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Hello and welcome to World Business Report on the BBC World Service.
I'm Wil Bain. Great as always to have your company here on the program today.
Brexit's back. Well, sort of, because the UK and the EU have reached a string of deals, it seems setting out post Brexit relations on areas including fishing rights, trade and defence.
Here on World Business Report today, we're going to pick through what's actually been agreed, what it means for businesses and consumers right across Europe.
And of course, look what it tells us about global trade more broadly, whether it's a sign potentially of things to come around the world to so loads for our panel to get their teeth into today and in the studio with us for the next half hour of Tineker Fricke, senior fund manager at the investment firm Waiverton here in London.
And to make a great to see you in a better time of day than normally when I see you on domestic radio.
You obviously watch the markets here in London pretty closely but have a good European perspective for our listeners today to Yeah, great to be here will Thank you all Matt European perspective, how big a deal has this been seen in Europe?
Well, if we look at the equity markets, it's not a great deal.
And we'll talk about later is there's a lot of talk but but what are the details and when will this all happen?
So the most influence is really what happened in the US where we had a credit rating downgrade and that really worries equity markets and weak China retail sales tells us a bit about the story doesn't it significant but so much going on in the world in the kind of a globalised economy, that there's other focuses still right now and all those what ifs as well that we're going to get to over the programme.
Ali Renaissance also in the studio with us Ali directorate the advisory firm SEC Newgate herself among a number of hats she's held here in the UK was at one point a policy advisor to the UK government on trade Ali great to have you in the studio as well.
Thank you. Give us a top line thought then as well.
How significant do you think what we know so far and you've been making this point a lot before we come on air there's a lot of ifs on there but what what we know so far How significant is it?
I think in terms of the partnership scope, it's quite considerable.
This is not just trying to fix some of the kind of more let's say damaging to trade aspects of Brexit, it's also genuinely about trying to facilitate a framework for cooperation between the UK and the EU on some really chunky issues, defence, security, mobility, in some areas energy cooperation in ways that could be transformative.
But I think we still have to see a lot more negotiating detail in the coming months.
Okay, that's the first big thoughts from our panel.
you've already heard the cautions that we're going to try and pick through over the next half hour as well about what exactly has been agreed.
The politicians were certainly exuberant about it, although here is Sakeer Starman, the UK Prime Minister speaking in the past hour or so in a press conference.
Ladies and gentlemen, Britain is back on the world stage, working with our partners, doing deals that will grow our economy, and putting more money in the pockets of working people.
One of those partners was the president of the European Union's Commission Ursula von de Leyen.
She was stood alongside him on that podium here in London.
And she said she believed this was the start of a better relationship between the UK and the EU.
We're turning a page we're opening a new chapter in our unique relationship.
This is the story of historical and natural partners standing side by side on the global stage.
Not everyone was happy though.
So this was the former Brexit chief negotiator, David Frost, who worked for the Boris Johnson Conservative government on Brexit in his time in government.
Well, it may make it very marginally easier in a few areas, but at what price?
We are accepting EU rules for agri -food, for food and agriculture effectively becoming part of the single market for that.
We're abandoning control of our fishing grounds for another 12 years.
We're rejoining the energy single market, the emissions trading scheme, carbon pricing, we're committing to a youth experience scheme if you want to call it that and for all these things we are going to have to pay in.
The document is very clear about that.
Okay, it may remove some costs at the margin for exporters, but it pushes up the tax burden.
These costs don't go away and they've just been shifted.
All we wanted with Brexit was to be able to govern ourselves democratically, set our own laws, set our own rules.
What this is doing is ensuring that in these quite important areas for our economy we're going to get no say.
Ali you were doing just as I was going to ask you during that clip that sort of weighing things up with your hands so weigh it up the pros and cons from the UK's perspective perhaps Ian.
I think from the UK's perspective there's a lot of good in terms of what it's aiming to do that will reduce the costs of trade and actually in some areas particularly for agriculture and agri food actually open up the EU market in a way in some products that whether it's on kind of, you know, sort of exporting, let's say, sort of various types of produce that the previous Brexit deal didn't allow us to do.
The big question is whether actually, you know, what are the details of that?
And how quickly does it coming into effect?
Because effectively, both sides have agreed to agree and agreement, as it were, and that needs to be negotiated.
Yeah, and that was one of the points that David Frost was making in that, that clip there wasn't as well about we don't really know the UK is going to have to pay for access.
This is not a member of the club anymore, it's left the European Union.
And we don't know that's one of the sort of we don't knows, isn't it as well how much that will be over what period of time etc. Yeah, I mean, he did make a point about maybe we sort of, you know, recoup some of the sort of costs of trade and for our exporters by having a sort of reduce of reduction in border checks and paperwork instead of sending produce and other goods to the European market.
There is a question about you know, how much does any kind of budget contributions end up being now I don't think actually, this is not like we were in the EU, we're not gonna be making an annual big contribution to the budget directly.
But if you look at what the EU and so on, Switzerland agreed last year at the end of last year, which is a similar package of kind of measures whether it's about access to the electricity sort of single market in terms of a common food safety area, there were some provisions around paying to EU cohesion funds.
So understanding exactly where these kind of contributions is going to be placed in the overall kind of package of measures that have yet to be agreed is a bit unclear.
Tineke, you mentioned right at the top of the markets, financial markets right across Europe, but kind of shrugged at this so far, and yet normally you would think right, easing of loads of trade barriers would be really great news for a whole bunch of companies potentially, particularly in some sectors that Ali mentioned is being significant, you know, defence, food, fishing, all that kind of stuff is the shrug because of those, okay, this is all going to be worked out yet, to some extent, because all the sort of the areas where the focuses and we sort of talked about, you know, fishing and raw
sausages, they're very lots of niche segments that all add up.
And that are really important for those companies, but they're not big listed names in equity markets.
So from an equity point of view, there's, there's a bit of shrugging off shoulders, because the big companies are global.
And what happens in China, what happens in the US just has a bigger impact.
But if you know, there's, it seems to be is a little bit of hope that maybe this would be have an impact on food inflation, and the UK has more to gain there than Europe.
inflation in Europe is already reasonably low, the UK was still higher, but it's still very early days.
But it's interesting that the UK banks are up for example, so that must suggest we have inflation numbers on Wednesday, that maybe interest rate in the UK.
If this all happens, food inflation comes down UK interest rates can go down a bit faster.
Maybe that is good for the UK economy.
Interesting, we come back to food again in the second half of the program.
We're here a big Italian exporter here on Royal Business Report, but for a bit of a general look as well.
We spoke to the Director General of the German British Chamber of Commerce and Industry.
That's Dr. Uruch Hopper.
Of course, that's very good that there are these talks because the mood music has become much better in recent times.
And I think it's now time to build on the more positive mood and to come up with some concrete examples where we can actually work more closely together to the benefit of both sides.
Let's come to those.
But first of all, what's been difficult, what's needed smoothing out?
regulatory issues in terms of standards.
So there's still some work to be done in many areas.
So that's continues to be critical.
And of course, customs formalities, they should become easier so that trade across the channel will become quicker.
And just in time production and production change can become more efficient again, so to reach old levels of efficiency, which we had before Brexit, and agriculture and horticulture seemed pretty obvious places to start with all that those are places that we can work on easily other places in other industries in other sectors where you think there are easy things that could be ironed out similar to that.
Yeah, for example, chemical regulations, that could be an alignment, there could be an alignment in terms of industry standards, especially for the car industry.
And then if we look at rules of origin for electric vehicles, there are certain provisions in the TCA which run out, and that needs to be looked at because we do want to trade across the channel.
And that's important for companies on both sides.
In terms of that stepping up then that you talked about, where and at what kind of pace would you like to see that happen?
We would like to see that at a much faster pace, but of course, we have to accept its politics and the the British government has to look after the electoral cycle and also in terms of what they can sell to the British public.
So of course, we have to be patient.
But I think progressing on a slow path is probably good and to take as many people with you as possible.
Not just the British government though, is it?
The government in France been under huge pressure over some of these issues movement, of people etc. Germany, seen big elections there, where people talk about the same overnight in Romania, Britain far from alone in being concerned about some of these issues that are once again, kind of back on the table again, particularly around movement of people and carve out for that.
Yeah, of course, movement of people is a big issue and the British government has ruled out a return of free movement.
Lots of continental European governments want a youth exchange programme because I think that is important not in terms of migration but in terms of keeping civil societies together so that we all know each other and for that we need to have the next generation to have exposure to each other because we have so many geopolitical challenges and they will continue to be there and therefore we need to know each other and then we can move forward in terms of addressing them jointly.
From a business perspective as well I mean has there been any frustration around that you know we talk a lot, don't we when we come back to talking about this about physical stuff goods and things like that is actually the movement of people even more important given that most of our economies here in Europe now are so services driven.
Yes, of course movement of people short term business assignment.
That's a huge issue for companies on both sides of the channel.
And because that enables actually working together and we have become so much more intertwined over the last decades.
And that was forgotten when the TCA was negotiated, was always looking at goods, which are key sector but movement of people were sort of taken for granted.
Yes, it will be more difficult, but will be manageable.
But that's been a huge issue in terms of working together in terms of designing things, developing things, sorting out things.
That's a key issue which still needs to be addressed.
And we feel that will take much longer into the future.
But there's urgent movement needed on that and there's nothing to do with long term immigration or migration.
It's really companies, businesses working together across frontiers.
both sides have said, oh this has been in the works for a long time.
But yet the timing does seem pretty perfect doesn't it?
Given everything that's been going on globally and the global backdrop and particularly around tariffs as well.
Do you think that has added an incentive, catalyzed these talks a little bit do you think?
And the importance of them?
Of course, defence and security cooperation has become ever more urgent and I think that has helped these talks, because there we need closer cooperation in terms of defence procurement, in terms of development.
There's also lots of companies involved in defence procurement and they need to work together and jointly develop.
So I think on the back of that we can probably move a few things forward which would have been more difficult otherwise.
From your perspective then, do you see this as a moment for hope?
Yes, this is a moment of hope something stronger can be built upon and developed and I think looking into the future I'm optimistic that we'll have a closer relationship.
Of course Britain will not be joining the EU again but that doesn't mean that we can't work closely together on all these common issues which we really need to address together.
Dr. Ulrich Hoppe there, the Director General of the German British chamber of commerce and industry.
Ali, what did you want to pull out from what Dr. Hoppe was saying?
I mean, I think two things on kind of agri food there's an obvious reason why I don't know if I'd necessarily consider it low hanging fruit but this is an area where there are actually not just barriers in place to the movement of goods and we also bring in a lot from the EU in terms of our own kind of sort of agri food, sort of retail and supply chains.
This can actually, in both directions, I think potentially help reduce the bills and maybe sort of food inflation by having sort of easier access.
We've actually sort of put in checks recently because we don't have that cooperation and biosecurity with the EU on sort of animal products from certain European countries.
I think the other thing about services is really interesting, because obviously there's been so much focus on youth mobility and what is and isn't going to go in there.
But actually one of the other things that he was alluding to is that their existing Brexit deal doesn't really touch services, it's mainly kind of a deal to kind of avoid tariffs and on goods.
That's what our Brexit deal is currently really broadly speaking.
And one of the things that the partnership framework today announces is they're going to be working on sort of some kind of provisions around sort of temporary mobility for businesses, mutual recognition of qualifications for professionals in certain sectors.
So, again, it's it's a wide scope, but these are all the different bits that are now going to be taken forward. So say if you are an accountant working somewhere else in the European Union, working in Spain, an architect, an architect, for example.
So we had some of these, you know, provisions for automatic recognition of our qualifications, when we were in the EU.
It's quite difficult to sort of get done when you're outside of it.
So, you know, I think that a lot of businesses were hoping to see, you know, great that we have something on youth mobility, that we'd like to see something that makes it easier for we because of our geographical proximity, we are sending people back and forth, yeah, we need to do something that's more than just a 90 day visa and tinnikin, not just that we are moving back and forth, but that the nature of all European countries and their economies and what they're being sort of successful in and where they see their pushing, we get very tied up, don't we?
Because I think everybody can follow a product and we can understand it simply.
And it's simplest, but the vast majority of people in all of these economies, the European, the UK are working in services for the most part.
Absolutely. And and that tends to be local writer, sort of you can the skills that people can move, but you sort of apply those skills locally.
And I do find it sort of interesting and slightly puzzling that there are clearly youth mobility schemes that the U .K. has in place with New Zealand and Australia.
And so it can be done and it's not a migration issue for those nations.
And we have, you know, we have an issue with wage growth in the U .K. You know, we have an issue in the pubs and the hotels and the restaurants that they can't get in, you know, the care homes, you know, we've read about those.
So it does seem to be that there is a, you know, there is a way when we can sort of have access to a greater pool of skills, which if the economic theory holds, if you have more labour, you know, the way to go down and keep that kind of career ladder moving, doesn't it?
If people want to go and seek perhaps in that bigger pool, go the other way, go into Europe and work in a place and someone moves up the ladder and fills their chain.
So something we were talking to actually with Stefan Hoffman, the UK Managing Director for Bosch, the giant German engineering company makes everything from washing machines, bits for car engines.
and of course, boilers as well.
Here's a little bit of his thoughts.
The biggest problem for us is the bureaucracy that has been added, the red tape that has been added.
Just to give you an example, Robert Bosch Limited, in one of our legal entities used to have before Brexit about 50 import transactions per year.
And now we are facing 10 ,000.
So that has added a lot of red tape, etc, etc. We had to create a whole new department and dealing with this kind of thing.
So that is for our business.
I think the biggest, biggest effect is that it has added expense as well.
We've talked a lot about the products.
What about people? Because that's been more difficult as well.
And again, you're an international company presumably sourcing talent from all around the world.
Yeah, I mean see, yes.
I mean, it is more difficult, obviously, to bring somebody into the UK visa process and so on and so forth, but it's still possible.
I mean we've not had a situation where we refuse to bring an expert into the country.
Where I see more problems is, if you take our automotive business, we have typically certain peaks in working around project starts.
When a vehicle manufacturer starts a new vehicle, we call that SOP, start of production, and around that date you have a lot of work.
It used to be very normal in the times before Brexit it, to bring in additional people on a short term basis from other countries in Europe to cover for those peaks.
And the other way round, we had British engineers that we've sent out to other countries in Europe, now that has become much more difficult.
From what you're saying, it sounds like it's been inconvenient, but not disastrous.
But do you hope that today, and this summit, and I guess the mood music around it starts the beginning of a process where actually the UK and Europe in business terms have a closer relationship.
And does the kind of global economic backdrop necessitate that even more than before perhaps?
Absolutely. If you look what we have achieved in Europe around defence and security on the back of the Ukrainian war, that is fantastic, you know, and that is, I think, exactly what is needed and I would hope that we can replicate that and move that to other dimensions of the EU -UK relationship.
I mentioned trade but you could go on, you could talk about energy cooperation, you could talk about the youth mobility scheme which I found very attractive as an idea.
Think back when I was young in that age, I had a lot of opportunity to spend time in other countries in Europe and it was easy to move for a few weeks or months.
And I would be really happy if we could offer that kind of opportunity to today's young generation.
Would it be good for Bosch as well?
Oh yes, oh yes. Stefan Hoffman there, the UK managing director for the engineering firm Bosch with World Business Report on the BBC.
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Terms apply. World Service, where today we're talking about what a reset of EU UK Trade Relations being discussed here in London could maybe look like going ahead.
Francesca Mooty is an exporter of tomato products, one of those big sections that Tinika and Allie have been talking about that was kind of thrashed out today as Allie will probably tell us about in a moment.
With caveats as well with ifs and buts still to come on there.
His 125 year old firm Mooty Pomodoro exports tomato ingredients, including passata, pulp, and canned tomatoes from their base in Parma, Italy.
And he told us how restrictions on cross -border trade had impacted his business.
Something changed, not dramatic, but definitely not positive.
So what do I mean? There has not been a major impact in our sales, our sales are growing, performing.
What creates is difficulties.
difficulties in terms of bureaucracy, difficulties in relation with other parts like Northern Ireland.
So, it's not a change in the position versus, in general, the U .K., is just a more difficult transaction.
It is creating small walls amongst countries.
Yeah, and if some of those walls, and it's just the beginnings of this agreement, isn't it?
We don't know all the details yet, but if it sounds like from both sides, those walls will come down, it will be the same rules in the EU and the UK?
Would that be good for business?
And would that mean you would sell more into the UK potentially?
We do not probably sell more, but we will sell in a better way.
I think that some costs will disappear that will dilute slightly the inflation, that in any case complexity is adding to a normal trade.
So I personally believe that with a few exceptions there should be a very free flow of trading, especially internally in the U .A.
and obviously with England because there are, in my personal you any reason – you have to imagine that every wall, every difficult creates cost. And these costs are absorbed by someone, and these normally are the consumer.
So there is no reason to create this wall, and vice versa reductions should bring to a lower cost. Do you think it would have an impact on prices then?
Yes, but do not imagine something enormous both in creating or eventually destroying these walls but definitely are money that will hit in the consumer pockets.
Italian exporter Francesco Mutti there.
So that was the positive side, perhaps the negative side.
Changes to rules about where European fishermen can fish and where UK fishermen can fish as well.
it was something that concerned Mike Cohen, the CEO of the National Federation of Fisherman's organizations here in the UK, fishermen already share waters with the European fleet.
That's very bad news for us.
And always has been.
Continuing that for 12 years means that we've given up the best opportunity we had to make things better for fishing communities by giving them better access and less exploitation of the fishing stocks in those areas that they depend on it will make it a bit cheaper for exporters and for retailers, but those cost savings are not going to filter down to the producers fishermen are not going to get a better price for their catch. So there's really nothing to be very positive about in this deal, and a lot to be very, very disappointed about Disappointed fisherman Mike Cohen that Ali it was negotiated
every year this deal, there's an argument that there's some certainty there now.
And yet clearly feels pretty disappointed for him, his members, those communities as well?
Are they been someone that's kind of been done out of this deal a little bit, or are they a loser in this deal?
I think it depends on how you look at kind of fishing in the main, and I think he actually hinted at it in sort of, he was talking about the retailers might benefit.
So there were some two starkly examples of very different sort of positions within, let's say, the Scottish, sort of, sort of the seas of Scotland, and you have the Scottish Fishermen Federation, were furious about it, because they thought that that as of 2026, next year, they were going to get much better access back control over their own waters back so that there were less fish, so to speak fishing in their pond.
But then you look at sort of, for example, the Scottish salmon industry.
And they're delighted because their access in terms of the seafood products into Europe is much, much, much, much less.
So I remember after the Brexit deal came into effect, I live in Scotland, and suddenly all these fishermen who were fishing didn't have anywhere to send their produce.
So it's two different sides of a similar coin here.
Yeah, it's a massive, I mean, it's the export market for British fish.
don't eat much fish here.
We sell a lot of it to Europe.
Tinika, on the flip side, what you were talking about prices Francesca rules, you saying, you know, don't hold your breath in terms of prices, but is that what you were talking about?
If there's an inch inch on loads of different things, perhaps that could have an impact on inflation?
Yeah, and I think that's right.
And in about 60 % of UK food is domestically produced, but 40 % comes from elsewhere, and the bulk of that comes from Europe.
So it is important if we can get those costs down, that makes a difference to food prices in the UK.
Obviously, product by product be different and inflation has been quite sticky.
Food prices are important.
Touched on labour earlier, wage prices are also important and that's also sticky.
So, anything that can help ease that burden will be good for the UK.
Ali, broaden it a little bit as we come to the end here.
We heard a couple of the guys mentioned in there Stephen Hoffman or a hopper, Francesca Moody went on in an interview to talk about it to about Europe needing to work better together.
This was a terrible divorce, very acrimonious, covered at length here on the BBC World Service.
It's telling isn't it that the global backdrop has kind of forced these partners to look at each other again.
And that is true in lots of different parts of the world as well right now as well.
I just wonder if we're going to see more and more of this.
Do you think? I think the government is currently very proud of the fact that it's been rattling off these trade agreements, even though very few of them apart from India are full.
We have the text agreements so between India and the US, an outline framework, an outline framework, key with the EU.
And I think that it's in part responding to a lot of the trade uncertainty and conflict that we're seeing coming out of moves in Washington, that we want to repair trade relations with our actual closest neighbor, but also interestingly, to some extent, also driven by moves out of Washington.
ambition. I think the sort of the guarantor role that the US has played on kind of Europe's sort of security and defense is not there anymore.
And so the UK is this is something I think that you should be not just permitting the UK to do but very grateful that the UK wants to play in this field.
And Tineke we've heard it actually we've had ASEAN so East Asia on the programme.
We've heard talk in Africa.
Let's talk about this stuff and doing of this stuff.
I guess that's the test now for this deal.
And a lot of those deals.
It's easy to say. We're turning away from the US and China much more difficult to do it.
Absolutely. And hopefully, sort of the increased uncertainty raised about sort of global trade really instigated by the US sort of, can really make these deals move faster from discussions to signing.
I think India took three years, so hopefully, Europe is measured in weeks rather than years.
But yes, ultimately, this only means something if it has an impact.
Well we'll get you both on in the week, hopefully not years, before it's time to talk about all the details again.
Ali Renison, Tinika Freika, thanks so much for being in the studio and thanks to you for listening to World Business Report.
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