tv BBC Business Live BBC News January 27, 2017 8:30am-9:01am GMT
this is business live from bbc news with aaron heslehurst and rachel horne. trading with trump, britain's prime minister becomes the first foreign leader to meet the new us president, but can she strike a bargain with the world's biggest economy? live from london, that's our top story on friday the 26th of january. story on friday the 27th of january. as britian leaves the european union, we'll ask which side of the special relationship has more to gain from a boost to transatlantic trade. and when is a $5.3 billion profit in three months just not enough? we'll tell you why investors are not happy with google and also find out if its parent company alphabet‘s other bets will pay off? despite a bit of profit taking...
and the markets still loving president trumps pro—growth drive of tax cuts, big spending and deregulation. and as the head of bt europe resigns over an accounting scandal, we'll be getting the inside track from our business editor, simonjack, on that and all the rest of the stories he's been covering this week. after ten years of almost constant growth, the sales of soft sugary drinks in australian supermarkets has fallen by more than $60 million. we want to know — are you more aware of sugar, and is it changing the way you shop? just use #bbcbizlive. welcome to the programme. we start in the us, where, as you have been hearing, uk prime minister theresa may will become the first world leader to meet president trump when they hold talks later today. mrs may has called on the president to renew the special relationship
between the two countries. she is keen to show britain can prosper outside the european union, so lining up a post—brexit trade deal is high on her agenda. but is it really a priority for the us? take a look at this... in terms of individual countries, the united states is the uk's top export destination. britain sold goods and services worth $125 billion to the us in 2015. that's17% of all its exports. taken together, though, the european union is by far britain's top export market, worth $280 billion, 44% of britain's total exports. any drop in those exports as a result of brexit could see britain relying far more on the us. britain is far less important to the us than the us is to britain. america sold $65 billion of goods
and services here in 2015, half the amount that went the other way. and to put that in the context of the vast us economy, that is little more than 4% of total us exports — and less than 0.5% of us gdp. so putting aside the warm words, will this really be a priority for the white house? dr brian klass, fellow in comparative politics at london school of economics is with me. thank you for coming in. let's go to the figures we were talking about. it looks like the uk on paper is far more dependent on the us than the other way around. why is donald trump making such positive noises? for both politicians this is about an early political whim for people trying to transform their countries
and trading relationships with the world. i think trump needs to say he has dealt with a global power and come away with a deal. he makes himself out to be a deal—maker and wa nts to himself out to be a deal—maker and wants to show results. it's much more important for theresa may who wa nts to more important for theresa may who wants to show there will be a soft landing from brexit and this us trade deal is one way this can be achieved. in the uk its headline news, but how aware are people in the united states of this meeting happening? i don't think they are aware at all. it's in the new york times and washington post. it's not on the new york times right now. is the 35th story on the washington post. it's not headline news for americans, who are much more concerned with things like the mexican war. trump was not chanting about trade deals with the uk. little bit of a problem that i believe the uk faces. all well and good that the prime minister and president will be talking. but they
are not the ones who really do the negotiating. it's the teams behind them. apparently the uk lacks trade negotiators where america has some of the best in the world who will wipe the floor, so i hear. that's right, the uk hasn't negotiated trade deals independently for a long time and they only developed a new office last summer. they are getting up office last summer. they are getting up to speed to the us has done for a long time. combine that with the leveraged the us saw the ball is in the us‘s court. leveraged the us saw the ball is in the us's court. both politicians looking for an early win. what sort of headlines tomorrow will give that impact? i think they will commit to working on a trade deal and try to have one in place, a framework, to be in fermented as soon as the uk leaves the eu. those are the headlines. what's not clear is whether they can battle the deregulation concerns that make the trade deal difficult to hash out and whether it will be a good deal for britain in the end. thank you for
joining us, really interesting. when is $5.3 billion profit in three months just not enough? when you're google, it seems. the parent company of the internet giant saw its shares fall in after—hours trade after its quarterly results disappointed investors. as dave lee reports from san francisco, there are concerns about a slowdown in the growth of online advertising and just how future—proof the company may be. we call it pixel... the final three months of 2016 were important for google — it launched a new smartphone range, the pixel, and went big with its voice activated assistant, google home. the company didn't break out the numbers for those new devices, so it's hard to know exactly how they have performed, but google's chief executive, sundar pichai, said he was "comfortable" with the direction things were going with the new products. he's going to need them to succeed. alphabet‘s revenues, which are up 22% on this time last year,
still rely heavily on earning money through google's advertising. as even more of us turn to mobile computer in, people are clicking — or rather tapping — on google ads more than they used to, but advertisers are paying less per click than before. aside from google, alphabet has what it calls its other bets — things like superfast broadband, smart thermostats and self—driving cars. the revenues of these other bets has doubled compared to this time last year, but overall in the past three months those bets collectively lost the company $1.1 billion. dave lee, bbc news, san francisco. toshiba has said it will split off its operation that makes memory chips for smartphones and computers and will sell a stake in the new business. the japanese company needs to raise funds after revealing a heavy one—off loss at its us nuclear power business. toshiba will unveil the size of the writedown next month, but some estimate it could be around $6 billion.
swiss banking giant ubs beat expectations in the last three months of 2016 to post a pre—tax profit of $847 million. it said that rising interest rates and stocks boosted the us wealth management and securities units, whilst the bank also put less money aside for litigation. ubs is among the few european banks still facing a us probe into sales of mortgage securities. the bank has $3.2 billion in reserve for legal matters. always good to see you. happy friday. ali bacher doing it again.
didn't they recently buy something in the states? they are making a big push in the states, but the country we are talking about today, the affiliate is called ant financial. they are buying moneygram. ant is china's biggest online payments company, and it's one third owed by the boss of eilidh barbour. it's an interesting deal. the business of international payments is a really tough one. it looks quite counterintuitive given that the world is deep globalising. ultimately, this is what ant financial get through this purchase of moneygram, a big brand name and network in america as well as
immediate expansion of the global remittances business. how do you say happy new year in china? right back at you. chinese new year tomorrow. let me show you those numbers. the dow on wall street continued extending those gains after breaking that 20,000 market on wednesday. and that rebound continues rippling around the world markets. the third straight rise forjapan's nikkei, banks and exporters leading the charge today. europe is expected to follow that optimistic wave, because despite president trump's words toward trade protectionism, investors are betting the new us president will embark on a pro—growth drive of tax cuts, big spending and deregulation. everything the markets love.
so let's find out what'll be making the headlines in the us today. here's samira. the end of the week has finally come, and what a week it was! but before we look to the weekend, there are still a few bits of business news to look at. now, investors here will be focused on the fourth—quarter gdp estimate, that's the gross domestic product. now, the us economy grew by 3.5% in the previous quarter. now, economists are not expecting anything that high, but they will be closely watching this metric. also happening on friday, durable goods orders. now, that is really looked as a proxy for how businesses are going to spend here in the us. now, after seeing a drop in the month of november, analysts are expecting to see an increase for the month of december. and finally, in earnings news, american airlines will be reporting. now, it is the number—one airline by passenger traffic, but that may not be reflected in their earnings. cheap airfares and higher wage costs have really hurt
american airlines this quarter. joining us is jane foley, senior currency strategist at rabobank thank you for coming in. let's start with currencies. sterling is on a much firmerfooting this with currencies. sterling is on a much firmer footing this week. with currencies. sterling is on a much firmer footing this weekm is. it's off the highest levels of the week but if you go back to the beginning of last week, it's much stronger. a lot of this is to do with uk politics. theresa may's speech last week, what the market liked was the idea that the government in the uk has a plan, and not only that it has a plan on brexit, but theresa may has been busy filling up her agenda. she has a busy to do list. she's talking about trade with the us. that will garner positive headlines for both. that will give sterling a bit more a boost? it'll be in the press. sterling coming off its highest levels, so what the market often
does is price in, wait for the news and see if it matches expectations. theresa may has talked about industrial policy this week and says she's lining up talks with china about trade there. she's trying to firm up this belief that the uk does have a strong outlook post brexit. but brexit talks haven't yet begun. so we still have a volatile ride for sterling for the rest of the year. going to the us dollar, which has had a ride recently. we are getting us gdp growth numbers out today. it's a funny old game because president trump doesn't want a strong dollar. 0thers president trump doesn't want a strong dollar. others do, though, in the us. the us treasury, is in charge of dollar policy, not the central bank. for years the us treasury has been saying they've had a strong dollar policy but we haven't heard much about it recently, because if you have slow growth and inflation, you don't want a strong growth and inflation, you don't want a strong currency. growth and inflation, you don't want a strong currency. they kept quiet about it. the treasury secretary
said yes they wanted a stronger dollar but he has backed down again. donald trump wants to export more, import less, and if you want to export more, you want a weak dollar. so products are cheaper for us around the world ? so products are cheaper for us around the world? precisely. you're coming back to take us through the papers. we will see you shortly. still to come, we'll get the inside track on the big business stories of the week from our business editor, simonjack. tesco has agreed to buy uk's biggest food wholesaler, booker group, in a £3.7 billion deal. the companies said the deal would create the "uk's leading food business". the joint announcement also said the deal would bring benefits for "consumers, independent retailers, caterers, small businesses, suppliers, and colleagues, as well as delivering significant value to shareholders". our business correspondent, theo leggett, joins us from our business unit. this is really a boost for
consumers? isn't this just tesco, which is a whopper as it is, just getting bigger? certainly, there may be concerns that tesco is gaining an even bigger slice of the uk food market than it already controls, and some analysts are saying that competition regulators may want to look into it carefully. tesco says, we're not buying any more big stores, so there is no reason for competition regulators to get involved, but that is a discussion for the future. tesco says it is looking to broaden its business, so the supermarket business itself, which is its core business, is very competitive, dominated by a small number of large players, very hard to gain market share, hard to grow
your business and expand revenues or cut costs in that way. so it is taking ona cut costs in that way. so it is taking on a different part of the food business, making itself bigger in that way, expanding what it has to offer. it says it is particularly interested in what it calls the out of home offering, so people who go to supermarkets, prepare at home, thatis to supermarkets, prepare at home, that is traditional business for them. but restaurants, catering, convenience stores, that is another pa rt convenience stores, that is another part of what it is looking at here. tesco says this is not about refining its supermarket business and making that cheaper, it is about expanding its business and increasing its offer into new areas. 0k, great stuff, enjoy your mg! 0n the weekend, i meant! it is the chinese new year, it is going to be the year of the rooster, give me your friday fact. president
trump and the chinese leader were all born in the year of the rooster. were you? no idea! let's look into it! welcome back for our international viewers, you are watching business live! britain's prime minister says she's delighted that new american president donald trump's has made a trade deal between their countries a top priority. theresa may is set to discuss it when she becomes the first foreign leader to meet him later. they are going to do that in the 0val they are going to do that in the oval office in a few hours' time. let's have a look at how the markets are getting on, just up ever so slightly in london, a bit of profit—taking on the dax and the cac 40. and now let's get the inside track on some of the big business stories of the past few days. 0ne story we have been covering is the growing accounting scandal at bt‘s italian operation. it's now being reported
by reuters that bt‘s head of continental europe, corrado sciolla, is to leave the company as a result of the crisis. simon, you broke this story earlier in the week, it is your baby! well, no, the boss of bt europe, i was told, was leaving several days ago, he has taken a long time to write his resignation letter, he is leaving today! this scandal broke at the end of last year, back in 0ctober, they said, we have a £140 million poll in their italian division, but it turns out to be much worse than they previously thought, more than £500 million, a whopping black hole for a business which is a tiny part of bt‘s total revenues. so something has gone seriously wrong. what has happened is that employees and customers have been colluding to pad out invoices,
hitting profits targets. it was missed by the external auditors, pwc, and i am told that bt is reviewing whether it even wants to have a subsidiary in italy anymore. a couple of interesting things, it is the one country where when you do a forensic investigation like this, personal e—mails of employees do not have to be handed over. and the authorities' approach to this is generally to find against the company, the company did wrong, not the individuals. so if you put that together, you have the potentialfor scandals like this to happen. bt, a big worldwide company, it is facing challenges and a number of fronts, it has a whopping pension deficit, it has a whopping pension deficit, it has a whopping pension deficit, it has got a stagnation in its core revenue, some of its biggest customers are not spending money, and that is worrying for the wider economy. when a company as big as bt
sees customers holding off, some people say it is to do with brexit, then they have a problem, and moody's downgraded them the other night, saying that things look pretty rough for the company. night, saying that things look pretty rough for the companylj night, saying that things look pretty rough for the company. i know we will keep across that. the us, we get growth numbers, and there is... 1:30 uk time, 22% get growth numbers, and there is... 1:30 uk time, 2.2% is the consensus, which is not brilliant but not bad. they have been adding jobs pretty well. better than europe! but not quite as good as the uk, actually. the interesting about this, we have this term animal spirits knocking around, basically the trump traders that he has been talking about, he has a couple of big plans, cutting corporate and individual taxes, and the other is spending big on infrastructure, including a wall. that does two things, people think it will stimulate growth, because, briefly, if you cut corporate taxes, they get to keep more money, spend
more of it, shares are worth more, so you have seen that trade. so a strengthening of the dollar, the dow jones going through 20,000. people arejust wondering now, where do jones going through 20,000. people are just wondering now, where do we go from here? as you say, some of these protectionist talk about trade makes people think, is ego to throw sand in the engine of the global economy? —— is he going to. could it reverberate around the world? it would be a damp and on global growth. it is till the world's biggest economy. it will be interesting to see how the dollar reacts to this number. we have to wrap it up, but interesting out trump is trying to talk down the dollar in some ways, he once a wea ker dollar in some ways, he once a weaker dollar. correct. have a great weekend, simonjack. us car giant ford has made its second—best annual pre—tax profit to date of $10.4 billion according to its results out yesterday. but what effect could president trump have on the auto industry? they have revealed they are
cancelling a planned new plant in mexico, it has cost $200 million. earlier i sat down and spoke tojim farley, their boss for europe, the middle east and africa, and he explained why free trade was very important to them. 0ur industry is based on free trade, you know, a good example is here in europe — we build all of our engines in the uk, we export them to europe, put them in cars, and we reimport them into the uk. we are the number—one brand here in the uk, so you know, this model of free trade is the basis for our business. but that could change, couldn't it? president trump is talking about 20%, your cars, whatever party make in mexico to bring to the states, you may have to pay 20% on those. in mexico to bring to the states, you may have to pay 20% on thosem is early days, we don't really know, so we will see, but it seems like a lot of his policies are friendly to business. he is talking about trade,
currency manipulation, talking about data driven regulations. we will see what happens. really wait and see, everyone is saying wait and see, jane is back, are we going to start with my neck of the woods? we are, do you buy sugary drinks? not that we are allowed to, but i love a diet coke once ina allowed to, but i love a diet coke once in a while! other drinks are out there! but that has got no sugar in it. anyway, consumer backlash being reported here in the sydney morning herald, australian supermarket is seeing a huge fall in the sales of sugary drinks. 2.2% down year on year, and they are talking about $80 million in lost sales, a fifth of their revenues, because of these sales not going through. and of course what they are talking about is the studies done on
obesity, particularly sugar. so there is the possibility of a tax on that, and we have heard of this in other developed countries, but one thing about this is that there is a lot of lobbying from some of these big companies, and of course now we also have companies coming up with natural sugar alternatives too. so the industry is quite complex, but i think there is a movement by some of these big manufacturers, instead of selling sugary drinks, to get hold of branded waters. is it that the money has gone out of the market, or is it being spent on alternatives? it is switching, all of the big drinks companies, over the last ten yea rs or drinks companies, over the last ten years or so, drinks companies, over the last ten years or so, have been rushing to buy up those smaller branded water companies, and generally they are owned by bigger companies. certainly, if you go back 20 years, we all know that the amount of water is sold in a supermarket has grown considerably. a huge market. that coconut water, 1 billionjust in
considerably. a huge market. that coconut water, 1 billion just in the uk! i hated! we saw that luxury goods do very well in china, then beijing had a corporate crackdown and things, luxury sales dropped in china, but they are coming back.“ you go back to 2015, you will remember the terrible stock market crash, it caused a lot of consumers to backtrack. last year, really since february onwards, a lot of confidence in the outlook for china, although we are very cautious. that has brought some consumers back, and now they are doing things in duty is to encourage spending. jane foley, thanks very much for coming in. that is business live, bye! it's a cold and frosty start for central and eastern parts
of the uk with patches of freezing fog and in east anglia and the south—east of england there is the risk of some icy patches on untreated surfaces from this area of cloud that is producing a bit of rain, sleet and snow. an area of less cold weather working from west to east, bringing patchy rain with it. we can see the temperatures already, six or 7 degrees in the far south and west. mid—morning, only two or three degrees. some parts of northern england around about freezing or just below. freezing fog patches should be slowly lifting by this stage. northern ireland, rain and mild conditions, still pretty cold across much of scotland, in spite of early sunshine. that band of rain makes slow progress is to woods, eventually pushing into the western side of scotland, the western fringes of wales. —— eastwards. more
rain pushing from the south through the afternoon, but further east, dry and bright, still cold, only two degrees in newcastle, eight or nine down towards plymouth. through this evening, rain becomes more extensive across england and wales, there will be some in northern ireland and scotland. not just a be some in northern ireland and scotland. notjust a rain in scotland, snow across higher ground, and with the rain comes hill fog as well. with the cloud, the rain, the breeze from the south, most places should be frost free. into the weekend, turning a lot less cold across weekend, turning a lot less cold a cross m ost weekend, turning a lot less cold across most bards, but breezy, outbreaks of rain. we will start the weekend on a wet note, early on saturday morning a fair bit of rain around, moving towards the north sea, drier and brighter conditions developing, sunshine coming in from the west, a scattering of showers as well, maybe a few rumbles of thunder to go with those showers. daytime
temperatures doing well, five in newcastle, eight or nine for cardiff and london. saturday is the better of the two days, sunday looks like being quite wet for the southern half of the uk, questions about the northernmost extent of the rain, scotla nd northernmost extent of the rain, scotland should enjoy a decent rain with dry conditions and sunshine. next week, unsettled to start the week, wind and rain, but at least a good deal milder. hello, it's friday, it's 9am, i'm joanna gosling. welcome to the programme. the vicar‘s daughter and the billionaire — prime minister theresa may is in washington to meet president trump for talks on trade, foreign affairs and strengthening the ties between the uk and the us. the prime minister is the first foreign leader to meet mr trump and his team, who are just one week into the presidency. speaking last night, the president again said he was determined to build a wall between mexico and the us and suggested taxing the goods to pay for it. people want protection. 0n the wall protects. all you have to do is ask israel. they by having