28/02/2018 BBC Business Live

This is Business Live from BBC

News with Ben Thompson

and Samantha Simmonds.

Brexit breakdown.

The EU publishes its first

formal look at how things

will work once the UK leaves.

Live from London, that's our

top story on Wednesday

the 28th of February.

Business continues to fret

about uncertainty as the document

says Northern Ireland might have

to follow EU rules to avoid

imposing a hard border.

We'll look at the implications.

Also in the programme.

The biggest recall in car making

history gets even bigger.

Australia orders a compulsory

return of more than two

million Takata airbags.

And an optimistic outlook

from the new boss of

America's Central Bank with more

rate rises on the cards.

The dollar has jumped,

but markets are down.

Hello and welcome to Business Live.

We will get the inside track on how

you

We will get the inside track on how

you stop Winter flu. The boss of one

of the biggest vaccine companies in

Europe will talk to us about how

healthy. With Toys R Us on the brink

of collapse, we want to know, do you

buy your toys online or in a shop?

Let us know.

Welcome to the programme.

With just over a year to go

until Brexit as we speak,

the EU is publishing a draft

of the Brexit treaty that

will specify the terms

of the UK's departure.

But for business and investors

there's still a huge

amount of uncertainty.

One of the key issues it covers

is Northern Ireland's land border

with the Republic of Ireland.

In 2015 $3.4 billion worth

of goods were traded

across it in both directions.

On Tuesday, the UK's International

Trade Secretary Liam Fox reiterated

that "The avoidance of a hard border

in Northern Ireland

is of crucial importance".

That's something the Republic

of Ireland agrees with.

But businesses on both sides want to

know what the future rules will be.

And in the document the EU

is expected to confirm its fall back

position, that EU rules continue

to apply on both sides of the Irish

border after Brexit.

Our correspondent Adam

Fleming is in Brussels.

Today is a significant day for

anyone who watches these

negotiations, today is a day which

could change the future of them.

Yes, we will get this 120 page

document with 168 paragraphs, a few

protocols and annexes thrown in for

good measure so not easy reading.

Everyone is looking at the language

about the Irish border and

preventing physical infrastructure.

In September three options were

agreed, option that a is an amazing

trade agreement which obviates the

border, option B means that you use

technology so you don't have to have

a hard border, and option C, the

most controversial and the UK

Government's least favourite, is

that Northern Ireland sticks to the

EU's rules on trade, customs and all

sorts of things. Option C is the

option that will be detailed in

legal language over a whole lot of

pages today. However the document

will not do options left a and B but

there has not been an opportunity to

negotiate that so it will all be

down to the British government and

their reaction. This is the first

strath of history, it hasn't even

been approved by the 27 member

states of the EU or negotiated with

the UK yet so long way to go until

its final draft.

Good luck, it will

be a busy for you.

With me is Sir Simon Fraser -

he is a Managing Partner

at the business cosultancy,

Flint Global.

He used to be Permanent Secretary

at both the UK Foreign Office &

Department for Business

as well as Chief of Staff

to the EU's Trade Commissioner.

So a man well placed to give us an

insight into what's going on! I'd

like to get your reaction to the

British Foreign Secretary's Boris

Johnson's comment a few days ago

that this border issue is being

caused to frustrate Brexit, what's

your assessment?

I don't think that

was the case, we have boys known

this was a key issue and Liam Fox,

as we have heard, hasn't said

avoiding a hard border is essential.

One of the things is that the

government has got to come up with a

proposal outlining what it wants.

We

have had significant days in the

past year of the negotiations but it

becomes significant today, the

lawyers have to get in a room and

the first things out and there does

not seem to be a significant

position from the British

government.

Yes, it's important, we

are moving from political

negotiations to a legal negotiation.

Once the lawyers in the room, you

have to have precision and things

nailed down in the details. We know

that there was a lot of ambiguity

around Northern Ireland which has to

be clarified now. That's why today

is such an interesting day and wait

there is -- why there is a debate

going on around the sticks.

You run

a consultancy service, what basis is

saying about this uncertainty?

Businesses are saying that it is

difficult in Ireland and Northern

Ireland, but it's wider than that,

because Irish businesses often

operate via the UK into the EU.

Business needs certainty and they

particularly want a transition

agreement arranged to cover the

circumstances around the UK leaving

and after March 20 19. It will be

part of this withdrawal agreement

which is now being negotiated so it

has to come together in a way that

gives business clarity.

What do they

say to you about what an ideal

scenario would be?

What they want

is...

Apart from the certainty.

And

an ideal scenario would be a

continuation of the current rules.

Business wants clarity and the

minimum number of changes to make,

and a longer-term security, so it

can make not only operational

choices but investment decisions the

future.

We will see if we get any of

the clarity in the coming hours and

days. We will keep you up-to-date.

Let's take a look at some of

the other stories making the news.

US customs will start

charging duties on imports

of aluminium foil from China.

The tariffs of as much as 106% have

been imposed after US

manufacturers complained that

Chinese made goods were being dumped

in the US at below cost price.

They also allege that Chinese

producers are receiving unfair

government subsidies.

Amazon has agreed to buy the video

doorbell maker Ring in a deal

reported to be worth more

than a billion dollars.

It's set to be one of Amazon's

most expensive takeovers

after its almost $14 billion

dollar deal last year for

Whole Foods Market.

It could help Amazon improve how

it delivers parcels.

In the UK, Toys R Us

and the electronics chain Maplin

are both on the brink of collapse

with more than 5,000

jobs at risk.

The struggling retailers

are understood to have put

administrators on stand-by

after failing to

secure a rescue deal.

The US parent of Toys R Us is also

reported to be trying

to sell its European and Asian arms

as it struggles with $5bn of debt.

The biggest recall in

carmaking history has just

got bigger yet again.

That's because the Australian

government has ordered a compulsory

recall of 2.3 million

Takata airbags.

More than 100 million have already

been recalled around the world

because of faults which mean

they have exploded and killed

at least 23 people and

injured about 200 others.

It's forced the Japanese

firm to bankruptcy.

Hywel Griffith has

the details from Sydney.

There was already a voluntary recall

last year, the government simply not

satisfied with the response.

And there are concerns

about what happened to some of those

vehicles that have already been

taken off the road

and put into garages.

It's understood that

while some were taken

in to have the old airbags taken

out, they were simply given

new similar airbags by the same

company with the same fault.

The fault increases over

time, so it was a make

do and mend approach.

The government isn't happy with that

and therefore those cars already

being taking in and new cars

and models will also have to go

in as part of this compulsory recall

before the end of 2020.

And now because this

recall is compulsory,

it's up to the manufacturers to bear

the cost of bringing the vehicles

back in and replacing the airbag

with a completely different one.

Of course, Takata is having huge

global of problems with this,

100 million vehicles

worldwide affected overall.

The company has already filed

for bankruptcy but this now

will mean the cost in part goes

on to the big brand car

manufacturers, many of them Asian

companies but also the likes

of Volkswagen, Ford

and Holden here in Australia.

So we heard from new Fed Chair

Jerome Powell yesterday

and he was pretty optimistic

about the state of the US economy.

That being seen as a sign

that the Fed could raise rates more

than three times this year

which pushed up treasury yields

and the dollar rallied

against all major currencies.

It appears he's firmly

of the thinking that rates need

to gradually increase to prevent

the US economy from overheating.

There is a concern that if they

raise rates to quickly, it could not

enough, but more than that and could

overheat.

We will assess all of the

indications of that and that new Fed

chair and what that could mean for

the economy. But first the details

from Wall Street.

New Fed chair Jerome Powell's

comments to Congress on

Tuesday seemed to

drive stocks lower.

Investors now have to wait a day

for his next appearance in

Congress which will be on Thursday.

In the meantime, they'll have plenty

of other news to contemplate.

The latest read

on GDP, for starters.

The second estimate for how well

the US economy grew in the last

quarter of 2017 is expected to show

a slightly reduced annualised

growth rate of 2.5%.

That's somewhere below the 3% that

President Trump says he'll deliver.

And there's a steady

stream of corporate news.

Software giant Salesforce is likely

to tout rising quarterly revenues

thanks to strong demand

for its cloud competing services.

The storage provider

Box Two is also forecast

to produce stronger earnings.

Joining us is Sue Noffke, UK

Equities Fund Manager at Schroders.

Good morning, thank you for braving

the snowy conditions out there. Fera

whether in the United States, we

have been talking about this speech

from Jerome Powell, first as chair

of the Fed, what did you make of it?

Markets have interpreted it as

hawkish. He is more plain speaking

than his predecessor, Janet Kelland,

so he had laid things out. The

economy is doing pretty well, pretty

strongly. Plus the fact that he was

highlighting that for the future

couple of years, he can see the

economic growth remaining quite

strong because of the tax cuts that

have been announced. That's going to

sustain growth. Inflation has been

muted and has not reached the 2% fat

target, so without interest rate

rises, we're going to overshoot.

We're in a diverse situation where

it's good news that leads to falls

in an equity moment.

As a change to

bad news leading to rises in the

equity market.

That seems weird to

many people.

Yes, it's all about

what is priced in and where the

tipping points are. We have this

Goldilocks scenario, neither not hot

enough or not too hot economic news,

just right. Very loose monetary

policy, but we're seeing that

change, we are seeing tapering in

quantitative easing which is slowing

the amount of government bond buying

this year and contracting mixture.

At the same time, interest rates

rising and the pace of those ahead

of what people thought.

So markets

are expecting three rate rises?

Up

to four. But that's only one

percentage point on interest rates

so it's not scaring the horses, but

bond yields are approaching 3% for

10-year Treasuries. That repricing

of money is beginning to cause

people to think about what products

they will undertake.

Thank you very

much.

It's that psychological shift that

we're so used to with money being so

cheap for so long with interest

rates being so and over so long, a

change could be seen as a big move.

Still to come...

Keeping on top of the flu,

as cold weather grips Europe one

of the continents largest vaccine

company's tell us how it's

technology is keeping us healthy.

You're with Business

Live from BBC News.

In the UK, we have had results from

the commercial broadcaster ITV.

They reported a 5% fall

in full-year profits,

after a tough year for advertising

However it saw growth

in its studios business,

which makes TV shows for the network

and other broadcasters.

New CEO Carolyn McCall

is aiming for a strategic

refresh of the business.

Tom Harrington is from

Enders Analysis is here to tell us

what that might mean.

She called it a strategic refresh

but that is tough for advertising

right now in the market?

They

announced net advertising revenue

was down 5%, in line with guidance,

and what has been happening in the

market, the market trend,

unsurprising in that regard. The

last five years has seen ITV moving

away height quickly from a model

that is based entirely upon

advertising revenue and towards one

which gets increasingly upwards of

50% now in their production

capabilities. They are protecting

themselves from the ups and downs of

the advertising market.

Carolyn

McCall came in from Ryanair, a lot

of hope split on her shoulders. Can

she turn things around?

I think she

has to worry about the ingress of

tech giants into the TV advertising

space. She has been championing

television as a safe and mass

reaching medium. You can see brands

adverts online easily, not next to

jihadi videos or anything like that.

The ITV Hub has been doing a lot

better. They also have the breadbox,

nobody knows what is happening with

that.

And all of the stuff that they

will show, the World Cup games, that

is a big one. And the perennial

favourite Love Ireland!

They have

done well in 2016 and 2017 -- Love

Island. Up 15% in terms of share,

they do have the World Cup,

something to look forward to. And

this is the year that they cash in

on Love Island. They did

phenomenally online last year. So

they can charge outrageous amounts

of sponsorship and stuff like that.

Thank you.

Carolyn McCall came in from easyJet,

not Ryanair.

You're watching Business Live.

The top story today, the first draft

of the EU's legally binding Brexit

treaty is being published as we

speak. There is a lot of it, about

150 pages. It will say that unless

there is another deal, Northern

Ireland will have two follow single

market rules to avoid having a hard

border with the Irish Republic. It

is a big sticking point as far as

Brexit negotiations are concerned.

And a quick

Brexit negotiations are concerned.

And a quick look at the European

markets, all opening slightly down

following negative trading on the

Asian markets overnight.

And also on the

Asian markets overnight.

And also on the US markets.

Have you fallen foul

of the dreaded flu this winter?

Doctors and companies,

suffering staff sickness,

will agree it's been the worst flu

season in years.

So what about prevention?

Our next guest runs one

of the world's largest flu vaccine

companies; Seqirus specialises

in the influenza vaccine

for the elderly, and is licensed

in Europe and North America.

The US Centers for Disease Control

and Prevention said this season's

vaccine is just 36% effective,

only 25% against the nastiest,

dominant strain H3N2.

The firm says its novel method,

producing vaccines in cells

at commercial scale,

is an industry first

and overcomes the problem

of vaccines being outsmarted

by a mutating virus.

We will ask him to explain this in a

minute!

But tackling constantly

mutating flu strains needs

cutting-edge innovation.

So it's focusing on its Liverpool

plant - one of the biggest

biotech sites in Europe -

with a £60 million investment.

Gordon Naylor, President

of Seqirus joins us.

A warm welcome to you. Let's talk

about how you, first of all, manage

the mutation of the flu virus and

try and precipitate that, when you

are creating a flu vaccine itself.

The influence virus is a wily foe

and it constantly changes and

constantly mutates. There are

multiple strains. There has been a

whole global collaboration which has

been working since the 1940s to find

out how to respond. That rapid

mutation is the reason why we have

to have a new vaccine every year. So

Fourie manufacturer like ourselves,

who are global, we go through two

product and development cycles, one

for the Southern Hemisphere and one

for the Northern hemisphere every

year.

We were just talking and I'm

staggered at how much planning you

have to do. Once you have decided,

or the organisation, has decided

which strains of the virus you will

tackle, you have a lot of work to do

before it hits the market.

It is

quite a challenge. As you know,

there was snow on the ground here in

London, we are in the middle of a

serious winter. We have been

manufacturing for several weeks now.

This will take us into the next

Northern Hemisphere winter.

12

months from now?

Yes, the World

Health Organisation directs free

agencies on which virus strains are

to be manufactured, and they made

the decision on Friday.

This year

has been really bad around the world

for those suffering from flu and the

number of deaths. Why is that? Is it

because the vaccines are wrong, or

because it is a wily foe, as you

said?

Influencer is a pretty --

influenza is a pretty serious

disease. Around 650,000 people per

year die globally from influenza out

of a backdrop of 5 million cases,

many. This year has been

particularly serious, we have had

elevated levels of serious illness

and mortality around the world.

These virus strains are particularly

difficult, especially for the more

vulnerable elderly. The challenges

because of this long lock in effect,

and we had to make the decision

early, this virus continues to

mutate and it can make it difficult

to catch up. The other challenge is

we know that for most manufacturing,

which is done in eggs, that

sometimes there is an effect where

the virus changes a little bit as

part of that manufacturing process

which can make it more challenging.

That is what we are seeing, we

think, in much of the markets this

year.

As Sam says, it has been one

of the worst flu seasons in decades.

I hesitate to use the phrase "Good

news" for you but as a business

selling a vaccine to tackle flu, how

does work financially when there is

such a bad flu season, do your sales

go up?

We would to think so but in

many of our markets the reality is

we made those manufacturing

decisions many months before we knew

the severity of the season.

So that

means you cannot particularly plan,

if there is a big upswing, you

cannot get the vaccine out quickly

enough to cope?

It is difficult for

a manufacturer to respond rapidly.

You tend to make a little more than

what you expect will be needed but

that's about the only measure you

can take.

It is good to see you this

morning. Good luck for next year!

Thank you.

A pair of smart shoes has been

created to help industrial workers

keep in touch via toe typed coded

messages.

Rory Cellan Jones met the inventor

and Mobile World Congress in

Barcelona. MORSE CODE.

In the year if the Internet,

it seems everything is connected,

including safety shoes.

This one has got a SIM card in it.

This is inside, what is it doing?

So, this product has

a smart SIM card

embedded in it and a

wireless module to send

a message from a worker,

a

safety message, from his team,

to send an alert or to get the other

way around, a message

from his manager.

Telling him to stay safe,

in case of a hurricane or a big

danger.

So just moving up the toe or pushing

a button on his shoe,

it will send a message directly

to his team or the other way around.

So the manager can

send a message and

the shoe will vibrate, telling them

that there is a message.

It will do a lot of noise.

80 decibels of sound,

to warn him of an alert.

I hope they make them in red...

A

great story, the latest technology

from Rory Cellan-Jones there. An

update on our top story. We've just

heard from the Irish Prime Minister

saying it is up to Britain to bring

proposals to the table as far as the

border is concerned. There is a lot

of concern as to whether there will

be a hard border between Northern

Ireland and the republic. He said it

is up to Britain to bring such

proposals to the table. Full

coverage of that at the top of the

hour. Sue has rejoined us to talk

about some of the stories in the

paper.

We have been talking about

electric cars, and the market for

them. Sometimes you can't plug them

The Guardian newspaper says that

isn't the case at all.

They are quite expensive as well. I

have an electric car. The range is

not as good as I would like to be.

There is a lot of development going

on, we are going to see some more

models coming onto the market give

consumers more choice at different

price points as well.

And a quick

word on our other story as well, the

future of Toys "R" Us in the UK. The

American firm said it is trying to

sell a number of units, could it

disappear from the UK?

It could, it

hasn't kept up with The Times or

student demands for service and

flexibility. I think the future is

pretty bleak.

A quick too sweet,

someone says they go online for

convenience, it isn't always the

cheapest option -- a quick tweet.