WEBVTT - Chancellor of the Exchequer Rachel Reeves Talks Fiscal Lock

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Chanceferor, thank you so much for joining us on Bloomberg TV.

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<v Speaker 2>It's been two weeks since the UK election. You've certainly

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<v Speaker 2>hit the ground running today. There was also talk about

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<v Speaker 2>this fiscal lock in why do you feel they need.

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<v Speaker 3>To do that.

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<v Speaker 4>We've introduced to Parliament today the Budget Responsibility Bill that

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<v Speaker 4>was first announced in the king Speech just yesterday, and

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<v Speaker 4>the purpose of this bill is to provide the fiscal

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<v Speaker 4>lock so that never again can a Prime Minister or

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<v Speaker 4>a Chancellor do what Liz Trust and Quasi Quatting did

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<v Speaker 4>with their disastrous mini budget just under two years ago.

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<v Speaker 4>So this will mean that the Office of Budget Responsibility,

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<v Speaker 4>the Independent Office, can always provide a forecast when there

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<v Speaker 4>are significant and permanent tax and spending changes, specifically worth

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<v Speaker 4>more than one.

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<v Speaker 3>Percent of GDP.

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<v Speaker 4>That would have meant it would have triggered an OBR

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<v Speaker 4>forecast back when Liz Trust and Cosey Quatin introduced that

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<v Speaker 4>disastrous Many budget.

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<v Speaker 2>And so that I guess it is something that investors

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<v Speaker 2>will you take solace to. You've announced a what the

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<v Speaker 2>Premister has said that you will achieve that two point

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<v Speaker 2>five percent target.

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<v Speaker 1>Are you confident that's achievable.

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<v Speaker 4>So the purpose of today really was to give businesses,

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<v Speaker 4>give investors that confidence that Britain is a stable place

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<v Speaker 4>to invest and do business.

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<v Speaker 3>I'm determined to do that.

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<v Speaker 4>We were elected two weeks ago on a mandate to

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<v Speaker 4>grow our economy based on that stability that is so

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<v Speaker 4>essential to underpin any economic decision making, and so that's

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<v Speaker 4>why this bill is so important.

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<v Speaker 3>Now.

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<v Speaker 4>I'm under no illusions about the scale of the challenge

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<v Speaker 4>that I face in this job. There are going to

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<v Speaker 4>be difficult decisions ahead, but I was really clear during

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<v Speaker 4>the election that everything that we put forward, whether that

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<v Speaker 4>is on the NHS or on defense or on tax policy,

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<v Speaker 4>will always be fully cost did and fully funded. That's

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<v Speaker 4>very different so what we've had these last fourteen years

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<v Speaker 4>with decisions with no regard to where the money's going

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<v Speaker 4>to come from, and I'm going to be different and.

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<v Speaker 2>Chance I know a lot of course of what you're

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<v Speaker 2>trying to put in place will depend on private capital

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<v Speaker 2>coming into the UK. Have you had discussions with institutions, investors,

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<v Speaker 2>even pension funds of their willingness to come to the UK.

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<v Speaker 4>You're absolutely right that our plans to grow the economy

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<v Speaker 4>depend on businesses and investors choosing Britain as a place

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<v Speaker 4>to invest. And I want investors to look at Britain

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<v Speaker 4>and see a country that's got a stable government with

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<v Speaker 4>a clear mandate to grow the economy and chooses Britain

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<v Speaker 4>as a stable place to invest in an increasingly volatile

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<v Speaker 4>and uncertain world. Which is why the fiscal lot today

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<v Speaker 4>is so important, but also the other changes we've announced

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<v Speaker 4>in the last two weeks. We have announced more policies

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<v Speaker 4>to grow the economy than the last government did in

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<v Speaker 4>fourteen years. In the first seventy two hours in the job,

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<v Speaker 4>I made more comprehensive changes to the UK planning system

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<v Speaker 4>than the previous government did in more than a decade.

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<v Speaker 3>Because I know that we need to unlock.

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<v Speaker 4>That private investment that businesses tell me they are ready

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<v Speaker 4>to invest if we get rid of some of those blockages,

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<v Speaker 4>and the blockages in the planning system I think are

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<v Speaker 4>more significant than anything else. And so those changes to

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<v Speaker 4>bring back mandatory housing targets for local authorities, ending the

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<v Speaker 4>moratorium on shore wind calling in planning decisions on data

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<v Speaker 4>centers and on housing really crucial, both to send a

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<v Speaker 4>signal to business that Britain is a place to invest,

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<v Speaker 4>but also to make sure that we can get on

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<v Speaker 4>with things and get building in Britain again.

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<v Speaker 1>And are they listening?

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<v Speaker 2>Have you gotten cars from big investors saying yes, that's

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<v Speaker 2>a plan that I wanted to see and I'm.

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<v Speaker 3>In absolutely so.

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<v Speaker 4>In my first speech at the Treasury a week and

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<v Speaker 4>a half ago, we had businesses, we had investors in

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<v Speaker 4>the audience met afterwards. The following day we announced the

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<v Speaker 4>creation of a National Wealth Fund work led by Mark Carney.

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<v Speaker 4>The task was led by Mark Carney for the Labor

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<v Speaker 4>Party when we were in opposition, now reporting to a

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<v Speaker 4>Labor government, and on that Wealth Fund task force we

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<v Speaker 4>also had Amanda Blank from a Viva Vencat, from Berkley's,

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<v Speaker 4>Antonio from Energy and other big UK investors. And that

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<v Speaker 4>is absolutely crucial because there's no plans that I can

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<v Speaker 4>draw up in my new office in the Treasury that

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<v Speaker 4>are going to work unless we have business buy in.

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<v Speaker 4>And I hope that businesses saw in Labour's manifesto and

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<v Speaker 4>also in the plans that we've announced in government have

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<v Speaker 4>the fingerprints of business all over them, because these plans

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<v Speaker 4>have been co written with business, because they're all about

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<v Speaker 4>unlocking private sector investment into our economy.

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<v Speaker 2>Chanser, are you considering tax breaks to either boost pension

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<v Speaker 2>savings or make UK investments more attractive.

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<v Speaker 4>I'm not going to announce any tax breaks or tax

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<v Speaker 4>changes without saying where the money is going to come from,

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<v Speaker 4>and we will have a budget later this year. But

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<v Speaker 4>I also just need to be really clear and honest

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<v Speaker 4>about the scale of the challenge that we have inherited.

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<v Speaker 4>With the public finances, We're going to have to make

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<v Speaker 4>difficult decisions. We need to fix the foundations before we

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<v Speaker 4>can start rebuilding things in Britain. But unlike the previous government,

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<v Speaker 4>I am going to be honest about the scale of

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<v Speaker 4>the challenge. I'm going to level with people and together

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<v Speaker 4>we're going to rebuild our country based on that private

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<v Speaker 4>sector business investment to get our economy growing. Because I

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<v Speaker 4>asked the Treasury officials to give me an assessment of

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<v Speaker 4>how much stronger the UK economy would be today if

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<v Speaker 4>we'd have grown at just the average rate of OECD

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<v Speaker 4>economies these last fourteen years, and the answer is we'd

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<v Speaker 4>be one hundred and forty billion pounds bigger today, worth

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<v Speaker 4>five thousand pounds for every family in Britain. We have

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<v Speaker 4>got to grow our economy. It's the only way to

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<v Speaker 4>improve living standards, keep taxes low and have the money

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<v Speaker 4>that we need for our dilapidated public services.

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<v Speaker 1>Jender.

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<v Speaker 2>You're also promising to reset the relationship with European partners.

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<v Speaker 1>Are there any quick wins there to be had?

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<v Speaker 3>Well?

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<v Speaker 4>The Prime Minister is hosting European leaders at blenh And

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<v Speaker 4>Palace in England today and that's really important as a

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<v Speaker 4>chance to reset those relationships and foster a new era

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<v Speaker 4>of trust between the UK and our nearest neighbors and

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<v Speaker 4>trading partners in Europe.

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<v Speaker 3>And we're determined to do that.

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<v Speaker 4>It doesn't mean going back into the Single Market or

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<v Speaker 4>Customs Union or bringing back free movement of labor, but

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<v Speaker 4>it does mean having a closer trading relationship and also

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<v Speaker 4>building a stronger strategic security alignment with our neighbors in

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<v Speaker 4>Europe given the threats that we face as a continent,

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<v Speaker 4>and so blenh And Palace just today is a chance

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<v Speaker 4>for us to begin to reset those relationships and foster

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<v Speaker 4>a stronger relationship between Britain and our neighbors and allies

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<v Speaker 4>in Europe.

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<v Speaker 2>But are there any industries that you would see you

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<v Speaker 2>again a win in terms of parallel kind of you know,

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<v Speaker 2>some of the laws being together.

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<v Speaker 4>Well, there's a number of areas where we would like

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<v Speaker 4>to make some changes to the deal that the previous

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<v Speaker 4>government secured. We would like the mutual recognition of professional

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<v Speaker 4>qualifications to help our services sector, reduce the bureaucracy for

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<v Speaker 4>our cultural industries when touring around Europe. And a veterinary

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<v Speaker 4>agreement to help our fantastic food and farming sector in Britain.

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<v Speaker 4>That will require negotiation and that will require give and

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<v Speaker 4>take on both sides, but we want to boost our trade,

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<v Speaker 4>make it easier for great British businesses big and small

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<v Speaker 4>to sell goods and services right across Europe.

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<v Speaker 2>Given the challenges you were mentioning, when can we expect

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<v Speaker 2>a budget from new September or October?

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<v Speaker 4>Well, I said in my first speech as Chancellor of

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<v Speaker 4>the Exchequer last Monday that before the summer recess I

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<v Speaker 4>would come to Parliament with an update on the fiscal position,

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<v Speaker 4>the spending inheritance that this incoming labor government is now

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<v Speaker 4>having to do with, and I will set out when

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<v Speaker 4>we do that statement the date for the budget in

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<v Speaker 4>the autumn.

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<v Speaker 2>But do you see that being a three to five

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<v Speaker 2>year spending review or does it need to be shorter

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<v Speaker 2>to make sure that the OBR then takes into the

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<v Speaker 2>growth you're expecting.

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<v Speaker 4>Well, we will set out those the details and the

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<v Speaker 4>dates when I come to the House of Commons in July.

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<v Speaker 4>But you know, Francing that I want to bring back

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<v Speaker 4>stability to the UK economy and that gives means giving

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<v Speaker 4>certainty to businesses and families, the state of the public finances,

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<v Speaker 4>what we're going to do to put them on a

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<v Speaker 4>firmer footing. But all that depends on bringing growth back

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<v Speaker 4>to our economy so that we can repair our public services,

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<v Speaker 4>repair our public finances and ensure that living standards increase,

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<v Speaker 4>that working people are better off by bringing investment, bringing

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<v Speaker 4>business back to Britain.

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<v Speaker 2>But chance for that growth target, is it two point

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<v Speaker 2>five percent for next year or is that something that

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<v Speaker 2>you'll you'll have to assess now.

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<v Speaker 4>Our ambition is to have the fastest growing economy in

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<v Speaker 4>the G seven, with good job some productivity growth in

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<v Speaker 4>all parts of the UK. And that's why all the

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<v Speaker 4>announcements that I've made since becoming Chancellor, the Planning Reform,

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<v Speaker 4>the creation of the National Wealth Fund. The fiscal lock

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<v Speaker 4>that we've introduced to Parliament today all about bringing the stability,

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<v Speaker 4>investment and reform to our economy so that we can

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<v Speaker 4>grow our economy and be competitive in that global economy.

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<v Speaker 1>Again, so difficult to put a number on it.

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<v Speaker 3>I'm not going to.

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<v Speaker 4>Put a number on it, and it's the end up

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<v Speaker 4>to the Office of Budget Responsibility to make those forecasts.

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<v Speaker 4>But I'm doing everything within my power, working with my

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<v Speaker 4>colleagues in the Cabinet, to ensure that we are pursuing

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<v Speaker 4>a pro growth, a pro business agenda to bring investment

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<v Speaker 4>back to Britain, because investment is the bedrock of a

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<v Speaker 4>strong successful economy. We have the lowest share of investment

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<v Speaker 4>of neg seven economy. I want to turn that around

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<v Speaker 4>so we can bring good jobs, bring prosperity back to

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<v Speaker 4>the United Kingdom.

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<v Speaker 2>Transfer do you worry about wealthy tax payers moving to Europe?

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<v Speaker 1>What can you tell us about Nanda.

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<v Speaker 4>Well, we were really clear in our manifesto that if

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<v Speaker 4>you make Britain you're home, you should pay your taxes

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<v Speaker 4>here and that's what the outgoing Conservative government we're looking

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<v Speaker 4>to do as well. But it is important that we

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<v Speaker 4>bring in that tax revenue, and that if you live here,

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<v Speaker 4>you should contribute to investment in our health service, in

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<v Speaker 4>our defense, in our law and order, and that will

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<v Speaker 4>happen under this labor government.

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<v Speaker 3>But we want Britain to be a really attractive.

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<v Speaker 4>Place for investors and businesses and successful wealth creators and

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<v Speaker 4>entrepreneurs from around the world, and that's why we're determined

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<v Speaker 4>to unlock our economy for private sector investment through the

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<v Speaker 4>planning reforms, through the National Wealth Fund, and indeed through

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<v Speaker 4>the other changes we're going to bring in, whether that's

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<v Speaker 4>through the skills system or pensions reform.

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<v Speaker 2>None times would be very different to what the Conservatives announced.

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<v Speaker 2>The plan that you're expecting for them, Well.

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<v Speaker 4>There's two differences between what the outgoing government was proposing

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<v Speaker 4>and what we'll do. First of all, we will bring

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<v Speaker 4>those changes forward by a year, and second we will

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<v Speaker 4>make reforms, for example around inheritance tax.

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<v Speaker 3>But it is right that if you make.

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<v Speaker 4>Britain your home, you should pay your share of taxes

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<v Speaker 4>here and an outdo data system based on where your

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<v Speaker 4>father was born to determine how you're treated in the

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<v Speaker 4>tax system. That's just not right, it's not fit for

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<v Speaker 4>a modern economy. Now, of course we will have rules

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<v Speaker 4>that if you come to Britain for a short period

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<v Speaker 4>of time on common with work, for example, that we

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<v Speaker 4>will not be taxing your global income. But if you

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<v Speaker 4>make Britain your home, if this is your permanent place

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<v Speaker 4>of residents, then just like everybody else, you should pay

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<v Speaker 4>your taxes. Here what a modern system fit for a

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<v Speaker 4>modern economy. We don't have that today. Those are reforms

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<v Speaker 4>we want to bring in Chanson.

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<v Speaker 2>When you look at Sheen, would you welcome an IPO

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<v Speaker 2>in the UK and the City of London.

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<v Speaker 4>Well, I welcome the FCA changes just last week to

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<v Speaker 4>really turbocharge listings in the UK, and I want a

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<v Speaker 4>businusinesses to choose Britain as a place to list. For

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<v Speaker 4>the last few years, we've seen story after story about

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<v Speaker 4>companies delisting from the London Stock Exchange, listing in New York,

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<v Speaker 4>listing in Europe.

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<v Speaker 3>I want to turn that around.

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<v Speaker 4>I want Britain to be the place of choice to

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<v Speaker 4>make an IPO to grow your business.

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<v Speaker 3>That's why I welcome.

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<v Speaker 4>The reforms that the FCA put in place last week.

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<v Speaker 4>It's also why I'm determined to change our pension system

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<v Speaker 4>so we can unlock some of those assets under management

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<v Speaker 4>to help start up and scale up businesses access the

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<v Speaker 4>capital they need, so we can keep more businesses here

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<v Speaker 4>in Britain.

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<v Speaker 1>Chance the US is.

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<v Speaker 2>Also really going quite hard on tariffs with China. We're

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<v Speaker 2>going up to an election. The UK has not really

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<v Speaker 2>squared with the EU on ev terrorifts, for example, or

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<v Speaker 2>the US. How would you deal as a small open

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<v Speaker 2>economy with China and Chinese tariffs.

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<v Speaker 4>Well, we are a small, open trading economy and we

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<v Speaker 4>benefit from those trade links with countries around the world,

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<v Speaker 4>both for exports and imports, but also for foreign director investment.

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<v Speaker 4>And our view is that where possible we trade, we cooperate,

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<v Speaker 4>and we challenge in areas where it's important to challenge,

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<v Speaker 4>but we don't want to close the UK economy down

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<v Speaker 4>to imports and exports. We benefit from those trade links

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<v Speaker 4>around the world, including with China.

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<v Speaker 1>Chancellor, thank you so much for your time.

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<v Speaker 3>Thank you