Speaker 1: Hello, and welcome to Stephanomics, and today we're bringing the
Speaker 1: world of three to you. It sound traditional, strangely popular,
Speaker 1: look ahead to the big themes and questions coming down
Speaker 1: the track over the next twelve months, with a carefully
Speaker 1: selected panel of wise men and women who have been
Speaker 1: kind enough to make Stephanomics part of their holiday season.
Speaker 1: So in the US we have our Washington bureau chief
Speaker 1: of Bloomberg, Peggy Collins, and Bloomberg's chief economist and frequent
Speaker 1: participant on this show, Tom Orlig. Here in London we
Speaker 1: have the glittering star of Bloomberg Television, Francine Lakoix, and
Speaker 1: a newcomer to Stephanomics who is not new to the
Speaker 1: European corridors of power, as views are taken extremely seriously
Speaker 1: by senior policymakers across Europe and beyond, Charles Grant, director
Speaker 1: and founder the award winning think tank the Center for
Speaker 1: European Reform. Welcome to all of you, and thank you
Speaker 1: very much for doing this, especially people who are doing
Speaker 1: it for the second time, because you know what you're
Speaker 1: in for. Um we are all about looking ahead on
Speaker 1: this program, not looking back. But I think it makes sense,
Speaker 1: just very briefly to ask you all what your most
Speaker 1: memorable moment of twenty two was, Peggy, you know, stepanitiely
Speaker 1: one of the most memorable moments of two that I
Speaker 1: think will reverberate in actually came in July when surprisingly,
Speaker 1: after a lot of resistance, Senator Mansion did a U
Speaker 1: turn um and struck a deal that was a surprise
Speaker 1: in Washington, which is pretty hard to do um with
Speaker 1: Senator Chuck Schumer, and they passed what is known now
Speaker 1: as the Inflation Reduction Act. But it was actually a
Speaker 1: turned around in the sense that a lot of people
Speaker 1: had thought that the Biden administration would not be able
Speaker 1: to get that comprehensive climate you know, energy tech bill
Speaker 1: through in this before the midterm elections came up. So
Speaker 1: I think that was one of the surprises for us
Speaker 1: in the news room of and we're going to get
Speaker 1: into some of that the changing politics in the US
Speaker 1: in a minute. Tom Aulick, what was your big surprise?
Speaker 1: So there were so many huge surprises in Stephanie, and
Speaker 1: I'm sure the other wise people on the panel, they're
Speaker 1: gonna going to hit the big ones. A kind of
Speaker 1: a small acquired a surprise which stuck with me was
Speaker 1: a moment in June when Treasury Secretary Janet Yelling put
Speaker 1: her hand in the air and admitted that she had
Speaker 1: been wrong on inflation. Yelling, in common with the vast
Speaker 1: majority of the economics profession, had dismissed inflation as a
Speaker 1: transitory phenomenon, nothing we needed to be really worried about.
Speaker 1: Of course, that proved to be a hundred and eighty
Speaker 1: degrees wrong. Inflation was a very serious problem. Central banks
Speaker 1: had to respond with the most aggressive tightening since we've
Speaker 1: seen since the nineteen eighties. And as we look ahead
Speaker 1: into three and recall that not many people anticipated the coronavirus.
Speaker 1: Not many people anticipated Russia's invasion of Ukraine. Perhaps Charles
Speaker 1: will help me, that's wrong, um, not people anticipated inflation.
Speaker 1: I think it's useful to remember that if Janet Yellen
Speaker 1: can get it wrong on something as big and important
Speaker 1: as that, we can all get it wrong as well.
Speaker 1: Oh and we have Charles Grant. What what stuck out
Speaker 1: for you in the thing that sticks in my memory
Speaker 1: from is was Olaf Schaltz's speech to the bunders Tag,
Speaker 1: the so called zeigen Vendor speech. It was two or
Speaker 1: three days after the Russian invasion. He basically rejected mercles
Speaker 1: many of the principles of Merkel's foreign policy. So they're
Speaker 1: gonna be much tougher on Russia. They're going to free
Speaker 1: themselves from dependency on Russian energy supplies, and we're going
Speaker 1: to spend two percent of GDP on defense. And meanwhile,
Speaker 1: a hundred billion euros are going to a special fund
Speaker 1: so that German forces could catch up with those of
Speaker 1: their peers. And this was a revolution in German foreign
Speaker 1: and security policy. Subsequently, one can be a bit frustrated
Speaker 1: with the slow pace of implementation. One could be a
Speaker 1: bit annoyed that the revolution didn't extend to China policy,
Speaker 1: where Germany still seems stuck on the old economic model
Speaker 1: of using China is a very important export market and
Speaker 1: almost dependent on China. Nevertheless, it was a revolution in
Speaker 1: German foreign policy, and I think that that sticks in
Speaker 1: my memory. Francia, I mean, first of all, time stretches.
Speaker 1: I feel like the last twelf months were a decade
Speaker 1: all in one, partly because we wan't used to traveling anymore,
Speaker 1: but also the news cycle has just been absolutely relentless.
Speaker 1: So the most memorable moment for me it has to
Speaker 1: be the lettuce righte the list Trust letters which brought
Speaker 1: us like, you know, it made us laugh, but it
Speaker 1: also made us cry at the same time. What a
Speaker 1: week of absolute mayhem in the UK. That was. I
Speaker 1: was in Rome covering the Italian elections, Stephanie, and they
Speaker 1: had to call me back in London because the markets
Speaker 1: in the UK was so crazy. I've been covering you know,
Speaker 1: news for twenty years. They never pulled me out of
Speaker 1: a time story to cover UK one because it was crazier.
Speaker 1: And you know, we had the Jubilee celebrations, we had
Speaker 1: Boris Jranson resigning, we had the Queen dying for funeral
Speaker 1: of the market meldown and then list Trust resigning. So
Speaker 1: it was quite a year for the UK and the
Speaker 1: sheer absurdity being symbolized by this Iceberg lettuce, which was
Speaker 1: judged to be more like more likely to last the
Speaker 1: month than Liz trusts and and so and so it
Speaker 1: proved um thanks to everyone for that. I look back
Speaker 1: at my look Ahead column, which I'm writing again this
Speaker 1: year for Business Week. I started with what I suspect
Speaker 1: was not a very bold prediction at the time, that
Speaker 1: coronavirus was not going to be enemy number one for
Speaker 1: the global economy. The biggest changes we're going to stem
Speaker 1: from inflation and the risk that policymakers called the post
Speaker 1: COVID recovery wrong. I mean, Tom even as I wrote
Speaker 1: that central banks worst scrambling to reassess how long inflation
Speaker 1: was going to stick around, what kind of policy action
Speaker 1: it might require to put it back in its box.
Speaker 1: I mean, we have now had almost a year and
Speaker 1: maybe nine months of record breaking monetary tightening around the world,
Speaker 1: many central banks going up in three quarter of a
Speaker 1: percentage point increases for the first time. Are we there
Speaker 1: yet or will three bring more of the same. So
Speaker 1: the story of two was the story of how far
Speaker 1: and how fast inflation rose and what central banks have
Speaker 1: to do to respond. The story of three is going
Speaker 1: to be the story of how far and how fast
Speaker 1: inflation recedes um. So our view is that we're going
Speaker 1: to see a pretty rapid drop from the extremely elevated
Speaker 1: levels that we've seen in the back end of two.
Speaker 1: We're not going to see inflation sticking around at for
Speaker 1: very long. Even so, especially in the United States, where
Speaker 1: wage games are pretty astronomical, we're going to see inflation
Speaker 1: sticky at an uncomfortably high level for the FED, the
Speaker 1: European Central Bank, the Bank of England and others. What
Speaker 1: that means, we think is that the pace of rate
Speaker 1: hikes is going to slow and then stop um But
Speaker 1: we're not quite there yet in terms of central bank tightening.
Speaker 1: A couple of other wild cards to throw in there
Speaker 1: in terms of global monetary policy. The first one is Turkey. Now, Turkey,
Speaker 1: of course has been marching to its own drumma on
Speaker 1: monetary policy, cutting interest rates despite inflation running at and
Speaker 1: that's very much been a political decision driven by President Hurdan.
Speaker 1: Now there's an election coming up in Turkey in June.
Speaker 1: The view from our Turkey economists, who, by the way,
Speaker 1: he joined us from the central bank over there, is
Speaker 1: that the current policy settings just aren't sustainable and after
Speaker 1: that general election, after that presidential election, no matter who wins,
Speaker 1: we're going to have to see a significant shift with
Speaker 1: a big rate hike to stave off a currency and
Speaker 1: financial crisis. The other wild card, of course is Japan,
Speaker 1: where Harahiko Coroda, the architect of extreme easing, is now
Speaker 1: poised to step back from the front lines of policy making,
Speaker 1: retiring in the first half, that's going to be an
Speaker 1: opportunity for a reset there as well. And of course,
Speaker 1: apart from the very modest but significant change at the
Speaker 1: end of this year, UM that's the one central bank
Speaker 1: that has just not moved as the world has moved
Speaker 1: around them. Tom, there's much talk about whether or not
Speaker 1: we will dodge a recession in the US or indeed globally.
Speaker 1: What's your take. So it's funny. I think a lot
Speaker 1: of people look at the strength in the US labor
Speaker 1: market right now, the strength of UM wage gains, the
Speaker 1: very low unemployment, and say, you know what, all this
Speaker 1: talk about recession we had over the last few months,
Speaker 1: it must have been overdone. The economy is still looking
Speaker 1: pretty healthy. I think you actually need to flip it
Speaker 1: around and look at it in the other in the
Speaker 1: other direction. And it's the fact that the labor market
Speaker 1: remains very hot, with unemployment low and wages rising quickly,
Speaker 1: which means the Fed's job is still far from done.
Speaker 1: And it's the fact that the FED has to carry
Speaker 1: on layering on rate hikes, which means that a recession,
Speaker 1: we think in the back end of remains more likely
Speaker 1: than not. Did they dodge that yeah, they could dodge it.
Speaker 1: Inflation could disappear more quickly than we expect, the FED
Speaker 1: could get away with less rate hikes than we expect.
Speaker 1: Other unexpected stuff could happen. But if you look at
Speaker 1: the history books, there aren't many examples of this pace
Speaker 1: of monetary tightening occurring without a downturn following if few
Speaker 1: months later. And of course, of you're the west of
Speaker 1: the world, which we'll get onto in a minute. That is,
Speaker 1: the fact that the US is looking relatively strong now
Speaker 1: is actually in some sense bad news, because it does mean,
Speaker 1: as you've suggested, that there will be further interest rate
Speaker 1: rises that in a sense, the rest of the world
Speaker 1: may not may not need Peggy just staying in the
Speaker 1: US for a minute. I mean, if we had spoken
Speaker 1: six months ago, or even just before the US mid
Speaker 1: term congressional elections in early November, we would have expected
Speaker 1: the inflation and the economy to dominate the results of
Speaker 1: those But it didn't work out like that, did it. Well.
Speaker 1: It's interesting, Stephanie, because it did in some ways. The
Speaker 1: economy was certainly a priority on voters minds, but it
Speaker 1: turned out that the job market that Tom was just
Speaker 1: talking about, the strength of that, the fact that most
Speaker 1: Americans had a job, or if they were looking for
Speaker 1: a job, they could find one, seemed to put them
Speaker 1: in a better state when they went to the ballot box,
Speaker 1: and that some of the social and cultural issues that
Speaker 1: we're really bubbling up with the roev Wade decision um
Speaker 1: and other things seemed to be one of the most
Speaker 1: important things for voters when they ultimately pressed the button.
Speaker 1: So the economy was certainly there. But as Tom is saying,
Speaker 1: if next year, Ine, we do actually see some of
Speaker 1: the feds jacking up of interest rates actually hurting people
Speaker 1: when it comes to whether or not they can hold
Speaker 1: onto their job or get another job, then you might
Speaker 1: see voters have more of a reaction at the ballot
Speaker 1: box against the Bidet administration, if that makes sense, Stephanie, Yeah,
Speaker 1: And of course we do have there. There was a
Speaker 1: time when we thought we were going to have a
Speaker 1: sweep across the boarder for the for the Republicans, which often,
Speaker 1: of course happens in mid term elections against the incumbent president.
Speaker 1: We ended up with in a more mixed picture. But
Speaker 1: we do have a different Congress coming back in January.
Speaker 1: How is that going to feed through to pull to
Speaker 1: seeing what Congress does well. It certainly will make a difference.
Speaker 1: As you said, Stephanie, Democrats did better than many people
Speaker 1: were expecting, both on the federal level and in many
Speaker 1: of the governor's races across the country. But it will
Speaker 1: still mean that Republicans have the House coming into three.
Speaker 1: That may mean a couple of things, that the White
Speaker 1: House may have to turn to more executive orders to
Speaker 1: get things done, and also that they will get fewer
Speaker 1: things done through Congress. I do think there's some issues
Speaker 1: that they might still be able to find some common
Speaker 1: ground on, but we may see, as I mentioned, some
Speaker 1: more executive orders ruling the day when the Biden administration
Speaker 1: really wants to get something done. And very briefly, I'm
Speaker 1: gonna put you on the spot, and of course we've
Speaker 1: got a countdown now now we've got through the mid terms.
Speaker 1: Of course we're going to have a gradual crescendo up
Speaker 1: to the presidential elections in is Trump going to be
Speaker 1: on the ballot? You have to guess right now, we'll
Speaker 1: give you the nominee. He says he's going to be
Speaker 1: on the ballot. So I think we have to Visian ourselves,
Speaker 1: and and you know, I expect that he will be
Speaker 1: certainly candidates like Ron de Santa's who hasn't declared a
Speaker 1: candidacy for the race, but a lot of people expect
Speaker 1: him to. We expect others will certainly UM surface in
Speaker 1: the Republican Party. But Trump is still, in many people's minds,
Speaker 1: the biggest threat to widen and winning a second term
Speaker 1: if he declares. We're also waiting for that UM decision
Speaker 1: to come in early January. So to answer you directly, Stephanie,
Speaker 1: because Trump has said he will run UM, I think
Speaker 1: we expect him to, but a lot can happen in
Speaker 1: two years. Okay, we're going to cross the Atlantic now.
Speaker 1: And Charles Grant Tom mentioned, I mean, we've had many
Speaker 1: things kind of overturned our predictions in this session. Last year,
Speaker 1: it would have been the Russia's invasion of Ukraine, which
Speaker 1: the Russian Experts Center European Reform had definitely put on
Speaker 1: the radar, but not everyone was predicting. What what surprised
Speaker 1: you about the way the Russia's invasion of Ukraine has
Speaker 1: played out? And where do you see it going in
Speaker 1: twenty three? Two things surprised me Stephanie. I'll say more
Speaker 1: about the second. The first one. I think everybody was
Speaker 1: surprised by the Ukrainian's ability to resist the invasion, by
Speaker 1: the shearing competence of the Russian military leaders. Having said
Speaker 1: that the war is not over. Ukraine is not one
Speaker 1: and most of the military experts I talked, I think
Speaker 1: we're going to face a stalemate of several years, with
Speaker 1: neither side probably able to greatly pushed back the other
Speaker 1: side to a huge degree. So I think the war
Speaker 1: is going to go on, which leads to my second
Speaker 1: thing that surprised me was the degree of Western unity
Speaker 1: really surprising given how badly the trans atlantic relationship was
Speaker 1: at the time that Biden pulled out of Afghanistan, given
Speaker 1: the arguments within the European Union and how to handle Russia.
Speaker 1: The fact is the Europeans have been more or less united,
Speaker 1: with the possible exception of Hungary and and the U
Speaker 1: S and the EU have worked pretty well together on
Speaker 1: most disused most of the times. Having said that the
Speaker 1: caveat is of course, will the unity whole looking forward?
Speaker 1: I think if if we face a stagflation in the
Speaker 1: coming years and people see that it's caused by the
Speaker 1: war in Ukraine leaving very high energy prices and inflation
Speaker 1: in the lower standard of living. Then you know the
Speaker 1: public opinion and may be whipped up by populace to
Speaker 1: oppose the war. It's not really happening to a very
Speaker 1: great deal at the moment. But perhaps more worrying is
Speaker 1: that it is just the difference of analysis between two
Speaker 1: groups of governments. In the EU. You have the the
Speaker 1: Baltic countries in Poland and to some degree the Nordics
Speaker 1: and Romania in the Czech Republic, who want to be
Speaker 1: very tough on Russia. They don't want to talk to poosting.
Speaker 1: They say regime change in Russia. The warmest go on
Speaker 1: to Ukraine has reconquered all its territory and isolate Russia.
Speaker 1: When you have then you have the French and their towns,
Speaker 1: and the Germans and indeed President Biden, and this isn't
Speaker 1: the same groups saying, actually, don't humiliate Russia. We're going
Speaker 1: to have to deal with Russian the longer. At some
Speaker 1: point that will have to be a negotiation and we
Speaker 1: have to find a way of working out a relationship
Speaker 1: with Russia in the long term, which sort of implies
Speaker 1: that at a certain point they'll put pressure on Ukraine
Speaker 1: to to compromise some of its territory and return for peace.
Speaker 1: That nobody's at he's saying that at the moment. That
Speaker 1: is the implicit I think in the French, German, Italian,
Speaker 1: American position. So there is this tension between the two
Speaker 1: schools of thoughts in the European with the British somewhere
Speaker 1: in the middle, but perhaps on the bit of the
Speaker 1: tougher end of the spectrum. And the longer the war
Speaker 1: goes on, the more these tensions will will grow, and
Speaker 1: the harder it will be to keep the West united.
Speaker 1: And you mentioned at the start that very striking speech
Speaker 1: that the Chancellor that Schultz gave, and but you also
Speaker 1: mentioned that there had been a bit disappointing when it
Speaker 1: comes to the follow up on that. I mean, when
Speaker 1: you're someone who's been quite frustrated over the years sometimes
Speaker 1: that the Europeans were not more muscular in their approach
Speaker 1: to defense. Is this going to fundamentally change the way
Speaker 1: Europe sees itself geo politically. Is it going to change
Speaker 1: its commitment to defense in a lasting way? I think
Speaker 1: that the war has been good for European defense. Both
Speaker 1: the sort of manifestations of European defense. What one is NATO,
Speaker 1: which includes the Americans, one is the EU which doesn't
Speaker 1: include the Amans. They both actually move forward. NATO is
Speaker 1: clearly been a very very important organization protecting European countries
Speaker 1: from the Russian threat, and although Native hasn't has made
Speaker 1: a point of not being directly involved in the war
Speaker 1: of course and staying out of it, it is behind
Speaker 1: the scenes strengthening its eastern flanks, sending more troops to
Speaker 1: its eastern member states to to protect them. So that's
Speaker 1: good for Native but also the EU itself outside the spotlight,
Speaker 1: behind the scenes that he's doing a lot on defense.
Speaker 1: It's got something called the European Peace Facility which is
Speaker 1: funding the purchase of arms for Ukraine. It's never done
Speaker 1: that before and it's spent most of the first seven
Speaker 1: or eight billion euros has been spent in the Ukraine already.
Speaker 1: They're replenishing it with another top up of a similar amount.
Speaker 1: Because the European Defense Fund, which is being spent on
Speaker 1: European industries that use played a huge rule in pushing
Speaker 1: through sanctions against against Russia. Because of Ukraine this sounds
Speaker 1: funny to say it's been good for European defense. I
Speaker 1: guess in the same way that World War Two is
Speaker 1: good for Europe's sense of its need for defense. Yes,
Speaker 1: it's worth actually saying just one number, because bloom Bird
Speaker 1: likes numbers. European defense budgets have gone up about two
Speaker 1: hundred billion euros this this year, which is a huge amount.
Speaker 1: Half of that is the German budget going up by
Speaker 1: a hundred billion. You're the extra hundred billion for the Germany.
Speaker 1: So Europe, Europe are actually putting the money where their
Speaker 1: mouth is when it comes to defense for the first
Speaker 1: time ever really in many years. And when I was
Speaker 1: in Japan and not not long ago, that was the
Speaker 1: week that the Prime minister announced a big increase in
Speaker 1: defense spending there. So the world has been been shaken
Speaker 1: shaken up. Francine, you've been very patient. As you mentioned,
Speaker 1: you were often DoD gadding around Europe for Bloomberg Television
Speaker 1: and interviewing some of the great and good. I mean,
Speaker 1: it has not been great for Europe this winter, and
Speaker 1: we are probably looking at a recession thanks to high
Speaker 1: energy prices. But what you might have called the real
Speaker 1: downside scenarios for Europe that we might have had a
Speaker 1: few months ago as a result of the Ukraine War,
Speaker 1: they haven't materialized. Is the hard part still to come? Well,
Speaker 1: I think it could get harder from here, stephanitely partly
Speaker 1: because of the fairly mild winter I guess that we
Speaker 1: had in you know, the Euros are and in the
Speaker 1: UK in October and November, so oddly, and I have
Speaker 1: checked this with the news room because I couldn't quite
Speaker 1: believe what I was reading. Europe is ending one of
Speaker 1: the toughest years for energy in a stronger position than
Speaker 1: it started the year. And this is partly because of
Speaker 1: the high energy prices attracting cargoes for example of L
Speaker 1: and G liquified natural gas over the autumn, which then
Speaker 1: continued to be discharged. So you're right, you know, we've
Speaker 1: had a pretty difficulty or inflation climbing to the hystin decades,
Speaker 1: household builds increasing multi fold, but a lot and everything
Speaker 1: probably will depend on energy. Um it's a bit counterintuitive that,
Speaker 1: you know, our storage sites are now at the brim,
Speaker 1: so we do have quite a few months of being
Speaker 1: able to cope December that freeze, and we're still in
Speaker 1: its energy prices soaring, So I guess it's it's whether
Speaker 1: we have power shortages, whether the situation in Europe will
Speaker 1: get much worse. Um there are other major risks, example
Speaker 1: that that gas price cap from the EU, which is
Speaker 1: seen as a positive, could also send some of the
Speaker 1: cargoes elsewhere, So you know, as you know, watch out
Speaker 1: for energy prices which could get a lot higher. And
Speaker 1: if that touches un employment, then I guess all bets
Speaker 1: are off. And I mean you spend a lot of
Speaker 1: time in Italy. It's usually safe to put decent odds
Speaker 1: on an Italian crisis when the cost of money is
Speaker 1: going up, and obviously the European Central Bank is raising
Speaker 1: interest rates. But the new government has been quite timid
Speaker 1: so far, the government that came in as a as
Speaker 1: a new populist government. Um, so is it possible that
Speaker 1: Italy is gonna miss that great moment of reckoning in
Speaker 1: three They've kind of been our best behavior, haven't there Now.
Speaker 1: I don't think it will be smooth sailing, but I
Speaker 1: do think the trend will be it will be trying
Speaker 1: to stick to the reforms that Mario Druggi had promised
Speaker 1: in exchange for money. There has been huge opposition, and
Speaker 1: this is something sometimes that's missed if you're not in Italy.
Speaker 1: There's been huge opposition to the ECB and to Christine mcgarden,
Speaker 1: but Georgia Maloney has scrapped one of the controversial measures
Speaker 1: aimed at promoting cash payments, and that was to please
Speaker 1: the European Union. And for the moment, she's also stuck
Speaker 1: to her you know, staunch support for Ukraine following the
Speaker 1: Russian invasion, which to some could be seen as a surprise.
Speaker 1: Um so she's been more vocal in questioning that you
Speaker 1: stands on immigration and energy, but actually, so far it
Speaker 1: looks like you know, plane sailing for now step famous
Speaker 1: plane sailing? Can we ever use that phrase for Italy? Charles?
Speaker 1: Do you share Francine's view? And is there anywhere else
Speaker 1: that we should be looking for potential trouble in twenty
Speaker 1: three or not trouble for them? Slightly more right than Francine,
Speaker 1: I mean, Maloney is a close friend of Mr Kachinsky
Speaker 1: who runs Poland, and Mr Auburn, who runs Hungry, and
Speaker 1: they are embarked on a sort of permanent warfare against
Speaker 1: the EU of a so called rule of laws us
Speaker 1: that you being upset that they denied the damage the
Speaker 1: independence of the judicies. And so I think Maloney has,
Speaker 1: as Francine says, has been a very good good behavior
Speaker 1: so far. But I'm not sure it's gonna gonna last.
Speaker 1: I think that the pressures on her from her base
Speaker 1: to sort of through a few stones at the glass
Speaker 1: houses suscles may rise. But that's one thing I'm looking
Speaker 1: at it for. And other things I said is is
Speaker 1: there going to be a resolution of this endless argument
Speaker 1: between Poland and Hungry on the one hand and the
Speaker 1: E and the other over the rule of law. I'm
Speaker 1: not very optimistic. Two final questions I pose are is
Speaker 1: that you're going to become more protectionists, more focused on
Speaker 1: industrial policy, more focused on securing supply chains, which has
Speaker 1: been the tendency of recent years, and suspending rules on
Speaker 1: state aid so it can build up huge hydrogen industries,
Speaker 1: battery industries and so on, and microchip industries. So I think,
Speaker 1: you know, the use under French leadership is becoming far
Speaker 1: more protections than it used to be. Is that going
Speaker 1: to persist in? Finally, We'll come back to this later,
Speaker 1: I guess Stephanie is will there be a repress more
Speaker 1: between the UK and the EU. That is an interesting question. Well,
Speaker 1: we may part the UK briefly because people will feel
Speaker 1: they've had an excess of Europe already. But Tom, one
Speaker 1: thing that we've mentioned briefly on this program before that's
Speaker 1: helped Europe have those overflowing gas supplies that Francine talked
Speaker 1: about it was the slowdown in China because it made
Speaker 1: more energy available thought for Europe to snap up. And
Speaker 1: the part was partly because the Chinese authorities have continued
Speaker 1: to put control of COVID ahead of economic growth and
Speaker 1: we had sort of expected that to continue for a
Speaker 1: large part of three only a grad or move away
Speaker 1: from the COVID zero policies, but but everything seemed to
Speaker 1: change very quickly in the last few weeks of the year.
Speaker 1: Um I guess I'm interested. You spent eleven years in Beijing.
Speaker 1: How do you read what happened to COVID policies in
Speaker 1: China and how that affects the outlook for next year? Um, So,
Speaker 1: before you're getting onto China stuff, and I just wanted
Speaker 1: to pick up on one comment from Charles, just from
Speaker 1: a British negotiating position. I suggest we hold back on
Speaker 1: using French words like reproach, more con sessions from from
Speaker 1: across across the channel, um so, um so on China,
Speaker 1: um now. I gave Beijing a lot of credit for
Speaker 1: the way they manage edged COVID. Yes, COVID zero placed
Speaker 1: enormous strain on the economy and enormous strain on society,
Speaker 1: and we saw that social strain bubbling up in those
Speaker 1: extraordinary protests in the last few weeks. But COVID zero
Speaker 1: saved a lot of lives until a few weeks ago,
Speaker 1: just a few thousand people dead from COVID in China
Speaker 1: compared to vastly larger numbers for much smaller populations in
Speaker 1: other parts of the world. So I gave them a
Speaker 1: lot of credit. The last few weeks have sort of
Speaker 1: really shaken my confidence that they've got a plan for
Speaker 1: an exit. Um now. There is a way out of
Speaker 1: COVID zero whilst minimizing public health costs, and that requires
Speaker 1: a gradual approach to allow time for vaccines to go
Speaker 1: into arms and for health facilities to be moved into place. Clearly,
Speaker 1: that is not the approach which China has taken. Reopening
Speaker 1: has happened really really quickly UM And I'm not an epidemiologist.
Speaker 1: I don't know how things are going to play out
Speaker 1: in the next few weeks and months. But the experience
Speaker 1: in other countries around the world, and what I read
Speaker 1: from people who are experts in the way diseases spread
Speaker 1: through populations suggests there's a risk of a really serious
Speaker 1: public health catastrophe in China in the start of UM.
Speaker 1: So that's really important. Hasn't happened yet. We don't know
Speaker 1: how Chinese society, how China's policymakers are going to react
Speaker 1: to it, and that means there's still a huge amount
Speaker 1: of uncertainty as we look into China in the year ahead.
Speaker 1: That said, from an economic perspective, the rapid exit from
Speaker 1: COVID zero is pretty clearly a positive for China's growth
Speaker 1: numbers looking forward. Yes, right now, people are pretty cautious.
Speaker 1: They don't want to get infected in this first wave.
Speaker 1: They're staying at home. We're going to see some pretty
Speaker 1: brutal growth numbers from China in the fourth quarter of
Speaker 1: two and perhaps right at the start of but by
Speaker 1: the time we get through the winter and into the
Speaker 1: second quarter of three, I think we're going to start
Speaker 1: looking at some pretty strong growth numbers out of China.
Speaker 1: Our base case for the year ahead is that we
Speaker 1: get five point one percent growth. That base case assumed
Speaker 1: a gradual reopening. We've now got a more rapid reopening.
Speaker 1: So I think risks to that five point one percent number.
Speaker 1: And now to the upside for the rest of the world.
Speaker 1: Of course, there's a positive there China is going to
Speaker 1: be buying more stuff, but there's also a negative. Because
Speaker 1: China is going to be buying more stuff, the prices
Speaker 1: of stuff are going to start going up, and we'll
Speaker 1: look especially at prices for commodities like energy and think
Speaker 1: about how they're going to be playing into the inflation
Speaker 1: story in the US, in Europe and elsewhere. Yeah, so
Speaker 1: that if you do have good economic news in China,
Speaker 1: that will be making the job of central banks everywhere
Speaker 1: harder and increasing, as you say, the sort of stickiness
Speaker 1: of inflation. I mean, Charles, obviously, the shifting relations with
Speaker 1: China is the stuff of years, not months. But we
Speaker 1: do seem to be in a new era of geoeconomics,
Speaker 1: and actually I spoke about it at length in the
Speaker 1: last week's episode with with support Tucker, economic tools increasingly
Speaker 1: being used for geopolitical objectives. Is Europe inevitably going to
Speaker 1: be pulled into this what we would call the new
Speaker 1: Cold War? Or do you think there's a desire to
Speaker 1: really resist this weaponization of the global economy. I think
Speaker 1: Europe is going to be pulled into a new Cold War,
Speaker 1: but rather reluctantly dragging its feet. I mean, Europe's in
Speaker 1: a very difficult place when it comes to the growing
Speaker 1: conflict between China and the US because economically it depends
Speaker 1: more on China than the US does, a greater pertentage
Speaker 1: of its trade is with China. It also has a
Speaker 1: very different sort of geopolitical attitude to China. Europeans worried
Speaker 1: about Chinese behavior, the abuse of human rights, the threats
Speaker 1: to its neighbors, the theft of intellectual property, and so on.
Speaker 1: But I think many people in Washington worry about Chinese
Speaker 1: power per se, and I think many people in Washington,
Speaker 1: even if China started behaving better, would still see China
Speaker 1: as a threat to American America's role in in Asian securities. Biden,
Speaker 1: to his credit, has made an effort to reach out
Speaker 1: to the Europeans to consult them on what he does
Speaker 1: on China. But I think that the tensions will will
Speaker 1: grow because the Europeans just don't want to be as
Speaker 1: tough as as the Americans. However, the more we get
Speaker 1: into a sort of new Cold War, and the more
Speaker 1: inevitably the Europeans, whoever reluctantly, are forced to take sides
Speaker 1: and will take sides on on the American side as
Speaker 1: far as I can see. And Peggy, I mean, we
Speaker 1: talked about the new Congress. The one thing that there
Speaker 1: is bipartisan agreement on is that the U s should
Speaker 1: continue to be playing tough with China. Do you sense
Speaker 1: from the administration and appetite for opening up more sort
Speaker 1: of wars along the lines of the chip chip wars
Speaker 1: and more weaponization of trade rules from the US? I
Speaker 1: do think there's appetite, there's Stephanie. I think the Bion
Speaker 1: administry and has tried to position itself very tough on
Speaker 1: China particularly. We saw President Biden himself be very forthright
Speaker 1: about his feelings about Taiwan, for example, and we've seen
Speaker 1: Secretary of State Blink in this fall say that the
Speaker 1: US sees the timetable for China potentially invading Taiwan moving up.
Speaker 1: So I do think there's quite a um a hawkish
Speaker 1: viewpoint from the Biden administration towards China while they are
Speaker 1: still trying to keep a dialogue open, and the Republicans
Speaker 1: certainly are coming out of the gate in with control
Speaker 1: of the House in a similar position that they want
Speaker 1: to look strong on China. So I do think you
Speaker 1: will continue to see legislator legislators try and policymakers try
Speaker 1: to show that they're being tough on China while keeping
Speaker 1: the door open between the two countries because we are
Speaker 1: still so interconnected. I think that's one thing to watch, certainly.
Speaker 1: And then the other is the chips bill that you
Speaker 1: mentioned that is really really just starting to get off
Speaker 1: the ground, passed in two but a lot of money
Speaker 1: and energy is going into trying to onshore or near
Speaker 1: shore the making of semiconductor chips that those all important
Speaker 1: semiconductor chips. So I do think the Biden administration is
Speaker 1: hoping that some of that will actually get off the
Speaker 1: ground in three and potentially offset some of the job
Speaker 1: losses that we may see from the FED ratcheting up
Speaker 1: the interest rates. So they are hoping that as the
Speaker 1: FED tries to strike this soft landing that Tom talk
Speaker 1: talked about before, that there will be some new jobs
Speaker 1: coming into the economy from the infrastructure bill that they
Speaker 1: passed in their first couple of years, and then from
Speaker 1: this semiconductor bill that passed as well in two Although
Speaker 1: it's funny because one of our colleagues, Sean donnand has
Speaker 1: been going has been going down to where the new
Speaker 1: one of the new semiconductive factories is going to be,
Speaker 1: and they're struggling to find construction workers. Said that the
Speaker 1: issue of of tight labor markets as what's turning to
Speaker 1: bite them. This is the time of year, Peggy, where
Speaker 1: you as bureau chief of sort of thinking about reallocating
Speaker 1: people as we see kind of the political mood shifting
Speaker 1: and activity moving to different areas. And I was struck
Speaker 1: by you mentioning antitrust sort of competition moves being an
Speaker 1: area that you saw being a more active next year.
Speaker 1: Is that is that one of the areas where President
Speaker 1: Biden can continue to make news and do things even
Speaker 1: with a divided Congress. Yes, I do think so. I
Speaker 1: do think there is some appetite in Congress on both
Speaker 1: sides of the Aisle on this issue of antitrust and
Speaker 1: particularly related to the consolidation of power amongst the big
Speaker 1: tech companies. But even without that, the Biden administration has
Speaker 1: two key allies and potential forces behind it. One is
Speaker 1: Lena Kahn heading up the FDC, and then also the
Speaker 1: at the Justice Department there's Assistant Attorney General Jonathan Cantor.
Speaker 1: Both of them are very aggressive on this anti TUCH
Speaker 1: issue and they see it as the kind of the
Speaker 1: new frontier for helping consumers and workers that this consolidation
Speaker 1: of industries and business has really at many junctures hurt workers,
Speaker 1: especially given that fewer and fewer of them are protected
Speaker 1: by unions. And so I do think there's a three
Speaker 1: pronged effort between the Biden and administration push on the
Speaker 1: hill as well as um Lena con and Jonathan Canters
Speaker 1: pushes on antitrust where you could see more moves or
Speaker 1: cases coming down that could change the landscape. Okay, so
Speaker 1: I feel like since at least some of us are
Speaker 1: sitting in UK, we probably have to linger a little
Speaker 1: bit on the sad, sorry state of the UK economy
Speaker 1: and politics front scene. You started with the lettuce I
Speaker 1: was struck by a pole. I just saw of just
Speaker 1: under half of the UK population is thinking we might
Speaker 1: get yes, another prime minister in three despite the fact
Speaker 1: there's no election on the eies and and the government
Speaker 1: in theory has quite a big majority. There are strikes
Speaker 1: up and down the country as we speak, including an
Speaker 1: unprecedented nurses strike ambulance workers. Can it Can it only
Speaker 1: get better from here? Or do you think actually things
Speaker 1: are going to get worse? First well, I thought stephanitiely
Speaker 1: that things could only get better, mainly come an optimism.
Speaker 1: I spoke to John Stepic of course from Boomburgh Wealth
Speaker 1: and he thoroughly depressed me on house prices and frankly
Speaker 1: everything else. So he you know, he argues that house
Speaker 1: prices could fall over house price fall that's a crash.
Speaker 1: I mean that's a lot. So frankly, everything depends, as
Speaker 1: you know now, on the labor market whether that stays strong.
Speaker 1: I think the lesson from history is that when a
Speaker 1: recession hits an employment takes about a quarter or so
Speaker 1: to respond. Once it does, it tends to rise rapidly.
Speaker 1: So it depends really on the rise and whether the
Speaker 1: bank in England can manage it whether we get through this.
Speaker 1: The Bank of England officials that we speak to, and
Speaker 1: you know them better than me, Stephanie, they're you know,
Speaker 1: they worry or they think there's a gradual riseing job
Speaker 1: is right next year. The big risk is that there's
Speaker 1: a huge increase all of a sudden. If it's a
Speaker 1: lot more rather than we think, then I guess all
Speaker 1: better off. And I noticed that our achieved europe economists
Speaker 1: had done a few sort of back of the envelope
Speaker 1: calculations that just in terms of where incomes were now
Speaker 1: and where the affordability of mortgages relative to a year
Speaker 1: or two ago, house prices look about twenty overvalued in
Speaker 1: the UK. So it does feel like they're heading for
Speaker 1: a for one way or another. Charles, that whole mini
Speaker 1: budget fiasco in the autumn. The optimistic take on that
Speaker 1: was it was it meant the death of cake is
Speaker 1: um in the UK. It meant the death of this
Speaker 1: idea that was associated particularly with Boris Johnson, that you
Speaker 1: could dodge tough choices, have your cake and eat it.
Speaker 1: Is that a sort of positive spin on what's happened
Speaker 1: that now Britain's going to get serious, is going to
Speaker 1: be forced to go on a better path because it's
Speaker 1: tried all the other ones. I think Cakism has been
Speaker 1: defeated and the the establishment and the grown ups are
Speaker 1: in control of the leavers on the British economy now
Speaker 1: for now. But let's not forget that the Tory Party
Speaker 1: has many members of Parliament in it who are who
Speaker 1: are Cakiss, who like Boris Johnson and his trust, sort
Speaker 1: of believe you can have tax cuts and spending increases
Speaker 1: and growth all all at the same time without worrying
Speaker 1: too much about the consequences. Some of them are still
Speaker 1: in that of that school, and they are particularly the
Speaker 1: ones who really hate the European Union. So they may
Speaker 1: prevent Richie Sunac from, if I may use a French word,
Speaker 1: engineering a repression of the European Union in the over
Speaker 1: the coming months, which which it's all about the Northern
Speaker 1: Ireland Protocol. It's far too boring to explain, but essentially
Speaker 1: the British Government has to compromise on this protocol and
Speaker 1: agree to allow some checks on goods passing between Great
Speaker 1: Britain and Northern Ireland to preserve the fact that there
Speaker 1: isn't a barrier between the North of Ireland and the
Speaker 1: South of Ireland because Northern Irelands and the civil market,
Speaker 1: that's what it's about. The British government is reluctant to
Speaker 1: do so, we'll have to do so. Richie Sunach is
Speaker 1: strong enough if he wishes to see down his own
Speaker 1: right wing Brexiteers and the DUP than leading unionist part
Speaker 1: and all down if he wishes to, but I'm not
Speaker 1: sure he's tough enough to do so. And if he
Speaker 1: doesn't do so, then but President Biden won't come to
Speaker 1: Northern Island for the for thenversity of the Good Friday
Speaker 1: Agreement in April, and the Americans to be quite annoyed,
Speaker 1: and he won't get a better relationship with the European Union,
Speaker 1: which is really bad in very many respects at the moment.
Speaker 1: That he does have to take on the cakes, take
Speaker 1: on the extremist, take on the Brexiteers and defeat them.
Speaker 1: I hope he does, but I'm not sure that he's
Speaker 1: going to be able to do something. And probably the
Speaker 1: single most effective thing you could do to support the
Speaker 1: economy is to have a stronger trade relationship with the EU.
Speaker 1: But as you suggest, it's it's it's politically extremely difficult
Speaker 1: to handle well. I think when we're heaving, probably for
Speaker 1: a labor government in a couple of years time, that
Speaker 1: even a labor gunner which will want a stronger relationship
Speaker 1: with the EU, a close relationship will not reverse the
Speaker 1: essentials of the Brexity deal, namely out of the Single Market,
Speaker 1: out of the Customs Union, no freedom of movement. So
Speaker 1: even a better relationship will still lead to a lot
Speaker 1: of economic damage. As you may have noticed, Stephanie, the
Speaker 1: Center for European Reform just published a report today on
Speaker 1: how much Brexit has damaged the British economy. We've constructed
Speaker 1: a Doppleganger model of an economy similar to the British
Speaker 1: economy which didn't undergo Brexit, and the gap between the
Speaker 1: growth of the Doppelgan economy and the British coconomy is
Speaker 1: about five and a half percent. That's led to put
Speaker 1: lead to the income for the treasury being cut by
Speaker 1: about forty billion pounds a year, which is roughly the
Speaker 1: same as the tax increases Writchily Sooner recently known. So
Speaker 1: the cost of the British economy under the exchequer of
Speaker 1: Brexit is quite large, and it's going to remain. Sadly, Tom,
Speaker 1: it has been a tough year in Europe, the US
Speaker 1: still potentially looking at a recession, and China, but it
Speaker 1: should be said there's a lot of the rest of
Speaker 1: the world that has not necessarily been as hard hit.
Speaker 1: I mean, I noticed India's growth is now going to
Speaker 1: outpace China's for at least a couple of years in
Speaker 1: a row, and of course the Gulf is booming thanks
Speaker 1: to high energy prices. Were looking, as a global economist does,
Speaker 1: at the entire world economy. Who are the relative winners
Speaker 1: from the shocks of two? Who's coming to this better?
Speaker 1: First of all, definitely, let me say that I was
Speaker 1: poised to forgive Charles for the repeat appearance of reproach more,
Speaker 1: but then he had to follow up with Doppelgang, which
Speaker 1: is different country but the same, the same, same, same,
Speaker 1: wrong side of the linguistic divide. Um. So um, So look,
Speaker 1: I think until quite recently, UM, we could tell a
Speaker 1: story about a global economy which was supported by three pillars,
Speaker 1: really low borrowing costs, reliably supercharged demand from China and
Speaker 1: ever increasing tip trade and financing ties. Um. And what's
Speaker 1: happened in the last few years is all of those
Speaker 1: pillars have been kicked away, Borrowing costs have gone to
Speaker 1: the roof. China, as we've just discussed, has gone from
Speaker 1: being a reliable growth driver to a real wild card
Speaker 1: for the global economy next year. And of course, Frank
Speaker 1: should us China ties and even more rushes invasion of
Speaker 1: Ukraine are really replaced kind of optimistic hopes for globalization
Speaker 1: with a new reality of kind of tariffs and embargoes
Speaker 1: and sanctions and geopolitical state craft. So for the global
Speaker 1: economy written large, all of these things are negative. Right.
Speaker 1: Growth is going to be weaker, inflation is going to
Speaker 1: be higher. But as you mentioned, Stephanie Um, there is
Speaker 1: also at a kind of micro level going to be
Speaker 1: a pattern of winners and losers, right, And if we
Speaker 1: think about some of the potential winners in this new
Speaker 1: and more chaotic and more disorderly and more fragmented world,
Speaker 1: I think we can point to companies and countries that
Speaker 1: control access to crucial resources. Right. So if you're controlling
Speaker 1: access to a crucial piece of the semiconductor supply chain,
Speaker 1: or if or pumping a lot of the petrochemicals which
Speaker 1: the world relies on, potentially the new world looks better
Speaker 1: for you, more opportunities than the old world. If you're
Speaker 1: a country that could potentially step into supply chains and
Speaker 1: give countries and companies a bit of a hedge against
Speaker 1: their China exposure. If you're in Mexico or a Vietnam
Speaker 1: or an India, it's definitely you mentioned India now outpacing China.
Speaker 1: Then this shift to a more broken, more fragmented world
Speaker 1: could also mean significant opportunities as well as new risks.
Speaker 1: So I think we tend to think about emerging markets
Speaker 1: as as a as a pack, right, and certainly investors
Speaker 1: often treat them as a kind of a pack and
Speaker 1: don't differentiate in between them and the reality though, of course,
Speaker 1: is that within the emerging market universe, you've got lots
Speaker 1: of different qualities of institutions. So you've got Brazil's central Bank,
Speaker 1: for example, which hikes aggressively to get inflation under control.
Speaker 1: And you've got turkeys central Bank, which is dominated by
Speaker 1: politics and which bizarrely cuts interest rates and gives a
Speaker 1: further leg to already supercharged inflation. You've got emerging markets
Speaker 1: that are massive commodity exporters, Like many of the emerging
Speaker 1: markets in the Middle East and which are kind of
Speaker 1: just counting the money flow into their treasuries as Russia's
Speaker 1: invasion of Ukraine drives global energy prices through the roof.
Speaker 1: And then you've got lots of other emerging in frontier
Speaker 1: economies like Sri Lanka, for example, which defaulted on its
Speaker 1: debt last year because it couldn't afford to pay for
Speaker 1: food and pay for energy imports and repay its lenders
Speaker 1: at the same time. Um So, I think this sort
Speaker 1: of more fragmented world, the world of higher borrowing costs,
Speaker 1: the world of broken supply chains. I think it's going
Speaker 1: to reinforce the sort of the need to differentiate within
Speaker 1: the emerging market universe. Who's got what technologies, who's got
Speaker 1: what commodities, who's got good institutions, who's got bad institutions.
Speaker 1: He's going to be some of the important questions going forward. Okay,
Speaker 1: So I think we have had our tour of the world.
Speaker 1: I'm very briefly before you escape. Traditionally I now ask
Speaker 1: for everyone's wild cards, things to watch, unexpected, things to
Speaker 1: look out for. In twenty twenty three, Francine, So the
Speaker 1: one thing I'm watching out force definitely is probably that
Speaker 1: you could get potentially better data. I don't know whether
Speaker 1: Tom and you think that we could get inflation, you know,
Speaker 1: suddenly disappearing quicker than expected. But if that helps the market,
Speaker 1: then we're in very different economy in two thousand and
Speaker 1: twenty three, with households, you know, willing to spend and
Speaker 1: everything looking much rosier. I'm not sure about my own conviction,
Speaker 1: but that's what I'm watching out for. Child. I think
Speaker 1: I my sort of wild card would be actually an
Speaker 1: unexpected represh more in the relationship between China and the West.
Speaker 1: She's been getting worse and worse for ten years because
Speaker 1: of Chinese behavior has been unacceptable to the West. It's
Speaker 1: been bullying its neighbors, stealing intellectual property, abusing human rights
Speaker 1: and song. But actually, although as Tom said, the economy
Speaker 1: is probably going to pick up in China, they've got
Speaker 1: a lot of internal problems. There was unrest we haven't
Speaker 1: talked about, of demonstrations all across China, which forced es
Speaker 1: and paying to abandon a zero COVID policy, which is
Speaker 1: quite a quite a thing. They're tied tied geo politically
Speaker 1: to Russia, which has turned out to be rather a
Speaker 1: Dodgy an unsuccessful ally in the West is very united,
Speaker 1: and I think that the Russian War has made the
Speaker 1: Chinese scared of invading taime One because they can see
Speaker 1: the West would back Taiwan probably, and so I think
Speaker 1: I would predict that the Chinese leadership will be so
Speaker 1: focused on sorting out domestic problems are actually be a
Speaker 1: bit nicer to the West and looked looked for some
Speaker 1: represh more. M's interesting, Peggy, what's your wild card? So,
Speaker 1: Stephanie in the US, I think the wild card to
Speaker 1: watch would be the debate over the debt ceiling or
Speaker 1: debt limit. We are expected to hit that sometime and
Speaker 1: I think the Republicans are really going to come to
Speaker 1: the bargaining table to talk about the entitlement programs for
Speaker 1: the first time in several years. Entitlement programs meetings, social Security, Medicare,
Speaker 1: and Medicaid. Some changes potentially there to cut costs, and
Speaker 1: I do think that's one area where Congress likes to
Speaker 1: go up to the deadline like journalists do, and that
Speaker 1: could cause some real rattling in markets, not only in
Speaker 1: the US, around the world. Thanks Peggy, until all like
Speaker 1: your wild club? So after after after a number of
Speaker 1: years which have been marked by my plague, by war,
Speaker 1: by talk of recession, is really easy to focus on
Speaker 1: what could go wrong, UM, And our base case for
Speaker 1: the global economy next year is pretty blue. Me We're
Speaker 1: forecasting two point four percent global growth into any twenty three,
Speaker 1: and if you leave aside the COVID crisis year of
Speaker 1: and the global financial crisis year of two thousand and nine,
Speaker 1: two point four percent growth is actually the lowest going
Speaker 1: all the way back to so pretty gloomy baseline projection.
Speaker 1: I think it's also important to keep in mind, though, UM,
Speaker 1: coming back to sort of Janet Yellen's acknowledgement of forecasting failure,
Speaker 1: that we could just be wrong right and this time
Speaker 1: we could end up being too pessimistic. If you ask,
Speaker 1: inflation disappears more quickly than we expect, if Europe has
Speaker 1: a warmer winter, more gas and so less of a
Speaker 1: problem with inflation than we expect, if China manages to
Speaker 1: exit from COVID zero a bit more smoothly than we expect,
Speaker 1: and perhaps even as Charles mentions adopts a bit of
Speaker 1: a warmer relation between Beijing and Washington, d C and Brussels,
Speaker 1: then we could be looking at a world in three
Speaker 1: with stronger growth, last inflation and a bit more positive
Speaker 1: tone to this conversation, and hopefully we get back together
Speaker 1: on Stephano Mix at the end of the year. Well,
Speaker 1: that is a very fine thing to hope for now.
Speaker 1: The other tradition is I lower the tone with my
Speaker 1: wild card. Last year I had a sporting prediction that
Speaker 1: England would win the Football World Cup and everyone would
Speaker 1: judge Cats the best World Cup ever. I didn't quite
Speaker 1: work out that way, but it was a pretty good final,
Speaker 1: i would say, and maybe a better World Cup than
Speaker 1: many thought. I'm going to try my luck and make
Speaker 1: the same prediction this year that England are going to
Speaker 1: win the Football World Cup. But I think I have
Speaker 1: a much better chance of being right this time because
Speaker 1: it's the women who'll be playing at the finals next
Speaker 1: summer in Australia. Thanks for listening to Stephanomics. We'll be
Speaker 1: back next week next year. In the meantime, you can
Speaker 1: find us on the bloom Book Terminal website or wherever
Speaker 1: you get your podcasts, and please do rate and review
Speaker 1: our show so it can reach more listeners. You can
Speaker 1: also get news and analysis from Bloomberg Economics all the
Speaker 1: time by following at Economics on Twitter. This episode, as ever,
Speaker 1: was produced by Magnus Herrickson, Summer Sadi, and Yang Yang,
Speaker 1: with special thanks to Francine Laquid, Charles Grant, Peggy Collins,
Speaker 1: and Tom Porlock. Mike Sasso is our executive producer. Thank
Speaker 1: you to all of you, and a very happy New Year.