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Speaker 1: Good morning. It's Monday, the twenty ninth of January in London.

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Speaker 1: This is the Bloomberg Daybreak Europe podcast. I'm Stephen Carroll.

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Speaker 1: Coming up today. Joe Biden vowed retaliation for the killing

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Speaker 1: of three American soldiers in Jordan, putting the US on

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Speaker 1: a possible collision course with Iran. The world's most indebted

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Speaker 1: property developer evergrand Is ordered into liquidation by a Hong

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Speaker 1: Kong court, and Ursula vonder lyons EU stewardship comes into question.

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Speaker 1: We have a special report on the brewing leadership fight

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Speaker 1: at the heart of the European Union. Let's start with

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Speaker 1: a roundup of our top stories. The risk of a

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Speaker 1: direct confrontation between the United States and Iran is growing

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Speaker 1: after three American soldiers were killed by Iran backed militants

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Speaker 1: and Jordan. The serviceman died in a drone attack that

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Speaker 1: also wounded twenty five others near the Syrian border. In

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Speaker 1: a statement, President Joe Biden said the US would retaliate

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Speaker 1: our Middle East. Economics and Government editor Paul Wallace says

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Speaker 1: political pressure in the US to take action is already mounted.

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Speaker 2: If you look at some hawkish members of Congress, they

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Speaker 2: want something very firm. For example, Lindsay Graham, the Republican

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Speaker 2: He has said that the US has to attack Iran directly.

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Speaker 3: Now that may not happen.

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Speaker 2: Iran has plenty of assets and commanders in Iraq and Syria,

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Speaker 2: and the US may decide to go after them. It

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Speaker 2: may see that as a slightly less escalatory step than

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Speaker 2: attacking Iran itself. But certainly I think all eyes will

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Speaker 2: be on what the US does this week in reaction

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Speaker 2: to these attacks, and then after that what Iran says

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Speaker 2: and does in response.

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Speaker 1: To that has been Brooks Paul Wallace. US bases in

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Speaker 1: Iraq and Syria have come under fire multiple times Moran

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Speaker 1: supported groups since the Israel Hamas War up toed in October.

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Speaker 1: A source familiar with the US position has told Bloomberg

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Speaker 1: that these latest deaths of American soldiers will force a

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Speaker 1: stronger response than what the US has done so far.

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Speaker 1: Turning now to other news in the Middle East, the

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Speaker 1: New York Times is reporting the talks on an UC's

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Speaker 1: fire and the Israel Hamas War in closer to a deal.

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Speaker 1: This is NBC says the Biden administration may slow or

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Speaker 1: pause deliveries of some weapons to Israel to pressure the

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Speaker 1: Prime Minister of Bendamnettia, who to scale back military operations

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Speaker 1: in Gaza. CAI director William Burns is set to join

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Speaker 1: talks in the coming days, seeking a deal that US

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Speaker 1: and regional officials say would be part of a ceasefire

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Speaker 1: of at least two months. The Chinese property the giant Evergrand,

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Speaker 1: is heading for liquidation. The Hong Kong High Court has

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Speaker 1: ordered the trouble for and be wound up to deal

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Speaker 1: with its massive debts. Bloomberg's Loretta Chen says attempts to

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Speaker 1: restructure Evergrand's debt didn't work.

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Speaker 4: We're talking about a company that has over three hundred

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Speaker 4: billion dollars in debt and the bulk of that is

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Speaker 4: in mill in China on shore, whereas the offshore creditors

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Speaker 4: holds about twenty billions of dollars of debt and that

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Speaker 4: they were looking to restructure. But that restructure plan eventually

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Speaker 4: fall apart, and Evergrand right now has offshore assets such

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Speaker 4: as listed companies of the China Evergrond unit.

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Speaker 1: It has a evun the writ of Chen Bloomberg's loans

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Speaker 1: and bonds. Reporter there, Judge Linda Chan says the ruling

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Speaker 1: will result in new management at the home builder, alongside

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Speaker 1: addressing other issues. A further hearing this afternoon is expected

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Speaker 1: to determine if the court will regulate the liquidation process.

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Speaker 1: The UK government has asked city firms to submit proposals

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Speaker 1: for a potential retail offering of nat West shares. The

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Speaker 1: respective advisors must send their bids by late February, with

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Speaker 1: the Treasury hoping to issue an update alongside the budget

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Speaker 1: on the sixth of March. Economic Secretary to the Treasury

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Speaker 1: bim Afalami told Bloomberg last week of the government's hopes

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Speaker 1: for the sale.

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Speaker 5: We announced at the Autumn Statement that nat West share

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Speaker 5: sale to retail offer to the public that is going

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Speaker 5: to happen this year. The prospects for that are looking good.

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Speaker 5: The prospects more broadly for IPOs are looking good. And

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Speaker 5: so if you're somebody watching this who's thinking about listing,

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Speaker 5: go ahead, come and speak to the Treasury, come and

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Speaker 5: speak to us.

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Speaker 1: That's the City Minister bim Afalami speaking to Bloomberg. People

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Speaker 1: familiar with the matter say a disco entered retail offer

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Speaker 1: to the public is likely alongside an offer to institutional investors.

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Speaker 1: The plans are part of the government's wider effort to

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Speaker 1: attract more funds to UK shares.

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Speaker 3: And boost growth.

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Speaker 1: Almost one in five UK listed companies but at a

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Speaker 1: profit warning last year. That's more than during the financial crisis.

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Speaker 1: The data from ey Parthenon suggests businesses are in distress

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Speaker 1: after dealing with the highest interest rates in fifteen years.

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Speaker 1: Bloomberg James Wilcock has.

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Speaker 6: More higher borrowing costs, steeper prices and delayed decisions coming

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Speaker 6: home to roost. Those are the three main reasons making

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Speaker 6: British companies worry about their profits. Hiring data has also

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Speaker 6: fallen by the most in three years last month, which

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Speaker 6: some experts say points to firms holding back due to

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Speaker 6: economic uncertainty. It's all a sign that the Bank of

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Speaker 6: England is slamming on the economic breaks and that's having

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Speaker 6: a major effect, but not without an impact on growth.

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Speaker 6: In London James Wilcock, Bloomberg Radio.

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Speaker 1: And homes in London are at their most affordable level

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Speaker 1: in a decade. That's according to data from the property

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Speaker 1: portals Zuplow, which sees houses in the capital costing thirteen

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Speaker 1: times the annual earnings of an average worker in the UK.

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Speaker 1: That's down from over fifteen times in twenty sixteen. Zuoper

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Speaker 1: is also pointing to an increase in sales agreed at

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Speaker 1: the start of this year. The CEO of Property Mark,

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Speaker 1: Nathan Emerson says it's not just London seeing a booster demand.

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Speaker 7: You're sure and Humber, for example, you're looking at a

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Speaker 7: sort of nineteen percent increases in activity there and you're

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Speaker 7: also looking at the West Midlands you know that's currently

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Speaker 7: sitting at around about seventeen percent increase, so very positive

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Speaker 7: signs from that.

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Speaker 1: Emerson notes that London is still far more expensive than

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Speaker 1: any other part of the UK. He predicts that buying

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Speaker 1: activity UK wide will start to follow London upward as

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Speaker 1: interest rates fall well. Coming up in a moment, we

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Speaker 1: will get more on the latest events in the Middle

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Speaker 1: East and the pressure on the US president to respond

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Speaker 1: to the weekend's attacks. Will also be looking at the

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Speaker 1: leadership battle ahead in the European Union as we look

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Speaker 1: towards the European elections in June of this year. But

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Speaker 1: another story that caught my eye this morning from Germany

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Speaker 1: and forty five companies joining a trial of the four

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Speaker 1: day week, so the six month program starting on the

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Speaker 1: first of February will give hundreds of employers one hundred

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Speaker 1: employees rather an extra day off every week, well keeping

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Speaker 1: them on full pay. It's aiming to find out if

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Speaker 1: unions are right, that they could leave staff healthier and happier,

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Speaker 1: but also more productive. Now it's happening at a time

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Speaker 1: in Germany too, where there is a continued lack of

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Speaker 1: skilled workers that's putting pressure on companies who are trying

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Speaker 1: to hire. So that shortage, coupled with high implation, has

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Speaker 1: emboldened employees across industries to seek wage increases. In fact,

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Speaker 1: half of German companies are at least partly unable to

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Speaker 1: fill the vacancies that they're trying to Germany is also

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Speaker 1: facing a demographic issue. More than seven million people are

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Speaker 1: set to leave the German workforce by thirty five, so

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Speaker 1: all of that combining to this expansion of a trial

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Speaker 1: of the four day week to these forty five companies.

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Speaker 1: Germany is the country that has one of the highest

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Speaker 1: portions of part time workers in the EU. The hope

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Speaker 1: is that perhaps the four day week might be able

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Speaker 1: to attract more people into the labor force and perhaps

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Speaker 1: solve some of those issues. Of tightness in the labor

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Speaker 1: market as well, so that trial the six month pilot

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Speaker 1: beginning on the first of February. Well, let's go to

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Speaker 1: our top story now and the events in the Middle

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Speaker 1: East and the pressure on Joe Biden to respond to

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Speaker 1: the attack which left three American soldiers dead in Jordan

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Speaker 1: at the weekend, an attack being blamed on around backed militants.

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Speaker 1: Our Middle East Economics and Government editor Paul Wallace has

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Speaker 1: more for us this morning. Paul, First of all, what

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Speaker 1: exactly do we know about the details of this attack?

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Speaker 3: I seen? So these attacks happened over the weekends sort

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Speaker 3: of it we think late Saturday it was a big,

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Speaker 3: aggressive drone attack on a US base in the northeast

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Speaker 3: of Jordan called Tower twenty two. It's slightly smaller than

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Speaker 3: some of some of the US's main bases in the region.

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Speaker 3: This is more like a garrison, but nonetheless, these drones

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Speaker 3: seem to have hit the living quarters. They killed three

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Speaker 3: US soldiers and injured dozens more, at least thirty four

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Speaker 3: according to the Pentagon Is. The basis is right on

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Speaker 3: the border with Syria and Iraq, and so it's close

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Speaker 3: to where a lot of Iranian backed proxy groups operate

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Speaker 3: in those two countries, Iraq and Syria. Biden has vowed

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Speaker 3: a response, and I think that's something that Blober markets

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Speaker 3: will be watching very closely in the next week or so.

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Speaker 3: These are the first deaths from an attack, a US

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Speaker 3: death in the region from an attack since the Israel

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Speaker 3: Hamas War started and roiled the region. So it is

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Speaker 3: a pretty major development.

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Speaker 1: What could the response from the US look like? As

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Speaker 1: you say, this is a significant escale for the US

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Speaker 1: with these first first American.

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Speaker 3: Death it is. And if you look at some of

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Speaker 3: the let's say the Hawks in Washington, I'll take Lindsay

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Speaker 3: Graham or Republican Senator as an example. He has said

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Speaker 3: that Biden must attack targets inside Iran. So he's saying

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Speaker 3: not just Iranian proxies in Iraq or Syria or places

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Speaker 3: like that, but actually inside Iran.

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Speaker 8: That would be a serious, serious development that I think

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Speaker 8: would could potentially be very very bullished for energy markets,

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Speaker 8: especially oil.

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Speaker 3: Biden has other oxygens aside from that. He may opt

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Speaker 3: to hit Iranian targets, if you know, that's the roots

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Speaker 3: he goes, but outside the country, so Iraq and Syria

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Speaker 3: would be the obvious examples. I suppose it depends partly

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Speaker 3: on which group the Americans decide carried out these attacks.

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Speaker 3: There was a claim yesterday from an Iraqi based group

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Speaker 3: that's backed by Iran. It's said that it attacked US

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Speaker 3: Bass over the weekend. It didn't specifically say that it

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Speaker 3: attacked this one in Jordan's so we still don't know,

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Speaker 3: but no doubt the Americans they already know or they're

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Speaker 3: working that out now, and then that may determine where

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Speaker 3: they strike and how hard.

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Speaker 1: What would this escalation of around US tensions mean for

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Speaker 1: efforts to broke or cease far in the Israel Hamas war.

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Speaker 3: At the moment, the US and the UK and Salites

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Speaker 3: are trying to separate what's going on in Gaza with

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Speaker 3: these other conflicts around the Middle East, whether SOCU Diip

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Speaker 3: attacks in the Red Sea or these strikes on a

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Speaker 3: US basis in a Rack and Syrian and now Jordan.

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Speaker 3: Obviously they're all linked and they're very you know, what's

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Speaker 3: going on outside Gaza is very much a consequence of

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Speaker 3: that war and the atensions being inflamed by it in

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Speaker 3: the region. However, I think the US very much wants

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Speaker 3: to deal with these separate lease So there's no suggestion

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Speaker 3: in so far that Israel Kamas hostage talks are going

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Speaker 3: to be derailed by what's going on. But it is possible,

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Speaker 3: of course, because at the center of all this is Iran,

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Speaker 3: and if Iran wanted to gop those hostage talks, it

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Speaker 3: could presumably do that Viajamas. There's no suggestion again that

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Speaker 3: it will do that, but it has the ability to.

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Speaker 1: Okay, Paul wallas Im ad Least Economics and Government editor,

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Speaker 1: thank you very much. Next to a story from the

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Speaker 1: top levels of the European Union in the future of

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Speaker 1: Commission President Arsla Vanderline. She's expected to seek a second

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Speaker 1: term ahead of elections in June, but the achievements of

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Speaker 1: her first term haven't come without controversy. Bloomberg' Jorge Valleiro

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Speaker 1: has been writing about this and he joins us from

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Speaker 1: Brussels this morning. Good morning to you, hore Arth Levanderline.

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Speaker 1: First of all, a good Commission President.

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Speaker 9: I think we can stay in short jazz with the nuances,

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Speaker 9: of course, and this is the same conclusion that you

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Speaker 9: reach when you talk to analyst, the diplomats and people

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Speaker 9: in the European Parliament of course she had a very

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Speaker 9: difficult manday because of the COVID crisis, war in Ukraine,

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Speaker 9: energy crisis. But she's been the strong question of the

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Speaker 9: Commission that broke the block forward.

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Speaker 10: Of course, it's been also controversial, as.

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Speaker 9: You said, because her style, her management style and the

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Speaker 9: Commission didn't make everybody is happy because she centralized a

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Speaker 9: lot of power or you've.

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Speaker 1: Been looking at in the story though, some of the

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Speaker 1: dilemmas that the facing the EU that s Levonderline could

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Speaker 1: be looking at in a possible second mandate. What are

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Speaker 1: the big issues that the next Commission president needs to

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Speaker 1: be worried about.

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Speaker 9: We can summarize it in two big squeeze we'll call

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Speaker 9: it like that. One is this fight between the two

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Speaker 9: big titans, the US and China, and how the EU

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Speaker 9: is trying to forge its own stand and with this

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Speaker 9: the riskiness strategy. And the other one is a difficult

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Speaker 9: compromise between the green deal that the EU is championing

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Speaker 9: with the competitiveness of its economy and the fact that

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Speaker 9: the EU lacks many of the critical minerals and energy

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Speaker 9: sources for this to remain a competitive economy, and how

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Speaker 9: green deal push and how the fact that the EU

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Speaker 9: might need to centralize more competencies in the future if

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Speaker 9: he wants to remain strong, is at the same time

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Speaker 9: fueling the rise of far right in many corners of

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Speaker 9: the EU.

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Speaker 1: What could a second arsen Evonderline Commission look like given

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Speaker 1: the experience that we've had of the past five years, Yeah.

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Speaker 10: I mean it's for sure.

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Speaker 9: I mean the past five years, it's been one of

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Speaker 9: the most difficult mandates and periods in the history. And

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Speaker 9: we've seen a lot, as you know well over the

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Speaker 9: past decades with the Uroson crisis, migration and break sists

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Speaker 9: and so forth.

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Speaker 10: But the past five years have been especially difficult.

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Speaker 9: But the following one, the follow Monday, can be even

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Speaker 9: worse because, on top of the war against Ukraine, the

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Speaker 9: Kaza crisis, a possible return of Trump and more assertive China,

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Speaker 9: the Commission will face a very difficult situation with greatly

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Speaker 9: practically no budget difficulties to complete the implementation of the

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Speaker 9: Recovery Fund, the COVID Recovery Fund, with the pushback against

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Speaker 9: the Green Day legislation, and also with the Parliament that

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Speaker 9: very likely will see more fragmentation, the rise of far

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Speaker 9: right among its it's members, of the Parliament.

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Speaker 10: So yes, it's gonna be complicated.

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Speaker 1: Indeed, and of course the composition of the European Parliament

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Speaker 1: after Jean's election is going to be very important in

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Speaker 1: that development too. For now, Jorge Valero, thank you very much.

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