Business

Takata: Airbag-maker files for bankruptcy

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A recalled Takata airbagImage copyrightReuters
Image caption The faulty devices have been linked to at least 17 deaths globally

Japanese car parts maker Takata has filed for bankruptcy protection in the US and Japan.

It is facing billions of dollars in liabilities over its defective airbags, which have been linked to at least 17 deaths worldwide.

Some of the airbags contained faulty inflators which expanded with too much force, spraying metal shrapnel.

US-based Key Safety Systems (KSS) has bought all of Takata’s assets, apart from those relating to the airbags.

The $1.6bn (£1.3bn) deal was announced after the Japanese firm filed for chapter 11 bankruptcy protection in the US, with similar action taken in Japan.

“Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach, and exceptional steering wheels, seat belts and other safety products have not diminished,” said KSS chief executive Jason Luo.

Trillion-yen liabilities

More than 100 million cars with Takata airbags, including around 70 million vehicles in the US, have been recalled since concerns first emerged in 2007. It is the biggest safety recall in automotive history.

In January, Takata agreed to pay $1bn (£784m) in penalties in the US for concealing dangerous defects, and pleaded guilty to a single criminal charge.

The firm paid a $25m fine, $125m to people injured by the airbags as well as $850m to carmakers that used them.

But it is facing further legal action in the US and liabilities of 1 trillion yen ($9bn) – including to clients including Honda, BMW and Toyota have been paying recall costs until now.

Trading in Takata shares has been suspended on the Tokyo Stock Exchange, and the firm will be delisted late next month.

Small businesses that may be affected by Takata’s bankruptcy will get support including loan guarantees says Japanese trade minister Hiroshige Seko.

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Holland & Barrett sold for £1.8bn to Russian billionaire

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Holland & Barrett storeImage copyrightH&B

Holland & Barrett, the UK’s biggest health food retailer, is being bought by a Russian billionaire for £1.8bn.

L1 Retail, a fund controlled by Mikhail Fridman, is buying the 1,150-store chain from Carlyle, the US private equity firm, the Financial Times reported.

Carlyle acquired Holland & Barrett as part of its $3.8bn purchase in 2010 of US firm Nature’s Bounty, now NBTY.

The chain has about 600 stores in the UK as well as China, India and the UAE.

The retailer, which employs more than 4,000 people, was founded in Bishop’s Stortford, Hertfordshire, in 1870.

Holland & Barrett has opened more than 300 stores in the seven years since the private equity takeover, the Financial Times reported.

The purchase is the first by L1 Retail, which was set up in late 2016.

It aims to invest $3bn in a small number of retail businesses that it believes can be market leaders by “moving with and leading long-term trends”.

Image copyrightGetty Images
Image caption Mikhail Fridman’s L1 Retail fund is buying Holland & Barrett

The fund’s advisory board includes John Walden, the former chief executive of Home Retail Group.

The company owned Argos and Homebase before selling both chains last year.

Other members are Karl-Heinz Holland, who was chief executive of Lidl Group, the German supermarket chain; and Clive Humby, one of the founders of dunnhumby, which came up with the idea for Tesco’s Clubcard.

L1 also has funds focused on energy, technology and health.

Peter Aldis, Holland & Barrett chief executive, is expected to stay on.

Mr Fridman is best known for his role as chief executive of BP’s Russian joint venture TNK between 2003 and 2012, when it was sold to Rosneft for $56bn.

Mervyn Davies, the former Standard Chartered chief executive who is now Lord Davies of Abersoch, is chairman of L1 Holdings.

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CEO Secrets: Bumble founder says don’t take yourself too seriously

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Whitney Wolfe launched dating app Bumble to put women in the driving seat. On Bumble, only women can initiate conversations.

What advice does the Tinder co-founder and entrepreneur wish she’d had when she started up? “Don’t take yourself too seriously.”

Follow #CEOSecrets on our website here.

Video journalist: Greg Brosnan

Follow series producer Greg Brosnan on Twitter @gregbrosnan

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Tricky trade-off

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Charles DickensImage copyrightGetty Images

In January 1842, Charles Dickens arrived on American shores for the first time.

He was greeted like a rock star in Boston, Massachusetts, but the great novelist was a man with a cause: he wanted to put an end to cheap, sloppy pirated copies of his work in the US.

They circulated with impunity because the United States granted no copyright protection to non-citizens.

In a bitter letter to a friend, Dickens compared the situation to being mugged and then paraded through the streets in ridiculous clothes.

“Is it tolerable that besides being robbed and rifled,” he wrote, “an author should be forced to appear in any form – in any vulgar dress – in any atrocious company?”

Monopoly

It was a powerful and melodramatic metaphor. But the truth is the case for what Dickens was demanding – legal protection for ideas that otherwise could be freely copied and adapted – has never been quite so clear cut.


50 Things That Made the Modern Economy highlights the inventions, ideas and innovations that helped create the economic world.

It is broadcast on the BBC World Service. You can find more information about the programme’s sources and listen online or subscribe to the programme podcast.


Patents and copyright grant a monopoly.

Dickens’s British publishers will have charged as much as they could get away with for copies of Bleak House. Cash-strapped literature lovers simply had to go without.

But these potential fat profits encourage new ideas.

Image copyrightAlamy
Image caption Many US editions of Dickens’s work – including Bleak House – were pirated copies

It took Dickens a long time to write Bleak House. If other British publishers could have ripped it off like the Americans, perhaps he wouldn’t have bothered.

So, intellectual property reflects an economic trade-off, a balancing act. If it’s too generous to the creators, then good ideas will take too long to copy, adapt and spread. If it’s too stingy, then maybe we won’t see the good ideas at all.

This trade-off has always been coloured by politics.

The British legal system strongly protected the rights of British authors and British inventors in the 1800s because the UK was then – as now – a powerful force in world culture and innovation.

Brazen copying

But in Dickens’s day, American literature and innovation were in their infancy. The US economy was in full-blown copying mode: they wanted the cheapest possible access to the best ideas that Europe could offer.

US newspapers filled their pages with brazen copying – alongside attacks on the interfering Mr Dickens.

A few decades later, when American authors and inventors spoke with a more powerful voice, America’s lawmakers began to take an increasingly fond view of the idea of intellectual property. Newspapers, once opposed to copyright, now rely upon it.

And we can expect to see a similar transition in developing countries today: the less they copy other ideas and the more they create their own, the more they protect ideas. There’s been a lot of recent movement: China didn’t have a copyright system at all until 1991.

The modern form of intellectual property originated, like so many things, in 15th Century Venice. Venetian patents were explicitly designed to encourage innovation.

Image copyrightGetty Images
Image caption Francesco Foscari was Doge of Venice in 1474 when the Venetian patent statute was introduced

The inventor would automatically receive a patent if their invention was useful. The patent was temporary, but could be sold, transferred or even inherited during its lifetime.

It would be forfeited if it wasn’t used, and invalidated if the invention proved to be closely based on a previous idea.

These are all very modern ideas. And they soon created very modern problems.

Rivalry

During the British industrial revolution, the great engineer James Watt worked out a superior way to design a steam engine. He spent months developing a prototype, but then put even more effort into securing a patent.

His influential business partner, Matthew Boulton, even got the patent extended by lobbying Parliament.

Boulton and Watt used it to extract licensing fees and crush rivals – for example, Jonathan Hornblower, who made an even better steam engine yet found himself ruined and imprisoned.

Image copyrightHulton Archive
Image caption Boulton and Watt put a huge amount of effort into protecting their invention

The details may have been grubby, but surely Watt’s famous invention was worth it? Well, maybe not.

The economists Michele Boldrin and David Levine argue that what truly unleashed steam-powered industry was the expiry of the patent, in 1800, as rival inventors revealed the ideas they had been sitting on for years.

And what happened to Boulton and Watt, once they could no longer sue those rivals? They flourished anyway. They redirected their attention from litigation towards the challenge of producing the best steam engines in the world. They kept their prices as high as ever, and their order books swelled.

Far from incentivising improvements in the steam engine, the patent actually delayed them.

Expansion

Yet since the days of Boulton and Watt, intellectual property protection has grown more expansive, not less so.

Copyright terms are growing ever longer. In the US, they were originally 14 years, renewable once. They now last 70 years after the death of the author – typically more than a century.

Patents have become broader and are being granted on vague ideas – for example, Amazon’s “one-click” US patent protects the not-entirely-radical idea of buying a product on the internet by clicking only one button.

Image copyrightGetty Images
Image caption Amazon’s “one-click” buying process is now protected

The US intellectual property system now has a global reach, thanks to the inclusion of intellectual property rules in what tend to be described as “trade agreements”.

And more and more things fall under the scope of intellectual property – for example plants, buildings and software have all been brought into its domain.


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These expansions are hard to justify, but easy to explain: intellectual property is very valuable to its owners, which justifies the cost of employing expensive lawyers and lobbyists.

Meanwhile, the cost of the restrictions are spread widely among people who barely notice it.

The likes of Matthew Boulton and Charles Dickens have a strong incentive to lobby aggressively for more draconian intellectual property laws – while the many buyers of steam engines and Bleak House are unlikely to get politically organised to object.

The economists Boldrin and Levine have a radical response to this problem: scrap intellectual property altogether.

There are, after all, other rewards for inventing things – getting a “first mover” advantage over your competitors, establishing a strong brand, or enjoying a deeper understanding of what makes a product work.

Financial upside?

In 2014, the electric car company Tesla opened up access to its patent archive in an effort to expand the industry as a whole, calculating the company would benefit overall.

Image copyrightGetty Images
Image caption Tesla’s Model S was the world’s best-selling plug-in electric car for two years in a row, 2015 and 2016

For most economists, scrapping intellectual property entirely is going too far. They point to important cases – such as new medicines – where the costs of invention are enormous and the costs of copying are trivial.

But those who defend intellectual property protections still tend to argue that – right now – those protections offer more than enough incentive to create new ideas.

Dickens himself eventually discovered a financial upside to weak copyright protection.

Twenty five years after his initial visit to the US, Dickens returned, keen to make some money.

He reckoned that so many people had read cheap knock-offs of his stories that he could cash in on his fame with a lecture tour. He was absolutely right: off the back of pirated copies of his work, Charles Dickens made a fortune as a public speaker, many millions of dollars in today’s terms.

Perhaps the intellectual property was worth more when given away.

Tim Harford writes the Financial Times’s Undercover Economist column. 50 Things That Made the Modern Economy is broadcast on the BBC World Service. You can find more information about the programme’s sources and listen online or subscribe to the programme podcast.

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‘I love doing battle’

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David McCourtImage copyrightClaire Wood Photography
Image caption David McCourt is proud of his Irish-American heritage

With his thick, working class Boston accent, David McCourt doesn’t immediately come across as a successful entrepreneur with a personal fortune of $750m (£589m).

If you ever saw the 58-year-old drinking in an Irish bar in his native “Southie”, the blue collar southern part of the US city, you’d be minded not to annoy him.

He looks like a tough guy who doesn’t tolerate fools; you’d guess he was an off-duty policeman, fireman, or construction boss.

A proud Irish American, he says this is his heritage.

“When I was growing up, every Irish guy in Boston was a contractor, a policeman, or a fireman.

“My dad was a contractor, my dad’s dad was a contractor, my dad’s dad’s dad was a contractor.”

Image copyrightGetty Images
Image caption Mr Court’s business interests expanded out from his home town of Boston

However, Mr McCourt didn’t follow his father into the building industry for long. Instead he made his first fortune in the early 1980s as one of the first, and largest, installers of cable TV networks in the US.

A serial entrepreneur, he then went on to expand into telephone systems and making television programmes.

But while Mr McCourt is softly spoken and polite, the “Southie” steel is more than evident.

“I’m definitely not afraid of a fight [in business],” he says. “If I have been wronged, I will spend as long as it takes so that I feel I have been righted.”

After school in Boston, Mr McCourt went to Georgetown University in Washington DC, from where he graduated in 1979 with a degree in sociology.

Moving back to Boston he worked in construction for a year or two, until aged 24 he found out that cable TV was coming to the city, and firms were being invited to bid to lay the wires in the ground.

Image copyrightDavid McCourt
Image caption Mr McCourt has won numerous awards for his work as a television programme producer

Despite having no real knowledge of the sector, Mr McCourt decided to make a pitch.

Quickly doing some work in the industry so that he could learn the ropes and show he had experience, albeit brief, his bid was accepted.

What gave him the edge over his rivals was that he said he could start the work straight away.

While the other bidders were worried about delays in getting permits to dig up Boston’s roads, Mr McCourt says that thanks to his local knowledge he had a cunning plan.

He says he realised the city’s then mayor was being criticised in east Boston because he had agreed to the expansion of the city’s airport – located in that part of the city.

Image copyrightAltv
Image caption ALTV has launched online in North Africa

So in order to help placate the local residents, Mr McCourt said he would start his work there, making them the first to get cable. It worked, and he quickly got his permits.

After Boston his business – McCourt Cable Systems – expanded across the US.

When problems arrived, it was invariably always a customer not paying him. Mr McCourt says he always resolved the issue with a tactic a friend taught him in a Boston bar.

“[On one occasion] my biggest customer had all my money, and all of sudden a tough guy starts taking my calls, telling me I had been charging them too much, and they were going to renegotiate my bill,” he says.

Image copyrightDavid McCourt
Image caption Mc McCourt has long mixed with the great and the good

“So I was in a pub… bitching about not getting paid, and the guy I was with grabs me by the tie and says ‘do something about it, or shut up’.”

Mr McCourt says his friend then told him about a builder who, after not being paid, turned up at a customer’s house with a hammer and said he would smash the wall he had built unless he got his money.

“That was my answer,” says Mr McCourt. “So I phoned up the company and said I’m going to start digging up all my cables.

“There was then a huge meeting with lawyers, chaos and threats, but by Thursday they had paid me everything, 100%.”

Within a few years Mr McCourt had expanded overseas, and was laying cable in Mexico, a business he subsequently sold to Mexican billionaire Carlos Slim.

Image copyrightDavid McCourt
Image caption He worked with Meg Ryan on a documentary in his native Ireland

As the US telephone network was opened up to competition, he also set up a phone business called Corporate Communications Network that he merged with another business before selling for $14.3bn.

He also bought a number of TV stations in the Caribbean, and moved into making TV programmes when he realised this was cheaper than buying them in.

His TV career as a producer has seen him win a number of Emmy Awards, and make documentaries with the likes of Michael Douglas and Meg Ryan.

Today Mr McCourt is chief executive of Granahan McCourt Capital (GMC), which has numerous business interests around the world. These range from Irish broadband business Enet to a Saudi Arabian joint partnership to develop satellite technology.


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The more recent ventures of GMC include TV business ALTV.com, which aims to help people in the developing world get paid for recording videos on their mobile phones, be it reporting news or making longer form films.

Mr McCourt also has high hopes for a smart phone app called Findyr, which he hopes will revolutionise information gathering around the world, as it enables members of the public to get paid for sending data to survey firms.

He explains: “So instead of the cost of having to send expensive survey staff somewhere, you pay members of the public to send in a geo-located photograph or piece of data.”

Image copyrightGetty Images
Image caption Mr McCourt made his fortune installing cable TV across the US

Brian Morgan, professor of entrepreneurship at Cardiff Metropolitan University, says: “David McCourt is one of those entrepreneurs who has learned to successfully create and to navigate public-private partnerships in order to increase investment in mobile and cable connectivity in areas where it has traditionally been deemed as uneconomic.

“In the process he has made himself a very rich entrepreneur, but this is exactly what constructive entrepreneurship is all about – it’s about providing a service or product that people want, and/or introducing something new into the market that enhances the social capital of the region.”

Mr McCourt admits that he often takes on too many projects, but says he has no intention of slowing up.

“I love business, and I love doing battle, I love competition and I love to win,” he says.

“I like to accomplish stuff and I like to build stuff… I like all those better than golf, or drinking, or watching TV.”


Follow The Boss series editor Will Smale on Twitter.

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Business confidence on the up, Lloyds survey finds

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Car workerImage copyrightGetty Images

Business confidence has jumped to an 18-month high, but companies are having trouble recruiting skilled workers, according to a new survey.

The Lloyds Bank Business in Britain report’s confidence index rose to 24% – double the level immediately following the EU referendum last year.

The index is a measure of expected sales, orders and profits.

The report surveyed the views of 1,500 UK companies in May, after the general election was called.

The average for the confidence index in the 25 years the report has been compiled is 23%.

The net balance of companies that said they had found it difficult to find skilled labour in the past six months hit a 10-year high of 52%.

That was up from 31% in January when the last report was released.

The share of firms facing similar issues with unskilled workers also rose to 26%, up from 14%.

Tim Hinton of Lloyds Banking Group said: “Although challenges remain in recruiting both skilled and unskilled labour, businesses are anticipating higher sales, increased profits and staffing levels to rise.

“However, the outlook remains mixed at best.”

According to the survey, four out of six business sectors reported higher levels of confidence since January.

That was attributed mainly to increased demand from UK customers, which Lloyds said suggested was due to factors other than the help that weaker sterling had given to exporters.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Although the pound’s value is seen as nearer ‘fair value’, currency volatility remains a big concern for some UK businesses that trade internationally.”

Inflation fears

Meanwhile, the British Chambers of Commerce said that economic growth will remain weak anaemic over the next few years.

The business group, which represents thousands of small and medium-sized companies, said annual GDP growth will not exceed 1.5% by 2020 and inflation could end up being higher than expected.

The BCC expected inflation to average 2.9% this year and peak at 3.4% in the last three months of 2017, which it said would hit consumer spending.

The group raised its forecast for economic growth from 1.4% to 1.5% for this year, but expected GDP to increase by just 1.3% next year.

Adam Marshall, director-general of the BCC, said: “Over recent months, many of the businesses I speak to have expressed cautious optimism for their own prospects, but remain wary about the growth prospects of the UK economy as a whole.

“In the wake of an inconclusive general election, that wariness is set to increase.”

The group has urged the government to spend more on infrastructure, particularly broadband and mobile phone connectivity, while it has described the UK’s road network as sclerotic.

In May the Office for National Statistics said the economy expanded by 0.2% in the first three months of the year, down from its first estimate of 0.3%, as the key services sector lost momentum.

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Italy forced to bail out two more banks for 5.2bn euros

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Intesa Sanpaolo HQImage copyrightGetty Images
Image caption Intesa Sanpaolo will take on the two failing banks’ good assets

Italy’s government is bailing out two banks in the Venice region at a cost of 5.2bn euros (£4.6bn; $5.8bn).

The move comes two days after the European Central Bank warned that Banca Popolare di Vicenza and Veneto Banca were failing or likely to fail.

The banks’ “good” assets will be taken on by Intesa Sanpaolo banking group.

Italian Prime Minister Paolo Gentiloni said the rescue was needed to protect savers and ensure “the good health of our banking system”.

The two banks’ branches and employees will be part of Intesa by Monday morning in a move designed to avoid a potential run on deposits that could have spread to other Italian banks.

Economy Minister Pier Carlo Padoan said Rome would also offer guarantees of up to 12bn euros for potential losses to Intesa from bad and risky loans.

“Those who criticise us should say what a better alternative would have been. I can’t see it,” he told a press conference on Sunday.

Rome’s plan has been approved by the European Commission and avoids a bailout under potentially tougher European rules.

The EC’s competition commissioner, Margrethe Vestager, said allowing Italy to use state aid would “avoid an economic disturbance in the Veneto region”.

She added: “These measures will also remove 18bn euros in non-performing loans from the Italian banking sector and contribute to its consolidation.”

Intesa, Italy’s biggest retail bank, has paid a symbolic one euro for the two banks’ good assets.

“Without Intesa Sanpaolo’s offer – the only significant one submitted at the auction held by the government – the crisis of the two banks would have had a serious impact on the whole Italian banking system,” financial analysts at Messina said.

The failure of the two Venetian banks could result in as many as 4,000 job losses, La Repubblica newspaper reported.

Bailout fund

Sunday’s rescue is the latest twist in the drive to fix the Italian banking system, which is saddled with bad loans worth about 350bn euros – a third of the eurozone’s total bad debt.

In early June the European Commission and the Italian government agreed a state bailout for Monte dei Paschi di Siena (MPS) that included big cost cuts, losses for some investors and a pay cap for its top executives.

Image copyrightGetty Images

The agreement followed months of talks over the fate of the world’s oldest bank and Italy’s fourth-biggest lender – the worst performer in last year’s European stress tests.

Monte dei Paschi was forced to ask for state aid in December 2016 to help cover a capital shortfall of 8.8bn euros after investors declined to put more funds into the troubled bank.

The same month Mr Gentiloni said his government had set up a 20bn euro fund – largely to bail out MPS.

Sunday’s announcement comes less than a month after Spain’s Banco Popular was rescued by Santander.

The European Central Bank said Banco Popular was “failing or likely to fail” due to its dwindling cash reserves.

The bank has struggled after billions in property investments turned sour.

The rescue will cost Santander about 7bn euros (£6.1bn).

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Wonder Woman continues to smash box office records

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Gal GadotImage copyrightWarner Bros
Image caption Gal Gadot takes the leading role in Patty Jenkins’ film

Patty Jenkins’ Wonder Woman film is on track to break box office records by becoming the top grossing live-action film from a female director.

The film has generated more than $620m worldwide since its launch 21 days ago, media reports say, and is on course to outperform the $665.7m made by Kung Fu Panda 2 – also directed by a woman.

Some analysts predict Wonder Woman will also overtake Frozen, made in 2013 by male and female directors.

It generated $1.28bn in ticket sales.

Ms Jenkins’ Wonder Woman is due to generate $319m (£250m; €285m) in the US in 24 days, Forbes’ Scott Mendelson reports, which is only a little less than the $325m and $330m US totals of Suicide Squad and Batman v Superman: Dawn of Justice.

Image copyrightGetty Images
Image caption Israeli actress Gal Gadot has also starred in the Fast & Furious films

Gal Gadot’s Wonder Woman salary seems low compared to male actors

Wonder Woman’s female director conquers box office

Does Wonder Woman live up to the hype?

Wonder Woman is soon likely to be the biggest US success for DC Comics, apart from the last two Batman Dark Knight sequels.

The film – starring Israeli actress Gal Gadot in the lead role – has already overtaken the international ticket sales of Phyllida Lloyd’s Mamma Mia!, which earned $609m in 2008, Mendelson says.

“[The] action spectacular is still doing ridiculously well, both in terms of raw numbers and legs,” he writes.

“It’s projected $27.5m fourth weekend is a drop of just 33% from last weekend, which is nuts for a movie like this.”

Wonder Woman is also due to secure “the seventh-biggest fourth weekend gross of all time”, he adds.

Wonder Woman is the first female-led superhero film to be directed by a woman. It has received largely positive reviews from film critics.

Hollywood is known for its reluctance to hire female directors, especially for blockbuster superhero movies.

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Brexit: David Davis ‘pretty sure’ of free trade deal

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Media playback is unsupported on your device
Media caption“Very French”: What David Davis thinks of his EU counterpart

Brexit Secretary David Davis has told the BBC he is “pretty sure”, but not “certain”, that he will be able to get a free trade deal with the EU.

He told BBC One’s Andrew Marr Show that other EU states “have a very strong interest in getting a good deal”.

But he said that if the UK was only offered a “punishment deal” then it had to be prepared to “walk away”.

His Labour shadow Sir Keir Starmer said Mr Davis should focus on getting the best deal, not “preparing for failure”.

In his interview, Mr Davis also defended Theresa May as a “very good prime minister” – although said she was “under pressure”.

When asked if it would be “catastrophic” for Brexit negotiations for there to be a Tory leadership contest, he replied: “Yes.”

“Let me be absolutely plain about this, number one, I happen to think we have got a very good prime minister. I know she is coming under a lot of pressure at the moment, but I have seen her in action.

“I think she is very good. She makes good decisions. She’s bold. She takes her time.

“Point number two is, I want a stable backdrop to this Brexit negotiation.”

‘No deal’

Mr Davis is heading up the UK side of negotiations, and began talks last week with his EU counterpart Michel Barnier. Of Mr Barnier, he said: “He wants a deal as much as we want a deal, I think.”

Mrs May has been criticised by some for saying “no deal is better than a bad deal” with the EU.

Image copyrightGetty Images
Image caption Mrs May has been under pressure since losing her Commons majority in the general election

Last week, Chancellor Philip Hammond said “no deal would be a very, very bad outcome for Britain” although he went on to say a “worse outcome” would be a deal “deliberately structured to suck the lifeblood out of our economy”.

When Mr Davis was asked by Marr whether he was sure there would be a deal, he said: “I’m pretty sure, I am not 100% sure, you can never be, it’s a negotiation.

Reminded of his past words that “we are guaranteed to get a deal”, Mr Davis said: “You can be sure there will be a deal, whether it’s the deal I want which is the free trade agreement, the customs agreement and so on – I’m pretty sure but I’m not certain.”

On the prospect of no deal, he said a bad deal “would be better than a punishment deal”.

“We cannot have a circumstance where the other side says that they are going to punish you. So if that happens then there is a walkaway, and we have to plan for that.”

Image copyrightAFP
Image caption Mr Davis and EU chief negotiator Mr Barnier began talks last week

Mr Davis said he wanted to deliver an outcome “which helps both sides” and said it was likely there would be a transitional period, after the UK leaves the EU, for trade arrangements, probably of “one to two years”.

Sir Keir Starmer, shadow secretary of state for exiting the EU, said “no deal is not a viable option as it would be catastrophic for British trade, jobs and security. The sooner David Davis realises this, the better.

“Instead of preparing for failure the government should be putting all their efforts into getting a Brexit deal that works for Britain – that means putting jobs and the economy first and dropping the no deal mantra.”

Mr Davis also said he wanted to get a deal on the rights of EU citizens in the UK, and UK citizens living in other EU states, “through now” and to discuss the issue of how the border between Northern Ireland and the Irish Republic will operate, although he acknowledged that it would not be concluded in the negotiations this summer.

‘Not good enough’

He said the government wanted to have an “invisible border” between Northern Ireland and the Irish Republic and said there was lots of “technical stuff” to start working on now – such as number plate recognition and “trusted trailer schemes”.

But the Liberal Democrats’ Brexit spokesman, Tom Brake, said Mr Davis “inspires about as much confidence as a drunken trapeze artist”.

“It is the country as a whole that will suffer when he comes crashing to the floor.

“These negotiations will affect our lives for decades, but he’s only ‘pretty sure’ of getting a deal. It is simply not good enough.”

‘Pragmatic’

Meanwhile Shadow Cabinet Office minister Jon Trickett has been asked to clarify Labour’s position on the single market after 50 Labour politicians signed a letter to the Guardian urging the party to back staying in.

Shadow Chancellor John McDonnell has previously said he did not think remaining a member of the single market was “feasible” and Mr Corbyn has suggested Brexit would mean an end to the UK’s single market membership.

Mr Trickett told BBC One’s Sunday Politics that while Labour’s position is to “have access to all of the tariff-free arrangements which exist within the customs union and single market” it was not wedded to any “particular institutional form”.

He said: “We are pragmatic about it. Let’s see how the negotiations go. We are not going to say one thing or another in terms of institutional relationships.”

The prime minister has said the UK “cannot possibly” remain in the single market as to do so would mean “not leaving the EU at all”.

EU leaders have warned that the UK cannot access the single market, which allows the free movement of goods, services and workers between its members, while at the same time restricting the free movement of people.

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