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tv   BBC Business Live  BBC News  September 14, 2017 8:30am-9:01am BST

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this is business live from bbc news with ben thompson and sally bundock. panic on the high street — it was britain's first bank run in 150 years, but a decade on, have the lessons of northern rock been learnt. live from london, that's our top story today, on thursday 14th september. following the money ten years on from the collapse of northern rock — who are the winners and losers? we will find out more on that front, the first bank run in 150 years. plus — as most big car—makers bet on electric to power their new cars, toyota is opting for hydrogen — who was right about the future? we'll hear from toyota's european boss.
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and it's rate decision day in the uk today — will we see a split in the vote to raise rates after a week of strong inflation data and falling unemployment numbers? what will it mean for rates? and from fishmonger to anti—establishment media mogul — we'll be speaking to the man behind the register website about hisjourney, and how he competes with the likes of facebook and google. and as the bank of england issues its new £10 note with jane austen on the back, we want to know, is cash still king for you? do you still use cash? let us know — just use the hashtag bbcbizlive. a p pa re ntly apparently we have to give that £10 note note back, so no coffee on sally later... exactly ten years ago today the bbc broke the news that high street lender northern rock had been forced to ask the bank of england for help. what happened next was an early warning that the global financial crisis was in meltdown.
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those events prompted major changes in the financial services industry, but some say the subsequent reforms have not gone far enough. these were the scenes at northern rock branches around the uk. you may remember them. it was the first ‘run‘ on a british bank in 150 years, with savers queuing to try and get their money out. as you can see. five months later the bank was taken into government hands — it was nationalised. northern rock had borrowed too heavily on international money markets in order to lend to customers. and as fears of a financial crisis began to grow the cash dried up, pushing the bank to the brink of collapse. so what's changed ? well, here in the uk savers get much more protection now. as of this year, the government guarantees up to £85,000 of your savings — that's around $112,000 —
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if a bank fails you get it back. that's well over double what was before the financial crisis. what about the banks themselves? they are now obliged to keep more money in reserve. and they have had to ring fence their retail services from the investment arms to protect consumers‘ money better. but is it enough? joining us is professor steve keen, head of the school of economics at kingston university london. what is your view, have we learned the lessons? no, we haven't, we don't even know what caused it, well not us, but the authorities have not identified it. it is only rebels like myself who know why it occurred and why we still have not got away from those problems. from your point of view, in a nutshell, what is the key problem? the level of private debt was allowed to go completely out of control. in the uk a century,
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from 18821980, it never exceeded about 5% of —— 7% of gdp. then it grew to 195%. it is currently running at about 160% of gdp, three times the average level of what it was before margaret thatcher got elected. it is effectively like having a ball and chain around you like and you're wondering why you can't walk quickly. but have they not put measures in place to prevent a similar crisis from happening ain? a similar crisis from happening again? many say, you know, financial crises happen, it isjust again? many say, you know, financial crises happen, it is just what happens in history, they are for different reasons and with different causes, but in terms of what happened in 2017, 2018 onwards, banks are now much more stringent about what they lend and to whom, and of course the financial conduct authority is much more hands—on? that site has been strengthened to some degree but what has not been strengthened is the macro economic
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impact of this type of debt and the reliance on credit for demand. that is why the economy has slowly recovered but it has been the slowest recovery since the crisis in the history of capitalism for the uk and the reason is we are carrying a level of debt which is so much higher that we are dragged backwards. so we have that, but we have not address the underlying cause. what about the issue of culture, because when it comes to debt and how much that we are willing to take on board, that is something that we have been very used to in the uk and other developed economies for a long long time, whether good or bad thing. for example, in china there is real concern about them changing culturally from savers to those living on credit, to basically pay for what they want? yes, well, we have lived on credit for the last 30-40 have lived on credit for the last 30—110 years, and that works when you are borrowing money, the person going down the street with a credit card, and everybody loves you, and by the time you have maxed out the credit cards you stop shopping. but the shops have built a capacity to
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handle your extra three credit cards, and suddenly there is a plunge and that is what causes the uk it is about half or two thirds of what private debt is. the government can pay its own bills. we can't. so we are still stuck in that problem. professor steve keen, thank you for your time this morning. there are many many viewpoints and discussions on our website about that anniversary, and of course where we are now. let's take a look at some of the other stories making the news... president trump has warned that taxes could rise for rich americans. he wants to overhaul the us tax system, and is holding a dinner at the white house to win over top democrats. he said his main goal is to cut taxes for the middle class and cut corporate taxes to boost job creation. the uk chancellor philip hammond says britain will aim for a "bespoke" deal with the eu to protect the city
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of london after brexit. mr hammond said financial services are the uk's most important export to the eu, and warned brussels would not be allowed to use brexit to introduce "protectionist" measures. the new £10 note featuring novelist jane austen has entered circulation in the uk. it marks the return of a woman — in addition to the queen — on bank of england notes. the new £10 note is made of polymer and includes raised dots for blind people. it replaces the paper £10 note, with the portrait of naturalist charles darwin, which will still be legal tender until spring 2018. so if it goes in the washing machine, it is ok, is that the idea? yes, well, if it is anything like the fiver, it doesn't survive the hot wash very well. you have experienced that then? maybe i
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have... your comments coming in. here's one. "i can't remember the last time i used cash except for paying for parking... " luke says he still uses cash quite regularly. keep your comments coming in, using the hashtag bbcbizlive. president trump has blocked a chinese—backed private equity firm from buying a us—based chipmaker. it's being seen as a clear sign that washington will oppose takeover deals that involve technology that could have a military application. sarah toms is in singapore. nice to see you again, sarah. can you tell us a bit more about this story? as you said, it has cast a bit of a cloud over other chinese deals waiting for approval, the white house spokesperson said the sale was rejected because it could risk national security. an
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intervention by the white house in business deals israel, but the chinese owned fund had hoped mr trump would approve it after the committee on foreign investment ruled against the $1.3 billion deal. the trump administration has taken a tough stance, as you know, against chinese takeovers of us businesses. 0fficials chinese takeovers of us businesses. officials of course are concerned this could threaten the competitiveness of the us industry, but they are also worried it could give beijing access to cutting edge technology with commercial and military applications, as you said. what does that mean for other deals on the table, like the proposed sale of us moneygrand to chinese giant alibaba of us moneygrand to chinese giant aliba ba group of us moneygrand to chinese giant alibaba group might we will have to see what happens with that. thank you for that. let's stay in the region. 0vernight china industrial production and retail sales figures giving investors something to worry about. a sharp fall in both readings — as well as the fall in export
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data we saw last week. retail sales in china showing their weakest rate of growth since february. in europe, it's about rates today as the bank of england wraps up its rate—setting meeting. we've had inflation data showing an unexpected rise in prices. wages still failing to keep up, despite another fall in unemployment — to its lowest level since the mid—1970s. soa so a lot for the bank of england to content with and we will talk more about that in a moment. first let's assess what's ahead on wall st — michelle has the details. company results are thin on the ground right now. earnings season picks back—up in october. but investors won't be completely starved of corporate profit news. 0racle reports first—quarter results after thursday's us market close. encouraging reports from analysts saw its share price hit a record high ahead of its quarterly results,
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and the business software maker is expected to report a rise in revenue as investment in its cloud computing business continues to pay off. turning to economic data, and the consumer price index is due out. the report from the us labor department is likely to show a rise of 0.3% in august. that's compared to a 0.1% rise injuly. this follows wednesday's inflation report, which showed us producer prices increased less than expected. that is the lovely michelle based in new york talking us through the day on wall street. joining us is kathleen brooks, research director at city index. good morning. is it fair to assume your eyes on the bank of england to a degree today? 100%, yes. your eyes on the bank of england to a degree today? 10096, yes. this is probably one of the most interesting non—super thursday meetings we have had actually, because as you said we have at the high inflation, the wea ker have at the high inflation, the weaker wage growth, so it is that conundrum that the bank of england really have to deal with today.
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because policy would suggest that when you have inflation going up, you would raise rates to take that, but then there are so many other things to content with and they are so things to content with and they are so scared of knocking any kind of fire jail economic recovery, given brexit. this thing about the consumer squeeze, brexit. this thing about the consumer squeeze, but hike interest rates because it will affect consumers, but there is no point in wages rising if inflation is rising at the same time because your wages are still being eroded. i think there is too much focus on the weird side and not enough on the inflation side. it is interesting, looking at oui’ side. it is interesting, looking at our business live page, they are looking at that, and the fact that we will have the minutes from the previous meeting, so we can see who voted to go up and who to go down. there are also results from john lewis, from next, morrisons, not bad, but a lot of indication certainly that when it comes to how we spend our money and how much we are spending, people are feeling the pinch. people are being more
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cautious. a few extra dynamics. the weather can impact things. retail sales can get impacted in the late summer sales can get impacted in the late summer because of the shifting of summer because of the shifting of summer sales and the bringing of new season summer sales and the bringing of new season collections, so there are a lot of dynamics going on. what will they be looking at, because these are lagging indicators, are the? evenif are lagging indicators, are the? even if there is policy action at this might we will not see the impact of that for a couple of months at least. they are unlikely to do anything today but even if they do hike interest rates by 0.2% by the end of this year, it is still such a tiny amount, but a very symbolic impact because it will be raising them from their lowest ever level so they have to be careful. how much do you use cash? sorry, i threw that one out there! so rarely. ido threw that one out there! so rarely. i do have cash in my wallet today but i had specifically to go to a bank to get it. i remember not so long ago you could not walk out the door without cash on you. that paranoia, oh, i've got no cash. you
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don't even need your purse, if you have your phone, in some cases. kathleen will be back and she has a really interesting stories for later. if you are watching from around the world you may think this is old hat, but in the uk it is big news. we will speak to —— more about that in a moment. still to come: we'll be speaking to the man behind the technology media website the register, and how he competes with the likes of facebook and google. you're with business live from bbc news. so let's talk some more now about this new £10 note. then is pretty excited about this, but don't put it ina hot excited about this, but don't put it in a hot wash! hot on the heels of a new five, kevin, you have lent me this plastic tenor. is that kevin's? yes, i have to give it back. it is a
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bit smaller and made of plastic, but importantly, it has got jane austin on it, and we have had four months now without any kind of female representation on banknotes in england after elizabeth fry was withdrawn to be replaced by winston churchill. it might take a little while before you can get hold of one, they will be in banks and the like. i have been left with this £10 note, the paper called one, but luckily i can still spend that in the shops until the spring. we will get three months notice before that is withdrawn. and the plastic notes are not without controversy. we touched on whether they shrink in the wash. they are supposed to be able to go through a cycle, but not too hot? i actually put one through a cycle and it seems to, quite well, they don't care as easily as the
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others. but there has been controversy because of the use of tallow, an animal derived product, in the production of these notes, and the guns and various religious groups have been unhappy about that use, and the bank of england has that into it. —— v vegans and various religious groups. the bank of england looked into it but decided to continue to use the tallow. the next note will be in 2020, the £20 note with turner on it. this is kevin's money. fine, i will bring it back! i want to talk aboutjohn lewis, a big fall in profits, more than 50%. they are blaming brexit. the chairman ofjohn lewis, who has been on the radio for today programme today, and says it has had a big impact on the economy. john lewis has a lot of cash so that
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they can ride the wave for now, but people are not spending as much, and the products they are buying into their shop are costing them all. so it is tough times. you're watching business live. our top story: a decade on from the demise of northern rock, it was an initial signal of the globalfinancial it was an initial signal of the global financial crisis. it was an initial signal of the globalfinancial crisis. do it was an initial signal of the global financial crisis. do you remember where you were? i was overseas. i was remember where you were? i was overseas. i was on remember where you were? i was overseas. i was on maternity leave after having my second child! i was watching it all unfold thinking, i am missing a massive story. but that is the gift thatjust keeps on giving to ten years! my son is ten yea rs giving to ten years! my son is ten years old. it's no surprise that newspaper sales are falling as more of us make the switch to reading our news via the internet, social media and smartphones. and that also means a big change
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in how and where advertisers choose to spend their money, too. in the us, experts predict that the two dominant players — facebook and google — account for 99% of all internet ad spend. a further complication for news providers is the rise of social media. more than half of people now use platforms such as facebook and twitter as a dedicated source of news. situation publishing is one veteran of the industry which is weathering the storm. it's been providing technology—based news since before the dotcom bubble. the company owns the technology website the register, which attracts more than 5 million unique visits every month. linus birtles, co—founder and owner of situation publishing, owners of the register, joins us now. welcome, linus, good to have you here. your first
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welcome, linus, good to have you here. yourfirstjob was welcome, linus, good to have you here. your firstjob was any fishmongers in liverpool. that is correct. just explain how you went from there to where you are now! correct. just explain how you went from there to where you are nomm isa from there to where you are nomm is a long story, and it involved quite a bit of hard work and quite a lot of luck as well. i can talk you through it... horrible shift under strong smell! i wasn't spectacular at school when it came to a—levels, it'll be four years to squeeze through with some very poor grades. i went to polytechnic very briefly, and flunked out of that inside one term, and my mother got me a job through a friend in liverpool fish market, and i was working there for four years, greatjob but long hours, and it was quite. did you enjoy it? i did. it was risible thing, get up early going by your fish, sell your fish, thing, get up early going by your fish, sell yourfish, go to bed, get up fish, sell yourfish, go to bed, get up and do it again. and then it went from fish to printers, that is how
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you got into technology?” from fish to printers, that is how you got into technology? i was 26 yea rs you got into technology? i was 26 years old, and my first child was on the way, and a good friend of mine said to me, you need to get a proper job, you can't stay working in the local fish market earning job, you can't stay working in the localfish market earning not job, you can't stay working in the local fish market earning not very much money at all and working long hours and having a certain smell about you, and he got me a job with about you, and he got me a job with a friend of his who essentially specialised in buying redundant stock, last year's stock of printers, and i was very lucky, i went there as their sales person, it was a husband—and—wife team plus myself and one other person, and this business grew over the space of five years to doing £50 million of turnover, and we had a sales team of a hundred people, and i was lucky enough to go from being the only salesperson to managing the team, andi salesperson to managing the team, and i was part of that, we used to advertise heavily in the tech press and national newspapers, and i became familiar with magazine advertising and what were good and bad magazines, and i left that
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business after about ten years with an idea to launch my own magazine, andi an idea to launch my own magazine, and i managed to find a baco, on the back and i were very lucky, we managed to launch it and then sell it to managed to launch it and then sell ittoa managed to launch it and then sell it to a large newspaper group inside two years. it to a large newspaper group inside two yea rs. we it to a large newspaper group inside two years. we made some money, and off the back of that, i invested in this product called the register. so how have you managed to keep going? because many who are long in the tooth, and you and i can both get into that category, not so much baby ben! we are talking 1980s, and fast forward to 2017, so much has changed and so many magazines and publishers have gone under, it has been a difficult market. it has, and we have been doing thisjob difficult market. it has, and we have been doing this job for 20 yea rs, have been doing this job for 20 years, and it has been a roller—coaster. years, and it has been a roller-coaster. if you go back to the .com, we were the first pure
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digital product, it was a problem also benefit, because mainstream publishers have suffered from this transition from paper to digital, and their revenue sources changing all the time, it is death by a thousand cuts. you talk about that revenue source. how thousand cuts. you talk about that revenue source. how would you make money from journalism? so many sources are free? and we are free. we make our money on a very traditional model, through advertising. we also run some live events, but the main core... . had you track the advertisers when facebook and google dominate so much? it is all down to the journalism. 0ur mantra is the content is king, and if you have good journalists, you get good content, and you build a readership who stay with you, and that is in effect your currency, and it is the quality. so things haven't changed that much? it is exactly the same as
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it used to be, the only difference is that it it is changing all the time, and it keeps me young! we have run out of time, but thank you for coming in. we have to move on. frankfurt motor show this wee. theo leggett is there for us. theo asked toyota's european boss. the big driver, of course, will be customer choice, and of course also the infrastructure. hydrogen society needs to created, and that will take of course longer than creating electric infrastructure. but hydrogen in the long—term is really, really a very good solution in terms of an alternative form of energy. of course, the fact is you can utilise hydrogen to store energy as much as an energy carrier. if you want to convert a renewable energy and storage, you need to put it in big, massive batteries, so i don't know whether it is ready practical to do it that way. toyota 20 years ago had already started investing in the electrification of cars through our hybrid strategy, where we have hybrid vehicle which is not required to be plugged in, but on our hybrid technology architecture, we can bolt plug—in hybrids, we can bolt battery electric
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vehicles, and also of course we have the hydrogen vehicle. that is the european boss of toyota talking about why they are opting for hydrogen rather than electric vehicles. kathleen is back to discuss the papers. this one on the bbc website, too fat to fly, russian women fightjob discrimination. this is at aeroflot. and air hostess has had a 30% pay jolt because she doesn't match their sizes. aeroflot, she decided to take them to court, they decided to defend their position by saying that each extra kilo of weight, they have to spend more on fuel etc. luckily
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enough, thejudge to spend more on fuel etc. luckily enough, the judge saw sense and ruled with the air stewardess, because she was only a size 16. there is also a debate about passengers. i get a flight, and i have a heavy bag, you have to pay more to take an extra bag, but if you are heavier person, you don't pay more. external things, there you are heavier person, you don't pay more. externalthings, there is an ethical issue, fine, charge for bags. don't make every body stand on the scales. i agree, 10096. the financial times and many others, steven mnuchin faces the enquiry at his insistence on using the air force jet to get around honeymoon. and he is doing it because he says he needs secure communications, but he needs secure communications, but he also did it for another trip last month. watch this space. i am off to give kevin back his £10 note! goodbye. good morning. sunshine and showers
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isa good morning. sunshine and showers is a phrase you might hear a lot over the next few days. that is certainly the case that today, but a fairly good opportunity to catch some rainbows as those showers move through. if you look at the pressure chart, track back these isobars and they go all the way up towards greenland, so here we have a cold air stream greenland, so here we have a cold airstream coming in, and that greenland, so here we have a cold air stream coming in, and that means it will be quite chilly at times today. some cloud and rain across southern areas this morning will clear away to the size, and then we are clear away to the size, and then we a re left clear away to the size, and then we are left with a rash of showers into this afternoon. some of those showers will be particularly heavy. there will be the odd thunderstorm around as well, and while temperatures will get to 16 or 15 celsius, when those showers move through, the temperatures will drop bya through, the temperatures will drop by a good few degrees so it will feel quite chilly at times. there will be some sunshine, the opportunity to catch a rainbow or two, and into the afternoon, showers
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will continue across south—west england and wales as well. temperatures in cardiff 15 celsius, pretty chilly on anglesey, and for northern ireland, the mixture of sunshine and showers continuing. there will be more persistent rain slowly moving its way in by the end of the afternoon. through this evening and tonight, a lot of the showers will tend to move away, but around coast of areas in wales, we will continue to see the showers moving in. temperatures getting eight to 10 celsius, and then we have this weather front here which will bring a band of cloud bring a more enhanced showers moving south and east, but by lunchtime is that clears away from the kent coastline, we are left again with this regime of sunshine and showers. but once again it will feel quite chilly, especially with the brisk northerly
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wind, temperature is 16, 15, 16 celsius, and temperatures will drop away when the showers pass through. into the weekend, this area of high pressure will move in. things are little more settled towards western and northern areas, but this low pressure towards the east will give more showers. for the weekend, the wind will ease away. it will still feel rather cool, most of the showers across england and wales, particularly during sunday, that'll drier and brighter the further north and west you are. goodbye. hello, it's thursday, it's 9 o'clock, i'm victoria derbyshire — welcome to the programme. 0ur our top story today — the public inquiry into the grenfell tower fire opens this morning. some survivors tell us they have no faith it will uncover the truth. there needs to be accountability to what's happened. i think the residents have the right to know. for me, ijust wantjustice. ijust wantjustjustice. give the world the truth, and let the world judge, because we have been really badly treated. exactly three months
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on from the fire we'll look at what the inquiry aims to achieve. also, this programme has been told that the former england manager graham taylor was warned about the abuse of young players at aston villa in the 1980s and allegedly told one victim to "sweep it under the carpet."
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