helped by energy shares climbing

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with another surge in oil prices.

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Let's look at the European markets,

the FTSE up slightly. The others

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down.

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Samira Hussain has the details

about what's ahead

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on Wall Street Today.

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On Wednesday the US Labour

Department will release export

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and import prices for December.

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Now, these measures show how prices

of a market basket of goods

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in international trade change

from one month to the next.

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Now, these numbers are used

to predict possible future

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inflation, to set fiscal

and monetary policy,

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to measure exchange rates,

forecast futures prices and,

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of course, to negotiate

trade contracts.

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Now, the import prices are expected

to have increase by 0.5%

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in the month after a rise

of 0.7% in November.

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Export prices are likely to have

risen 0.3% in December,

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compared to a 0.5% rise

in the month before.

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Home-builder, Lennar, will report

higher profits and revenue

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for the last three months.

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The improving job market has been

lifting demand for housing

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and investors will be looking

for comments on the impact of

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changes in tax laws on home sales.

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Nandini Ramakrishnan

is Global Market Strategist at JP

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Morgan Asset Management.

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Thank you very much for being here.

So you want to talk about

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unemployment in the eurozone first

of all?

Yes, it was released

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yesterday with a significant fall.

If you look at it on the month it

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fell 08.1% -- 0.1%. It is the

largest fall in unemployment over

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the past 12 months in the eurozone.

That means in real terms that people

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are employed more than ever in the

eurozone. Good for consumers, good

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for confidence and retail sales, the

more people are in work, the better

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the economy does. That's one of the

reasons we like the eurozone.

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Something good for France on the

closing day of that Macron trip to

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China?

The Airbus deal.

184?

A lot

of money on the table there if it

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gets finalised. A big, big symbolic

thing as well for France because the

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Macron presidency was based on

making France a leader in the

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business world and making it more

efficient for global business and if

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the deal goes through with China,

the leading economic fire house of

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the world then that could be big.

That gift of a horse has really paid

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off.

It could be.

Oil prices sitting

at a three year high?

First, we have

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to remember that the production has

been cut. So, the reason why the oil

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price fell in the past few years

because the producers were pumping

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oil into the markets and the price

was pushed down by that over supply.

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Now we have the producers pulling

back a bit, we are seeing a higher

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oil price and some of the highest

levels we have seen in the past few

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years and while that's important for

just the oil price, it is important

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for the countries and economies that

export that. They're in a better

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position because they can get more

money off the sales, but the people

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who buy that. So it will be

interesting to watch.

What do you

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make of this World Bank report about

economic growth.

I think it is

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emphasising what we have been saying

for a while, growth is looking good

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around the world for the first time

since the economic crisis, we are

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seeing every economy in the globe

growing and that's huge. In 2009 if

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you look at the map, most economies

were shrinking.

Good to have you on.

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Thank you very much.

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Still to come, we'll be

joined by Nadja Swarovski,

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the first ever woman to be appointed

to the executive board of Swarovski.

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You're with Business

Live from BBC News.

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The UK's second largest supermarket,

Sainsbury's, has raised its profit

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guidance after record sales

during Christmas week.

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Sainsbury's said it now expected

annual profits to be up

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to £20 million better than expected

despite supermarkets facing

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a "challenging" market.

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The chain sold 1.1% more in the 15

weeks to 6th January,

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with grocery sales up 2.3%.

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Joining us now is

Neil Wilson, senior market

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analyst, at ETX Capital.

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Welcome to you. So how have they

managed to do it?

I think

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Sainsbury's have enjoyed the uplift

from the trend that we saw in

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December. We saw the figures showing

that Britons spent £1 billion over

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Christmas. Whilst the like for like

sales growth was decent at 1.1% and

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ahead of expectation it is lagging

competitors. We saw Morrisons at

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2.8% and we have seen the German

discounters Aldi and Lidl, they saw

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sales increase by 15%. 16% over

December, so whilst the top end

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growth looks decent, there is still

the relative values maybe not there.

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But food inflation presumably

playing into the figures in a

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significant way as well.

That's

right. I think what we haven't seen

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today is the details on margins and

we know in the first-half, the

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margins at intoes collapsed from

2.5% to below 2% and I think that's

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really something that needs to be

addressed. Clearly, there is a lot

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of pressure with food inflation as

you say, and that does flatten the

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top line sales. It is easy to

generate higher sales when the

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prices are going up, but retail is

all about margins and if intoes

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isn't improving its margins it is

not doing as well as the top line

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figures suggest.

Neil, thank you

very much indeed for joining us.

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Thank you.

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Govia Thameslink franchise is not

providing value for money. The

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largest rail franchise has not

provided value for money. Passengers

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have suffered the worst rail

disruption in the UK according to

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this highly critical report. It

found the services had been the

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worst on the network since Govia

Thameslink took over the route. The

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Department for Transport said the

disruption caused a shortage of

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train crews and blamed not for

having adequate staffing. It had too

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few drivers when it was awarded the

franchise in the first place.

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You're watching Business Live.

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Our top story:

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The World Bank says it expects

the global economy to pick

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up speed this year

and to operate at close

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to full potential for

the first time in a decade.

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For over a century, the Swarovski

name has been synonymous

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with luxury crystals -

the Austrian firm supplied crystals

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for Queen Victoria's dresses.

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It was founded by Daniel

Swarovski in 1885.

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His great, great grand

daughter Nadja Swarovski

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made history in 2011,

by becoming the first woman to be

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appointed to the executive board.

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She oversees the brand

strategy of Swarovski's

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$3.8bn global business,

working with the fashion industry

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and designers to keep

crystals contemporary.

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Nadja Swarovski joins us now.

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I went to a gallery just before

Christmas and I saw some art using

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the crystals, you are branching out.

It is a multifaceted product and I

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was proud to see it used in such a

beautiful way. It can go into a

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different direction but this is what

we are trying to do, to steer

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designers into the right direction

in terms of the use of crystal.

Take

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us back, in its heyday it was of

course used by the fashion houses of

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the day and then it fell into

decline in terms of its usage there

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and became really well-known for

crystal animals in the 70s. What

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happened, how did that happen and

how did you resurrect it so

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successfully?

They heyday was the

late 40s and 50s when we saw style

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icons experimenting with fashion and

different materials within their

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fashion and I have to say it was my

grandfather who work very closely

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with them. I heard stories by him of

working with these people and

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eventually when I found myself

joining the company you are right it

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was all about the crystal animals

which was wonderful because I

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appreciate how hard it is to make

those crystals but I felt the

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heritage was not properly reflected.

So I think the decline happened

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because perhaps there was the

inappropriate use of crystal and as

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mentioned it's so important to

implement the crystal in the right

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creative way to find the right

creative expression in order to be

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beautiful.

How do you contain that

and control something like that

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without actually restricting the

obvious growth you looking for?

You

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try to lead with a good example and

the way we brought ourselves back to

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the forefront of fashion was by once

again teaming up with people like

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Alexander McQueen who brought us

back into the rightful position. You

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use people like that to demonstrate

the creative merit of crystal and

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hopefully the industry follows and

that was the case with Alexander

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McQueen. Our challenge is to

continue to find innovative

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designers that inspire the rest of

the industry, whether it's fashion,

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jewellery, architecture or art.

You

have five quite the path in terms of

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running the company, when you took

over you had challenges within the

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company itself to drag it in the

direction he wanted to go.

It was a

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challenge but if your last name is

the name of the company you

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certainly feel a strong motivation

to position the product in its

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rightful way. I have to say it's all

has been very inspirational to see

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how the market responded, not just

creatively but also financially and

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we see it very often when we have

standing initiatives that the

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financial rewards follow. Therefore

it's important for us to demonstrate

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a very good position creatively.

Tell us about your background, did

0:18:300:18:36

you go straight in?

Absently not, my

father was in charge for 44 years as

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was my grandfather and every

conversation was the business so I

0:18:410:18:45

thought I don't want to work in the

business. It wasn't until I studied

0:18:450:18:49

art history and find my path in

fashion I actually knew about the

0:18:490:18:53

company and I realised what I could

contribute.

The founding principles

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of your great, great, great

grandfather, presumably you have

0:18:590:19:03

followed those to keep the

continuity going.

Absolutely, I grew

0:19:030:19:08

up in an environment of hard-working

people passionate about what they

0:19:080:19:13

have created, my great, great

grandfather was the first to use

0:19:130:19:16

electricity to power his machines,

eventually moving to Austria were

0:19:160:19:20

used hydro electricity in 1895 which

was so cutting edge. That is what

0:19:200:19:25

made the company as big as it was.

This is the challenge today, how do

0:19:250:19:29

we keep up the innovation, what do

we do and how do we implement our

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technology to create a product which

is totally irrelevant to the

0:19:330:19:36

consumer and in powers the consumer?

Tell us about that, you have created

0:19:360:19:42

this crystal mesh?

Yes, it was

another material, metal on top of

0:19:420:19:50

which we applied the crystals, so

it's like a fabric, it's very fluid,

0:19:500:19:54

you can use it in jewellery and

clothing.

I long does it take to

0:19:540:20:01

make?

It is a very tedious process

but in a nutshell, how long does it

0:20:010:20:08

crystal mesh? We melt the crystal,

we melt the glass in tonnes and then

0:20:080:20:13

it goes into smaller moulds and they

are cut, then eventually they are

0:20:130:20:18

sorted out by quality, so it's a

long process and very tedious and

0:20:180:20:25

intricate.

Really good to talk to

you, I actually wrapped up one of

0:20:250:20:29

your bracelets last night to give to

as a gift to somebody.

I really hope

0:20:290:20:36

that person feels empowered.

Thank

you for coming in.

0:20:360:20:41

Now, they may be out

of the reach of you and I -

0:20:410:20:44

but a report out today suggests

that the market for

0:20:440:20:47

superyachts is booming.

0:20:470:20:48

One particular winner in the global

race to attract billionaire dollars?

0:20:480:20:50

The British yachting industry.

0:20:500:20:51

For more, our business

correspondent Kim Gittleson

0:20:510:20:53

is at the London Boat Show.

0:20:530:20:58

I bet there are some beauties there.

It's quite astounding, I am

0:20:580:21:06

surrounded by some of the most

expensive boats and yachts on the

0:21:060:21:09

planet. Anything less than 24

metres, around 80 feet is just a

0:21:090:21:16

yacht, not a superyacht these days.

One of the biggest benefit trees has

0:21:160:21:20

been the British board and yacht

industry, report this morning

0:21:200:21:24

suggesting cells in the past year

have increased by 3.4% to £3.1

0:21:240:21:31

billion or around $4.2 billion. One

reason is the weaker pound as a

0:21:310:21:35

result of Brexit making a lot of the

boats here more to international

0:21:350:21:38

buyers. I will be here all day

looking at over 300 exhibitors to

0:21:380:21:46

try to figure out what you get if

you buy one of those yachts or

0:21:460:21:50

boats. Stay tuned for more.

Thank

you very much. I'm not sure what the

0:21:500:21:59

cheapest one is. I don't think it

would be in either of our price

0:21:590:22:02

ranges!

0:22:020:22:04

Nandini is back to

look at the papers.

0:22:040:22:07

We have got a story, I am tried to

get it on the website, it's about 5p

0:22:070:22:12

plastic bags at the moment it's only

big shops that do that but they

0:22:120:22:16

might extend it to corner shops and

smaller operations.

It's

0:22:160:22:21

interesting, the government says the

5p charge on bags has reduced usage

0:22:210:22:26

by 90%.

It's been huge. In such a

short beaded of time.

I think that

0:22:260:22:32

is the key, as an economist you'd

think by P is not as much as what

0:22:320:22:37

you are buying but it's the extra

cost which deters people from

0:22:370:22:41

wanting it, so I think the logic of

it applies to more stores, different

0:22:410:22:46

bags, there could be success is no

long term.

Is there any concern

0:22:460:22:51

about where all this money goes?

It

does not seem it's a huge part of

0:22:510:22:57

this story. I think the general

sense is it is to reduce waste and

0:22:570:23:00

be better for the environment and I

think broadly you could say most

0:23:000:23:04

people would be on board with that.

There is a huge backlash about all

0:23:040:23:09

this waste, we did a story about

copy cups the other day but I think

0:23:090:23:13

people are generally on board.

Everyone wants to do their part.

0:23:130:23:17

It's simple if you don't want to

play on a plastic bag take your own.

0:23:170:23:26

Or easy cloth bag. Or a trolley.

Toyota and Mazda picking Alabama for

0:23:260:23:38

a big investment, 1.6 billion.

They

are thinking about starting a new

0:23:380:23:43

venture in the US state of Alabama,

it would produce 200,000 vehicles

0:23:430:23:48

per year which is huge. Definitely a

big thing for a country like the US,

0:23:480:23:53

we think about with the UK and

Europe as well, not known for

0:23:530:23:58

manufacturing, it's a dying or a

weekend part of the economic space.

0:23:580:24:02

Where does this play into Donald

Trump's views about Japanese cars

0:24:020:24:07

and tariffs?

I think the fact it's

been made in America and

0:24:070:24:14

manufactured in America and will

employ 4000 people in a state which

0:24:140:24:18

is not always at the top of economic

output lists could be very good for

0:24:180:24:23

the campaign promises as well as

just bringing up different parts of

0:24:230:24:26

the US economy to catch up with

other parts.

Bad news for North

0:24:260:24:33

Carolina, interesting in terms of

what the states could offer in terms

0:24:330:24:37

of supply chains.

Yes a lot of

competition in American states but

0:24:370:24:42

on the whole it looks like it would

be good for the US and certainly

0:24:420:24:46

symbolises the sense of

manufacturing and global trade

0:24:460:24:48

happening more and more.

Do you

think big companies do want to play

0:24:480:24:54

ball with Donald Trump, they are

listening to what he said?

Yes,

0:24:540:24:59

political or maybe social use a site

he is the leader of one of the

0:24:590:25:03

largest economies in the world which

has a lot of manufacturing power. As

0:25:030:25:11

well as global presence. People care

about what America does and makes.

I

0:25:110:25:16

was wondering if this would change

any domicile line of companies

0:25:160:25:20

bearing in mind the tax reforms

which have gone through.

That

0:25:200:25:24

something we are looking at, which

could boost a lot of American

0:25:240:25:27

companies and has been one of the

reasons we like American equities,

0:25:270:25:32

it's a complicated tax loss we have

to see how it affects various

0:25:320:25:36

companies, if they are domiciled in

America are not, it should be an

0:25:360:25:43

interesting year for companies.

And

the best option is to be stateless

0:25:430:25:48

and not pay anything anywhere! Good

to see you, thank you. Goodbye for

0:25:480:25:53

now.

0:25:530:25:55