19/03/2018 BBC Business Live


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19/03/2018

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This is Business Live from BBC

News with Sally Bundock

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and Jamie Robertson.

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Six more years!

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Vladimir Putin is re-elected

as Russia's President.

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Live from London, that's our top

story on Monday 19th March.

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President Putin is promising

an increase in the standard

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of living and big spending

on health, education

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and infrastructure.

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But can he keep his promises?

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We'll get an expert view.

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Also in the programme...

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The boss of Facebook,

Mark Zuckerberg,

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faces a backlash over the company's

use of data during the US

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presidential election.

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And markets are open

and trading in Europe -

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it's another week packed

with Central Bank action.

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We'll tell you all you need to know.

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Also in the programme, here's

a story to get the heart racing!

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We'll be getting the Inside Track

on fighting the flab

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with an entrepreneur

in the booming fitness sector.

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And following that story

about Facebook, today

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we want to hear your

thoughts about how the tech

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giants use your data.

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Let us know.

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Just use the hashtag #BBCBizLive.

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Hello and welcome to Business Live.

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As usual, it's jam-packed. We begin

in Russia.

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Vladimir Putin's re-election

hands him another six years

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as Russian president

and extends his grip on the world's

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12th biggest economy.

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This economy has had a tough time of

late.

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As you can see, growth was stronger

when Mr Putin came into office

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at the turn of the century -

but the economy has suffered

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in recent years as global oil prices

fell, with Russia dipping

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in and out of recession.

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Russians have seen

living standards fall.

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Look at this sharp drop, which has

just disappeared! This is what

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happened when international

sanctions were imposed on Russia

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when Russia annexed Crimea.

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The average income is

now just over $10,000,

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a third lower than its peak.

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That is a figure from 2016.

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But Mr Putin said he wanted

to reverse that gap

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with a 50% rise by 2025.

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President Putin did pledge

to spend more on healthcare,

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education and infrastructure

including about $194bn on roads

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over the next six years.

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There is some room to spend

because government debt

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is relatively low -

just 13.2% of the economy in 2016.

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That is something that many around

the world would envy.

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Andrew Foxall is director of Russia

and Eurasia Studies Centre

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at the Henry Jackson Society.

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It's extraordinary that in a country

which has seen declining wealth for

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the average person, to get such a

landslide majority. One can say what

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one likes about the election, but on

the other hand, he is still very

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popular.

He is indeed. It is

important to say that President

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Putin's popularity was, during his

first two presidential terms between

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2000 and 2004 and 2004-2006, very

much based on Russia's economic

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performance. As your graphics are

suggested, these were the boom years

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based on oil and gas sales of 9% or

10% GDP growth year-on-year.

And yet

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the reverse happens, and his

popularity goes up!

Now his

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popularity is based on Russia's

geopolitical status. Since 2014,

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Russia's economy has been

stagnating, partly as a result of

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Western sanctions, but also because

of a fall in the global price of

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oil. But that stagnation predates

the 2014 annexation of Crimea.

How

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long can his political popularity be

maintained without an upturn in the

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economy? The economy hasn't crashed.

It hasn't crashed. It is struggling,

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it's fair to say. GDP growth last

year was 1.7%. That compares pretty

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favourably to 2015-2016, when GDP

fell by 4%. Many Russians remember

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when the economy was an awful lot

worse in the early 1990s, when it

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fell by 40%. So it is all relative.

Since President Putin returns to the

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presidency in 2012, he has

demonstrated an inability to

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generate any degree of domestic

legitimacy in the context of

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economic stagnation without foreign

policy achievements. So that might

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be Crimea, it might be Ukraine as a

whole, it might be Syria, MIB the

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Fifa 2018 World Cup.

So you're

saying in order to achieve political

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legitimacy, he has to go outside

Russia? He has to continue being

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aggressive to maintain his political

superiority at home?

Precisely. He

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has political superiority anyway

because it is effectively an

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authoritarian state. But he has been

unable to generate any legitimacy

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without foreign policy goals,

because the economy has been

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stagnating.

Andrew, thanks.

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Let's take a look at some of

the other stories making the news.

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Melrose Industries has stepped

up its fight to snap up UK

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engineering firm GKN,

with a promise to pump

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around $1.4 billion

into the firm's pension fund.

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The hostile takeover bid by Melrose,

worth some $11 billion,

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has attracted opposition

from politicians, customers

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and some shareholders.

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Apple is designing and producing

its own device displays

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for the first time at a secret plant

near its California HQ,

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according to Bloomberg.

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The iPad maker is reported

to be making a big

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investment in the development

of MicroLED screens,

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which use different technology

to the current OLED

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displays, and could replace

those made by Samsung.

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The G20 gathering of finance

ministers kicks off

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in Buenos Aires against a backdrop

of global trade tensions.

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There are concerns over

a potential US-China trade rift

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and President Trump's steel

and aluminium tariffs.

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Facebook and a US data firm,

Cambridge Analytica,

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have been accused of gathering

information from 50 million

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profiles without consent.

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Although Facebook has

suspended Cambridge Analytica

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from its platform, the social media

giant's chief executive,

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Mark Zuckerberg, is facing mounting

pressure on both sides

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of the Atlantic.

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Dave Lee reports

from Silicon Valley.

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Facebook may be something

of a tourist attraction

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here but for many, this place now

represents something else.

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The company that has enabled

the collection of personal

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data that was then used

for political propaganda.

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Its latest problems

are because of information allegedly

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obtained by Cambridge Analytica -

the firm widely credited

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with helping Donald Trump

win the presidency.

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Reports claim details of around

50 million profiles were gathered

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without the users' explicit consent.

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Both Facebook and Cambridge

Analytica deny any wrongdoing.

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But now prominent lawmakers

are demanding that Facebook's

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founder Mark Zuckerberg address

the concerns about his company

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in person and not just

through his own Facebook page.

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Mark Zuckerberg needs

to testify before the Senate

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judiciary committee,

demanded one Democrat,

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who said her office was launching

a fresh investigation.

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Former presidential hopeful

Marco Rubio had this

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to say on Sunday morning.

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These companies are

growing very fast.

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Within the span

of less than ten years

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they have gone from being a novel

idea to a major corporation.

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And I'm not sure if the sort

of institutional knowledge

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about responsibilities both legal

and ethical that come with that have

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kept pace with the growth.

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Similar calls have been made

in the UK and investors are perhaps

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beginning to show some

signs of concern.

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If Mark Zuckerberg hides behind

the walls and is not front

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and centre, this has potential

to grow into something a lot more

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onerous for the Facebook model.

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So it is trying to get ahead

of this storm before it

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turns into a hurricane.

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Facebook became a multi-billion

dollar industry because it made

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advertising more effective

by knowing more about each

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and every one of us.

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It seems that same innovation

has given added power

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to political propoganda as well.

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Are you concerned about what

Facebook or any other platform,

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Google, Twitter, Instagram is doing

with your data?

Are you worried or

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have you got the most incredible

privacy settings?

Are you worried

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about them reading what you have to

say?

I just assume what I put out

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there is available to everybody must

I don't write much. Do get in touch

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and we were so your comments later.

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There's a new boss in charge

of the central bank in the world's

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second largest economy -

the People's Bank of China has

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appointed US-educated economist

Yi Gang as its next governor.

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Let's go to our Asia

business hub in Beijing,

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where Stephen McDonell

is following the story.

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We say he is new in the top job, but

he has been there quite a while.

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Well, one of the most interesting

things about the unexpected

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appointment of Yi Gang to head up

China's reserve bank is that we

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don't really know whether it will be

him or the newly appointed Vice

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Premier in charge of China's

economic policy. The vice president

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is already powerful. He went to

Washington in a failed attempt to

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stave off those US steel tariffs,

but either way, Yi Gang will be one

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of two people pulling the levers

here. He is on the record as saying

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he was to open up the Chinese

economy to more foreign investment,

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especially in the finance sector,

but his other two headaches will be

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controlling the ballooning debt in

this country and working out how to

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deal with the potential trade war

with the United States. Whichever

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way you look at it, he has what is

probably one of the most important

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jobs in the world.

Thank you. So

that is one of the central bank

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stories which has kick-started a

week that will be dominated by

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central bank news, because as

Stephen was saying, Yi Gang has been

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appointed as the head of the

People's Bank of China, but we also

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have Jerome Powell's first meeting

as governor of the US Federal

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Reserve. That takes place tomorrow

and Wednesday. And we have the Bank

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of England, so there is quite a bit

going on with central banks. But

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also in terms of how markets did

today, you can see that is how

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things ended on Friday. This is

Australia and Hong Kong, but it is

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important to note that Japan closed

down by almost 1% at the end of

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today's trade. A lot of the losers

today our suppliers to Apple. For

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example, Samsung shares were hit.

These companies are the companies

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which make the displays for Apple

products, the iPhone and the iPad.

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That is huge in terms of revenues,

but could be lost if Apple starts to

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make their own screens. Let's look

at Europe quickly so you have a

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sense of how the European day is

going. I am hoping we will get the

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European numbers. We are trying to

change them, but we can't, so I will

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hand over to Jamie.

It works over here. The Dax is down

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sharply and the FTSE is down

sharply.

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Lawrence Gosling is with me -

he's the editor in chief

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of What Investment.

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Let's start with that Apple story.

It is because of the ramifications

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for all the other countries. It is

great for Apple, presumably, but not

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for the companies supplying Apple.

No, and a spot of the tariffs are

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given we are having as well. Some of

these companies may be subjected to

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tariffs into the US. So you can see

Apple shoring up its production,

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which will increase its margin if it

can do it cheaply compared to

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suppliers from Asia.

Do you think

this has anything to do with the

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environment we are in with President

Trump at the helm? If they make

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their dispose in California down the

road, it is a lot easier if you have

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tariffs going on.

You are spot on.

Politically, it looks very good. We

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have seen General Motors doing

similar things. Partly, it is to

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curry favour with the presidency.

I

can understand the emphasis being on

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the big companies and big

manufacturing, and that is what

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Trump's home ground is. Whereas the

tech companies, I feel they have

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slightly gone their own way.

We are

in a slightly different environment.

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The tech companies are not the

darlings they used to be. People see

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them as being more sinister.

Big

week for Jerome Powell.

A very big

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week for Jerome Powell, the new head

of the Federal Reserve in the

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States. We are looking forward to

listening to him. The market is

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pretty much priced in a rate rise on

Wednesday. This is the first of four

0:14:030:14:07

rate rises this year.

That is the

prediction, not a given.

Never a

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given, but it is the prediction from

the markets. Then we have the Bank

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of England, the EU and a new

governor in the central Bank of

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China. So if you love central banks,

this is a big week.

I love them. But

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I am missing Janet.

I think she

misses you too! On the Russian

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election, any thoughts on that?

The

Russian stock market hasn't moved

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much in quite a while, ironically.

But the economy is where the big

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problem is and President Yeltsin Dr

I did say Yeltsin! I am showing my

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age! Mr Putin.

You only read about

him in history books. That is a

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blast from the past.

The economy is

back in President Yeltsin's age,

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even though it is President Putin

now.

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Still to come.

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Healthy body, healthy mind!

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Later in the programme,

we'll be getting the Inside Track

0:15:130:15:15

Still to come.

0:15:150:15:17

on the business of staying in shape!

0:15:170:15:19

You're with Business

Live from BBC News.

0:15:190:15:25

Stay with us.

0:15:250:15:34

Travelodge has released

full year results today.

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Total revenues grew 6.6%

to £637.1 million in the 12

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months to December.

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And it has also announced the

expansion plans including something

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called the superbly.

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Joining us now is Peter Gowers,

the Chief Executive of Travelodge.

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Huge expansion, you're going to

employ a lot more people.

Britain is

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becoming a nation of hotel budget

travellers. As we have attracted

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more and more people it gives us

different kinds of groups to target

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and for some of the longer staying

business customers we have

0:16:190:16:24

introduced super rooms.

Talk about

costs and employees from the EU and

0:16:240:16:30

in particular. Something like 30%

come from the EU. Is that a problem

0:16:300:16:34

for you?

Well there are no real cost

pressures right now, the national

0:16:340:16:41

living wage, the apprenticeship

levy, these are bigger things but

0:16:410:16:46

medium-term Brexit is a factor. We

are taking measures now to try to

0:16:460:16:50

protect ourselves against a

shortfall of Labour post Brexit.

0:16:500:16:56

Supporting staff to apply for

residency if they are already here

0:16:560:16:59

and widening up apprenticeship

schemes. Also attracting back

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working parents.

You say in the UK

that we are seeing a build in the

0:17:040:17:09

budget hotel industry. How long do

you think that this will continue,

0:17:090:17:15

what is your long-term forecast for

Travelodge?

Today in the UK roughly

0:17:150:17:19

one in five hotels is a budget hotel

for the friends it is one in four

0:17:190:17:24

hotels and one in three in the

United States. So plenty of room for

0:17:240:17:29

expansion. We hope to open 100

hotels in the next five years so

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future expansion plans focused very

much on the UK.

Thank you very much

0:17:320:17:39

indeed. Those results announced

today. One interesting story on the

0:17:390:17:47

business page, betting machine wages

are to be cut to £30 alas, that is

0:17:470:17:54

the maximum amount you will be able

to bet on these fixed odds betting

0:17:540:17:57

terminals. By some thought it would

come down from £100 down to just £2

0:17:570:18:04

but it is £30 so somebody for the

bookmakers for top that some relief

0:18:040:18:12

for the bookmakers.

0:18:120:18:13

You're watching Business

Live - our top story.

0:18:130:18:17

Vladimir Putin has won the

presidential election in Russia. So

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he is in charge for another six

years. He received more than 76% of

0:18:210:18:28

votes in the election on Sunday. He

served as either president or Prime

0:18:280:18:32

Minister since 1999 now.

0:18:320:18:35

Many of us want to be healthier -

and increasingly there are services

0:18:350:18:38

to help us achieve that goal.

0:18:380:18:39

The fitness industry in the UK

was estimated to be worth

0:18:390:18:42

$6.5 billion last year -

up 6% from a year earlier.

0:18:420:18:47

And that's just for people

who go to the gym.

0:18:470:18:50

But if you're short on time you can

download e-guides to give

0:18:500:18:53

you a bit of support.

0:18:530:18:58

London Muscle has sold 130,000

of these guides since 2013.

0:18:580:19:04

And the company also

dabbles in clothing,

0:19:040:19:05

a supplements range,

and last year they launched

0:19:050:19:07

a fresh food delivery arm.

0:19:070:19:11

Tom Exton, co-founder

of London Muscle is here.

0:19:110:19:18

Welcome to the programme. And that

was used in that video behind us. --

0:19:180:19:28

that was you. Just tell us about how

this started. Clearly you are

0:19:280:19:35

someone who is really into this, in

the gym and busy trying to get

0:19:350:19:39

fitter.

It began as a hobby back in

2012, myself and my twin brother and

0:19:390:19:46

some other browsers as well used to

be in the gym all the time. And we

0:19:460:19:51

thought that we would set up a

website just as a hobby. And it just

0:19:510:19:55

spiralled from there. We did not

really need to start a business.

You

0:19:550:20:02

have grown pretty fast. I find this

extraordinary. It must've been a

0:20:020:20:07

very competitive market. No one is

going to say to you that is a great

0:20:070:20:12

idea because everyone would have the

same idea about doing fitness video

0:20:120:20:16

on YouTube. What makes you

different? And getting this

0:20:160:20:21

particular growth.

I think when we

started we capitalised on the growth

0:20:210:20:26

of twitter back in 2012 and then is

to grant came along and we really

0:20:260:20:31

utilise social media. And then

fitness became more and more popular

0:20:310:20:36

and social media. We just advertise

our website articles on twitter, we

0:20:360:20:45

put on recipes, workouts and answer

questions as well.

Most of the

0:20:450:20:51

people who download your health

adviser by, do they also go to the

0:20:510:20:58

gym, do you know that kind of

information?

Or maybe just at home.

0:20:580:21:04

Well the guides have been gym -based

but recently we have introduced home

0:21:040:21:07

work-out alternatives as well so

people can train anywhere they like.

0:21:070:21:13

So you could do them at home as

well. The downloads, you pay to

0:21:130:21:19

download them. The current guides,

it depends how long, you can choose

0:21:190:21:26

up to about 20 weeks. That is in the

region of £60, £80. And basically it

0:21:260:21:35

is like having a personal trainer

for about 20 weeks.

A personal

0:21:350:21:41

trainer, and give me an idea of what

you get.

They will tell you when to

0:21:410:21:54

work-out, what to do, repetitions,

tempo, what movement to do. What and

0:21:540:22:00

when to eat. But within a flexible

structure. I could go on and on.

0:22:000:22:07

Just one quick answer, what stops

people giving up after one year of

0:22:070:22:13

doing this because that is the

problem, but people give up.

It is

0:22:130:22:18

motivation all the time and there is

an online community, lots of people

0:22:180:22:24

doing the same thing and people

sending in their results. You can

0:22:240:22:29

see a letter from down the road has

got amazing results. It is kind of

0:22:290:22:31

peer pressure if you like.

Thank you

for coming in, really interesting.

0:22:310:22:40

This is how to stay in touch. We

will see in a moment. Stay

0:22:400:22:46

up-to-date with all the business

news as it happens. And we want to

0:22:460:22:53

hear from you. Get involved on the

BBC business life web page.

0:22:530:23:04

Lawrence Gosling has returned and we

have been looking at this Facebook

0:23:180:23:20

story. This is extremely interesting

because it has been the concern

0:23:200:23:26

about these organisations that are

now huge, 2 billion active monthly

0:23:260:23:32

users around the world.

Absolutely

and a piece of legislation is coming

0:23:320:23:37

in, the general data protection

regulations and this falls into

0:23:370:23:41

this. How these companies use data

and how and if we have given them

0:23:410:23:46

permission. This is Europe wide. And

there was a harsh penalty, 4% of the

0:23:460:23:52

company turnover. So for Facebook

that could be the story. It is about

0:23:520:23:57

how we and our data over to them and

how they then use it.

This is a

0:23:570:24:03

political story, or is it business

or both? Where do you think it will

0:24:030:24:09

have the maximum impact, politically

or in terms of business.

I think

0:24:090:24:15

largely it is a political story but

we could see the Facebook share

0:24:150:24:20

price drop later. But really here in

the UK we are driving away the

0:24:200:24:28

story, and you can see the kind of

power of the MPs on this.

I tell you

0:24:280:24:34

what strikes me about this story,

the idea, how little we as

0:24:340:24:40

individuals feel affected by this

because who would say I feel I have

0:24:400:24:45

been manipulated by these people. No

one feels that, they do not feel it

0:24:450:24:52

is a personal affront to their

abilities.

I think it depends what

0:24:520:24:57

the information was, and it could

affect future decisions for example

0:24:570:25:03

medical insurance and your data has

been passed on to other companies.

0:25:030:25:08

But we must state both Facebook and

Cambridge and Alaska are denying any

0:25:080:25:14

wrongdoing at all in this case. -

Cambridge Analytica.

Exactly and I

0:25:140:25:23

think we feel upset as consumers is

suddenly someone tries to take

0:25:230:25:27

something from us but in this case

there was no suggestion that

0:25:270:25:30

anything like that could happen.

Couple of messages, one saying they

0:25:300:25:34

need to be made far more

accountable. Another saying I came

0:25:340:25:41

off Facebook, best thing I ever did.

Thank you for coming in and thank

0:25:410:25:53

you for your company. We are back at

the same time tomorrow. We will see

0:25:530:25:55

you then. Goodbye.

0:25:550:25:59