1 00:00:02,720 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,760 --> 00:00:12,440 Speaker 2: Hello Trump Andomics listeners. We're working hard on an episode 3 00:00:12,520 --> 00:00:16,079 Speaker 2: with opinion columnist and energy bureau Javier Blass and Bloomberg 4 00:00:16,160 --> 00:00:20,439 Speaker 2: Economics Ziad Daude assessing the economic impact of the war 5 00:00:20,600 --> 00:00:23,040 Speaker 2: in Iran, and that's going to be out in feeds 6 00:00:23,040 --> 00:00:26,920 Speaker 2: at the regular time tomorrow Wednesday. But earlier today I 7 00:00:26,960 --> 00:00:30,880 Speaker 2: sat down for an exclusive conversation with the UK's Chancellor 8 00:00:30,960 --> 00:00:34,199 Speaker 2: of the Exchequer, Rachel Reeves. We had an opportunity to 9 00:00:34,240 --> 00:00:39,240 Speaker 2: discuss her expectations for the UK's economy over the coming years, 10 00:00:39,520 --> 00:00:41,800 Speaker 2: how she sees the escalating war in the Middle East 11 00:00:41,880 --> 00:00:45,640 Speaker 2: affecting it. We also mentioned her take on the Supreme 12 00:00:45,680 --> 00:00:48,600 Speaker 2: Court ruling on Trump tariffs, the status of the UK 13 00:00:48,800 --> 00:00:51,880 Speaker 2: US trade deal, and I asked her whether she thought 14 00:00:51,960 --> 00:00:55,680 Speaker 2: people moving to Dubai to avoid UK taxes might now 15 00:00:55,760 --> 00:01:08,480 Speaker 2: be starting to rethink. Here's that conversation, Chancellor, Thank you 16 00:01:08,560 --> 00:01:11,360 Speaker 2: so much for doing this. You've come over to Bloomberg 17 00:01:11,480 --> 00:01:14,760 Speaker 2: headquarters straight from the Treasury on a busy. 18 00:01:14,600 --> 00:01:16,199 Speaker 1: Day, Okay, straight from the Chamber. 19 00:01:16,440 --> 00:01:19,000 Speaker 2: From the Chamber of course, Yes, you wanted to talk 20 00:01:19,040 --> 00:01:22,360 Speaker 2: about your thoughts about the state of the UK economy 21 00:01:22,640 --> 00:01:26,920 Speaker 2: and the growth plan going forward. But obviously, given everything 22 00:01:26,959 --> 00:01:30,640 Speaker 2: that's happening today in markets in the Middle East, I 23 00:01:30,680 --> 00:01:32,319 Speaker 2: want to start with just asking you a few questions 24 00:01:32,360 --> 00:01:34,600 Speaker 2: about that. I mean, you mentioned in your speech in 25 00:01:34,640 --> 00:01:37,560 Speaker 2: the Commons that you were planning to talk tomorrow to 26 00:01:38,080 --> 00:01:41,479 Speaker 2: northse oil producers. What are you hoping to get out 27 00:01:41,480 --> 00:01:42,240 Speaker 2: of that conversation. 28 00:01:42,959 --> 00:01:45,360 Speaker 1: So I said in the Chamber that some of the 29 00:01:45,400 --> 00:01:50,280 Speaker 1: most affected industries I wanted to spend some time with 30 00:01:50,360 --> 00:01:52,400 Speaker 1: and been in touch with over the last few days. 31 00:01:52,440 --> 00:01:57,600 Speaker 1: And obviously developments in oil and gas markets are absolutely 32 00:01:57,640 --> 00:02:01,960 Speaker 1: crucial for every family, in every business in Britain. Now 33 00:02:02,560 --> 00:02:05,120 Speaker 1: oil and gas production in the North Sea Council less 34 00:02:05,160 --> 00:02:08,240 Speaker 1: than one percent of global supply of oil and gas, 35 00:02:08,600 --> 00:02:11,239 Speaker 1: but it's still very important. It's important for jobs in 36 00:02:11,280 --> 00:02:14,960 Speaker 1: the UK, it's important for investment, and it's important for 37 00:02:15,120 --> 00:02:17,600 Speaker 1: every family in Britain. So I'm going to be a 38 00:02:17,680 --> 00:02:21,880 Speaker 1: meeting with them tomorrow to talk about their production plans 39 00:02:22,240 --> 00:02:26,079 Speaker 1: and also to talk about how they see the situation evolving. 40 00:02:26,120 --> 00:02:29,560 Speaker 1: Because every oil and gas company pretty much that operates 41 00:02:29,600 --> 00:02:31,920 Speaker 1: in the North Sea will also operate in other parts 42 00:02:31,960 --> 00:02:34,800 Speaker 1: of the world, whether that is SHELL or BP or 43 00:02:34,800 --> 00:02:41,160 Speaker 1: equinor or others, and so getting their insights into how 44 00:02:41,720 --> 00:02:45,040 Speaker 1: oil and gas prices might evolve based on a number 45 00:02:45,040 --> 00:02:48,320 Speaker 1: of different scenarios over the coming days and weeks will 46 00:02:48,360 --> 00:02:51,480 Speaker 1: be very useful for me and for the government. 47 00:02:51,840 --> 00:02:53,840 Speaker 2: We can give you our scenarios as well, but our 48 00:02:53,840 --> 00:02:56,799 Speaker 2: economists are looking at this as you suggest, there's nothing 49 00:02:56,840 --> 00:02:59,240 Speaker 2: that our north to oil producers could do to affect 50 00:02:59,520 --> 00:03:02,960 Speaker 2: a globe or price hike. It is already up significantly. 51 00:03:03,639 --> 00:03:06,720 Speaker 2: If it's sustained for any period, it seems like it 52 00:03:06,720 --> 00:03:10,000 Speaker 2: would be much harder to get the headline inflation rate 53 00:03:10,080 --> 00:03:13,240 Speaker 2: in the UK back to two percent as you were, 54 00:03:13,280 --> 00:03:14,480 Speaker 2: as you were hoping it would be. You did a 55 00:03:14,480 --> 00:03:17,239 Speaker 2: lot of things in the budget to encourage shall we 56 00:03:17,280 --> 00:03:19,960 Speaker 2: say inflation to go back to two percent even by April. 57 00:03:20,160 --> 00:03:23,520 Speaker 2: Has Donald Trump's wore an iran taken that away from you? 58 00:03:23,720 --> 00:03:25,720 Speaker 1: Well, the first thing I would say is that the 59 00:03:25,760 --> 00:03:28,880 Speaker 1: action that I took in the budget will still happen. 60 00:03:29,480 --> 00:03:33,440 Speaker 1: So the freezing prescription charges, the freezing rail fares, and 61 00:03:33,520 --> 00:03:36,520 Speaker 1: also the one hundred and fifty pounds off of energy 62 00:03:36,560 --> 00:03:40,240 Speaker 1: bills that I announced in the budget will take effect 63 00:03:40,400 --> 00:03:43,560 Speaker 1: next month and so people paying families paying their gas 64 00:03:43,560 --> 00:03:47,000 Speaker 1: and electricity bills do not need to worry about the 65 00:03:47,040 --> 00:03:51,920 Speaker 1: next three months. That price cap is set and they 66 00:03:51,960 --> 00:03:55,160 Speaker 1: will get the benefit of those policies I announced in 67 00:03:55,280 --> 00:03:58,360 Speaker 1: the in the budget. But of course, you know, we 68 00:03:58,440 --> 00:04:01,640 Speaker 1: have to see how things evolved in terms of where 69 00:04:01,680 --> 00:04:04,200 Speaker 1: oil and gas prices go going forward. But what the 70 00:04:04,200 --> 00:04:07,240 Speaker 1: Office's Budget Responsibility confirmed today and what the Bank of 71 00:04:07,240 --> 00:04:11,680 Speaker 1: England said when they published their most recent outlook for 72 00:04:11,720 --> 00:04:15,880 Speaker 1: inflation in February, was that the measures that we have 73 00:04:16,000 --> 00:04:19,200 Speaker 1: taken as the government are helping bring inflation back down 74 00:04:19,200 --> 00:04:22,640 Speaker 1: to target much sooner than they anticipated. I think in 75 00:04:22,680 --> 00:04:26,359 Speaker 1: the OBR numbers today inflation is likely to meet target 76 00:04:26,600 --> 00:04:31,280 Speaker 1: at six months earlier than they previously envisaged. Now, of 77 00:04:31,320 --> 00:04:34,440 Speaker 1: course that doesn't take into accounter developments over the last 78 00:04:34,440 --> 00:04:38,400 Speaker 1: few days. But also we are only just into what 79 00:04:38,560 --> 00:04:41,440 Speaker 1: is happening in the Middle East. We saw each other 80 00:04:41,520 --> 00:04:43,760 Speaker 1: last week, Stephanie, and we were not talking about the 81 00:04:43,800 --> 00:04:46,520 Speaker 1: Middle East or Iran. There was lots of other things 82 00:04:46,560 --> 00:04:49,840 Speaker 1: to talk about in the economy, but this only really 83 00:04:50,520 --> 00:04:53,839 Speaker 1: kicked off on Friday. So of course we're monitor developments 84 00:04:54,240 --> 00:04:57,760 Speaker 1: very very closely and do everything in our power to 85 00:04:57,839 --> 00:05:02,680 Speaker 1: protect businesses and and families in the UK, and we 86 00:05:02,800 --> 00:05:06,000 Speaker 1: are better placed to do that than we were just 87 00:05:06,080 --> 00:05:09,159 Speaker 1: a few months and years ago because of the choices 88 00:05:09,160 --> 00:05:11,799 Speaker 1: we've taken as a government. So what I was able 89 00:05:11,880 --> 00:05:14,400 Speaker 1: to set out today in the OBR forecast is that 90 00:05:14,920 --> 00:05:19,240 Speaker 1: both interest rates and inflation have been falling faster than expected. 91 00:05:19,320 --> 00:05:24,080 Speaker 1: Government borrowing and debt have been revised down since the 92 00:05:24,279 --> 00:05:30,400 Speaker 1: budget last year G seven borrowing is not coming down 93 00:05:30,400 --> 00:05:32,080 Speaker 1: at the same rate that it is in the UK. 94 00:05:32,200 --> 00:05:34,400 Speaker 1: Our public sect to net borrowing, forecast to be just 95 00:05:34,440 --> 00:05:36,680 Speaker 1: four point three percent this year, is the lowest in 96 00:05:37,240 --> 00:05:40,320 Speaker 1: six years and the first time in twenty two years 97 00:05:40,760 --> 00:05:44,720 Speaker 1: that are borrowing has been lower than the G seven average. 98 00:05:44,800 --> 00:05:48,160 Speaker 1: So welcome developments which put us in a stronger position 99 00:05:48,200 --> 00:05:51,120 Speaker 1: to be able to withstand the shocks, including the shock 100 00:05:51,200 --> 00:05:53,640 Speaker 1: that we are likely to be responding to in the 101 00:05:53,640 --> 00:05:56,839 Speaker 1: weeks and months ahead, than we would have been without 102 00:05:56,839 --> 00:05:58,840 Speaker 1: the action that we've taken as a government to secure 103 00:05:58,839 --> 00:06:00,599 Speaker 1: and stabilize the public FIINDNSS. 104 00:06:00,640 --> 00:06:02,680 Speaker 2: But it is vulnerable. I mean even that fall in 105 00:06:02,760 --> 00:06:06,800 Speaker 2: borrowing is driven in large part actually by lower than 106 00:06:06,839 --> 00:06:10,240 Speaker 2: expected spending, which is actually in turn lower spending on 107 00:06:10,640 --> 00:06:13,280 Speaker 2: guilt interest, which is a result of lower inflation. So 108 00:06:13,320 --> 00:06:16,680 Speaker 2: that lower path for inflation that we were counting on 109 00:06:16,760 --> 00:06:19,760 Speaker 2: even markets were assuming for this year, that was also 110 00:06:19,839 --> 00:06:22,880 Speaker 2: going to potentially pave the way for another rate cut. 111 00:06:22,960 --> 00:06:25,840 Speaker 2: You mentioned in your speech how proud you were that 112 00:06:25,880 --> 00:06:28,200 Speaker 2: you've been part of the government at the Bank of 113 00:06:28,240 --> 00:06:31,240 Speaker 2: England had been able to have six rate cuts since 114 00:06:31,880 --> 00:06:32,960 Speaker 2: ry King was going on. 115 00:06:33,400 --> 00:06:35,520 Speaker 1: There's three things that are going on to put our 116 00:06:35,560 --> 00:06:39,160 Speaker 1: public finances in a better position. First of all, tax 117 00:06:39,200 --> 00:06:42,800 Speaker 1: revenues have come in stronger than anticipated, and we saw 118 00:06:42,839 --> 00:06:46,359 Speaker 1: that particularly in the January. January borrowing numbers, it was 119 00:06:46,640 --> 00:06:48,120 Speaker 1: the biggest surplus on record. 120 00:06:48,320 --> 00:06:50,360 Speaker 2: But yet to day, isn't it still lower than the 121 00:06:50,360 --> 00:06:54,039 Speaker 2: forecast than the oba's forecast, so that that month was 122 00:06:54,120 --> 00:06:54,719 Speaker 2: very good. 123 00:06:54,839 --> 00:06:59,400 Speaker 1: But borrowing has come in lower. This revenue, the borrowing 124 00:06:59,400 --> 00:07:03,880 Speaker 1: has come in lower than forecast. And spending. We set 125 00:07:03,880 --> 00:07:06,960 Speaker 1: out the spending review last summer, many people said, well 126 00:07:06,960 --> 00:07:09,640 Speaker 1: we wouldn't really able to live within those budgets. Well, 127 00:07:10,120 --> 00:07:12,600 Speaker 1: this year we have not used all of the surplus 128 00:07:12,640 --> 00:07:15,480 Speaker 1: that is put aside for genuine emergencies and instead we're 129 00:07:15,520 --> 00:07:19,280 Speaker 1: able to roll that surplus forward, so spending is under control, whereas, 130 00:07:19,280 --> 00:07:23,200 Speaker 1: of course when I became Chancellor, the reserve for the 131 00:07:23,280 --> 00:07:25,320 Speaker 1: year that we were in and we were only three 132 00:07:25,360 --> 00:07:28,280 Speaker 1: months into it had been spent four times over, so 133 00:07:28,320 --> 00:07:31,120 Speaker 1: we haven't used a full reserve for this year. And 134 00:07:31,200 --> 00:07:35,240 Speaker 1: also borrowing costs have come down. The OBR today forecast 135 00:07:35,360 --> 00:07:38,320 Speaker 1: that borrowing costs next year will be four billion pounds 136 00:07:38,360 --> 00:07:41,160 Speaker 1: lower than that even they thought in the budget last year. 137 00:07:41,280 --> 00:07:45,119 Speaker 1: So tax review coming in a bit stronger, spending coming 138 00:07:45,160 --> 00:07:47,160 Speaker 1: in as planned and in fact not even using the 139 00:07:47,200 --> 00:07:51,080 Speaker 1: full reserve, and also boring costs coming down because of 140 00:07:51,120 --> 00:07:54,960 Speaker 1: that additional stability we've brought to the economy have all 141 00:07:55,000 --> 00:07:58,360 Speaker 1: contributed to the better forecast or the public finances that 142 00:07:58,400 --> 00:07:59,600 Speaker 1: I was able to set out today. 143 00:08:00,120 --> 00:08:02,880 Speaker 2: But that good news, A lot of that was related 144 00:08:02,920 --> 00:08:05,560 Speaker 2: to the fallen guilt yields, a lot of some of 145 00:08:05,600 --> 00:08:08,440 Speaker 2: that has been reversed even just today in the concerns 146 00:08:08,440 --> 00:08:11,920 Speaker 2: in the markets and expectations of lower interest rates from 147 00:08:11,960 --> 00:08:14,720 Speaker 2: the Bank of England, which traders in the market this 148 00:08:14,800 --> 00:08:18,440 Speaker 2: week have decided again to certainly not happen in March 149 00:08:18,520 --> 00:08:20,920 Speaker 2: now and where as they were expecting and maybe not 150 00:08:20,960 --> 00:08:22,160 Speaker 2: happen in the next few months. 151 00:08:22,560 --> 00:08:26,440 Speaker 1: I won't comment on market movements over a day or two. 152 00:08:26,800 --> 00:08:30,280 Speaker 1: I think it is too early to know what the 153 00:08:30,360 --> 00:08:34,360 Speaker 1: market impact is. Obviously, the immediate concern for the government 154 00:08:34,559 --> 00:08:37,480 Speaker 1: is trying to get the three hundred thousand British citizens 155 00:08:37,520 --> 00:08:40,080 Speaker 1: who are in the Middle East back home if they 156 00:08:40,679 --> 00:08:43,720 Speaker 1: want to come back to the UK. Think around one 157 00:08:43,800 --> 00:08:47,559 Speaker 1: hundred thousand have always already registered for the scheme to 158 00:08:48,679 --> 00:08:53,200 Speaker 1: say that you are there, and that is very welcome, 159 00:08:53,240 --> 00:08:57,360 Speaker 1: and that's our mediate goal, as well as protecting our 160 00:08:57,400 --> 00:09:01,160 Speaker 1: personnel and our assets in the region. But of course 161 00:09:01,280 --> 00:09:06,760 Speaker 1: the economic consequences of any extended military action, especially in 162 00:09:06,800 --> 00:09:10,560 Speaker 1: the Middle East, which is so crucial for trade and 163 00:09:10,679 --> 00:09:13,400 Speaker 1: for oil and gas, would have an impact on the 164 00:09:13,480 --> 00:09:16,200 Speaker 1: UK economy, but it is too early to judge exactly 165 00:09:16,240 --> 00:09:18,600 Speaker 1: what that will be and therefore what response would be needed. 166 00:09:18,920 --> 00:09:20,960 Speaker 2: I mean, I'll focus on the economy today. I'm not 167 00:09:20,960 --> 00:09:23,960 Speaker 2: going to go into the government stance in relation to 168 00:09:24,040 --> 00:09:26,760 Speaker 2: the support or not for what the president's doing. But 169 00:09:26,880 --> 00:09:30,760 Speaker 2: judging from Donald Trump's posts in the last and interviews 170 00:09:30,760 --> 00:09:32,439 Speaker 2: in the last twenty four hours, he does seem to 171 00:09:32,480 --> 00:09:35,760 Speaker 2: be not very happy with the Prime Minister as a 172 00:09:35,800 --> 00:09:38,000 Speaker 2: result of the last few days, do you worry that 173 00:09:38,000 --> 00:09:42,440 Speaker 2: that will make it harder to finalize, finally finalize the 174 00:09:42,480 --> 00:09:45,000 Speaker 2: trade situation, the trade deal with the US, which was 175 00:09:45,040 --> 00:09:47,560 Speaker 2: put into quite a lot of uncertainty by that Supreme 176 00:09:47,640 --> 00:09:49,439 Speaker 2: Court judgment a few weeks ago. 177 00:09:50,040 --> 00:09:56,560 Speaker 1: When it comes to decisions around using British armed forces 178 00:09:57,200 --> 00:10:01,719 Speaker 1: to take part in a conflict around the world, it 179 00:10:01,800 --> 00:10:06,360 Speaker 1: is very important that we judge those on whether it 180 00:10:06,440 --> 00:10:09,640 Speaker 1: is legal and whether it is the right thing to do. 181 00:10:11,000 --> 00:10:14,320 Speaker 1: You can't make a decision about whether to get British 182 00:10:14,440 --> 00:10:16,640 Speaker 1: armed forces involved in a conflict because it may or 183 00:10:16,640 --> 00:10:19,200 Speaker 1: may not make it more likely to get a trade deal. 184 00:10:19,679 --> 00:10:23,920 Speaker 1: And we judged that there was not a legal basis 185 00:10:23,040 --> 00:10:28,600 Speaker 1: for offensive action on Iran, but of course once Iran 186 00:10:28,800 --> 00:10:31,240 Speaker 1: responded particularly. 187 00:10:31,520 --> 00:10:33,679 Speaker 2: Sorry, not a legal basis for the UK or but 188 00:10:33,760 --> 00:10:35,200 Speaker 2: presumably not for the US either. 189 00:10:35,840 --> 00:10:39,400 Speaker 1: We can only make judgments for ourselves and that was 190 00:10:39,440 --> 00:10:43,640 Speaker 1: the judgment that we came to based on our legal advice, 191 00:10:43,720 --> 00:10:46,520 Speaker 1: and it's up to other countries to explain what action 192 00:10:46,600 --> 00:10:50,400 Speaker 1: they've taken and on what basis. But once Iran responded 193 00:10:50,920 --> 00:10:55,360 Speaker 1: in the way that they did, including with missiles being 194 00:10:55,440 --> 00:10:58,160 Speaker 1: launched into our allies who were not involved in the 195 00:10:58,240 --> 00:11:04,080 Speaker 1: offensive action and the risks to our military basis in Cyprus. 196 00:11:04,120 --> 00:11:08,120 Speaker 1: Of course it was right that we became involved in 197 00:11:08,160 --> 00:11:11,280 Speaker 1: defensive action and we were involved in that from Saturday, 198 00:11:11,480 --> 00:11:15,000 Speaker 1: and of course on Sunday we go permission for US 199 00:11:15,320 --> 00:11:19,920 Speaker 1: jets to use British assets from which to launch those 200 00:11:19,960 --> 00:11:23,559 Speaker 1: defensive actions, and that's a decision that we've taken as 201 00:11:23,600 --> 00:11:26,520 Speaker 1: a government. On trade, I'm proud of what we've done 202 00:11:26,559 --> 00:11:30,040 Speaker 1: as a government. We've secured a trade deal with India, 203 00:11:30,120 --> 00:11:32,280 Speaker 1: I think probably the best trade deal that any country 204 00:11:32,320 --> 00:11:34,800 Speaker 1: in the world has secured with India, and we hope 205 00:11:34,800 --> 00:11:36,720 Speaker 1: to be able to bring that into effect in the 206 00:11:36,720 --> 00:11:40,880 Speaker 1: next couple of months. But in addition, improving our trade 207 00:11:40,920 --> 00:11:43,880 Speaker 1: relations with our nearest neighbors and trading partners in the 208 00:11:43,920 --> 00:11:46,520 Speaker 1: European Union. And I'm going to say more about our 209 00:11:46,559 --> 00:11:49,200 Speaker 1: relations with the European Union in a speech I'm going 210 00:11:49,240 --> 00:11:50,839 Speaker 1: to give in a couple of weeks time, because I 211 00:11:50,880 --> 00:11:52,880 Speaker 1: think that that is one of the big bets that 212 00:11:52,920 --> 00:11:55,920 Speaker 1: we can take as a country to change our trajectory 213 00:11:56,559 --> 00:12:01,480 Speaker 1: for productivity and growth. We've already rejoining the Erasmus Scheme 214 00:12:01,520 --> 00:12:04,440 Speaker 1: to allow young people to be able to study in 215 00:12:04,760 --> 00:12:07,320 Speaker 1: European Union countries and for young people in those countries 216 00:12:07,360 --> 00:12:09,640 Speaker 1: to be able to study in the UK. But we 217 00:12:09,760 --> 00:12:14,160 Speaker 1: also want to deliver an energy and electricity trading deal, 218 00:12:14,640 --> 00:12:17,959 Speaker 1: we want a food and farming agreement and SPS agreement, 219 00:12:18,480 --> 00:12:22,400 Speaker 1: and also we want to bring in a youth ability 220 00:12:22,440 --> 00:12:25,240 Speaker 1: schemes so that young people in Britain can go and 221 00:12:25,280 --> 00:12:29,120 Speaker 1: take advantage of opportunities in Europe and vice versa, young 222 00:12:29,160 --> 00:12:31,760 Speaker 1: people in the European Union can come and work in 223 00:12:31,760 --> 00:12:34,160 Speaker 1: the UK. I know that some countries around the world 224 00:12:34,360 --> 00:12:37,840 Speaker 1: are looking to pull up the drawbridge, but Britain benefits 225 00:12:37,880 --> 00:12:40,960 Speaker 1: from being an open trading economy, open to trade, open 226 00:12:41,000 --> 00:12:42,960 Speaker 1: to investment and also open to talent. 227 00:12:43,440 --> 00:12:46,320 Speaker 2: But for trade, it's enormously important just to have some 228 00:12:46,440 --> 00:12:49,040 Speaker 2: kind of certainty about what the trade rules are. I mean, 229 00:12:49,080 --> 00:12:52,520 Speaker 2: are you able to say to UK exporters to the 230 00:12:52,640 --> 00:12:56,559 Speaker 2: US that you know currently what the trade rules are 231 00:12:56,640 --> 00:12:59,000 Speaker 2: for going into the US because it's not clear to US. 232 00:13:00,120 --> 00:13:02,640 Speaker 1: Or did a trade deal with the US last year 233 00:13:02,960 --> 00:13:05,720 Speaker 1: on the export of goods. Since then, we've gone further 234 00:13:05,800 --> 00:13:09,160 Speaker 1: and secured a deal around pharmaceuticals, which is obviously crucial 235 00:13:09,280 --> 00:13:14,360 Speaker 1: for the UK given the importance of our pharmaceuticals. 236 00:13:12,840 --> 00:13:15,760 Speaker 2: As ferns, and those things are not affected by the 237 00:13:15,800 --> 00:13:17,440 Speaker 2: Supreme Court ruling as far as your. 238 00:13:17,280 --> 00:13:21,360 Speaker 1: Concern, obviously we are in constant negotiation and dialogue with 239 00:13:21,440 --> 00:13:24,480 Speaker 1: the US administration, but there's absolutely no reason why the 240 00:13:24,520 --> 00:13:28,080 Speaker 1: trade deal that we secured last year can't be maintained. 241 00:13:28,080 --> 00:13:30,080 Speaker 1: And of course there are other areas as well where 242 00:13:30,080 --> 00:13:32,120 Speaker 1: we want to go further with our trade links with 243 00:13:32,200 --> 00:13:35,480 Speaker 1: the US, whether that is on the future of capital markets, 244 00:13:35,880 --> 00:13:40,120 Speaker 1: where we want to deepen and strengthen the capital market 245 00:13:40,679 --> 00:13:43,840 Speaker 1: links between our economy, making it easier for British companies 246 00:13:44,200 --> 00:13:47,360 Speaker 1: to raise finance in the US and US businesses to 247 00:13:47,440 --> 00:13:50,679 Speaker 1: raise finance in London, as well as doing more in 248 00:13:50,760 --> 00:13:54,400 Speaker 1: terms of mutual recognition of standards so that if you 249 00:13:54,520 --> 00:13:56,720 Speaker 1: have a license for a product in the US, you 250 00:13:56,760 --> 00:13:59,160 Speaker 1: can bring it to the UK and again vice versa, 251 00:13:59,280 --> 00:14:02,880 Speaker 1: to help British businesses in financial services and elsewhere to 252 00:14:02,880 --> 00:14:05,600 Speaker 1: be able to launch product products in the US, which 253 00:14:05,640 --> 00:14:09,000 Speaker 1: is obviously hugely beneficial for UK firms. So there are 254 00:14:09,040 --> 00:14:11,920 Speaker 1: other areas as well where we want to deepen those 255 00:14:11,920 --> 00:14:15,840 Speaker 1: relations with the US, but our nearest neighbors and trading partners, 256 00:14:16,040 --> 00:14:20,600 Speaker 1: our countries in the EU, and the benefits from rebuilding 257 00:14:20,760 --> 00:14:25,880 Speaker 1: trust between US and the European Union, and crucially those 258 00:14:25,920 --> 00:14:28,640 Speaker 1: trade links in goods and our hope in services in 259 00:14:28,720 --> 00:14:32,400 Speaker 1: due course is what will have the biggest impact on 260 00:14:32,480 --> 00:14:35,760 Speaker 1: British businesses and jobs and living standards. 261 00:14:47,400 --> 00:14:50,840 Speaker 2: Let's talk about that sort of broader approach to growth. 262 00:14:50,880 --> 00:14:52,600 Speaker 2: I know you're going to talk about also in a 263 00:14:52,640 --> 00:14:55,600 Speaker 2: speech in a couple of weeks, you promise that today's 264 00:14:55,960 --> 00:14:59,400 Speaker 2: spring statements being forecast would be a non event so 265 00:14:59,440 --> 00:15:01,680 Speaker 2: I think I can who you succeeded in making it 266 00:15:01,760 --> 00:15:04,160 Speaker 2: not very eventful. We haven't had all this kind of 267 00:15:04,200 --> 00:15:06,160 Speaker 2: speculation that we had leading up to the budget, so 268 00:15:06,160 --> 00:15:08,880 Speaker 2: we haven't had that uncertainty. As you've mentioned, the economic 269 00:15:08,920 --> 00:15:11,040 Speaker 2: news leading up to this, at least till this week 270 00:15:11,320 --> 00:15:14,880 Speaker 2: was fairly positive. The political environment is, if anything, has 271 00:15:15,000 --> 00:15:18,480 Speaker 2: deteriorated for the government, and we had a poll today 272 00:15:18,560 --> 00:15:21,880 Speaker 2: that showed labor even potentially behind the Greens. As well 273 00:15:21,920 --> 00:15:26,800 Speaker 2: as reform, I guess I mean your economic mission, which 274 00:15:26,880 --> 00:15:30,240 Speaker 2: was central to this government. A large chunk of voters 275 00:15:30,280 --> 00:15:33,480 Speaker 2: you look at the polling, are disappointed feel that the 276 00:15:33,520 --> 00:15:35,800 Speaker 2: government should have done better. Do you think that you 277 00:15:35,840 --> 00:15:36,720 Speaker 2: could have done better? 278 00:15:37,400 --> 00:15:39,920 Speaker 1: People voted for change at the general election a year 279 00:15:39,960 --> 00:15:42,320 Speaker 1: and a half ago, and I'm deeply aware of my 280 00:15:42,400 --> 00:15:45,800 Speaker 1: responsibility and helping to deliver that change. Now since I 281 00:15:45,880 --> 00:15:50,840 Speaker 1: became Chancellor, wages have increased faster than inflation every single month, 282 00:15:51,160 --> 00:15:53,840 Speaker 1: and the six cuts in interest rates means that if 283 00:15:53,840 --> 00:15:57,960 Speaker 1: you're taking out a mortgage, a typical mortgage, you'll be 284 00:15:58,000 --> 00:16:01,000 Speaker 1: saving around one three hundred pounds a year than if 285 00:16:01,000 --> 00:16:03,320 Speaker 1: you'd have taken that mortgage out the day before I 286 00:16:03,360 --> 00:16:07,480 Speaker 1: became Chancellor of the Exchequer. But the years leading up 287 00:16:07,520 --> 00:16:10,680 Speaker 1: to that had been really tough for people. The last 288 00:16:10,680 --> 00:16:13,960 Speaker 1: parliament was the first parliament ever where people were poorer 289 00:16:14,040 --> 00:16:15,920 Speaker 1: on average at the end of it than they were 290 00:16:15,960 --> 00:16:19,440 Speaker 1: at the start, and it takes time to unwind that legacy. 291 00:16:20,120 --> 00:16:23,240 Speaker 1: We've made progress, but is there more to do? Absolutely 292 00:16:23,280 --> 00:16:26,800 Speaker 1: there is, which is why I'm so focused on bringing 293 00:16:26,800 --> 00:16:30,320 Speaker 1: down inflation and interest rates and returning that stability to 294 00:16:30,360 --> 00:16:33,600 Speaker 1: the economy. But the other thing that makes people's lives 295 00:16:33,640 --> 00:16:37,560 Speaker 1: better is having public services that function properly. Being able 296 00:16:37,560 --> 00:16:40,160 Speaker 1: to get a hospital appointment or a doctor's appointment when 297 00:16:40,160 --> 00:16:43,560 Speaker 1: you need it. Ensuring your kid gets into the school 298 00:16:43,600 --> 00:16:47,320 Speaker 1: they want to go to and has good qualified teachers, 299 00:16:48,400 --> 00:16:52,800 Speaker 1: buses and trains that run frequently and are affordable, all 300 00:16:52,840 --> 00:16:56,320 Speaker 1: of those things that we're starting to make a difference, 301 00:16:56,760 --> 00:16:59,320 Speaker 1: but there is more to do. I think that the 302 00:16:59,360 --> 00:17:01,440 Speaker 1: next election, what people are going to ask is and 303 00:17:01,520 --> 00:17:04,000 Speaker 1: me and my family better off? And I'm determined that 304 00:17:04,000 --> 00:17:06,639 Speaker 1: the answer to that question is yes, by ensuring that 305 00:17:06,680 --> 00:17:09,600 Speaker 1: people have more money in their pockets to spend on 306 00:17:09,640 --> 00:17:11,360 Speaker 1: the things that they want to spend it on, not 307 00:17:11,400 --> 00:17:15,600 Speaker 1: just the essentials the mortgage, the bills, the weekly food shop, 308 00:17:15,640 --> 00:17:17,640 Speaker 1: but more money to spend on the things that they 309 00:17:17,720 --> 00:17:21,760 Speaker 1: actually want to do that give them pleasure in their lives. 310 00:17:21,800 --> 00:17:25,639 Speaker 1: And are undetermined that people have more of that. But 311 00:17:25,720 --> 00:17:27,760 Speaker 1: the first thing you need to do to achieve that 312 00:17:27,880 --> 00:17:30,040 Speaker 1: is to bring stability back to the economy. And what 313 00:17:30,080 --> 00:17:34,280 Speaker 1: the OBR forecasts showed today is that we have made 314 00:17:34,920 --> 00:17:38,440 Speaker 1: great strides forward in returning that stability to the economy, 315 00:17:38,840 --> 00:17:42,240 Speaker 1: which should pay dividends in terms of having money to 316 00:17:42,280 --> 00:17:45,080 Speaker 1: spend on the priorities of working people and to make 317 00:17:45,119 --> 00:17:46,120 Speaker 1: working people better off. 318 00:17:46,400 --> 00:17:48,000 Speaker 2: There was quite a lot in the forecast. I mean 319 00:17:48,240 --> 00:17:50,680 Speaker 2: there is a slightly lower growth forecast for this year, 320 00:17:51,440 --> 00:17:54,639 Speaker 2: and that's due to lower net migration, which the government 321 00:17:54,640 --> 00:17:56,920 Speaker 2: has obviously taken a lot of measures on, but the 322 00:17:56,960 --> 00:18:01,120 Speaker 2: ABI expects it and expects that fall in migration, the 323 00:18:01,320 --> 00:18:03,560 Speaker 2: increase in the labor force and people coming in to 324 00:18:03,600 --> 00:18:06,320 Speaker 2: be permanent, but that that sort of half a percent 325 00:18:06,359 --> 00:18:09,520 Speaker 2: of GDP loss and growth will be made up for 326 00:18:09,640 --> 00:18:12,000 Speaker 2: in productivity will actually get more out of the people 327 00:18:12,040 --> 00:18:15,439 Speaker 2: we have working in this country. So is that the 328 00:18:15,560 --> 00:18:19,080 Speaker 2: new UK growth model that we were not really welcoming 329 00:18:19,080 --> 00:18:20,720 Speaker 2: people in the same way, but we want to get 330 00:18:20,960 --> 00:18:23,680 Speaker 2: We hope employers get more out of British workers. 331 00:18:24,320 --> 00:18:27,000 Speaker 1: So we want to make sure that the best talent 332 00:18:27,040 --> 00:18:29,520 Speaker 1: in the world comes to Britain and that's why we've 333 00:18:29,560 --> 00:18:33,120 Speaker 1: extended our global talent visas and they're available for high 334 00:18:33,119 --> 00:18:39,359 Speaker 1: net worth individuals, entrepreneurs and also academics in key subjects, 335 00:18:39,800 --> 00:18:42,560 Speaker 1: particularly where they bring research teams with them to the UK. 336 00:18:43,000 --> 00:18:46,080 Speaker 1: And those new global talent visas are proving very popular 337 00:18:46,440 --> 00:18:49,120 Speaker 1: and that is about us being able to have greater 338 00:18:49,280 --> 00:18:52,000 Speaker 1: say about who comes into this country. And we have 339 00:18:52,080 --> 00:18:56,760 Speaker 1: tightened up the rules around dependents, around students, around low 340 00:18:56,800 --> 00:18:58,879 Speaker 1: skilled workers, that is the right thing to do, and 341 00:18:58,920 --> 00:19:01,160 Speaker 1: we want to make sure that people who are already 342 00:19:01,200 --> 00:19:04,399 Speaker 1: here have got the skills to fill the vacancies that 343 00:19:05,000 --> 00:19:08,080 Speaker 1: exist in the economy. But as I said before, I 344 00:19:08,119 --> 00:19:09,960 Speaker 1: want Britain to be seen as a country that is 345 00:19:10,040 --> 00:19:13,320 Speaker 1: welcome to investment, trade and talent and that's what those 346 00:19:13,320 --> 00:19:16,640 Speaker 1: global talent visas do. Now. The OBI have revised down 347 00:19:16,680 --> 00:19:19,720 Speaker 1: their forecasts for net migration, so it's something like two 348 00:19:19,800 --> 00:19:23,360 Speaker 1: hundred thousand net migration a year. That is obviously way 349 00:19:23,480 --> 00:19:26,679 Speaker 1: down on the nearly a million number we had a 350 00:19:26,680 --> 00:19:29,679 Speaker 1: couple of years ago. But what matters in terms of 351 00:19:29,720 --> 00:19:33,920 Speaker 1: GDP is whether that GDP is felt in people's lives, 352 00:19:34,280 --> 00:19:36,840 Speaker 1: and that's why GDP per capita is probably the better 353 00:19:36,880 --> 00:19:41,040 Speaker 1: measure of whether that GDP is actually impacting on your 354 00:19:41,080 --> 00:19:44,560 Speaker 1: living standards. And what the OBR today say is that 355 00:19:44,600 --> 00:19:48,560 Speaker 1: they're revising up GDP per capita and expect GDP per 356 00:19:48,640 --> 00:19:51,840 Speaker 1: capita to increase by five point six percent during the 357 00:19:51,840 --> 00:19:54,159 Speaker 1: course of this parliament, and of course in the last 358 00:19:54,160 --> 00:19:58,040 Speaker 1: parliament GDP per capita actually fell and so that is 359 00:19:58,720 --> 00:20:02,320 Speaker 1: a sharp turnaround from one parliament to the next, and 360 00:20:02,359 --> 00:20:05,719 Speaker 1: those numbers were revised up today, which is very welcome, 361 00:20:05,760 --> 00:20:08,680 Speaker 1: because in the end, what matters is whether that GDP 362 00:20:09,320 --> 00:20:12,159 Speaker 1: is being felt by you and your family, and GDP 363 00:20:12,280 --> 00:20:14,520 Speaker 1: per capiture is what really shows that. 364 00:20:14,720 --> 00:20:17,240 Speaker 2: Yeah, that's very striking in the numbers. I mean, if 365 00:20:17,240 --> 00:20:18,880 Speaker 2: we end up I mean the path we're on now, 366 00:20:19,000 --> 00:20:21,800 Speaker 2: we could have negative net migration by the end of 367 00:20:21,840 --> 00:20:24,200 Speaker 2: the year. I'm quite interested in whether that's going to 368 00:20:24,240 --> 00:20:26,720 Speaker 2: be a sort of cause for celebration inside the Treasury, 369 00:20:26,960 --> 00:20:29,280 Speaker 2: given the pressure on the government to reduce those numbers, 370 00:20:30,000 --> 00:20:33,960 Speaker 2: or concern about how that was achieved. I mean the 371 00:20:34,000 --> 00:20:36,760 Speaker 2: things that were easiest to control. I mean students. For example, 372 00:20:37,040 --> 00:20:39,400 Speaker 2: I spoke to someone at a major university last night 373 00:20:39,440 --> 00:20:42,159 Speaker 2: that has been benefiting from some of the measures you 374 00:20:42,240 --> 00:20:46,840 Speaker 2: just talked about attracting foreign academics, academics from the US, 375 00:20:47,160 --> 00:20:49,600 Speaker 2: but at the same time they're losing foreign students who 376 00:20:50,000 --> 00:20:52,880 Speaker 2: find it less attractive the regime here and are even 377 00:20:52,920 --> 00:20:56,240 Speaker 2: sort of worried about the environment for foreign students. So 378 00:20:56,400 --> 00:20:59,000 Speaker 2: if you're undermining the business model for universities and it 379 00:20:59,040 --> 00:21:02,120 Speaker 2: doesn't matter so much able to attract all these great academics, I. 380 00:21:02,040 --> 00:21:04,440 Speaker 1: Think we've done a lot to support universities since we 381 00:21:04,800 --> 00:21:08,480 Speaker 1: came into office, we've increased R and D funding and 382 00:21:08,520 --> 00:21:11,159 Speaker 1: obviously a lot of that budget goes to universities to 383 00:21:11,800 --> 00:21:17,800 Speaker 1: invest in basic research, and we are reintroducing maintenance grants 384 00:21:17,800 --> 00:21:21,600 Speaker 1: for the poorest students to encourage them to take that 385 00:21:21,680 --> 00:21:24,720 Speaker 1: leap and go to university. But we've got to get 386 00:21:24,720 --> 00:21:27,919 Speaker 1: the balance right. It has been the case on some 387 00:21:28,040 --> 00:21:31,960 Speaker 1: courses at some colleges and universities many people at the 388 00:21:32,040 --> 00:21:35,040 Speaker 1: end of their course are applying for asylum in Britain 389 00:21:35,320 --> 00:21:38,200 Speaker 1: and that is not what student visas were ever meant for, 390 00:21:38,640 --> 00:21:40,560 Speaker 1: and so we have got to be tightening up when 391 00:21:40,600 --> 00:21:43,400 Speaker 1: there is abuse. But at the same time that gives 392 00:21:43,520 --> 00:21:48,560 Speaker 1: us greater freedom to introduce those high talent visas because 393 00:21:48,560 --> 00:21:52,160 Speaker 1: we're freeing up space to enable us to offer more 394 00:21:52,160 --> 00:21:54,320 Speaker 1: of those and I think that's what is most valuable 395 00:21:54,320 --> 00:21:58,639 Speaker 1: to us as a country, to attract that wealth creating 396 00:21:58,880 --> 00:22:04,280 Speaker 1: talent to the UK, and that is that is our ambition. 397 00:22:04,520 --> 00:22:06,439 Speaker 1: At the same time, we've got to do more to 398 00:22:06,480 --> 00:22:09,159 Speaker 1: make sure that young people in particular who are already 399 00:22:09,200 --> 00:22:12,720 Speaker 1: in this country have got the skills and the confidence 400 00:22:13,119 --> 00:22:15,320 Speaker 1: to succeed in the jobs market. 401 00:22:15,560 --> 00:22:18,199 Speaker 2: Do you worry some of Our most successful sectors that 402 00:22:18,200 --> 00:22:20,960 Speaker 2: we would encourage people to go into are in professional 403 00:22:21,000 --> 00:22:24,280 Speaker 2: services that are potentially going to be the most transformed 404 00:22:24,359 --> 00:22:26,280 Speaker 2: by AI. So do you worry that some of our 405 00:22:26,320 --> 00:22:29,760 Speaker 2: most successful companies and sectors has got this massive missile 406 00:22:29,840 --> 00:22:31,320 Speaker 2: headed in its direction called AI. 407 00:22:32,000 --> 00:22:36,440 Speaker 1: The industries where we are successful, like professional business services, 408 00:22:36,920 --> 00:22:41,000 Speaker 1: financial services, creative industries and AI and tech and life sciences. 409 00:22:42,200 --> 00:22:45,760 Speaker 1: Of course there are risks of destruction and some jobs going, 410 00:22:46,160 --> 00:22:49,320 Speaker 1: but there's also massive opportunity if we seize them to 411 00:22:49,400 --> 00:22:52,800 Speaker 1: get the innovation and get the research here in Britain 412 00:22:52,840 --> 00:22:55,399 Speaker 1: and then build those new businesses in Britain. I am 413 00:22:55,440 --> 00:22:58,240 Speaker 1: an optimist when it comes to innovation and AI. Every 414 00:22:58,240 --> 00:23:04,240 Speaker 1: other wave of transformation and in industrial change has resulted 415 00:23:04,359 --> 00:23:07,600 Speaker 1: in there being more jobs and better paid jobs. There's 416 00:23:07,600 --> 00:23:11,520 Speaker 1: no reason why this revolution can't be the same. But 417 00:23:11,880 --> 00:23:14,240 Speaker 1: we've got to make sure that people in this country 418 00:23:14,320 --> 00:23:16,719 Speaker 1: have got the skills to be able to do those jobs. 419 00:23:17,080 --> 00:23:19,280 Speaker 1: We're well placed. We've got some of the best universities 420 00:23:19,320 --> 00:23:21,720 Speaker 1: in the world, we've got some of the best entrepreneurs 421 00:23:22,000 --> 00:23:23,840 Speaker 1: in the world, and we've got a government that is 422 00:23:23,880 --> 00:23:27,199 Speaker 1: backing that, for example through R and D funding but 423 00:23:27,560 --> 00:23:30,560 Speaker 1: we've got to seize that opportunity rather than being scared 424 00:23:30,560 --> 00:23:31,919 Speaker 1: of it. And one of the things I'm going to 425 00:23:31,920 --> 00:23:34,119 Speaker 1: be talking about in my Maiz's lecture next week is 426 00:23:34,160 --> 00:23:37,119 Speaker 1: how a government as a country can do more to 427 00:23:37,200 --> 00:23:41,040 Speaker 1: back innovation and AI, but in a way where the 428 00:23:41,200 --> 00:23:44,160 Speaker 1: rewards are reaped by ordinary citizens. 429 00:23:44,240 --> 00:23:46,359 Speaker 2: I mean, as you know, Chancellor, there's a lot of 430 00:23:46,359 --> 00:23:49,000 Speaker 2: people in the city, a lot of Bloomberg clients who 431 00:23:49,080 --> 00:23:52,280 Speaker 2: talk about how the environment, the tax environment and elsewhere 432 00:23:52,320 --> 00:23:55,800 Speaker 2: other things has changed since Labor came into power, and 433 00:23:55,800 --> 00:23:59,080 Speaker 2: they're all they say they're advising their children to move 434 00:23:59,119 --> 00:24:03,280 Speaker 2: to Dubai, seeing clients move their accounts, hedge fund investors 435 00:24:03,320 --> 00:24:05,520 Speaker 2: and others move their accounts to Dubai. Does that look 436 00:24:05,560 --> 00:24:08,560 Speaker 2: like such a safe decision today when the missiles are flying. 437 00:24:08,600 --> 00:24:10,960 Speaker 1: Look, I think all of us are reading stories in 438 00:24:11,000 --> 00:24:15,040 Speaker 1: the paper or hearing of people who we know or 439 00:24:15,640 --> 00:24:20,600 Speaker 1: we've worked with, who have made those decisions to move abroad. 440 00:24:21,480 --> 00:24:23,720 Speaker 1: But I would say that there are lots of things 441 00:24:23,720 --> 00:24:26,400 Speaker 1: that are attractive about the UK. A safe and secure 442 00:24:26,480 --> 00:24:29,800 Speaker 1: economy with strong defenses, and that is one of the 443 00:24:29,800 --> 00:24:32,760 Speaker 1: many things that is attractive about being in the UK. 444 00:24:33,480 --> 00:24:36,360 Speaker 1: But We only have those things because we pay for them, 445 00:24:36,400 --> 00:24:39,080 Speaker 1: including investing more in our defense, which in the world 446 00:24:39,119 --> 00:24:41,600 Speaker 1: that we live in todays, seems more important than ever. 447 00:24:42,119 --> 00:24:43,879 Speaker 2: Well, another time I'll ask you how you're going to 448 00:24:43,880 --> 00:24:47,400 Speaker 2: get that three percent of GDP, but i I'm getting 449 00:24:47,480 --> 00:24:50,439 Speaker 2: ushered out. So thank you very much, Chancellor for joining us. 450 00:24:50,480 --> 00:24:59,720 Speaker 2: Thank you, Stephanie, thanks for listening to this extra special 451 00:25:00,160 --> 00:25:03,080 Speaker 2: this episode of Trumponomics. It was produced by Samasadi and 452 00:25:03,119 --> 00:25:06,520 Speaker 2: Moses and with special thanks to James Wilcock. We'll be 453 00:25:06,560 --> 00:25:10,640 Speaker 2: back tomorrow with our regular episode