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tv   BBC Business Live  BBC News  June 1, 2018 8:30am-9:01am BST

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this is business live from bbc news with alice baxter and david eades. world leaders react furiously to president trump's decision to put steel and aluminium tariffs on america's closest allies — unveiling a tit—for—tat response. live from london, that's our top story on friday 1stjune. france's president macron tells donald trump his tariffs are illegal as affected countries set out their retaliatory measures — ranging from levi jeans to ballpoint pens. also in the programme... more political instability in the eurozone — spain's prime minister mariano rajoy is expected to be forced from office in a no confidence vote later today. and we will keep a close eye on the
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markets. european markets have openedin markets. european markets have opened in the green. and it's been a big week in the world of business — we'll be looking at why italy's political crisis managed to spook the markets, as populist parties there make a fresh attempt to form a government. it's been a big week for driverless taxis and drones as food deliveries via flying drones get the go—ahead in china — how ready are you to embrace the future? just use the hashtag #bbcbizlive. hello and welcome to business live. welcome to the programme. some of america's closest allies have reacted furiously to president trump's decision to slap steep tariffs on steel and aluminium imports. the trump administration says the levies are needed
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to protect national security. meanwhile, countries affected have promised to retaliate. let's hear some of the reaction — starting with canada's prime ministerjustin trudeau. these tariffs are totally u na cce pta ble. we send steel to the united states that is vital for their businesses and defence industry. it is patently absurd. it's totally unacceptable that a country is imposing unilateral measures. translation: it is totally inadequate. we reject it completely. we think it'll damage consumers, not the industry. translation: it is a brutal and unacceptable decision. it is the law of the strongest, but international relations don't fall under the law of the strongest. translation: today's decision is wrong. it is harmful for europe, but also for the us itself. canada says it will put tariffs on about $13bn worth
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of american products, including yoghurt and roasted coffee, while mexico says it will put duties on us agricultural products including apples, grapes and cheese. but how will europe retaliate? it's understood the eu has drawn up a list targeting 100 different us goods with worth $3.5bn — covering agricultural, industrial and cosmetic goods. many of the goods are targeted for maximum political effect — ahead of the mid term elections later this year. orangejuice is on the list — it's a key export for florida which is a crucial swing state. bourbon whiskey also features. produced in kentucky — it's the state of the senate majority leader — republican — mitch mcconnell. but any retaliation could potentially turn the heat up on european car makers — with president trump saying autos
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could be the next battleground. with me is rajneesh narula — a professor of international business regulation at the henley business school in the uk. it is always fascinating seeing which products they are going to target to come back on. nonetheless, is there a major trade imbalance with the eu in any case? not really. there is a trade imbalance, but the current account is actually in surplus. since 2009, the eu has been in surplus against the us. so this isn't about actual economics, it's about picking particular statistics and focusing on the ones that fit trump's argument. so they have every right to be jumping
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trump's argument. so they have every right to bejumping up and down, as they are doing, despite the fact that there has been some negotiation but no apparent movement? indeed. this is him posturing, the trump administration posturing to say, we are doing what we promised in the elections and so forth. the big concern would come up if he goes after the car industry next with claims of a national security interest preventing german cars from coming into the us. this national security option or clause that he can use, we have already heard emmanuel macron saying it is illegal. if that is put to the test in the wto, what do you think is the likely outcome? well, no one has tested this. it has been used in the past for small things like foreign ownership of assets like aircraft, airlines and newspapers, but never really for something like this.
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where there is no clear military issue or so forth. the question is whether this to trump will follow wto procedure or go unilateral again. he has made it clear that this is leverage and it is still quite difficult for us to think this is more than a phoney war. but as soon as there is retaliation, things can run out of control. that is a big concern. as long as the eu stays united. they are taking the high ground, the europeans, the chinese and canadians, that they are doing everything right. as long as they stick together, the rule of law and checks and balances will function. but with the loose cannon type of behaviour he is using, if the small countries peel off and give in to american pressure, that is a concern. we wait to see if that will
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happen. thanks. let's take a look at some of the other stories making the news... mps in the spanish parliament are due to vote today on a motion of no confidence against the spanish prime minister mariano rajoy, following a huge corruption scandal involving the governing party. the motion was called by the socialist party and is expected to topple the prime minister and the government. we'll have more on this later in the programme. japan's toshiba says it has completed an $18 billion sale of its chip unit to a consortium led by us private equity firm, bain capital. the deal had been delayed due to a prolonged review by chinese antitrust authorities. china approved the deal last month. under the deal with bain, toshiba repurchased 40% of the unit. the indian government's attempt to sell a stake in the national carrier air india has failed to attract a single bidder. in march the government announced they were going to sell three—quarters of the airline as a way of offloading some of its $5 billion debt. but despite a booming aviation market, prospective
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buyers stayed away. that must be a blow to national pride. shares in australia's anz bank have fallen as much as 2.4% on news it will be prosecuted over an alleged criminal cartel arrangement. let's go to our asia business hub in singapore, where leisha sa ntorelli is following the story. this is a big story? it is, and typically when you hear the word cartel, you think about people like pablo escobar and the drug trade, but cartel behaviour can also apply to all types of businesses including banks. this explains why people act together to drive a profit rather than compete against each other. the case in australia focuses on anz‘s
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nearly $2 billion share sale that took place a few years ago. the other players were deutsche bank and citigroup, who were the underwriters, and these three banks are accused of working together on a cartel—like arrangement that influenced the trading of shares. the banks say the allegations involve a highly technical area and that they acted in accordance with the law. but this is just the latest example of banks behaving badly and it came to light as part of a government backed inquiry in australia into misconduct in the financial industry. this inquiry is uncovering many skeletons in the closet. this ranges from bribes, interest rate reading and charging that customers service fees. so we will see what moore comes out of inquiry in the coming days and months. thanks, leisha. asian equities recovered from early weakness on friday as a lower yen supported japanese stocks and firm exports boosted south korean markets. still, rekindled concerns about us trade policies limited regional gains. and indeed, a fall on wall street on thursday — after the us announced import
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tariffs on canada, mexico and the european union, set the initial tone in asia. so japan's nikkei ended lower on friday, as selling in large cap stocks also erased earlier gains made after that weaker yen supported exporter firms. here in europe, european stocks followed asia's firmer tone and have enjoyed a modest rise. and kim gittleson has the details about what's ahead on wall street today. on friday, investors will take a short break from wondering what will be the next move in an ongoing us trade war to instead turn their eyes to what's happening in washington. that's where right before us markets open, the latest us monthlyjobs report will be released. most analysts are expecting that the us unemployment rate will remain at an 18—year low of around 3.9%. the key focus will be on another survey which will showjust how many jobs the us added in may
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and whether or not american workers have finally been given a long—awaited raise. this is the biggest question facing the us jobs market right now — why is it that if the unemployment rate is at historic lows, americans are not seeing it in their pay cheques? so analysts will be looking for any signs that those wages are finally rising and if they're not, they will be asking why, something that will be a continued point of focus for the us federal reserve when it meets in the middle ofjune. joining us is richard dunbar, investment director at aberdeen standard investments. explain something for us. we were looking at green arrows were european markets today. the asian markets were at best pretty flat, and yet we are trying to digest this bombshell of a new trade war?m and yet we are trying to digest this bombshell of a new trade war? it is a balance of two things from donald
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trump. a few months ago, we had the tax cuts which he promised when on the campaign trail. that was positive for markets. on the negative side, he also promised trade sanctions, and we are getting that in spades today. so the markets are balancing reasonable growth globally and reasonable profits from globally and reasonable profits from global companies against what is undoubtedly a subtraction of growth and profits in terms of the trade actions. is it becoming a trend in markets, this sort of non—reaction to what is coming out of the trump administration? back in the day, the moment trump said junta, they would alljump. moment trump said junta, they would all jump. whereas we moment trump said junta, they would alljump. whereas we have the cancellation of the korean summit and there was another market non—reaction, with a similar thing happening today. markets move on interest rates, the price of money, profits, earnings from companies and sentiment. i suppose interest rates are still low and sentiment is poor because of some of the actions from donald trump today, but profits are
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still reasonable. so it is a balance of these three things. on balance, maybe it is not as bad as the headline suggests. maybe they don't believe it is going the whole way. we also have a change in the scene in italy at last, it seems. that will obviously have an impact. i suppose there will be much relief that something is settled, even if it doesn't last long. the markets we re it doesn't last long. the markets were pretty spooked by the italian gyrations. the price of borrowing for the italian government doubled, so that was a real impact of some of the discussions over there. it has come back a bit over the last couple of days, which is helpful. but what we are seeing in italy is a symptom of what we are seeing around the world in terms of populist parties either gaining control or having more influence on government. and that trend will continue. at least they will have a government. we will see you later. still to come... more political instability in the eurozone... spain's prime minister mariano rajoy is expected to be forced from office in a no confidence vote later today.
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you're with business live from bbc news. management at the troubled retailer mothercare will meet landlords and other creditors today, trying to secure their agreement for a plan to pay less rent at 21 of its stores. but faced with a growing number of so—called company voluntary arrangements, some landlords are resisting requests from retailers to reduce rents. mothercare says it's in a perilous financial position and 50 other shops will close. richard buxton is chief executive at old mutual global investors. it does seem very tough on landlords. whatever the situation of
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the retailer, to say, can't pay you that much any more? indeed. it does seem unfair that a retailer can have signed the lease years ago on a property that the landlord developed in good faith, understanding that they would receive these rents for yea rs. they would receive these rents for years. but the sad fact is that the growth of online against bricks and mortar is absolutely accelerating. the level of rent some leases signed 15 years ago against today's rent, the differential is massive. and if the differential is massive. and if the alternative is that the retailers do go bankrupt and the landlord has no tenure, it is better to have some rent than none. is this also perhaps an opportunity for landlords who have been struggling and have not been balancing the books to renegotiate, which also is not fairfor books to renegotiate, which also is not fair for those successful landlords out there? absolutely. if you have been a retailer which has
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had too much debt on the balance sheet and you signed leases when times were good and full of expectation against a more prudent retailer with less debt on the balance sheet, you could argue that it is pretty unfair on the good retailer that the poorer retailer goes free. again, it is partlyjust the reality of the fact that we have too much retail estate at the over rented level today. canny retailers like next, if they are signing a lease today, are putting in with the landlord a kind of next —— cva clause that says if you sign a new clause that says if you sign a new clause with a retailer on this site, we wa nt clause with a retailer on this site, we want the same discounted rates. richard, thank you. you're watching business live — our top story — some of america's
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closest allies have reacted furiously to president trump's decision to slap steep tariffs on steel and aluminium imports. the us says it is a matter of national security, while the countries affected — including canada, mexico and the eu, have promised to retaliate. it's been a busy week for the eurozone — we've had italy's political crisis, which spooked markets as it initially looked like there could be fresh elections. and as we've mentioned, later today the spanish prime minister mariano rajoy is facing a vote of no—confidence later today. with me is our economics correspondent andrew walker. let's start on the tariffs. interestingly, wilbur ross is heading out to beijing to try and sort out china. that is the big
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cheese, isn't it? it is. and in relation to the steel and aluminium, one of the reasons why the united states and other industries around the world have problems is because of excess capacity in the global industries to supply both those metals. one of the principal reasons for that has been the dramatic expansion over the turn—of—the—century of the capacity of the chinese industry. when when mr ross goes to china, he is not specifically focusing on those two issues. the united states has threatened a wide range of tariffs, specifically on chinese goods. that is driven by president trump's concern that china is stealing the intellectual property, the patents, design, copyright and trademarks of american businesses. that is a view thatis american businesses. that is a view that is shared by a lot of america's other trade partners including the european union, but they are not convinced that this sort of
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unilateral action is the most effective way of tackling it. unilateral action is the most effective way of tackling itm unilateral action is the most effective way of tackling it. it is odd that it is a divide and rule approach that trump is taking. rather than perhaps unite and conquer, which might have been better. exactly. he is dividing against himself people that could otherwise be on his side, at least in some of these disputes. you mentioned europejust in some of these disputes. you mentioned europe just now. in some of these disputes. you mentioned europejust now. another day, another crisis. we mention how in italy, we are seeing bond yields double. but let's talk about spain. mariano rajoy, these allegations against him have been swirling around him since the beginning of his tenure. but today he is potentially facing a vote of no—confidence. potentially facing a vote of no-confidence. and there are signs that he might lose it. the leading opposition party, the socialists, appear to have the support of sufficient numbers of the smaller
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parties to be able to win this vote. there is the prospect that their leader pedro sanchez will end up at least on a temporary basis as prime minister. so politically for mr roger and his party, it a serious problem. and that has been reflected in some movements in spanish markets. the stock market has lost ground and borrowing costs have gone up. but it has been much more moderate than in the case of italy and it is still the case that borrowing for two years is at an interest rate of below zero, which isa interest rate of below zero, which is a reflection of the extraordinary situation we are in generally. generally, markets are not panicking about spain. if the eurozone financial markets were not capable of withstanding bouts of political instability in member countries, it would have been history years ago. belgium had more than a year without a government. we have talked a lot about italy in the last week. we had
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about italy in the last week. we had a man whose name i can't remember on the programme. but now we are back on conte. and we have this clear message that that is coming quarters, but it will only be for the time being, isn't it? there were two issues that are unsettling the markets in relation to italy. one has not gone away, which is the thought that this coalition of two antiestablishment parties would be boosting public spending and would not be making the tax increases to pay for it, the thought being the italy's precarious government finances would get worse. that is still a worry. what seems to have gone away is the idea that italy could conceivably end up leaving the eurozone. that was because of this nomination for economy minister
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which was vetoed by the president. now he is not being put in that position, although it appears he will have a job in the cabinet. the markets have taken a degree of consolation from that. he will only be europe minister. thanks very much. in a moment, we'll take a look through the business pages, but first here's a quick reminder of how to get in touch with us. stay up—to—date with all the day's business news as it happens on the bbc‘s business live page. there is insight and analysis from our team of editors around the globe. and we wa nt to of editors around the globe. and we want to hear from you. of editors around the globe. and we want to hearfrom you. get of editors around the globe. and we want to hear from you. get involved on the bbc‘s business live web page. business live — what you need to
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know, when you need to know. what other business stories has the media been taking an interest in? richard dunbar, investment director at aberdeen asset managementjoins us again. so we are starting with this front cover of time magazine, and it is called the drone age. we have read so called the drone age. we have read so much about drones in the past week. there has been so much coverage is not just week. there has been so much coverage is notjust of drones, but the whole advance of new technology like driverless cars etc. at the beginning of the programme, david andi beginning of the programme, david and i tweeted our viewers, asking them to get in touch and let us know how they feel about the future. we have had a few responses. this is our favourite. " if have had a few responses. this is ourfavourite. " if my have had a few responses. this is our favourite. " if my muesli and wholemeal bread breakfast is coming via drone, will it arrive? if seagulls are brave enough to attack
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as humans for our lunch, then they will attack the drone". and a brief one here. "i welcome our drone and robotic overlords. they are coming to rule the world, but it is something we should welcome". this article is interesting. 3 million of these things already exist. the army and doctors and restaurants are starting to use them. it feels like we are on the cusp of greater use, and that may be interesting. amazon are talking about using them even more. restaurants are talking about using them more and facebook are talking about using drones to get internet access to areas of the world where it is not already there. for those who like to visualise things, they are talking about heli—taxis as well, like in the jetsons cartoon. feels such a long way away, and yet things are moving fast. but one thing they do say is
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that regulation is miles behind. there are 3 million of these things andi there are 3 million of these things and i suspect air—traffic control are not happy about that. and if there is going to be a boom from here, i think some of our airspace might bea here, i think some of our airspace might be a little populated. the seagulls might have something to say about that. another case of regulation lagging behind technology. takeaways are going to be delivered by drone in shanghai. another story that piqued our interest in the guardian is a kind of back to basics tail. avoiding meat and dairy, becoming a vegan, is that the best way to safeguard the environment? as neither a vegan or vegetarian, i would say not, but it is interesting in the sense that two thirds of the land is being used to provide a third of the protein that we eat. i have two stoke because we have to go. paxo watching. —— thanks
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for watching. technically speaking, the 1st of june is the first day of meteorological summer, but the 21st ofjune is the summer solstice. today we are forecasting thundery downpours. it is also going to feel very warm, so downpours. it is also going to feel very warm, so the summer—like weather continues. and the thunderstorms today which will be brewing later will be affecting parts of the country that so far have not seen much in the way of downpours. today, the majority of the country will enjoy bright if not sunny weather, but showers will be brewing across more western parts of the country. yesterday, we had lots across the south. today, we will see some across the west country into wales. we will also see showers
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across the north—west of england. so there could be thunderstorms there. northern ireland will also get downpours, and south—western parts of scotland. if you drew a line to the lake district and down into wales, that is the area affected. flash flooding is certainly a possibility. some of the heavy showers will continue into the evening and then it turns misty and murky again. a warm night on the way. that takes us into saturday morning and showers will once again be developing. and a warm day again. sunday, a dry day. there will be a
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few showers around. they will mostly be across the north and in scotland, and we will have sunshine around on sunday. a quick look into next week. temperatures will still be fairly pleasant, with at least some sunshine. hello, it's friday, it's nine o'clock, i'm chloe tilley, welcome to the programme. a warning that vulnerable children are at a risk because they are being shunted around the care system. they're much more likely to deteriorate in terms of their own mental health, in terms of their well—being, and much more likely to be at the prey of those predators — the gangs, the grooming and the like. we'll talk to care leavers about their experiences. also ahead — on the
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brink of a trade war, fears for thousands of uk steeljobs. donald trump claims he's putting america first as he imposes tariffs on imports, but europe threatens to retaliate. it's totally unacceptable that a country is imposing unilateral measures when it comes to a threat. we'll explain what it all means and why as a result,
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