12/06/2017 World Business Report

So, as the UK Prime Minister fights to stay in power, experts warn

prolonged political uncertainty will take its toll on sterling and the

economy. Not so in France -

the euro strengthens as Macron's new party en Marche takes control

of French politics. This is World Business Report, where

we will now focus on the business and economic implications of the

elections in the UK and France. Theresa May, has formed

a new government but without a majority in parliament

she is relying on an alliance with Northern Ireland's

largest political party, But while the DUP insist

their relationship with May's team has been close since she became

Prime Minister, 11 months ago, any

alliance will come at a price, An economic terms, they are less

developed than the Republic of Ireland or the UK. It has low levels

of productivity and is heavily dependent on the state. Those

sectors apart from the state that it relies on our tourism,

manufacturing, and food. And they need large supplies of low skilled

labour, mostly from Eastern Europe, especially Poland. And if Britain is

to lead the single market, and that is the stated policy, then the DUP

may ask the Conservatives for an exemption when it comes to the free

flow of labour to Northern Ireland. On top of that, they will want

London to pick up the $450 million a year that Brussels seems to Belfast

in agricultural subsidies. And that comes on top of the $1 billion a

month that London fans already to Belfast. And then there is the

political bribes, or poor, as it is known as. They will want more

investment in infrastructure. That means that their roads and rail

projects, which might otherwise be uneconomical, will be built, and

will not be shut down. Those with some of the issues that could be the

agenda. With me is Simon French,

chief economist at Panmure Gordon. Good morning, Simon. So much to

digest and discuss. For market a really uncertain time which they

observe the head. But if we look at of the other issues, business

optimism has plunged over the weekend. And as higher than it was

after last year's decision on leaving the European Union. Give us

your take on all of us. What you have is domestic economic

uncertainty put on top of Brexit economic uncertainty. It is a double

whammy. I think most assumed that the conservative manifesto was go to

be lamented domestically. They knew that Brexit was an uncertain outcome

for at least two years, but you now have that multiplied twofold. And

therein lies a lot of deep sentiment that we have seen out of business

over the weekend. If you add to that some of the economic issues on top,

like consumer spending, the latest figures show that it is falling in

May for nearly the first time in four years. This is inflation

tightens its grip. There is a lot of headwind and stir -- sterling been

depressed all the time. So how is this organ to play out when Theresa

May is trying to me desperately, to stay in power, and form a government

that she hopes will be stable and strong, but could be far from it?

Consumer spending was all ready under pleasure. You mention the

weakening sterling. -- under pressure. Households have pulled

back on their spending as a result. That is a difficult backdrop for

politicians while they deal with Brexit and pushing through a

domestic agenda when they are going to give vital votes in Parliament.

And additional public spending in certain areas to buy a vote is may

well be the theme of however long as Parliament goes. And that does not

always generate the best economic policy-making, because you end up

having to appeal to people's political instinct, rather than

assessing a project on its real merits. And business leaders and

market watchers have two work out what it means, a conservative

government with the DUP of Northern Ireland, and what that means for

economic policy, but also the Brexit negotiations. Cheesemaker. So taking

a conservative economic policy foes, adding additional spending in

Northern Ireland will be a fan to try and secure the votes on a deal

by deal basis. They can adapt to seek cross party support. On Brexit,

there is a potential here for a softer version of Brexit is at -- as

a result of backbenchers wishing the gunmen to this offer. Sterling has

been so softer. -- pushing the government. You may well see a rally

as the market looks at this and sees a softer Brexit down the pipeline

that we would have assumed under a conservative majority. Thank you so

much to your analysis this morning, Simon. There will be more of that,

because in the news review, will be looking at some of the newspapers

and what they are discussing this morning,

following Thursday's election. But let's take you across the water to

France. Things could not be any more different.

The new centrist party of French President Emmanuel Macron

looks on course to win a landslide victory following the first

Projections suggest En Marche could get as many as three-quarters

The final outcome will be decided at a run-off next Sunday.

Mr Macron's party was established just over a year ago and many

candidates have little or no political experience.

Joining us now is Tomasz Michalski, Professor of International Economics

at the HEC International Business School in Paris.

Good morning to you. Give us your take on this, not landslide, but

this extremely strong rally behind Emmanuel Macron and his new party,

and what it means for the economy in France? Well, this gives a space for

long-awaited reforms, that is for sure. Along with the Republican

Party, which is going to have the larger part of the seeds of the

remaining seats. We are looking into a 90% pro reform majority in the

Parliament. So we can, this is a once-in-a-lifetime chance, that

there is could be a reform agenda pursued. And already, we know what

the first battle will be. It will be reforming even slightly the labour

code. Let's talk about that. That was a key plank of his election

campaign, that he would be the man to deliver on that, where Francois

longed and Nicolas Sarkozy had failed. -- Hollande. But will he

deliver? This is to be seen. The political situation, or you would

think, could not be more favourable. Yet even with such a huge majority

on the cards, his go to try to push the legislation for a fast track

authority that isn't to limit their discussions in the Parliament. There

would be to try and sign before September, when people return back

after vacation. But this is made more surprising when Jean-Luc

Melenchon said let's defend the labour code. So could be a heated

fall, because the opposition will not be the Parliament, they will

take to the streets. We have seen that before. Thank you for joining

us this morning, Tomasz. Let's now mention what is happening at Uber.

It has been in the headlines are lot lately.

Uber's chief executive Travis Kalanick could be forced

to take a leave of absence under changes reportedly being considered

A decision on whether to alter Travis Kalanick's role was set to be

taken at a meeting of Uber's board on Sunday.

Reports also suggest the company's Chief Business Officer is planning

All this trouble at the top follows a review in February after former

Uber engineer Susan Fowler made claims of sexual harassment.

There has been an investigation into that sense. Having a look at the

markets began, now. The pound is still lag wishing after having

fallen 1.6% from Friday. It is bumping along that low level. The

euro is bumping along a little bit, and that is how the markets are

changing in Asia today. -- trading. Stay with us. Much more to come in

just a moment.