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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Boomberg Day ba QT podcast, available every

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Speaker 2: morning on Apples, Spotify or wherever you listen. It's Friday,

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Speaker 2: the twenty eighth of March in London. I'm Caroline Hepki.

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Speaker 1: And I'm Stephen Carroll. Coming up today a Bloomberg exclusive.

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Speaker 1: Our reporting finds the US as looking to control all

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Speaker 1: major future infrastructure and natural resource investments in Ukraine.

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Speaker 2: Global leaders hold off on tariff retaliation against Trump for now,

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Speaker 2: as one FED policymaker calls the inflationary impact inevitable.

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Speaker 1: And a growing degree of debt. The funding crisis facing

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Speaker 1: British universities is now worrying the banks who've lent them billions.

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Speaker 3: Let's start with a roundup of our top stories.

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Speaker 1: The United States is seeking a deal which would give

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Speaker 1: a control over major future infrastructure and mineral investments in Ukraine.

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Speaker 1: The agreement would potentially include a veto over any role

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Speaker 1: for other Ukrainian allies, undermining the country's bid for EU membership.

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Speaker 1: According to a draft of the documents seen by Bloomberg,

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Speaker 1: President Trump's administration has asked for the right of first

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Speaker 1: offer on all investments in infrastructure and natural resources projects.

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Speaker 1: But speaking yesterday from the summit of European support for

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Speaker 1: Kievan Paris, President Zelenski made clear he wants Europe to

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Speaker 1: be part of any peace process.

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Speaker 4: Europe should be at the negotiation table about to the war.

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Speaker 5: It's mandatory. They're no old tennaship. It's clear we don't

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Speaker 5: view any Ukraine.

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Speaker 1: Vadimir Zelenski. They're speaking through a translator. If accepted, the

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Speaker 1: partnership agreement would represent an unprecedented expansion of US economic

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Speaker 1: influence in Europe's largest country by area. Discussions are continuing

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Speaker 1: between the two sides, and the final draft may contain

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Speaker 1: revisions to the terms.

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Speaker 2: That exclusive reporting comes as President Trump's decision to impose

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Speaker 2: global auto tariffs of twenty five percent further strained relations

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Speaker 2: between America and its allies. France's President Immanuel Macon has

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Speaker 2: highlighted the risks of US economic and foreign policies becoming intertwined.

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Speaker 4: At the moment when we see the US markets don't

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Speaker 4: consider this a very good economic policy, at the moment

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Speaker 4: when the President Trump actually europeans to step up militarily

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Speaker 4: to ensure their own security, saying do yourselves, we won't

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Speaker 4: pay for you. That's not the moment to impose tariffs.

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Speaker 2: Macall's comments, spoken thereby a translator, come as Canada, Mexico,

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Speaker 2: and the EU all say that they will wait to

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Speaker 2: respond to Trump's move on car tariffs until after his

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Speaker 2: expected announcement of broader levies next week.

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Speaker 1: Boston Federal Reserve Presidencies in Colin says it looks inevitable

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Speaker 1: that tariffs will boost inflation in the US, at least

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Speaker 1: in the short term. Speaking at an event in Boston,

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Speaker 1: she went on to say it's lightly appropriate to keep

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Speaker 1: interest rates steady for longer in the face of growing uncertainty.

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Speaker 6: Looks inevitable that tariffs are going to increase inflation in

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Speaker 6: the near term, and my kind of modal outlook would

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Speaker 6: be that that could be short lived, with a continuation

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Speaker 6: of some disinflation, but further in the future than I

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Speaker 6: might have expected before.

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Speaker 1: Susan Collins's comments were echoed by Richmond FED President Tom Barkin.

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Speaker 1: He said that rapid policy changes by the Trump administration

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Speaker 1: have created a sense of instability in the business community,

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Speaker 1: which could, in his words, quiet demand.

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Speaker 2: The global uncertainty cause by the US. A senior European

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Speaker 2: leaders asking if the Euro might be a potential new

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Speaker 2: reserve currency. Bloomberg has learned presidents, central bankers and finance

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Speaker 2: ministers are considering the idea more seriously. Bloomberg's James Walcock

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Speaker 2: has the story.

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Speaker 7: Sixty percent of the world's foreign reserves around dollars and

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Speaker 7: only twenty percent in Euro's size brings liquidity, influence and investment.

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Speaker 7: So Francis President Emmanuel Macron, ECB president Christine the Guard

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Speaker 7: and Eurogroup head Pascal Donaho are among those wondering if

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Speaker 7: Trump's chaos might be an opportunity to change that ratio.

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Speaker 7: There are still major hurdles in this long term vision.

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Speaker 7: For one, the EU is still yet to agree a

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Speaker 7: banking union, but our reporting suggests these figures at the

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Speaker 7: helm of the Euro are privately asking if the title

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Speaker 7: of reserve currency is up for grabs and how they

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Speaker 7: might position themselves to be next in line. In London,

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Speaker 7: James Wallcock, Bloomberg Radio.

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Speaker 1: This week, the UK's Chancellor Rachel Reeves made a show

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Speaker 1: of restoring her fiscal headroom back to its original level.

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Speaker 5: She's already lost half of US.

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Speaker 1: Reeves made cuts worth billions to welfare and spending to

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Speaker 1: return her buffer to nine point nine billion pounds, but

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Speaker 1: Bloomberg Economics says market moves in recent weeks have already

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Speaker 1: wiped out five billion pounds of that fiscal breathing room.

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Speaker 1: Here's our chief UK economist, Dan Hanson.

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Speaker 8: If you set yourself a big buffer, then whether the

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Speaker 8: IBIL downgrades productivity forecast from hits US with tariffs, you

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Speaker 8: know you're safe. You're not having to go after and

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Speaker 8: constantly rebuilding every fyscal event is just this obsession with

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Speaker 8: the headroom. If you have a broader fiscal strategy where

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Speaker 8: you've set yourself some money aside.

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Speaker 1: Hanson adds the market moves since Reeves spoke have been

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Speaker 1: positive for the UK, but data for the official forecast

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Speaker 1: was collected last month. His calculation exposes the fragility of

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Speaker 1: the government's fiscal plans, confirming warnings that market movements or

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Speaker 1: a trade war could derail the UK's finances.

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Speaker 2: Elon Musk says that he is planning to slash a

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Speaker 2: trillion dollars in US government spending by the end of May.

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Speaker 2: Speaking to Fox News, Musk said that his Department of

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Speaker 2: Government Efficiency can reach that amount within one hundred and

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Speaker 2: thirty days. Of the start of Donald Trump's second term.

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Speaker 9: Our goal is to reduce the deficit by a trillion dollars,

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Speaker 9: so from a nominal episode of two to track, cut

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Speaker 9: the episode and half to one trillion, or looked at

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Speaker 9: it in tole federal spending, to drop the federal spending

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Speaker 9: from seven.

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Speaker 5: Trillion to six trillion.

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Speaker 2: Elon Muskat lining an ambitious goal which would require slashing

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Speaker 2: more than half of the one point eight trillion dollars

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Speaker 2: the US spent on non defense discretionary programs last year.

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Speaker 2: Figures form Mosque's own team show that they are still

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Speaker 2: far from that one trillion dollar mark. The Doze website

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Speaker 2: lists about twenty two billion dollars in contract savings. The

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Speaker 2: cost cutting efforts have faced a series of legal setbacks

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Speaker 2: as judges have halted some of their cuts.

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Speaker 1: Those are your top stories on the markets. We saw

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Speaker 1: the S and B five hundred closing in the red

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Speaker 1: for a second day, down three tenths of one percent.

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Speaker 1: General Motors closed down o verse seven percent after we

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Speaker 1: had that news of the tariffs being proposed by the

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Speaker 1: Trump administration on car imports. Looking at the future's picture

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Speaker 1: is pretty steady for Wall Street at the moment, but

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Speaker 1: a sell off continuing in Asia at the Nicker and

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Speaker 1: Tokyo and two point two percent the mscirishpecific index one

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Speaker 1: point two percent lower, Toyota, Nissan, Honda all suffering further

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Speaker 1: losses today. European stock futures are pointing lower as well,

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Speaker 1: two tents of one percent for eurostocks fifty. We're also

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Speaker 1: watching gold prices eight tenths of one percent higher this

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Speaker 1: morning at fresh record high three thousand and eighty two dollars.

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Speaker 1: And this as we're looking ahead to today's PCE data

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Speaker 1: later on to keep in focus for markets as well.

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Speaker 2: Anyway, we're going to bring you more on what the

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Speaker 2: US wants in its bigger Ukraine minerals and infrastructure deal proposal,

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Speaker 2: plus the latest in the funding price it's facing Britain's universities.

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Speaker 2: But first come on, we're gonna have a bit of fun.

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Speaker 2: It's Friday, and.

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Speaker 1: In just in time for that, there's a new game

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Speaker 1: from Bloomberg that we've been playing in the office this morning.

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Speaker 5: It's called Pointed.

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Speaker 1: It's a news quiz with the twist, so you can

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Speaker 1: wager points based on the subjects that you know best.

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Speaker 1: You know the subjects in advance, and then when you

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Speaker 1: actually look at the questions and answers, you can leverage

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Speaker 1: your guesses to try and win more points that you

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Speaker 1: also lose some if you get them wrong. The Catteries

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Speaker 1: cover of the week's news in markets, politics, culture, and

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Speaker 1: more as well. I'm not a quiz person, but I

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Speaker 1: did find this quite fun.

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Speaker 2: Yeah, I really liked it. I'm going to be bold

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Speaker 2: and tell you the number that I managed to rack up.

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Speaker 2: Go on one hundred and twenty seven point five points. Oh,

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Speaker 2: I'm sure this is going to five. Yes, well as

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Speaker 2: a multiplier. There were multipliers and I use them. But listen.

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Speaker 2: Of course, you know I'm in the news game, so

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Speaker 2: maybe that's a high school but I bet someone I got.

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Speaker 5: I think I got about one hundred. I think I

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Speaker 5: finished around where I started.

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Speaker 3: I wasn't going to quizy on that, but anyway, you can.

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Speaker 1: Play it to Bloomberg dot com, slash pointed at its

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Speaker 1: life for you.

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Speaker 9: Now.

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Speaker 1: That's bringing more details though. On our top story this morning,

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Speaker 1: our exclusive reporting about the US seeking to control investment

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Speaker 1: in Ukraine, Our EMA news director Rosalind Mathison joins US

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Speaker 1: now for more. Raz Good morning, What would this deal

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Speaker 1: give the US control over in its current draft that

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Speaker 1: we've seen.

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Speaker 10: Well, it would give it control over an awful lot,

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Speaker 10: basically the power to control investments in the infrastructure side,

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Speaker 10: which is railways, ports, mines, but also into resources, oil gas,

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Speaker 10: and the critical minerals that Donald Trump is so interested

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Speaker 10: in when it comes to Ukraine. And that's just an

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Speaker 10: extraordinary level of economic influence over Ukraine. Basically into this

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Speaker 10: special reconstruction Investment fund, this partnership, so called partnership that's

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Speaker 10: being talked about, where they're supposed to each.

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Speaker 5: Put in money.

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Speaker 10: The US would say, well, all the money that we've

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Speaker 10: spent on Ukraine during the war in terms of military

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Speaker 10: and economic support, that's outside of it, So we're done.

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Speaker 10: Ukraine now needs to put money into that fund, so

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Speaker 10: basically payback the money that the US has sent there

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Speaker 10: in support, and then the US gets first claim on

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Speaker 10: any profits that are transferred into that fund. So it's

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Speaker 10: a bit complicated and based on this draft, but what

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Speaker 10: it does mean is you say, is essentially just a

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Speaker 10: very high level of control from the US over all

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Speaker 10: major future infrastructure and mineral investment in Ukraine.

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Speaker 2: Do you think that the Ukraine will accept it. I

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Speaker 2: suppose the flip side of that is do they really

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Speaker 2: have any other choice?

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Speaker 3: Well, that is the big question.

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Speaker 10: I mean, obviously, this deal goes a lot further than

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Speaker 10: they probably thought it was going to go, and that

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Speaker 10: they that they said they would sign on to. But

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Speaker 10: equally they are in a corner on this because we

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Speaker 10: all know how that Oval Office meeting went between Donald

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Speaker 10: Trump and the Ukrainian President Volnimir Lynsky. We know that

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Speaker 10: after that Zlinsky was really forced in a way to

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Speaker 10: apologize for what happened and say, yes, yes, we will

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Speaker 10: consider this deal. And you know, it's unclear what other

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Speaker 10: options they have because the US is very much in

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Speaker 10: the in the driving seat on this.

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Speaker 3: Europe is largely out.

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Speaker 10: Of the picture when it comes to the negotiations. The

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Speaker 10: US is essentially negotiating directly with Ukraine and then separately

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Speaker 10: negotiating directly with Russia. So the ability of Ukraine to

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Speaker 10: say no to all of this is hard to see

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Speaker 10: because what are the alternatives.

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Speaker 3: Is there?

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Speaker 1: Does this deal provide, given the US investment that it

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Speaker 1: would involve in Ukraine, could it serve as something that

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Speaker 1: could deter Russia FC's fires agreed down the line from

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Speaker 1: taking future steps against Ukraine.

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Speaker 10: Well, that's the argument that the US does put forward,

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Speaker 10: and Donald Trump has said this a number of times.

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Speaker 10: He's saying he would be providing economic security for Ukraine,

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Speaker 10: and through economic security, you're acting as a military deterrent

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Speaker 10: of sorts. I mean, this is sort of one of

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Speaker 10: the reasons why the EU was set up in a

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Speaker 10: way was to have everyone bound together so economically that

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Speaker 10: they would never go to war again with each other.

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Speaker 10: And his argument again is that the US is providing

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Speaker 10: a form of protection by being heavily involved economically in Ukraine.

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Speaker 10: And Vladimir Putin's not going to push on things in

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Speaker 10: Ukraine if he knows he's going to run into projects

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Speaker 10: and investments that the US has a lot of money

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Speaker 10: at stake. So the question is does that deter Vladimir

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Speaker 10: Putin or is it done in a way that you

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Speaker 10: appreciates from the US side what Vladimir Putin wants himself

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Speaker 10: from Ukraine. So can these things work together in a

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Speaker 10: mutual fashion. It's possible at this stage that they could,

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Speaker 10: but again we don't know how the specifics of some

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Speaker 10: of the US Russian negotiations are going on.

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Speaker 3: Well, so thank you so much for being with us

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Speaker 3: this morning.

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Speaker 2: That is our EMEA News director Rosin Matherson. Of course,

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Speaker 2: this is the latest iteration of a deal between Ukraine

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Speaker 2: and the US, so let's see how it progresses now.

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Speaker 1: The funding crisis facing many UK universities is now causing

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Speaker 1: lenders concerns they face a struggle to recover the loans

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Speaker 1: they provided to the industry. New Bloomberg analysis shows university

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Speaker 1: is at a total of nine point five billion pounds

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Speaker 1: in debt in the twenty twenty three academic year, and

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Speaker 1: around one in ten institutions are having trouble repaying their loans.

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Speaker 1: Our reporter is about award is here with us for

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Speaker 1: more this morning. It's been a first of all, remind

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Speaker 1: us why are UK universities in such financial trouble.

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Speaker 11: Government funding to the sector has largely been frozen for

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Speaker 11: the last ten to fifteen years, so that's in terms

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Speaker 11: of the grant's universities get to carry out research, but

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Speaker 11: also the juition reviews they're allowed to charge domestic students

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Speaker 11: British students, which are underwritten by the government. Meanwhile, running

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Speaker 11: costs have gone up during by inflation. Energy prices have

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Speaker 11: soared and this shortfall, it has been identified by universities

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Speaker 11: for a while, but to close it they would always

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Speaker 11: rely on international students, so they can charge international students

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Speaker 11: a lot more than they can British students. But a

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Speaker 11: perfect storm of Brexit, of the pandemic of tightening of

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Speaker 11: immigration rules means that the number of national students just

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Speaker 11: has not grown as expected, and that's really just pulled

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Speaker 11: the rugout from under university's feet.

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Speaker 2: Yeah, okay, so then why have they taken on so

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Speaker 2: much debt and also how widespread the problems then in

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Speaker 2: terms of repaying all of that.

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Speaker 11: So in line of this freeze in government funding, the

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Speaker 11: whole kind of way, the whole funding model for universities

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Speaker 11: has kind of shifted more to more privately back projects

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Speaker 11: than grants in the past fifteen years. And that was

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Speaker 11: never a problem banks and insurance firms in particular, so

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Speaker 11: this is a really stable, long term lending opportunity and

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Speaker 11: were happy to lend, and at the time borrowing was

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Speaker 11: very cheap. Universities, however, have gone on a bit of

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Speaker 11: a building spree. They're so keen to attract international students

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Speaker 11: as well as domestic students, and they really bet on

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Speaker 11: upgrading their campuses or building shiny new ones as a

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Speaker 11: key part of that when you agree alone attached to

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Speaker 11: it what they call covenants, so basically terms lenders might

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Speaker 11: mandate that universities have like a certain have cash flow

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Speaker 11: above a certain minimum threshold, for example, and it sort

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Speaker 11: of just gives the lender and idea of the university's

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Speaker 11: financial strength. Since twenty twenty two, fifteen universities have either

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Speaker 11: broken or had to change those covenants before breaking them,

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Speaker 11: and additional nine have indicated that they're worried about it.

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Speaker 11: So that's one in six signaling credit risk.

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Speaker 1: So what are the universities and crucially the lender is

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Speaker 1: doing about this problem.

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Speaker 11: So particularly distressed universities and their lenders are in talks

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Speaker 11: with government as well as regulator the Office for Students

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Speaker 11: to try to find workarounds to insolvency because none of

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Speaker 11: them really want a university to go bust. It would

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Speaker 11: be terrible for students and the local economy. For lenders,

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Speaker 11: it's not great even if you can foreclose and take

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Speaker 11: over a university's land. The really specialized nature of campus

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Speaker 11: buildings just means that's not that good a deal. And

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Speaker 11: also publicity wise, it's bad not just for government, the

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Speaker 11: government on whose watch this happens, but also lenders. But

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Speaker 11: also there's a real concern that if a British university

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Speaker 11: does collapse, it's just going to further deter international students.

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Speaker 2: Okay, so briefly, what's going to happen next to think

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Speaker 2: in this story?

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Speaker 11: So nine is still yet to publish their financial statements,

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Speaker 11: so there could be further issues, and government are expecting

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Speaker 11: to deliver reforms in summer, but it's not expected that

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Speaker 11: those will address the insolvency. In the meantime, we're seeing

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Speaker 11: large scale cuts across the sector to staff, courses, students, support,

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Speaker 11: and certainly this era of expansion and optimism for the

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Speaker 11: sector has come to an end.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 5: I'm Caroline Hipka and I'm Stephen Carroll.

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