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

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Speaker 2: This is the Bloomberg Day bake At podcast, available every

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Speaker 2: morning on Apple, Spotify or wherever you listen. It's Thursday,

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Speaker 2: the seventh of March in London. I'm Caroline Hepki and.

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Speaker 3: I'm Stephen Carroll. Coming up today, the UK Chancellor announces

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Speaker 3: tax cuts for workers, but slow growth leaves little leeway

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Speaker 3: for future giveaways.

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Speaker 2: The Office for Budget Responsibility says the UK is on

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Speaker 2: track for a four percent Brexit hit to the economy.

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Speaker 3: And Wall Street gets a big win as Your Own

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Speaker 3: Power floats the idea of scrapping plans to raise capital requirements.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 3: The UK's Chancellor has cut personal taxes for the second

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Speaker 3: time in four months, spending ten billion pounds a year

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Speaker 3: on reducing national insurance for millions of people. Here's what

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Speaker 3: Jeremy Hunt says it will mean for workers.

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Speaker 4: April sixth Employee National insurance will be cut by another

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Speaker 4: two pee, from ten percent to eight percent. Self employed

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Speaker 4: National insurance will be cut from eight percent to six percent.

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Speaker 4: It means an additional four hundred and fifty pounds a

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Speaker 4: year for the average employee or three hundred and fifty

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Speaker 4: pounds for someone self employed.

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Speaker 3: Despite Jeremy Hunt's talk of giveaways, Head of Bloomberg Economic

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Speaker 3: Stephanie Flanders says the Chancellor has taken a relatively cautious

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Speaker 3: approach to tax cuts and even then may still not

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Speaker 3: meet his own fiscal rules.

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Speaker 5: Even since twenty ten, the average headroom that Chancellor's given

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Speaker 5: themselves is twenty seven billion, so that shows how tight

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Speaker 5: it is. I think they think there's going to be

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Speaker 5: a fifty four percent chance of them hitting it, which

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Speaker 5: means he's sort of slightly more likely than not to

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Speaker 5: be hitting his rule. And of course you know at

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Speaker 5: some level the rule itself is a really silly one.

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Speaker 5: It allows you to be raising debt every year. All

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Speaker 5: you need to do is show in the distant you know,

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Speaker 5: fifth year of the forecast that it's falling slightly, but

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Speaker 5: then the next year you push it forward a year.

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Speaker 5: You never actually lower the debt, so you know, it's

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Speaker 5: certainly something that frustrates me. He recited the pledges that

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Speaker 5: the chance that the Prime Minister had made at the

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Speaker 5: beginning of last year, and the Prime Minister routinely claims

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Speaker 5: that they're bringing debt down and it's not true. You

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Speaker 5: know they have actually yet to reduce the.

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Speaker 3: Debt Stephanie Flanders. Analysis comes as the Office for Budget

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Speaker 3: Responsibility said the government's borrowing costs would only need to

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Speaker 3: rise by zero point three percent for the Chancellor to

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Speaker 3: run out of fiscal headroom. It comes as the UK

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Speaker 3: is planning one of its biggest annual borrowing sprees on record,

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Speaker 3: with the Debt Management Office planning to issue more than

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Speaker 3: two hundred and sixty five billion pounds worth of debt.

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Speaker 3: While Hunt pleased some with his announcement of lower taxes

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Speaker 3: a British ISA and the end of the non dam

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Speaker 3: tax status, his own party colleagues were underwhelmed by a

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Speaker 3: package that will only marginally improve household living standards, which

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Speaker 3: are still lower than they were before the pandemic.

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Speaker 2: The Office of Budget Responsibility says that Brexit hit the

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Speaker 2: UK economy is roughly what it forecasts. Despite the nay says,

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Speaker 2: the budget watchdog expects leaving the EU to reduce Britain's

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Speaker 2: productivity by four percent and to show a fifteen percent

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Speaker 2: fall in trade. Bloomberg's James Wilcock has more.

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Speaker 6: The OBR has long been accused of being a Debbie

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Speaker 6: downer on Brexit forecasting an economic hit his business secretary

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Speaker 6: Kenny Badenock, speaking to Bloomberg's UK Politics podcast way back

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Speaker 6: in twenty twenty two.

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Speaker 7: Yes, I do dispute the obr's forecast because what happens

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Speaker 7: with trade depends on the actions that I am, my

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Speaker 7: colleagues across governments take Right now. Thebr is probably making

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Speaker 7: a forecast based on how we used to do things.

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Speaker 7: They don't know how we're going to be doing things.

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Speaker 6: But in spite of what politicians might say, the independent

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Speaker 6: body says its negative scenario is unfolding as predicted, a

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Speaker 6: long term squeeze on economic potential and a falling goods

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Speaker 6: traded compared head to other G seven countries in London,

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Speaker 6: James Wilcock Bloomberg Radio.

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Speaker 3: In the United States, the chair of the Federal Reserve

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Speaker 3: as signal officials will scale back plans to make Wall

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Speaker 3: Street banks hold more capital. Jerome Powell told US lawmakers

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Speaker 3: it's possible the original government proposal could be completely reworked.

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Speaker 8: I do expect that there will be broad and material

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Speaker 8: changes to the proposal. I'll add that I'm confident that

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Speaker 8: the final product will be one that does have broad

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Speaker 8: support both at the FED end and in the broader world.

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Speaker 8: This would be a thoughtful, deliberative process. It's more important

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Speaker 8: that we get this right than that we do it fast.

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Speaker 3: Federal Reserve charg Jerome Powell, speaking to the House Financial

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Speaker 3: Services Committee. Industry groups have spent months lobbying against the changes.

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Speaker 3: Powell and other senior FED officials will need to vote

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Speaker 3: on a final plan before the rules can be implemented.

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Speaker 2: New York Community Bank has raised more than a billion

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Speaker 2: dollars in equity. The capital injection was led by the

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Speaker 2: former US Treasury Secretary Steve Manuchin's firm Strategic Capital, alongside others.

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Speaker 2: Manuchin said that he believes the struggling lend that now

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Speaker 2: has enough capital. The news comes after the Securities and

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Speaker 2: Exchange Commission Chair Gary Gensler called for greater transparency from banks.

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Speaker 9: In the role I'm in. I'm not going to comment

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Speaker 9: on any one registrant or file er, but many banks

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Speaker 9: for public companies, those banks need to make sure that

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Speaker 9: they make full, fair and truthful disclosures to the public

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Speaker 9: so that the public can make their investment decisions.

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Speaker 2: SEC Chair Gary Againster, speaking there NYCB also named Joseph Otting,

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Speaker 2: the former control of the currency, as its new chief

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Speaker 2: executive officer.

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Speaker 3: The European Central Bank is expected to hold interest rates

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Speaker 3: at a record high at its meeting today. While price

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Speaker 3: rises continue to cool in the euro Area, Officials are

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Speaker 3: focused on wages, which are still advancing at more than

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Speaker 3: double the ECB's two percent inflation target. Blimberg's Max Ramsey

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Speaker 3: has more from Frankfurt.

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Speaker 10: The market is position for interest rates to stay on

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Speaker 10: hold today, keeping the deposit rate and its record high

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Speaker 10: of four percent. That's been widely telegraphed by members of

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Speaker 10: the ECB's Governing Council. But of course the press conference

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Speaker 10: from President Christine Legard will still be closely watched. Will

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Speaker 10: be on the lookout for any signals on the potential

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Speaker 10: timing of a first cut. We'll also get new quarterly

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Speaker 10: economic projections at this meeting, so we'll see how that

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Speaker 10: plays in to the ECB's thinking. In Frankfurt, Max Ramsey

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Speaker 10: Bloomberg Radio.

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Speaker 2: The US military says that three people have died in

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Speaker 2: a missile strike on a commercial ship in the Gulf

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Speaker 2: of Aden. They are the first crew members killed since

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Speaker 2: the militant started attack and container vessels in one of

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Speaker 2: the world's busiest sea lanes. The Huthis say that they

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Speaker 2: will keep targeting ships linked to Israel, the US and

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Speaker 2: UK in the region until Israel quote and its aggression

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Speaker 2: in Gaza ends. Many commercial vessels are avoiding the region

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Speaker 2: due to the instability.

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Speaker 3: Deutsche Bank has cut bonuses by more than ten per

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Speaker 3: and its investment banking division after a slump in deals

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Speaker 3: and slow down in trading. The German lenders bonus pool

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Speaker 3: was down by around five percent overall, with merger and

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Speaker 3: acquisition advisors facing some of the harshest cuts, according to

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Speaker 3: sources that spoke with Bloomberg. James von Mulco warned in

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Speaker 3: January that variable pay for last year would reflect would

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Speaker 3: reflect performance and the difficult market for the investment bank.

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Speaker 3: Revenue declined by nine percent last year, driven by a

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Speaker 3: thirty eight percent drop on the advisory business and an

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Speaker 3: eleven percent fall in trading revenue. Well a moment, we'll

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Speaker 3: get more in the business reaction to the budget plus

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Speaker 3: the changes to mooted changes to regulation of Wall Street banks.

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Speaker 3: The story that caught our eye this morning. I look

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Speaker 3: inside Apple's decision to shut down its Apple car program

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Speaker 3: a billion dollars a year into a car that it

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Speaker 3: never built. This is an inside story of how that

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Speaker 3: decision came about. In Apple are reporting looking at sort

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Speaker 3: of how the company decided to make a decision to

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Speaker 3: scrap this project.

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Speaker 4: Yeah.

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Speaker 2: Look, it's a night watering sum because actually the billion

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Speaker 2: dollars a year is only the start of what Apple

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Speaker 2: put into this. Now, this is a deep dive. It's

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Speaker 2: part of our big take this morning is also in

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Speaker 2: Bluebeg Business Week. It's by Mark German and Drake Bennett.

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Speaker 2: I mean, Mark has broken so many of the major

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Speaker 2: Apple stories, but this includes the fact that I hadn't

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Speaker 2: understood that way back when Apple could have thought about

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Speaker 2: even buying Tesla and even thought about buying one of

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Speaker 2: the other old school carmakers in Detroit, you know, back

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Speaker 2: when there was the sort of virtual collapse of the

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Speaker 2: big Detroit car makers, but decided against. But their conclusion,

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Speaker 2: which I think is quite interesting and perhaps the whole

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Speaker 2: point of this is, you know that it's a story

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Speaker 2: about the indecision of Apple when it comes to, you know,

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Speaker 2: trying to create this car, perhaps buy a business, a

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Speaker 2: bolt on acquisition that have created the vision of an

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Speaker 2: Apple car.

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Speaker 3: Yeah, really interesting story. It's today's Boomberg Big take. How

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Speaker 3: Apple sank about a billion dollars a year into a

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Speaker 3: car that it never built. Worth a read if you've

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Speaker 3: got time this morning.

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Speaker 7: Now.

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Speaker 2: Shares in UK financial services companies rows yesterday on Wednesday,

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Speaker 2: after Jeremy Hunt announced the creation of a British ISA

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Speaker 2: which will give savers an additional five thousand pounds tax

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Speaker 2: free allowance to invest in UK stocks. Not everyone was impressed.

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Speaker 2: Dan Mutzuski, who is the UK managing director at the

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Speaker 2: retail trading platform e Toro, he warned against the risk

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Speaker 2: of investing in low yielding UK companies to avoid taxes

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Speaker 2: on the returns from those investments. Joining us now to

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Speaker 2: sift through what it all means for UK companies is

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Speaker 2: our business reporter Meddings Saber, Good morning. How has this

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Speaker 2: been received?

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Speaker 11: Then?

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Speaker 2: Is it even going to move the needle when it

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Speaker 2: comes to the depth of UK capital markets shoes that

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Speaker 2: we have?

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Speaker 11: Good morning, thank you. I mean, first of all, I

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Speaker 11: would say it's pretty light on details. They're going to consult,

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Speaker 11: but you know it's only going only going to be

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Speaker 11: people with more than twenty thousand pounds saved that will

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Speaker 11: actually be able to benefit. Likely that means one point

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Speaker 11: six million people in the UK maxed out their ICE

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Speaker 11: for Alliance.

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Speaker 12: And the latest figures which were work.

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Speaker 11: For twenty twenty one, so they are sort of quite

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Speaker 11: slim numbers.

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Speaker 12: Another thing would be sort of how.

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Speaker 11: Do you decide what are UK equities will funds be

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Speaker 11: allowed to invest? So there's not quite enough detail yet

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Speaker 11: to know the full impact.

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Speaker 3: So about ahead of the budget, the Treasury had also

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Speaker 3: announced that it would require pension funds to publicly disclose

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Speaker 3: how much they invest in UK businesses. What more did

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Speaker 3: we learn about this?

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Speaker 11: Again it was it was kind of perhaps less than

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Speaker 11: we thought. I mean, there was more stick than carrot.

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Speaker 11: He did say that yeah, DC and local government pension

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Speaker 11: funds would have to say how much they invest.

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Speaker 12: They'll need to disclose their net.

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Speaker 11: Returns, helping people make a better comparison between various funds.

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Speaker 11: But yeah, it was definitely perhaps not as much as

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Speaker 11: people expected and again more stick than carrot.

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Speaker 2: Hunt also announced the effective end of the non dom regime,

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Speaker 2: so that's set to come into effect in April twenty

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Speaker 2: twenty five. Sort of taking a labor policy you're saying

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Speaker 2: that it was actually rigidly conservative one or trying to

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Speaker 2: pass it off that way. How important is that the

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Speaker 2: non domicile tax regime.

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Speaker 11: Well, that means that we should expect an extra two

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Speaker 11: point seven billion in tax by twenty twenty eight. What

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Speaker 11: we don't know is how much people will bring back

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Speaker 11: to the UK. There's various kind of softer landing they

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Speaker 11: can sort of bring some money back and pay a

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Speaker 11: lower tax rate on that, So we don't know how

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Speaker 11: much they might bring and obviously if they did, that

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Speaker 11: would give more money to sort of vest and spend

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Speaker 11: in the UK. But yeah, I mean from year five

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Speaker 11: people will need to pay tax in the UK on doms,

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Speaker 11: so it is going to have a large impact.

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Speaker 3: What about more Broadlea's about the business reaction to the budgets.

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Speaker 11: I mean, I can't say anything more of exciting than

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Speaker 11: quite underwhelming. I think, you know, business obviously got a

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Speaker 11: great boost in the autumn statement, and yesterday there certainly

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Speaker 11: hasn't been the same kind of responses from business as

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Speaker 11: sort of saying you know, there are a few things

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Speaker 11: to help small businesses. Chevron have a land at the

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Speaker 11: BCC said it was always going to deliver less for business.

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Speaker 12: There is help on childca which obviously.

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Speaker 11: Indirectly helps business, and the CBI has welcomed that, But

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Speaker 11: aside from things like the alcohol duty, there wasn't any

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Speaker 11: help for the hospitality pubs and restaurants, and they've been causing.

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Speaker 12: Quite a clamor on that.

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Speaker 2: Yeah, absolutely, so well, thank you so much for being

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Speaker 2: with us and helping us to sift through them. The

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Speaker 2: reactions to Jeremy Hunt's budget, I mean underwhelming on one hand,

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Speaker 2: or just sort of making the best of a bad hand.

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Speaker 2: At least it was steady. Those seemed to be the

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Speaker 2: sort of reactions this morning. Sabah Meddings is our business

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Speaker 2: report Who in London.

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Speaker 3: Turning to Wall Street banks and them and the cusp

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Speaker 3: of sweeping regulatory victory after Jerome Power signal officials will

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Speaker 3: scale back plans to make them hold more capital. The

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Speaker 3: FED chair told a panel in Congress that he's a

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Speaker 3: no rush to lower rates, though doing so will probably

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Speaker 3: be appropriate at some point this year. Blomber of Curty

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Speaker 3: Group does with us for more on this morning to you,

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Speaker 3: Creti so pals intervention on banking regulation looks pretty significant.

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Speaker 3: The Fed looked to be pretty intractable on this issue.

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Speaker 5: Before they did.

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Speaker 1: And look, I think the context is everything here in

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Speaker 1: the last twelve months, I want to say it's been

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Speaker 1: a little over twelve months here, But twelve months ago

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Speaker 1: we were talking about a potential repeat of the global

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Speaker 1: financial crisis. That was the narrative in the markets coming

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Speaker 1: off of the Silicon Valley Bank stress. So you did

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Speaker 1: see this idea that maybe the capital buffers needed to

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Speaker 1: be bigger and stronger. And this was also coming at

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Speaker 1: a time when the markets were kind of going haywire,

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Speaker 1: which meant that trading profits were really increasing. Some of

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Speaker 1: these big banks make a lot of money when there

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Speaker 1: is volatility because at the end of day, they are

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Speaker 1: market makers, so they actually benefit from some of the

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Speaker 1: chaos that you see in the markets. On top of that,

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Speaker 1: they are increasingly leveraged as well, so that on top

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Speaker 1: of these cracks you were seeing on Silicon Valley Bank

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Speaker 1: and concerned about whether or not that would be the

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Speaker 1: first of a wider domino effect, we're all kind of

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Speaker 1: leading to this idea that we are going to do

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Speaker 1: everything in our power to stop a global financial crisis.

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Speaker 1: Two point zero. That is not the case anymore, because

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Speaker 1: it's quite clear that one, the Silicon Valley bank story

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Speaker 1: was not as widespread, and the regional banking crisis was

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Speaker 1: not as widespread as initially thought to The capital buffers

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Speaker 1: have actually been helping a lot of these banks stay

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Speaker 1: afloat and are doing so in a way that it

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Speaker 1: doesn't indicate that more are needed. And three American resilience,

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Speaker 1: specifically from the consumer, but also in terms of being

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Speaker 1: able to pay back some of the loans that a

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Speaker 1: lot of these banks are exposed to. I think about mortgages,

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Speaker 1: think about auto loans for example, even student debt. They're

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Speaker 1: actually making the returns there aren't cracksier. Delinquencies are actually

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Speaker 1: lower than they have been in ages. Some of that

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Speaker 1: is kind of the hangover from the stimulus, but some

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Speaker 1: of that is risk showing the banks are kind of

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Speaker 1: doing okay right now.

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Speaker 2: Yeah, okay, that's the positive side. But hang on a second.

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Speaker 2: Jamie Diamond and Wall Street CEO's it been lobbying incredibly

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Speaker 2: hard on this warning that it would put US banks

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Speaker 2: at a disadvantage compared to their upan rivals. I mean,

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Speaker 2: is they're not so detecting a bit of lobbying influence too.

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Speaker 1: Oh, absolutely, And it's interesting because even the lobbyists were

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Speaker 1: quite surprised at the one eighty that j Powell had taken,

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Speaker 1: and you're right, it did just give you the full

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Speaker 1: positive story. The other side of this really comes down

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Speaker 1: to the leverage issue, and that's where a lot of

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Speaker 1: this is so different. Remember, the more leverage you are,

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Speaker 1: the more risks you can take, and in theory, the

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Speaker 1: more benefits you can accrue. And that trade has been

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Speaker 1: going to the benefit of a lot of these US banks.

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Speaker 1: It can also very quickly go sideways if you start

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Speaker 1: to see cracks emerge if that recessionary narrative takes on

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Speaker 1: a bigger hold. But Jamie Diamond is right in advocating

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Speaker 1: for his own bank and that the more leverage you

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Speaker 1: want and the more that you can invest, the more

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Speaker 1: return that you can get, as opposed to just kind

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Speaker 1: of holding it steady. And the way that this initial

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Speaker 1: plan was going to work was that if there is

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Speaker 1: sort of bailout that's necessary, the bigger banks pay kind

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Speaker 1: of a pro rated amount to this fund that ultimately,

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Speaker 1: should they need it, bails out smaller banks. Jamie Damond

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Speaker 1: of course be taking the brunt of that hip.

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Speaker 3: This is Bloomberg Daybreak Europe. Your morning brief on the

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Speaker 3: stories making news from London to Wall Street and beyond.

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Speaker 5: I'm Caroline Hipka and.

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