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QUEST MEANS BUSINESS
Farage to Step Down as UKIP Leader; Third Suicide Bombing Rocks Saudi Arabia; Official: Dhaka Attackers Were Homegrown Terrorists; Japanese Companies Suspend Unnecessary Travel; Spanish Teams Break EU Competition Rules; Rio Mayor: State Doing a Terrible, Horrible Job; UK Foreign Secretary: UK May Hire Foreign Trade Negotiators; Chris Evans Resigns From BBC's Top Gear. Aired 4-5p ET
Aired July 4, 2016 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN HOST: There's no trading on Wall Street. There's only fireworks and Independence Day celebrations, because today of
course it's Monday. It's the fourth of July.
Tonight, Nigel Farage, farewell Farage. Britain's top Eurosceptic quits after Brexit. Foreign companies stop travel to Bangladesh after last
week's dastardly terror attack. And too much support. The EU cuts out on Spanish teams and their deals with the government. I'm Richard Quest. All
this week, live in London, where of course I mean business.
Good evening. As United States celebrates its Independence Day, the United Kingdom Independence Party is tonight looking for a new leader. Nigel
Farage, one of the most prominent campaigners for Britain to leave the EU, has announced he will quit. He says his political ambitions have been
(BEGIN VIDEO CLIP)
NIGEL FARAGE, OUTGOING LEADER, UK INDEPENDENCE PARTY: My aim in being in politics was to get Britain out of the European Union. That is what we
voted for in that referendum two weeks ago. That is why I now feel that I've done my bit, that I couldn't possibly achieve more than we managed to
get in that referendum. So I feel it's right that I should now stand aside as leader of UKIP.
(END VIDEO CLIP)
QUEST: Nothing like a blunt assessment of one's successes. Nigel Farage is notorious for doing business with a pint in his hand. He's become the
standard bearer for the entire Eurosceptic movement within the European Parliament. It's unclear from him, of course, if the pint glass is half
empty or half full. On the one hand, Eurosceptics are losing a charismatic and a well-known figure. On the other, a new leader could take the party
to the next level. The political environment seems set for the Eurosceptic to capitalize. To truly understand the Farage phenomenon, just look at how
he performance in adversity and in success. I spoke to Nigel Farage in Brussels last week. He believed the Eurosceptic movement will go from
strength to strength.
FARAGE: Our political class have let us down like a cheap pair of braces. What we did last week in that referendum was say, get thee gone. Political
change will be a good healthy, constructive --
QUEST: How much damage are you prepared to see? Because the chancellor now accepts there will be a recession, he said so on BBC radio this
morning. He accepts there will be economic damage. How many damage are you prepared to accept before you rebuild the house?
FARAGE: Do you know something? Freedom, independence, democracy, not being a slave to somebody else, is something on which you can't put a
price. What we did last Thursday is we voted to take back our country, to take back our laws, our courts, our borders, our pride and self-respect.
And do you know what? Actually I think in trade terms we're going to do better than we did before. Just last night the Australian and New Zealand
prime ministers said they want to come to the front of the trade queue for a trade deal with Britain.
QUEST: Nigel Farage talking to me just a week or so ago. Ray Finch is a member of the European parliament with UKIP. He joins me now from
Strasburg, France, where the parliament is sitting. Mr. Finch, good evening, first. Were you surprised that Nigel Farage decided to call it
RAY FINCH, MEMBER OF EUROPEAN PARLIAMENT, UK INDEPENDENT PARTY: No, not really. I've known Nigel for many years. We've been good friends. And
the fact is Nigel will always pull a new rabbit out of the hat. He's spoken for a while about is this as far as he should go, given what he's
given up to make these things happen. He's given up an awful lot of his life. He left his career, his family life has been difficult because of
the constantly pressures on him all of the time. Now he's just decided, as Nigel always does, the right time.
QUEST: Before we go into what happens to UKIP now, are you interested in becoming the leader? Let's face it, these days, everybody says one thing
on Monday and by Thursday they've changed their mind in the opposite direction. So we won't hold you to your answer, but just so we know, are
you interested in being the leader?
FINCH: That's most kind Richard. No chance whatever. Having seen what Nigel has put up with for the last decade, there is no way I would ever
consider throwing myself into that maelstrom. None whatsoever and I'm not being Michael Gove.
[16:05:00] QUEST: I was about to say, you'll forgive me if I say I take that with a Govian pinch of salt, when you turn around on Wednesday and say
you're running for leader. What happens to UKIP now? Because if the leader has reached his ambitions and success, then the party has too. You
are now a party without a purpose.
FINCH: Absolutely not. The fact is the referendum was the key in the door. Now we have a chance to make a greater Britain. Now we have a
chance to have a truly one-nation party, a party -- the Labour Party has sold out the working class. And the Conservative Party has sold out the
small and medium-sized enterprises that this country relies on. We need a party that is prepared to work for everyone and UKIP is that party. We're
not sectarian in any way. We believe in a greater Britain.
QUEST: Are you prepared to stand down as a member of the European Parliament once Article 50 has been invoked? Or are you going to stay
there? Because I think it's unclear whether you'll be allowed to vote as a member from the U.K. on any final proposal.
FINCH: Right, Ray, and finally, you've got to admit, whether you like him or dislike him. The fact is we will not be able to vote on the proposals.
But we will be able to keep an eye on and vote on everything else that this sham parliament is doing. We were elected by the British people to keep an
eye on them and whenever possible to stop them making a mess of Britain. And we will carry on doing that as long as we are needed and as long as the
EU keeps taking our money.
QUEST: Right now, Ray, finally, you've got to admit, whether you like him or dislike him, whether you think he's a villain or the vanquished or a
hero, Nigel Farage has been UKIP's biggest single asset. Personable, charming, advances his argument.
QUEST: You're going to find it very difficult to replace him.
FINCH: No. There's an entirely new battleground now. The battleground will be in the United Kingdom. The Labour Party are absolutely destroying
themselves, under the two wings that are both pro-EU. The Conservative Party, God knows how many wings they've got. They've got more wings than a
flock of albatrosses, and they're destroying themselves. We need a united party that works for the people of Britain, and UKIP are that.
QUEST: You sound like a man about to run for office. But for the purposes of this interview, I will take you at your word, sir. Good to see you --
FINCH: You're a gentleman.
QUEST: -- in Strasburg tonight. The European markets -- got a little bit excited there -- they fell on Monday. There is no trading on Wall Street,
it is July 4th.
A very serious story to bring to your attention tonight, a suicide bomber wreaked havoc in the Saudi Arabian city of Medina. Officials tell CNN that
the attackers cause a number of fatalities and serious injuries. We'll bring you those details as they emerge. It's the third attack in Saudi
Arabia within the last 24 hours. Nic Robertson, who knows an enormous amount about these sort of things. We always think of Saudi as this very
tightly environment on the religious front, the religious police and so on. So to have three bombs in 24 hours, what does it tell you?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: It tells me that somebody behind the scenes is calling the shots. And is organizing to say
today is the day you're going to do it. ISIS the group that fits that mantle. They haven't claimed responsibility. But their MO is all over
this. The targeting of Saudi security forces, they've been calling for that, that was in medina four of them killed, at least one injured. That
was a Saudi security post that was targeted there. Appearing to go after the U.S. consulate in Jeddah, not something they've done recently but on
their target list, if you will.
QUEST: We think of Saudi as a very tightly controlled environment. So the ability to launch three attacks in a day suggests they've found a chink.
ROBERTSON: There are several chinks. The Saudis are pretty well aware of them. The Saudi's have beefed up their own security forces. They've spent
a lot of money on their security forces and their learning tactics and techniques. But the bottom line is they've got a major conflagration going
on in Yemen to the south of them that is becoming essentially open season for al Qaeda and ISIS to take advantage. A lot of Saudis have been going
off to Syria to join ISIS there. In the past couple of years, the Saudi say they've arrested 2500 members of ISIS in their rehab program for
jihadists. They've sent 3000 people through that rehab program in the past couple of years. They know they have a big problem.
[16:10:00] QUEST: We have Ataturk a week ago. We have the most horrific bombing in Baghdad just in the last 24 hours. And you've got now three
bombings in Saudi. Is there a connection between them all? And is this ISIS flexing its heinous muscles?
ROBERTSON: This is ISIS exercising several of his muscles. What it has tried to do, while building and holding territory in Iraq and Syria that
it's been losing, it's trying to build franchises around the world. We can add to your list there, Dhaka, Bangladesh over the weekend.
QUEST: Forgive me how could I forget.
ROBERTSON: They've energized young jihadists there to join them. In Ataturk airport, the Turkish authorities said the connections went back to
ISIS headquarters in Raqqa, in Syria. You can see the way that they've chosen the three suicide bombers. Again, to grow the franchise,
Kyrgyzstan, Uzbekistan, and Dagestan in the Russian caucuses. And if you look at Baghdad that is pure and simple sectarian bombing and bloodshed to
create a division in Iraq. To try to hive off the west of a rack that is mostly Sunni.
QUEST: Nic Robertson, thank you. Appalling I had forgotten for a moment there the dreadful events in Dhaka, so let's talk about those now. A
second day of national mourning in Bangladesh for the victims of this weekend's terror attacks at the cafe in Dhaka. Bangladesh's information
minister says the attackers were likely home-grown terrorists, or ISIS as Nic was saying, has claimed responsibility.
Seven Japanese nationals were among the 20 hostages killed in Bangladesh. And now several Japanese companies are suspending travel there. As Matt
Rivers now reports, major companies are reviewing their operations in Bangladesh.
MATT RIVERS, CNN CORRESPONDENT: The victims here of course first on our mind. But the fact remains there are other implications from this attack
in Dhaka, namely implications for the business community. This has created a much more tense environment for the western and Japanese companies that
operate in Bangladesh. CNN earlier today confirmed with Uniqlo, the major Japanese clothing retailer that for the entire month of July, they will be
suspending any unnecessary, as they put it, business trips to Bangladesh. And they told their company employees, ten of them that live in Dhaka, that
lay low and make sure they stay safe out of an abundance of caution because of what happened in these attacks.
And they're not the only company. We also confirmed today other big brand names that you might know, Toshiba, Mitsubishi Motors, Obayashi
Corporation, which is a large construction firm. And Maruha Nichiro, which is a big fishing firm. These are companies that are all doing the same
thing as they put it, out of an abundance of caution, because of these attacking. It is having an impact here.
Now, Bangladesh really relies on these companies. They are a major part of Bangladesh's economy, exporting, especially things like clothing. A
company like Uniqlo, really rely on cheap manufacturing out of Bangladesh to make sure that it can bring its products to markets around the world.
So how these attacks will affect what's going on with the relationship between these companies and with Bangladesh remains to be seen. But at
least in the near term here, there is certainly more tension, and frankly a bit of fear on the part of these companies for the safety of their
employees in Bangladesh and in their manufacturing centers there. Matt Rivers, CNN, Tokyo.
QUEST: Eman Ali is the president of the British Bangladesh Chamber of Commerce. Thanks for joining us. Commiseration is obviously in force on
this horrific incident. What are you hearing now from companies saying about their intentions?
EMAN ALI, PRESIDENT, BRITISH BANGLADESH CHAMBER OF COMMERCE: They have tension, of course, a global tension from businesses right across the
world. And Bangladesh is one of the destinations that people like to invest. If you look at the biggest brand in the world, Bangladesh has
produced. And Bangladesh has GBP 46 billion of export, which the entire industry does. And around the world has produced a fashion in all big
brands. And as people said, if Bangladesh clothing water, the world would be naked. So there is the power of Bangladesh.
QUEST: Whilst the business there may not stop, the willingness of business people to go there to do the business most definitely may stop. I mean,
this particular attack hits right at the heart of western business people or in the case of Japanese business people.
ALI: Exactly. In the last 24 hours, for Bangladesh this is the first time we have experienced this. I think Bangladesh is trying to tackle those
terrorism acts unexpectedly. And I think both parties, opposition party and Bangladesh government has united together to combating the situation.
[16:15:00] QUEST: But how? Some of your members, some of your British side of your members must be saying to you, Eman, I'm supposed to go to
Bangladesh next week on a business trip to look at a factory or to look at a garment, textile enterprise, but frankly, if the Holey Artisan Bakery,
which I have been to on a dozen occasions, they would say, can be attacked, I'm not going.
ALI: Of course, I think people do have a worry. It's not only Bangladesh destination. If you look at the other they simply have in Turkey, happen
the same thing. But people do have a tension, as a businessman myself, as well to visiting an investment in a place like Bangladesh or India or
Pakistan or other countries. And it is very, very important in a worry as a country for us. And people do. I have so that members do share the view
on that respect. I have one of the IT investors who was to be a big factory in Bangladesh and obviously, IT very attractive nationally at the
moment, and he feels very worried. And before I came, he just rung me and said, what's happening in Bangladesh?
QUEST: So he is going ahead?
ALI: He is going ahead. Well, he just --
QUEST: Is he not going himself to do it? He'll send somebody else
ALI: He might send somebody else. But obviously the time will maybe defuse his tension.
QUEST: What do you need from the government in Dhaka, in Bangladesh, to actually reinforce a message? Clearly there can't be a message the safety
at the moment because of these atrocities. But at least that the government is taking it seriously sufficient to deal with it.
ALI: Yes, government has to reassure the world to make sure that people like us who want to go to Bangladesh, we are secure and have trust on the
security measure that make sure the people feel that we are very safe. And that's what people expect.
QUEST: Right, but if we look at the previous attacks on professors, on members of the gay community, which didn't hit the international community
as much, but the government went out of their way to say there was no organized terrorist link here, that they were isolated incidents. That
they were domestic sectarian violence, but now we know or we believe there's something far more deeply rooted here.
ALI: Yes, it is indeed. I think definitely there is influence, international influence to those, the people who did the catastrophe in
Bangladesh. I just personally believe there is some element of international influence within what happened in Bangladesh. And the
Bangladeshi government and opposition has to come forward and eliminate those fears affecting Bangladesh.
QUEST: Now on QUEST MEANS BUSINESS we never count dollars before bodies. It's the rule of the program. And we're not about to start doing so now.
However, the importance of industry and commerce to Bangladesh is not corporate profits. It's a nation out of poverty. So you can't afford for
business to stay away.
ALI: I think Bangladesh is attractive nation for offering to the world. If you look at the whole world, it's in Bangladesh. All the brands of the
products, if you look at MNS, if you look at the Walmart, if you look at all those people, they do business with Bangladesh. Of course we have
poverty level in Bangladesh, but it is trying to increasing to make a better position to Bangladesh. And taking all into proportion to make sure
Bangladesh is a better place to invest in.
QUEST: Good to see you, sir.
ALI: Thank you so much. Thank you, Richard.
QUEST: As we continue our nightly conversation tonight on business and economics, some of Spain's elite football teams have broken EU competition
rules. They actually paid millions of dollars to EU commission of the competition. We'll be right back after the break. QUEST MEANS BUSINESS.
[16:20:48] (COMMERCIAL BREAK)
QUEST: I want to just put out some facts about Rio. It's been making the headlines for all the wrong reasons in recent weeks. Just look at some of
the events that have taken place with one month before the world arrives in the magnificent city for the Olympics. Now the city's mayor says state
officials are failing when it comes to violent crime. The incidents that Rio has been making headlines for all the wrong reasons, first of all, the
Australian Paralympian robbed at gunpoint. A doctor killed by random gunfire. Human body parts washed ashore on the Olympic beach volleyball
area. Now the mayor, Eduardo Paes, has told CNN's Shasta Darlington things will be better by the time the games begin.
EDUARDO PAES, MAYOR, RIO DE JANEIRO: Fortunately, this is not can happen on the games. There's going to be the national force here, the army, the
navy, everyone is going to be here. As you know, this is not a city responsibility of Brazil, it's a state level responsibility. I think they
do a terrible job on security. They do a terrible job before the games and after the games. Fortunately, they are not going to be the ones
responsible for security during the games.
SHASTA DARLINGTON, CNN CORRESPONDENT: I think you raise a valid point. There's also the question of residents. Police aren't getting paid, crime
is rising. Do you worry that your citizens -- especially the most vulnerable -- could be abandoned during the Olympic games when everybody is
taking care of the tourists?
PAES: I'm not worried about them being abandoned during game time. I'm worried about them being abandoned every day, in everyday life. This is
the most serious issue in Rio. The state has been doing a terrible job here. I mean it has completely been failing in its work of police, of
taking care of security in the state.
DARLINGTON: One of the big problems has been Zika. Athletes have been cancelling. Do you think you might be underestimating the impact that the
fear over the Zika virus is going to have on the games?
PAES: I don't think so. Actually what's happening is exactly to the contrary. People are overestimating what could happen. At this time in
Rio, if you are American, please don't go to Florida. You have more cases of the Zika in Florida than what we have now in Rio. I'm not saying
there's not a problem. It's a problem that we have to face. But as we've always said, especially during this time of the year, it's wintertime in
Brazil, in Rio. The weather gets better. The spread of the mosquito gets better. So we don't have much cases of Zika right now.
DARLINGTON: I live here in Brazil. I live in Rio. I'm rooting for these Olympics to work. But it just seems like every time something can go wrong
it does, and even more. How are you going to even get people get excited about these games?
PAES: These are the kind of problems that you face in the U.S. There was a kid in the lake in Disneyland and Disney World, and then the crocodile
comes. It's the kid, you know, there a crazy guy, an American guy that goes into a gay disco and shoots 40 people. Problems happen everywhere.
Obviously, when you become an Olympic city, these problems, you know, they rise.
QUEST: The mayor of Rio on the problems.
Seven of Spain's top football teams, including Real Madrid and Barcelona have been ordered to repay millions of dollars' worth of illegal state aid.
The European commission says the teams broke the rules by allowing illegal tax breaks, loans, and land deals. Join me at the super screens, I'll show
you what those deals actually involve.
First of all, you have the various tax privileges. Blow the whistle on them. There were tax breaks for four teams, Real Madrid, Barcelona,
Athletic Bilbao and Atletico Osasuna. The clubs were basically treated as nonprofit organizations. And in doing so, they benefitted from lower tax
over 20 years, which, as the authorities now say, without objective justification. That's the tax side of the story.
[16:25:00] And then you have land. Land, wonderful land. Second investigation. There were land transfer deals between Real Madrid and the
city of Madrid. In doing so, it overvalued the property by $20 million. The word is it was an unjustified advantage to Real Madrid. Tax, land, and
of course, loans.
The final investigation concerns loans. The state owns Valencia Institute of Finance gave loans to three Valencia-based teams. These are the three
teams that got the loans. The public guarantees made the loans more favorable. Now collectively they have to pay back more than $30 million.
Just look at it, loans, land, and tax privileges. Nina dos Santos spoke to the EU's Competition Commissioner, Margrethe Vestager, and asked her what
she found most disconcerting and concerning about these revelations.
MARGRETHE VESTAGER, EU COMPETITION COMMISSIONER: What concerns me is fair competition. And we have found in these seven Spanish cases that the
illegal state aid has been given. And that of course is a concern, especially for the clubs who have not been having state aid.
NINA DEL SANTOS, CNNMONEY EUROPE EDITOR: So what we're talking about here is some of these teams, it seems, court your statement, have been allowed
to benefit from more favorable tax conditions. They've been able to benefit from land, particularly in central Madrid, and then sell that land
and profit the difference. Run us through what you're going to do to sanction these clubs. If and when it's determined that you believe that
unfair competition has actually happened here.
VESTAGER: Well, with the decision today, actually the Spanish state will have to start to recover the state support that has been given in order to
restore the level playing field. Because these Spanish clubs have lost just some, Spanish clubs to some of the clubs Europe. And these are
businesses that compete with one another. And therefore it's important that they start to recover the state support as fast as possible.
DEL SANTOS: Is this just pertinent to Spain, or are you also looking at the entire football landscape? Because the figures involved in the private
football teams are significant.
VESTAGER: Yes. I think you would see, if you see the numbers, that these are small numbers compared to the sale of rights or transfer pricing for
football players. But just the same, it is aid that has been given, because clubs were in different kinds of distress. Where other clubs may
not have been helped. And we can see in the Netherlands, where we have also done four cases, that state support has been given but on a market
economy investors principle. Which means that it actually is an investment decision as a private investor may have done it as well, or it's
restructuring a company where they have to restructure themselves. To change the management, the wages, the way things are done. And that of
course is a completely different matter.
DEL SANTOS: Out of all of these different cases that you've investigated, whether we're talking about FC Barcelona, or whether were talking about
Real Madrid, which one concerns you the most?
VESTAGER: Well, what concerns me is that state support has been given. Because I think for any fan, it is painful, because football is a passion
sport, to see if your team is losing on the playing field. But to know that it may be losing to a team who has been given taxpayers' money, maybe
your money, I think that's double painful. And that is why I think it's important to say, well we want fair competition also when it comes to
professional football clubs.
QUEST: The trade commissioner talking to Nina. As we continue our nightly conversation, the U.K. foreign secretary is speculating the country may
need to have foreign trade negotiations or negotiators. We're going to talk to Pascal Lummi, who knows a definite thing or two about how difficult
it is to put together a trade negotiation. It's QUEST MEANS BUSINESS, we're in London.
[16:31:44] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When "Top Gear's" new host quits as the ratings
stall, I am going to show you how New York prepares its massive fourth of July fireworks display. This is CNN, and on this network the news always
A suicide bomber has caused carnage in the Saudi Arabian city of medina, and official tells CNN the attackers take a number if lives and wounded
many people. It's the third attack in Saudi Arabia within the past 24 hours.
Iraq's Deputy Prime Minister Hoshyar Zebari tells CNN that unless ISIS is stopped, they could wreak havoc for generations. Saturday's attack in
Karada district of Baghdad is now the country's deadliest since 2003. He said the country has
no choice but to defeat the militant group.
(BEGIN VIDEO CLIP)
HOSHYAR ZEBARI, DEPUTY PRIME MINISTER, IRAQ: This is an existential battle against evil forces so we have no choices but to move on and to push and to
flush them out and defeat them and deny them any territory or control over any territory in Iraq. Their khilafat in Raqqa and Mosul must be defeated
and toppled otherwise this threat will be there for generations to come.
(END VIDEO CLIP)
QUEST: Two of the people injured in the Dhaka cafe attack are now suspects according police. 00:20:00 Bangladeshi Information Minister told CNN,
Pakistan intelligence agency may have involved in the attack. Pakistan's government responded saying the claims are baseless and unfounded.
The leader of the U.K. Independence Party, UKIP, has announced he'll quit now that Britain has voted to leave the European Union. Nigel Farage said
he never intended to be a lifelong politician and the Brexit vote has fulfilled his political ambitions.
(BEGIN VIDEO CLIP)
FARAGE: I now feel that I've done my bit, that I couldn't possibly achieve more than we managed to get in that referendum. So I feel it's right that
I should now stand aside as leader of UKIP.
(END VIDEO CLIP)
QUEST: Donald Trump is blaming the controversy over a recent tweet in his words, dishonest media. The presumptive Republican nominee tweeted out
this image of rival Hillary Clinton that featured dollar bills and a six- pointed star. It had previously appeared on message board known for anti- Semitic views and neo-Nazi views.
Jewish groups condemned the treat which was deleted. Now Mr. Trump is criticizing the media for suggesting the tweet may have been referencing
the star of David.
[16:35:00] Britain's Foreign Secretary says the job of reaching trade deals with the rest of Europe is so big, the government may have to hire expert
foreign trade negotiators to get it done. According to some reports, New Zealand has already offered the support of its experts, who are more used
to negotiating trade deals than the British over the last four decades. I spoke to the former Director General of the World Trade Organization and a
former EU trade commissioner, Pascal Lamy. I asked him how difficult it is to negotiate really big trade agreements.
PASCAL LAMY, FORMER DIRECTOR GENERAL OF THE WORLD TRADE ORGANIZATION: Well, difficult because it's about give and take. It's a tradeoff. I want
to enter your market, which is protected. You want to enter my market, which is protected. So I'll ask you for reducing your protection. You ask
me for reducing my protection. Let's say you have a tariff on bicycles, I have a tariff on scrap metal. Good for you to buy scrap metal cheaper,
good for me to buy bicycles cheaper.
But how much will you reduce your tariff for how much I reduce my tariff, that can take a very long time.
QUEST: How experienced are the EU negotiators in this? Bearing in mind they've been doing it for 40-odd years, and the British have only been
reviewing trade deals, not negotiating them.
LAMY: That's a very good point, Richard. An excellent point. The British, if they want to swim along, which is what they decided to do, will
have to rebuild a trade expertise, not only to negotiate with the European Union but to negotiate with all the other trade partners they have on this
planet, starting, by the way, with establishing a new independent U.K. trade regime, which means extracting the U.K. egg from the EU omelet.
QUEST: Can they do it?
LAMY: They should do it if you know they have to abide the decision of the British people. But many of us think it's an extremely long, arduous,
complex task. Maybe at the end of the day they'll come to a result which will look pretty awful, and when it to go to the U.K. House of Commons,
they'll say, mm-mm.
QUEST: But if we get to the end of the two-year Article 50 process, and there's no deal, or the deal is not acceptable, and the U.K. has to rely on
WTO terms of trade, now, bearing in mind it's quid pro quo, Pascal, so 10 percent tariffs on cars to the EU means 10 percent tariffs on cars from the
LAMY: Depends on what U.K. will decide, what is for sure is that we know that the EU trade regime is 10 percent tariff on car and 170 euros per 100
kilos of cheddar, we know that. What we do not know is what the new U.K. trade regime will be. Whether this will be clear in two years or will take
more time remains to be seen. 00:25:00
QUEST: Pascal Lamy talking to me on the question of trade and tariffs. Now let's have a look and see, the U.K. government has begun laying out its
plan to convince the world that post-Brexit Britain is still open for business. The Chancellor says he intends to cut corporate tax rate to 15
percent. So let's have a look.
The current rate is 20 percent. It's already one of the lowest amongst the major economies. Ireland is probably among the lowest at 12.5 percent.
Denmark at 22, Sweden at 22, Norway at 25. Germany has a corporate tax rate of 30 percent. So just behind Italy. And of course the United States
has a tax rate of 40 percent, which is why so many companies keep their foreign earnings offshore. If they reduce the tax rate to 15 percent, what
will the effect be? I asked George Buckley, the chief U.K. economist for Deutsche Bank, to explain the risks, bearing in mind the deficit that will
be created by slashing corporate tax rates.
GEORGE BUCKLEY, CHIEF U.K. ECONOMIST, DEUTSCHE BANK: There's a couple of risks here. Number one is that the EU may see this as a competitive move
just ahead of an important negotiation, which is a big risk. Secondly, it means the Chancellor is willing to spend a bit more potentially. We might
not even have this chance in place. We might see even more fiscal loosening, a higher deficit.
[16:40:02] QUEST: What will the market accept as a percentage of GDP for the deficit? We're obviously not going back to the days of 10 percent, 11
percent as it was after 2008. Would you accept 6, 7, 8 percent?
BUCKLEY: I think after spending so long trying to get the deficit down from 10 percent
you remember 2009, 2010, remember how bad the deficit was then.
QUEST: Remind us what it is going to be this year or next year.
BUCKLEY: It's expected to be 3 percent this year, and it probably will be. It's next year and the year afterwards, if you get a significant slowdown
in economic growth, that will do serious damage to the deficit reduction plan. So it could remain at 3 percent even if you stick with austerity.
If you don't stick with austerity, it could be 5 percent, easily.
QUEST: So we're not talk vast sums. As a percentage, we're not talking out of the ballpark.
BUCKLEY: Not huge. And also it's worth bearing in mind that the interest rate on this debt has fallen substantially. Since the end of April, the
ten-year gilt yield has fallen from 160, 170 percent down to about 0.85 percent.
QUEST: Explain to our viewers the apparent perversion, gilt which is safe but
gilt yields are falling dramatically for a government that's expected to have a higher borrowing requirement, and a lower rating. It doesn't make
sense in the sort of classical economics.
BUCKLEY: Well, you're assuming here the only thing which drives gilt yields is risk. And that's not the only thing, expectations of interest
rates and economic growth are just as important. And if you think that economic growth is going to weaken and the Bank of England is going to keep
interest rates exceptionally low, you would also expect average ten-year interest rates also to be very low. What's driving this is weak economic
growth and low interest rates over and above the perceived increase in risk.
QUEST: What do you think Governor Carney will do? What will be his preferred route? Because at .5 on base rate, a quarter point off, it's
neither here nor there at this point.
BUCKLEY: No, I think they'll be very cautious to start with, cut a quarter point maybe in the August meeting. Because in the August meeting that's
the important one, they produce the forecasts for GDP and inflation. I suspect they'll tone down their GDP forecast and possibly raise inflation
numbers simply because the fall in sterling that as to import costs.
They've got a bit of a dilemma. They've got higher inflation in the near term, but probably a lower inflation in the long term as weaker economic
growth pushes it down. I think thereafter further interest rate cuts to as low as they're willing to go, and I don't think they're willing to go
negative, so as far as they're willing to go, and then foot on the QE.
QUEST: More QE?
BUCKLEY: I think that's not going to be enough to satisfy markets, to support economic growth. Therefore, I think they're going to have to do
the only other thing they can really think about in the near term, which is QE.
QUEST: More quantitative easing, which of course would mean both the U.K. and the ECB will both be engaged in full scale printing of money. The
Welsh National Party is calling on the Welsh Parliament to get involved in any Brexit plan, Phil Black saying it's not just a decision for the
government in Westminster or in Cardiff. Most of Wales voted to leave the European Union even though many of its towns benefit from EU money. CNN's
Phil Black went to south Wales and asked voters if they were getting money from the EU, why had they voted to leave?
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT (voice-over): Ebbw Vale in southern Wales a small town in a region known as the valleys. Here
communities once built around coal mines that closed decades ago. So did Ebbw Vale steel plant. Tough times followed. Poverty, unemployment. For
many, the loss of hope. That's why the European Union took an interest. Peering through the gray mist and sideways rain of a Welsh summer's day,
you see the EU flag everywhere. It's often close to new buildings and infrastructure the EU has helped pay for, like this huge sport and
education center. A new trailer or a major new road. EU money also helps people with job training and apprenticeships. All up, the EU has
contributed around 145 million pounds to this local area over the last 15 years. Do you think people here know the EU pumped a lot of money into the
UNIDENTIFIED MALE: Yes, they know about it.
BLACK (on camera): They voted out anyway?
UNIDENTIFIED MALE: Yes.
BLACK: It's a contradiction not easily expand. This area voted for Britain to exit the EU by a whopping 62 percent, despite being a net
beneficiary. It gets back a lot more money than it contributes.
UNIDENTIFIED MALE: There is a lot of money that comes here from Europe.
[16:45:00] BLACK: A lot of money.
UNIDENTIFIED MALE: Yes. Where is that going to come from?
BLACK: That's the question. Do you think people have shot themselves in the foot?
UNIDENTIFIED MALE: I voted out. And I've got me doubts now.
BLACK (voice-over): In the Crossing Cafe, Debra, Jane and April they've been listening to customers talk all things Brexit for months. They know
the EU spends big money here. But they still want out.
(on camera): You know they make a difference here?
UNIDENTIFIED FEMALE: Yes, yes.
BLACK: You tell me. Do you think it's helped?
UNIDENTIFIED FEMALE: Yes. But I think a lot of it is being spent on things that we could have done without. It could have been spent in
BLACK (voice-over): Deb Phillips, a customer and Brexiter agrees. It's about control.
DEB PHILLIPS: Sick of being told where the money is going to be spent.
BLACK: Over coffee, Alan Jones, who voted to stay, predicts a new obvious problem. He says EU investment won't be replaced equally by the British
ALAN JONES: A stupid thing to do. Once you go, this money is gone.
BLACK: But here in Wales, as with many places across the U.K., money and the economy were not deciding factors in how many people chose to vote.
UNIDENTIFIED FEMALE: Out.
BLACK (on camera): What was the thinking there?
UNIDENTIFIED FEMALE: About them ruling us instead of ruling ourselves.
UNIDENTIFIED FEMALE: Out.
BLACK: Tell me why.
UNIDENTIFIED FEMALE: Immigration.
BLACK (voice-over): Change, sovereignty, border control. The referendum showed these things mattered more to people in this struggling town than
the EU's effort to improve the quality of their lives. Phil Black, CNN, southern Wales.
QUEST: One season and all done for Chris Evans behind the wheel at "Top Gear," one of the most watched television programs in the world. More
changes under the hood.
QUEST: Jeremy Clarkson spent nearly two decades as the presenter of "Top Gear" on BBC. His replacement, Chris Evans, lasted just six shows. Evans
resigned from "Top Gear" over reports of tensions with his co-host Matt Leblanc and disappointing ratings. Take a look at numbers. In the last
season, with Clarkson behind the wheel, the show averaged 6.5 million viewers in the United Kingdom.
This season, with Evans in charge, the average was just 4 million. The final numbers for Sunday's season finale aren't in yet but we know that
before you take into account the online viewing, the repeat viewing of the BBCI player, fewer than 2 million, 1.9 million viewers tuned in to watch it
live. To be fair, it was against Euro 2016, but that really is beside the point less than 2 million watched it.
[16:50:05] Max Foster has our report from outside the BBC's broadcasting house here in London.
(BEGIN VIDEO CLIP)
MAX FOSTER, CNN ANCHOR CORRESPONDENT: Chris Evans is a huge name in British television and a car enthusiast but he couldn't seem to make his
version of "Top Gear" work. The latest overnight figures for his overnight show dipped below 2 million in the U.K. His viewership was well below what
Jeremy Clarkson ever achieved, at the end of the last series who was bringing in something like 6 million viewers in the U.K. Chris Evans was
coming under huge pressure in the British newspapers for losing so many viewers in such a short space of time.
And he bowed out less than two months into his new series. A lot of the criticism was around how he didn't have chemistry with his co-presenter,
Matt Leblanc. It does seem as though Matt Leblanc is going to be stay in his position, but a lot of pressure on him now to try to create a comeback
now to bring people back to "Top Gear" and he's only been in the job for two months. This is the BBC's biggest earner around the world and it's
desperate to see this one through. Max Foster, CNN, London.
(END VIDEO CLIP)
QUEST: As we continue our nightly program, the largest fireworks display New York has ever seen since the turn of the millennium.
And you are going to meet the woman behind the 40th anniversary of the Macy's fourth of July fireworks, after the break.
QUEST: Coming up to 5:00 on the eastern seaboard, a few more hours before it gets dark on the east coast. And New York's East River is going to be
lit up with fireworks, as it always is, celebrating Independence Day. The whole thing only lasts about half an hour it is about good, rousing music.
But for the people who put these fireworks display together, it's a combination of a year's hard work. CNN's Maggie Lake has more.
MAGGIE LAKE, CNN, MONEY ANCHOR: Macy's fireworks show is an Independence Day tradition, the biggest in the country. More than 50,000 shells are set
to burst over New York City on July 4th, no small feat for the team behind the pyrotechnics. What are all these people actually doing? It looks like
cake mix from here, but certainly not.
AMY KULE, EXECUTIVE PRODUCER MACY'S FIREWORKS SHOW: What they're doing is individually, one by one, by hand, loading each one of the shells into the
mortar. We've got 56,000 that are going to come to life. Each one is put into the mortar and individually wired to the computer program that will
send off the fireworks.
LAKE: That is not easy to get together. How much planning and sort of manpower went into this?
KULE: It's a huge effort. We start planning the day after the fourth of July. We start looking at the following year. It's a 25-minute show.
It's really stunning. But we're here today building toward the fourth of July.
LAKE: Do you have any superstitions?
[16:55:05] KULE: I always wear a new pair of shoes.
LAKE: Really, why is that?
KULE: I don't know, every fourth of July I definitely I usually have a -- I definitely have a new pair of shoes. I take them out of the box that
morning. It's not really the smart thing to do, to wear new shoes on a day you're going to be on your feet for 24, 48 hours, but that is it.
LAKE: Could you have forecasted that you were going to end up in charge of the largest fireworks that we have, something that's such a tradition?
You're the maven.
KULE: If I were dreaming about it, absolutely, because it's the dream job, there's no doubt about it. For me the most majestic part of the day is
when that first shell goes up in the sky. I do take a moment to turn around and look at the audience and just watch them gazing up in the sky.
A lot of the time it's emotional, people are tearful, and everybody is hugging each other, it's celebratory. That's what it should be. It's the
coming together of everybody watching the show and celebrating our holiday.
QUEST: Maggie Lake. Profitable Moment after the break.
QUEST: Tonight's Profitable Moment. Night is coming in New York. The lights are dimming and the fireworks are going up. I like a good fireworks
display. There's something delicious about watching money go up in smoke. I know that might sound rather odd and a bit perverse, but every now and
again it's nice to see someone just send a whole load of fireworks up into the air and hang the expense.
That's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in London. Whatever you're up to in the hours ahead, hope your fireworks are roaring
and it's profitable.