:00:00. > :00:18.The British Finance Minister wants to promote the country as open
:00:19. > :00:21.for business by slashing the corporation tax to the lowest
:00:22. > :00:27.The battle of the financial centres -
:00:28. > :00:29.how will Brexit effect the planned merger between
:00:30. > :00:31.the London Stock Exchange and Frankfurt's Deutsche Boerse,
:00:32. > :00:55.You can't see me at the moment, but you can hear me. These robotic
:00:56. > :01:00.cameras, you want to kill them at times. You will see me shortly. Or I
:01:01. > :01:07.could walk down and sit on the chair. No, they are coming back!
:01:08. > :01:10.What a great start. What is going on.
:01:11. > :01:12.How do you attract businesses to a Britain outside the EU?
:01:13. > :01:19.That question must have kept the UK's Finance Minister,
:01:20. > :01:21.Chancellor of the Exchequer George Osborn, awake at night.
:01:22. > :01:26.In an interview with the Financial Times,
:01:27. > :01:30.Mr Osborne says he will cut corporation tax to 15%.
:01:31. > :01:32.At present, the tax businesses pay on their profits
:01:33. > :01:39.But in March, Mr Osborne said the corporation tax
:01:40. > :01:47.He gave no hint as to when the drop to 15%
:01:48. > :01:52.would take place, so your guess is as good as mine.
:01:53. > :01:55.One thing is certain, though, - it would bring the UK close
:01:56. > :01:57.to Ireland's very competetive and somewhat controversial
:01:58. > :02:11.All this is very different from what Mr Osborne was suggesting
:02:12. > :02:18.There will be a hole in public finances.
:02:19. > :02:21.You have Chancellors from two different political parties saying
:02:22. > :02:24.taxes will have to go up, spending will have to be cut.
:02:25. > :02:33.That is the reality of quitting the EU.
:02:34. > :02:39.Let's stay with the theme of Brexit. We are not going to escape it.
:02:40. > :02:41.The planned merger between the London Stock Exchange
:02:42. > :02:44.and Germany's Deutsche Boerse is now in doubt after the UK's vote
:02:45. > :02:48.The deal was meant to bring together Europe's leading financial
:02:49. > :02:50.hub, London, with Frankfurt, home of the European Central Bank,
:02:51. > :02:53.creating a giant able to compete with US and Asian rivals.
:02:54. > :02:56.But Brexit has cast doubt on where the EU's financial centre
:02:57. > :03:07.Some predict Frankfurt will become the continent's finance hub.
:03:08. > :03:14.Jonathan Beastall, Senior Advisor at Pinsent Masons, joins us.
:03:15. > :03:20.We had a sneak preview of you earlier, thank you for coming to the
:03:21. > :03:26.studio at this time of the morning. Before we talk about the impact of
:03:27. > :03:31.Brexit, can I ask you this? Why the talk of this deal in the first
:03:32. > :03:36.place? It is common knowledge that the global nature of business is
:03:37. > :03:40.ever more competitive, and I think it has been thought for many years
:03:41. > :03:45.that a combination of European stock exchanges would be much more
:03:46. > :03:50.competitive and able to offer new products in a rapidly changing
:03:51. > :03:53.global market. Very good point. I am just wondering now, with the Germans
:03:54. > :04:01.looking over towards us here and say be passed to the exact the past
:04:02. > :04:07.week, the pound has dropped, we have seen the markets tumble and banking
:04:08. > :04:11.stocks taking a hammering, and they are looking and going, I am not sure
:04:12. > :04:15.if this is what we originally agreed to sign up to all who wanted to sign
:04:16. > :04:20.up to. I figure will be uncomfortable on the side. But this
:04:21. > :04:25.merger has been a long time in the planning. It was not conditional
:04:26. > :04:27.upon a positive vote in the EU referendum. It is not set to close
:04:28. > :04:34.and to the first quarter of next year. Everybody knew about the
:04:35. > :04:38.referendum. They never said is the deal would go ahead if there was a
:04:39. > :04:42.yes or no? There are no conditions with this major in relation to that
:04:43. > :04:50.thread. Some European cities, satisfying effect, in London or the
:04:51. > :04:56.UK goes out, its title as the financial hub might be lost -- such
:04:57. > :04:59.as Frankfurt. Do we have European cities jostling with each other to
:05:00. > :05:04.see who will take that title? There has already been, Tish and between
:05:05. > :05:12.Frederick, London and Paris as to which is the leader -- competition
:05:13. > :05:15.between Frankfurt. But that pressure has certainly increased as a result
:05:16. > :05:19.of this vote, not least because there is quite a lot of discomfort
:05:20. > :05:23.about the idea of Euro trade deal being settled in London yet not
:05:24. > :05:28.being part of the EU. The reason we are talking about it today is
:05:29. > :05:36.because the LS see shareholders are getting to vote whether they want to
:05:37. > :05:42.put this plan forward -- LSC. This scheme of arrangement is a chord
:05:43. > :05:47.orientated process, any court said first you need a shareholder vote to
:05:48. > :05:53.approve it, and then they come to us and assess whether the merger should
:05:54. > :05:56.go ahead. This is a stage vital to be processed but not the end of the
:05:57. > :06:02.process. We have to leave it there. If you were a betting man, will go
:06:03. > :06:11.ahead? Overall, there are a lot of hurdles to get over, put it that
:06:12. > :06:13.way. Great answer. We appreciated. -- appreciate it.
:06:14. > :06:16.Australia could be facing the prospect of a sovereign credit
:06:17. > :06:19.rating downgrade in the wake of the inconclusive federal election
:06:20. > :06:32.Rico Hizon in our Singapore bureau has been following the situation.
:06:33. > :06:39.There is a similarity in what we are seeing around the world, in the UK,
:06:40. > :06:44.in the United States, voters are a little miffed. Uncertainty.
:06:45. > :06:54.Uncertainty. But you know what? Let me tell you this. I should be
:06:55. > :07:00.talking about a study and the economy, you are the Australian
:07:01. > :07:06.expert! -- are studying politics. We have a election cliffhanger. There
:07:07. > :07:10.is so much uncertainty right now in the Australian political economic
:07:11. > :07:12.and here. You have to major political parties failing to secure
:07:13. > :07:17.a majority to form the next government. By Minister Malcolm
:07:18. > :07:20.Turnbull has promised to stabilise the government but it is still not
:07:21. > :07:24.clear if he will have a majority or be able to form a coalition. Most
:07:25. > :07:27.ballots have been counted, but it will be Tuesday before we get the
:07:28. > :07:33.final result in this knife edge poll. If you have a hung parliament
:07:34. > :07:37.or a minority government, there is an inability to pass, rancid
:07:38. > :07:43.economic and budget reform agendas to the Senate, and for Australians
:07:44. > :07:46.like yourself and Australian business, you cannot afford a
:07:47. > :07:51.gridlock. The priority is approving the Australian standard of living
:07:52. > :07:54.for a strong and growing economy. Although the economy has been
:07:55. > :07:59.growing for the past 25 consecutive years, let's just hope that the
:08:00. > :08:03.streak will not be broken with all of this uncertainty. Hopefully we
:08:04. > :08:08.will soon have a few Prime Minister in three years. -- we might soon
:08:09. > :08:16.have. It is quite embarrassing, really. We will talk to you soon. It
:08:17. > :08:19.would be better if the Australian dollar had dropped last week!
:08:20. > :08:22.The potential effects of Brexit are far-reaching.
:08:23. > :08:25.D'Addario is one of the world's largest manufacturers of guitar
:08:26. > :08:32.Their headquarters are 50 miles outside of New York City.
:08:33. > :08:36.But their CEO says that Britain's decision to leave the EU could force
:08:37. > :08:53.The D'Addario family has been making these strings long before George
:08:54. > :08:56.Harrison started using them. But the uncertainty on the other side of the
:08:57. > :09:01.Atlantic is not exactly music to their ears. Give me a sense of how
:09:02. > :09:08.much of your business depends on your. It is close to 35%, export is
:09:09. > :09:14.very important to us worldwide. Europe is the biggest market right
:09:15. > :09:18.now. So what can send you the most about Brexit? There is a lot of
:09:19. > :09:22.uncertainty because nobody expected this thread to go that way.
:09:23. > :09:27.Uncertainty always makes people hesitant to restock their infantry
:09:28. > :09:32.is and so on. They started jamming things back -- inventories. That is
:09:33. > :09:38.always a concern for us. We have witnessed the dollar getting very
:09:39. > :09:43.strong, so that really puts a damper on exports. Have you already started
:09:44. > :09:51.making contingency plans Chris Mack not really. Not to the extent we
:09:52. > :09:56.probably should have. -- contingency plans? We did not think the vote
:09:57. > :10:00.would go this rate. Business is so, located today in the have to focus
:10:01. > :10:03.on so many different things to manage all of the channels out there
:10:04. > :10:07.in the fact the world is getting so much smaller. Sometimes you just
:10:08. > :10:11.take your eye of things, we probably were not thinking about it enough.
:10:12. > :10:15.The dizziness in Europe is making it difficult even for a company in New
:10:16. > :10:21.York that makes its money from Harmony -- descendants.
:10:22. > :10:33.The markets are slightly up. The Australian dollar under pressure
:10:34. > :10:40.because of the results from the federal election. I will be back to
:10:41. > :10:45.look at the newspapers shortly.