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Speaker 1: Hello and welcome to this special program on the UK economy.

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Speaker 1: I'm Caroline Hepcare. Last year was pretty difficult for Britain.

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Speaker 1: If you were listening to our coverage, the message was

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Speaker 1: pretty clear. The data and the mood among economists and

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Speaker 1: business leaders was rock bottom.

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Speaker 2: It looks broad based this weakness. It doesn't look like

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Speaker 2: a said of one of factors. You know, we're not

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Speaker 2: seeing the benefits of strong growth that we could be

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Speaker 2: saying in the other countries.

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Speaker 3: Say right now, Unfortunately, the United Kingdom is stuck in

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Speaker 3: a low growth situation.

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Speaker 4: The story of the year has just been, you know,

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Speaker 4: one of stagnation.

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Speaker 2: Still very grim in terms of the slow rate of

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Speaker 2: economic growth.

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Speaker 5: Jobs have gone unfortunately and have moved to the EU.

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Speaker 5: So there's a definite impact already.

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Speaker 2: Next YUK government, we'll need an additional one hundred and

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Speaker 2: forty two billion pounds just to keep things going as

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Speaker 2: they are.

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Speaker 5: We are seeing a really declinism attitude amongst the British population.

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Speaker 6: We are now we can confirm it.

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Speaker 1: The UK is in recession. So the end of twenty

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Speaker 1: twenty three did see the UK suffer two quarters of

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Speaker 1: negative growth, a shallow recession. Add to that the long

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Speaker 1: running problems of low growth and investment, the ingrained damage

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Speaker 1: of Brexit, and more recently political instability, higher taxes and

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Speaker 1: interest rates. Now Bloomberg's chief economics writer, Philip Aldrick and

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Speaker 1: I summed this up in a long read and a

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Speaker 1: radio program some months ago called Britain a drift. But

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Speaker 1: by the time we got to the new year twenty

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Speaker 1: twenty four, something seemed to have shifted, and so Phil

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Speaker 1: and I are back with this special report on whether

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Speaker 1: there is a more bullish case to be made for Britain.

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Speaker 6: Philip Aldrick joins me.

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Speaker 1: Now, Phil, by the time we got to the start

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Speaker 1: of this year, the pushback against underestimating the UK economy

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Speaker 1: was really quite broad. Wasn't just the sort of usual

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Speaker 1: optimistic entrepreneurs or even the almost libertarian Brexit supporting businessman

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Speaker 1: Tim Martin who's the chairman of the pub chain Weatherspoons

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Speaker 1: that we also spoke to. There are a couple of

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Speaker 1: things that really got my attention in terms of the

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Speaker 1: positive case. So there was a conversation with Berenberg senior

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Speaker 1: economist Callum Pickering and a note from Deutsche Bank senior

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Speaker 1: economist Sanjay Raja about the eight silver linings for the

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Speaker 1: UK economy. So I suppose I wonder, Phil, what got

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Speaker 1: you thinking and focus also on this idea that maybe

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Speaker 1: there's more of an upside for Breton.

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Speaker 7: A couple of things is there's some fundamentals which are

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Speaker 7: pretty good within the economy if we think of the

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Speaker 7: economy distinct from the public finances. You've got household balance

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Speaker 7: sheets at their best in their best conditions since two

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Speaker 7: thousand and two, that's the Bank of England. Corporate balance

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Speaker 7: sheets are better than they have been for more than

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Speaker 7: twenty three years. Those two things are pretty reassuring. You've

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Speaker 7: got lenders, banks have got their capital is pretty strong,

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Speaker 7: so you've got these kind of underlying solid fundamentals. Plus,

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Speaker 7: we've had six months of real wage growth that will continue.

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Speaker 7: If you look at the Bank of Englands forecasts for

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Speaker 7: the next couple of years, there is improvements in living

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Speaker 7: standards and those improvements in living standards will come through

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Speaker 7: quite quickly. In April when we have above inflation increases

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Speaker 7: in both the national living wage, the working age benefits

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Speaker 7: and in the state pension. Plus the expectation for pay

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Speaker 7: settlements this year is above five percent and we're going

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Speaker 7: to have inflation at about two percent in April May,

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Speaker 7: and then you've got the prospects of these tax cuts

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Speaker 7: coming through, plus the National insurance tax cut that's come

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Speaker 7: in January. So you've got these fundamentals which are a

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Speaker 7: lot more solid, plus the prospect of consumer spending because

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Speaker 7: living standards are just generally going to feel a lot better.

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Speaker 7: And so you know, twenty nineteen possibly was the last

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Speaker 7: year that you could call normal before the pandemic. Then

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Speaker 7: we've had a series of shocks, hopefully no more shocks

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Speaker 7: this year, and this year will feel normal again and

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Speaker 7: that should change the sentiment.

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Speaker 1: So that's some of the evidence base then that we

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Speaker 1: started out with a bit of a journey because Phil

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Speaker 1: and I spoke to a number of perhaps the most

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Speaker 1: important CEOs and chairs in UK business right now, from

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Speaker 1: insurance to asset management, advertising to property and retail. And

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Speaker 1: if you've noticed, it has been quite wet in the

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Speaker 1: UK for the past few weeks. My producer was pretty

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Speaker 1: determined to get me out there. He almost succeeded. In

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Speaker 1: the UK, you learn to love the weather and you

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Speaker 1: have to, but when the economy has been as clouded

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Speaker 1: over as it has been recently, you start to long

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Speaker 1: for any glimmer of sunshine. Last year, it was a

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Speaker 1: drizzly day when I spoke to the Marks and Spencer

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Speaker 1: chairman Archie Norman at the company's head office in Haddington.

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Speaker 1: The drizzle rather matched his mood at the time. He

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Speaker 1: was deeply concerned about post Brexit Britain. Since then we

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Speaker 1: know the UK has gone into recession. So with that

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Speaker 1: in mind and the rain of course still coming down,

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Speaker 1: I asked if his forecast is just as downbeat.

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Speaker 8: When you're running a business like M and as. Our

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Speaker 8: philosophy is we row our own boat and the Caesar

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Speaker 8: choppy or the Caesar calm, but our job is to

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Speaker 8: make the boat go faster. Actually, our success is more

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Speaker 8: to do with how successful we are and reshaping M

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Speaker 8: and S than what happens in the market. And you

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Speaker 8: know we've had a decent run, but a long long

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Speaker 8: way further ago.

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Speaker 1: While Norman puts the success of Marx and Spencer down

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Speaker 1: to the way that it's run, he does see light

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Speaker 1: on the horizon for the consumer and that will help

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Speaker 1: his business and many others.

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Speaker 8: Very importantly. Wages are now faster than inflation, faster than prices,

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Speaker 8: so people are genuinely better off on.

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Speaker 1: Everage from the iconic British retailer to one of the

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Speaker 1: country's largest pension providers. Legal and General Investment Management manages

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Speaker 1: pensions for five million people. Michelle Scrimjaw is the CEO.

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Speaker 5: It's easier to focus on the challenges when you're looking

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Speaker 5: outside the window of our UK headquarters and it's railing

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Speaker 5: down and it's a great day here in London. Actually,

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Speaker 5: the UK has been an amazing home for legal in

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Speaker 5: general for over one hundred and eighty years.

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Speaker 1: But what of this year or next year will the

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Speaker 1: UK see significant improvements in growth and wealth?

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Speaker 5: So if you think about where the world is today,

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Speaker 5: there is a lot of uncertainty. There is geopolitical uncertainty,

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Speaker 5: There is in certainty around interest rates. We're no different

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Speaker 5: in the UK. We're part of that big ecosystem. So

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Speaker 5: if I think about where things could go better, For sure,

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Speaker 5: we're still in a post COVID environment. We're still in

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Speaker 5: a post energy crisis environment that isn't going away, it

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Speaker 5: is working through. So as things work through, there is

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Speaker 5: certainly an opportunity for interest rates to come down. Yes,

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Speaker 5: we're in a technical recession, but as rates come down

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Speaker 5: and that frees up more capital and it actually has

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Speaker 5: an impact on individuals and where they are, because don't

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Speaker 5: forget this is if there's a cost of living challenge

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Speaker 5: here at an individual level, not just an economic challenge

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Speaker 5: for the country. I do think there is opportunity.

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Speaker 1: L Jim's Michelle Scrimjaw seeing opportunities. So is it the

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Speaker 1: start of a more bullish British economy? To know that?

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Speaker 1: You also have to get at the heart of what

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Speaker 1: drives economic sentiment for a large slice of the UK,

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Speaker 1: the property market.

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Speaker 7: If monetory is call my tail the yeah, that would

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Speaker 7: almost certainly become a problem.

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Speaker 1: Property prices well in July at their fastest pace since

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Speaker 1: a global financial crisis for the third month in a row.

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Speaker 4: The housing market is on track to see the lowest

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Speaker 4: level of home sales since twenty twelve.

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Speaker 1: But although house prices declined last year, they avoided predictions

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Speaker 1: of a collapse, and while office rents in the US fell,

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Speaker 1: in the UK that was not the case. British Land

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Speaker 1: CEO Simon Carter told me he's now hopeful for us.

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Speaker 3: What really matters is unemployment. If people have money in

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Speaker 3: their pocket, they spended our retail assets. I think it's

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Speaker 3: encouraging that we might see real wage growth that help,

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Speaker 3: because we haven't seen a lot of that. And similarly,

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Speaker 3: when we're leasing office space, what matters is we do

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Speaker 3: top end office space and it's headquarter space where businesses

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Speaker 3: are using it to attract and retain talent, and of

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Speaker 3: course they want to attract and retain talent when unemployment

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Speaker 3: is low. So I think if we can see a

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Speaker 3: situation where unemployment remains relatively low, the economy grows a

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Speaker 3: little bit and we see a bit of real wage growth,

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Speaker 3: the momentum that we've seen over the last couple of

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Speaker 3: years can continue, because that's been the odd thing in

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Speaker 3: the property market that the investment market, because of higher

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Speaker 3: interest rates, has struggled, But actually occupationally it's been very

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Speaker 3: good and people have taken space.

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Speaker 1: So momentum in the right direction. But what about some acceleration.

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Speaker 1: To get that, you need to tap into the buzzword

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Speaker 1: on every CEO's lips ay.

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Speaker 7: I's going to be important.

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Speaker 4: We believe, we're excited about it.

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Speaker 1: We're addressing some of the most profound social or challenges

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Speaker 1: with AI in ways they're transformative.

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Speaker 2: AI is going to change the nature of jobs.

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Speaker 4: We believe that AI is the most profound opportunity in

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Speaker 4: our lifetimes.

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Speaker 9: You heard executives mentioned the word AI about fifty times.

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Speaker 1: Advertising giant wpp's CEO, Mark Read is focused on the

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Speaker 1: benefits this once in a generation technology could deliver for Britain.

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Speaker 10: I think it's a massive opportunity for us. I mean,

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Speaker 10: at one level you could say, well, the large language models,

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Speaker 10: they're all being created in America. But actually what you

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Speaker 10: can do with AI is get access to these models

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Speaker 10: extremely cheaply. You know, we're not investing billions of dollars

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Speaker 10: at WPPNI we can't afford it, but we are using

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Speaker 10: the models created by open AI and Microsoft and Google

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Speaker 10: and others to power our work. And so it's really

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Speaker 10: about applications of technology. And as you say, because we're

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Speaker 10: a service based economy, it could our service structure much

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Speaker 10: much more productive, much much more efficient, and I just

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Speaker 10: think we have to lean into it and embrace it.

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Speaker 1: WPP is planning to spend about two hundred and fifty

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Speaker 1: million pounds a year on AI technology. Microsoft is investing

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Speaker 1: two and a half billion pounds in UK AI data

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Speaker 1: centers over three years, and the government says that it

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Speaker 1: wants Britain to be focused on reaping the rewards from

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Speaker 1: the AI gold rush. Here's the Deputy Prime Minister, Oliver

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Speaker 1: Dowden speaking to Bloomberg at last year's AI summits.

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Speaker 11: If you think about how financial services and the City

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Speaker 11: of London have so enriched the United Kingdom over the

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Speaker 11: past generation or two, I'm convinced that AI can do

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Speaker 11: the same thing for the UK over generations to come.

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Speaker 1: So the government is persuaded of the benefits of artificial intelligence.

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Speaker 1: But John Neil, the CEO of Lloyd's of London, says

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Speaker 1: better performance also needs political stability.

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Speaker 12: I think we all need the confidence of the two

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Speaker 12: term government, well whatever that government is, because I think

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Speaker 12: the issues that we're grapping with, you know, and the

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Speaker 12: need for confidence and the lack of the confidence that

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Speaker 12: whether it's the public or whether it's business, we just

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Speaker 12: need the sense that there is a plan and that

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Speaker 12: plan is going to have to stretch beyond one term

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Speaker 12: of government. So I would say we need change, and

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Speaker 12: I'm not saying that has to be a labor government

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Speaker 12: versus a conservative government. We do need to change. We

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Speaker 12: cannot carry on the way we are.

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Speaker 1: And he's concerned that even with the attempts by the

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Speaker 1: big political parties to woo the city, too much is

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Speaker 1: still being taken for granted.

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Speaker 12: Our advantage in insurance is the only marketplace for insurance

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Speaker 12: in the world is here. There isn't another one, and

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Speaker 12: I think we are standing up and representing the best

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Speaker 12: of that or doing our best to illustrate how that

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Speaker 12: value can be. We're growing, We're profitable. We need to

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Speaker 12: be profitable if we're going to innovate and reinvest in

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Speaker 12: what the future looks like. I don't think the same

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Speaker 12: is quite true everywhere in financial services.

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Speaker 10: We've seen a.

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Speaker 12: Wealth of delisting on the foot seat. We've seen real

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Speaker 12: challenges around investment and funding in the UK. We need

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Speaker 12: to get that back on track.

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Speaker 8: You know.

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Speaker 12: Part of the livelihood of wellbeing of UKPLC is as

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Speaker 12: a global financial services center.

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Speaker 1: There's a lot of ground to make up. Even with

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Speaker 1: the Chancellor Jeremy Hunt's mansion House reforms, the Footy one

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Speaker 1: hundred has lagged global markets since two thousand and eight.

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Speaker 1: Investors pulled a record twenty nine billion dollars from UK

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Speaker 1: equity funds last year, and Europe's too. He announced recently

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Speaker 1: it will delist from London. Those numbers are not lost

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Speaker 1: on other CEOs we spoke to. Here's wpp's mark read again.

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Speaker 10: I've learned the CEO never really to comment on our

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Speaker 10: share price, but I mean, you can but look at

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Speaker 10: your valuation relative to your peers in other markets and think,

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Speaker 10: you know, there are some possible attractions to being in

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Speaker 10: the US that I think the complexities of it make

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Speaker 10: it very difficult really in reality for most companies. And

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Speaker 10: what we really need to do is get UK pension

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Speaker 10: funds investing back in the UK market because you know, ultimately,

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Speaker 10: you know, we have a sizable stock market and if

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Speaker 10: it's not being supported by pension funds, you know, why

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Speaker 10: would international pension funds support us.

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Speaker 1: So the UK economy is still under a cloud and

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Speaker 1: no one expects rapid growth tomorrow, but there is hope

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Speaker 1: that it could stop being rained on and at last

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Speaker 1: enjoy some sunshine. So those were some of our conversations

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Speaker 1: with CEOs and chairs in the UK. Philip Aldrick, how

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Speaker 1: much changed do you think there's been since the last

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Speaker 1: big piece that we did on the UK economy in

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Speaker 1: April last year? How much hope is there that companies

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Speaker 1: will invest more in the UK.

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Speaker 7: There has been real numbers supporting the change in sentiment.

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Speaker 7: So there was the Global Investment Summit. We had thirty

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Speaker 7: billion pounds worth of commitments from international investors and companies.

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Speaker 7: Just a few days earlier, there'd been a twenty billion

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Speaker 7: dollar commitment from South Korea for infrastructure and renewable investment.

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Speaker 7: We had these big commitments from Tata and Nissan and

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Speaker 7: Stillantis or the car makers that they are going to

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Speaker 7: put money into the UK into the electric vehicle revolution,

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Speaker 7: and all of this was happening shortly after we did

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Speaker 7: our last piece. It all kind of started to come

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Speaker 7: out and I spoke to the Investment Minister, Dominic Johnson,

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Speaker 7: and he was saying there was real tepid tone about

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Speaker 7: the UK overseas whenever we spoke to foreign investors, and

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Speaker 7: that didn't really change until June July when the Tartar

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Speaker 7: investment was made, and then since then there's been a

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Speaker 7: pickup and you can see that in the number. You

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Speaker 7: definitely get a sense that businesses are feeling a lot

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Speaker 7: more confident about the UK's prospects and you are seeing

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Speaker 7: a bit of that actually delivered on the ground in

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Speaker 7: the numbers.

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Speaker 1: So let's bring in Bloomberg's chief UK economist, Dan Hanson.

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Speaker 1: Then on that point, what about recession? Does that get

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Speaker 1: revised away? How much of a negative factor is it

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Speaker 1: if we're talking about perhaps a more optimistic tone for

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Speaker 1: the UK.

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Speaker 2: Yeah, I mean we've run the numbers and if you look,

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Speaker 2: because it was, as you've mentioned, it was so shallow,

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Speaker 2: there is a pretty good chance it gets revised away.

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Speaker 2: If we remember back to twenty eleven twenty twelve when

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Speaker 2: we had the double dip, it was revised away. And

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Speaker 2: if you look at the way the ONS tends to

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Speaker 2: revise its data, we think there's a pretty decent chance

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Speaker 2: it gets revised away. I mean, we don't forecast revisions.

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Speaker 2: Some in the Bank of England has a bit of

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Speaker 2: an industry in but there is a chance it happens.

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Speaker 2: I mean, just for me sort of listening to everything.

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Speaker 2: There one thing that's really striking about last year, and

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Speaker 2: it's something that Andrew Bailey said actually recently, is that

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Speaker 2: there was really strong real income growth in the UK

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Speaker 2: and twenty twenty three so real income screw by nearly

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Speaker 2: two percent, for the economy grew by zero point one

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Speaker 2: percent and that's a very weird combination to have. It

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Speaker 2: speaks to the idea that if you're going to get

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Speaker 2: an upside surprise this year, it stems from consumers, so

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Speaker 2: they're going to have to dip into their pockets. And

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Speaker 2: I actually think all of what Phil said there, and

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Speaker 2: a lot of the people you interviewed, this idea about

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Speaker 2: another year of very strong reel income growth is really important.

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Speaker 2: But I think the thing that is the difference is

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Speaker 2: around uncertainty. You know, we had what appeared to be

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Speaker 2: a big inflation problem over the spring. There's a lot

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Speaker 2: of uncertainty about the inflation outlook, about the interest rate outlook,

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Speaker 2: how high interest rates would need to go to sort

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Speaker 2: the inflation problem out, and whether that would coincide with

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Speaker 2: a massive rise in unemployment that would be the price?

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Speaker 2: Was that going to be the price? And against that backdrop,

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Speaker 2: it's not really surprising people were a bit worried and

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Speaker 2: didn't spend too much money this year fingers crossed and

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Speaker 2: Phil said it there hopefully no more shocks, but things

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Speaker 2: look a bit more stable. Interest rates have probably peaked,

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Speaker 2: inflation is coming down, and because these energy price effects,

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Speaker 2: and it's going to come down quite sharply in the

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Speaker 2: next few months, so the outlook looks more stable and

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Speaker 2: that should shift sentiment, should shift confidence, particularly amongst consumers.

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Speaker 1: And I think that was very much reflected in the

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Speaker 1: conversations that we had with Archie Norman, the chairman of

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Speaker 1: Marx and Spencer, who kindly enough spoke to us last

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Speaker 1: year and then again this year, and he was really

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Speaker 1: underlining that fact. You know that he talked about it

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Speaker 1: not just being M and S customers who are benefiting

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Speaker 1: from increased wages, but it was also his own staff

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Speaker 1: Marks and Spencer's has increased wages for stuff and that's

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Speaker 1: several million people, you know, plus their families. So I

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Speaker 1: think that's an interesting thread. The other interesting thought that

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Speaker 1: I think emerged from all of those many conversations that

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Speaker 1: we had actually over a number of months Dan was

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Speaker 1: the idea that economics is is relative, that the UK's

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Speaker 1: performance is always relative, and then unfortunately the rest of

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Speaker 1: the world is becoming more insecure and therefore the UK

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Speaker 1: might look like a better bet.

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Speaker 6: I mean, how good is that for the UK?

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Speaker 2: Well, obviously on a global level it's not good that

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Speaker 2: it looks a bit more insecure, but I think there

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Speaker 2: is something in that in the sense that the UK

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Speaker 2: we had a bit of a blip at the end

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Speaker 2: of twenty twenty two, but generally the UK is seen

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Speaker 2: as a pretty safe bet and amongst developed economies at least.

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Speaker 2: You have to remember that we are in a slower

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Speaker 2: growth world now, the us A side and all the

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Speaker 2: fiscal expansion that's taken place there that's driven that growth,

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Speaker 2: But the us A side, if you look across the

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Speaker 2: rest of the G seven, we're sort of the middle

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Speaker 2: of the pack. It's like we're lagging.

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Speaker 13: You know.

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Speaker 2: The sort of sentiment and narrative around the UK can

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Speaker 2: be quite negative and maybe that's a bit of a

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Speaker 2: British thing. I don't know, but look, I think that

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Speaker 2: if there is a labor talk about it, don't they

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Speaker 2: the stability premium that idea, I think there is something

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Speaker 2: to that, to be honest with you, and I think

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Speaker 2: the lesson we had at the end of twenty two

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Speaker 2: was that it can go wrong very very quickly, So

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Speaker 2: there is huge benefit in steering a steady ship. And

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Speaker 2: the idea is about keeping the business tax regime very

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Speaker 2: consistent and constant. That's really important. And I also think

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Speaker 2: the idea that we're never going to get a two

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Speaker 2: term parliament, but I think Parliament should think about the

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Speaker 2: idea of having a ten year investment plan so that

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Speaker 2: investment projects don't immediately get ditched when the government a

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Speaker 2: new government comes in because you need, like there's no

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Speaker 2: doubt you need more than five years to build most

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Speaker 2: of these things. That that's just the reality of it.

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Speaker 2: So I think one of the really important things is

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Speaker 2: to ensure that we have this steady flow of investment

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Speaker 2: because when there is a new government, it's one of

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Speaker 2: the easiest things to ditch if you have to sort

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Speaker 2: of put in a austerity plan or whatever it might be.

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Speaker 2: Investment's just a really easy win. So that for me

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Speaker 2: is something that it's not spoken about, and it's probably

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Speaker 2: too optimistic to think it would ever come to pass,

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Speaker 2: but I think it realistically, if you wanted something good

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Speaker 2: on public investment, that's somewhere.

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Speaker 6: To look well.

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Speaker 1: A number of the seos did talk to us about that.

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Speaker 1: I was quite surprised you and I were in on

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Speaker 1: the very empty floor in the Lloyd's of London building

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Speaker 1: speaking to John Neil, the CEO there.

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Speaker 6: They were refurbishing one of the.

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Speaker 1: Floors and actually He took us both by surprise because

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Speaker 1: he said he wanted to see a two term government,

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Speaker 1: whatever that government is, and so Phil we were quite

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Speaker 1: surprised by just how warm a lot of the business

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Speaker 1: leaders were towards Keir Starmer's Labor Party.

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Speaker 7: Yeah, it wasn't just John who was talking about two

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Speaker 7: terms or long term planning to your point exactly on

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Speaker 7: the sort of investment needs of the country. Michelle Scrimmageer

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Speaker 7: was talking about it as well, how you need to

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Speaker 7: think in ten year cycles if you're going to try

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Speaker 7: and build the country and actually if you're going to

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Speaker 7: try and build these businesses. What was really striking was

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Speaker 7: that all of the people we spoke to felt pretty

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Speaker 7: comfortable with a Labor government. Some of them may have

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Speaker 7: even suggested they would vote Labor over the Tories. Definitely.

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Speaker 7: The good news in general from them is that they

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Speaker 7: believe the political establishment now is stable compared with not

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Speaker 7: just Britain's recent past of this trust and the mini

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Speaker 7: budget catastrophe in Boris Johnson, the sort of chaotic period there,

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Speaker 7: but also compared to other countries where you're seeing the

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Speaker 7: rise of populism. In this year where there's fifty general

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Speaker 7: election is going to be held potentially two billion voters,

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Speaker 7: and the UK is offering two managerial centrists and an

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Speaker 7: opposition party that is basically saying we're not going to

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Speaker 7: increase corporation taxes or VAT or not all the core taxes.

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Speaker 7: The messages. We understand that the most important thing is certainty,

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Speaker 7: stability and sort of policy making clarity, because if we

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Speaker 7: are going to get growth going, which is ultimately what

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Speaker 7: we kind of are writing about, is how we get

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Speaker 7: the growth going, and you've got no money at the

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Speaker 7: government level to spend try and generate that you need

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Speaker 7: to get the business community to do it and the

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Speaker 7: investors to do it, and that the business leaders have

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Speaker 7: spoken to both political parties and they feel quite reassured

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Speaker 7: that both parties understand the importance of what is needed

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Speaker 7: to generate the business, the private sector driven growth that

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Speaker 7: we're desperately after.

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Speaker 1: Well, the next conversation that we have for you is

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Speaker 1: actually to that point, the interface between government and business.

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Speaker 1: Phil thank you so much for being with me. That

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Speaker 1: is our economics writer, Philip Aldrick, and to our UK

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Speaker 1: Chief economist Dan Hansen for putting it into perspective.

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Speaker 6: I appreciate it.

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Speaker 1: We also though, sat down with Britain's biggest business lobby

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Speaker 1: to get their reading of the situation in the UK now.

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Speaker 1: The CBI Director General Rain Newton Smith, alongside Matt Clifford,

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Speaker 1: who is an entrepreneur who shot to prominence just in

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Speaker 1: November having organized a very short noticed the Prime Minister's

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Speaker 1: AI Safety Summit. He is of course the CEO of Entrepreneur,

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Speaker 1: first chair of ARIA and alongside the pension provider Pension

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Speaker 1: b just turned profitable in twenty twenty four their CEO,

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Speaker 1: Rommy Savova. I was sitting down with them right here

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Speaker 1: in Bloomberg's headquarters in London, and I began by asking

442
00:24:03,240 --> 00:24:07,200
Speaker 1: the CBI's Rain Newton Smith whether she thinks there is

443
00:24:07,240 --> 00:24:10,200
Speaker 1: a better case to be made for British business.

444
00:24:10,600 --> 00:24:13,399
Speaker 4: I do think the UK have so many capabilities, but

445
00:24:14,040 --> 00:24:16,879
Speaker 4: we can't rest on our laurels, and to make the

446
00:24:16,920 --> 00:24:18,560
Speaker 4: most of that, we need to make sure we have

447
00:24:18,600 --> 00:24:22,399
Speaker 4: an environment which is really competitive globally in terms of

448
00:24:22,440 --> 00:24:25,400
Speaker 4: our overall tax landscape. I think we've seen some important

449
00:24:25,400 --> 00:24:28,160
Speaker 4: steps that the government have taken on that, but there's

450
00:24:28,160 --> 00:24:31,359
Speaker 4: still more to be done and we need to make

451
00:24:31,400 --> 00:24:34,080
Speaker 4: sure that we're open to people and talent from around

452
00:24:34,080 --> 00:24:37,280
Speaker 4: the world and that we create the right ecosystem around

453
00:24:37,320 --> 00:24:40,640
Speaker 4: innovation to attract some of the best companies here into

454
00:24:40,640 --> 00:24:41,040
Speaker 4: the UK.

455
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Speaker 6: Romy let me turn to you.

456
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Speaker 1: I mean you are an innovative business in the UK

457
00:24:45,560 --> 00:24:49,399
Speaker 1: focus on the pensions industry, and this government under Ashisna

458
00:24:49,520 --> 00:24:52,480
Speaker 1: and the Chancellor Jeremy Hunt have made quite significant efforts

459
00:24:52,480 --> 00:24:56,040
Speaker 1: to try to reform, including the mansion house reforms. Do

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00:24:56,040 --> 00:24:58,240
Speaker 1: you think that those are going to make a significant

461
00:24:58,280 --> 00:25:03,000
Speaker 1: difference in terms of boosting the economy by increasing investment

462
00:25:03,119 --> 00:25:07,000
Speaker 1: and the options for pension savers to invest well.

463
00:25:07,040 --> 00:25:10,159
Speaker 9: I do think the mansion house reform still remain very

464
00:25:10,280 --> 00:25:14,800
Speaker 9: much in a voluntary phase. I think that until we

465
00:25:14,880 --> 00:25:19,800
Speaker 9: see the investment opportunities within the UK economy for pension funds,

466
00:25:20,280 --> 00:25:22,919
Speaker 9: that most pension funds will simply seek out the best

467
00:25:23,119 --> 00:25:27,919
Speaker 9: investment opportunities on a global basis, because pension funds like

468
00:25:28,119 --> 00:25:30,720
Speaker 9: us are very much here to represent the views and

469
00:25:30,760 --> 00:25:33,600
Speaker 9: the interests of consumers and so there has to be

470
00:25:33,680 --> 00:25:38,520
Speaker 9: a wholesale alignment I believe between consumers and the pensions industry.

471
00:25:38,560 --> 00:25:42,920
Speaker 9: More broadly, Now there is some more slated reform within

472
00:25:42,960 --> 00:25:47,360
Speaker 9: the pension sector which could be very transformative and it's

473
00:25:47,400 --> 00:25:51,040
Speaker 9: something that the government has been calling a pot for life,

474
00:25:51,040 --> 00:25:54,560
Speaker 9: meaning that consumers will be able to choose exactly where

475
00:25:54,640 --> 00:25:58,879
Speaker 9: their pensions are paid into by their employers. And should

476
00:25:58,960 --> 00:26:02,520
Speaker 9: this go ahead in a reasonable timeframe, it can really

477
00:26:02,520 --> 00:26:05,960
Speaker 9: give consumers the voting choice and the voting power to

478
00:26:06,000 --> 00:26:09,360
Speaker 9: support the kinds of businesses and the kinds of investments,

479
00:26:09,560 --> 00:26:13,120
Speaker 9: including in the UK economy that might benefit us all.

480
00:26:13,560 --> 00:26:17,600
Speaker 1: Now, I think the biggest issue for the UK, or

481
00:26:17,600 --> 00:26:21,960
Speaker 1: at least the biggest change that could be coming to workplaces,

482
00:26:22,080 --> 00:26:26,439
Speaker 1: is the artificial intelligence evolution revolution. You've been at the

483
00:26:26,440 --> 00:26:30,040
Speaker 1: heart of that. You advised the Prime Minister, you helped

484
00:26:30,040 --> 00:26:34,040
Speaker 1: to create. The AI Safety Summit happened just before Christmas,

485
00:26:34,080 --> 00:26:36,760
Speaker 1: and that actually, despite all the NA says, it was

486
00:26:36,840 --> 00:26:39,400
Speaker 1: really very well received, wasn't it. But do you think

487
00:26:39,400 --> 00:26:42,600
Speaker 1: that you've got the balance right between the risks the

488
00:26:42,680 --> 00:26:46,520
Speaker 1: word safety and also the actual opportunities that the UK

489
00:26:46,560 --> 00:26:47,480
Speaker 1: could see from AI.

490
00:26:47,880 --> 00:26:50,399
Speaker 13: I think the reason to care about safety is because

491
00:26:50,440 --> 00:26:52,720
Speaker 13: of the opportunities. I mean, the reality is that if

492
00:26:52,760 --> 00:26:54,720
Speaker 13: you look at where the public is on this issue,

493
00:26:55,200 --> 00:26:57,440
Speaker 13: safety is right at the top of their concerns when

494
00:26:57,480 --> 00:26:59,159
Speaker 13: it comes to AI, and you know, I would like

495
00:26:59,200 --> 00:27:02,840
Speaker 13: to see AI broadly diffused through the economy. I think

496
00:27:02,840 --> 00:27:06,639
Speaker 13: it's going to be. You know, probably most people listening

497
00:27:06,640 --> 00:27:08,760
Speaker 13: are already seeing this in their everyday lives, but you

498
00:27:08,800 --> 00:27:12,400
Speaker 13: know it's very poorly diffused today through businesses, through education,

499
00:27:12,520 --> 00:27:15,639
Speaker 13: through public services. Unfortunately, the UK historical has not been

500
00:27:15,720 --> 00:27:18,320
Speaker 13: very good at technology diffusion, at least in the sort

501
00:27:18,320 --> 00:27:21,120
Speaker 13: of software and Internet era, and it's very very important

502
00:27:21,119 --> 00:27:23,920
Speaker 13: that happens. I think is probably the single biggest lever

503
00:27:24,040 --> 00:27:27,200
Speaker 13: we have to improve productivity across the economy, particularly in

504
00:27:27,240 --> 00:27:28,159
Speaker 13: public services.

505
00:27:28,280 --> 00:27:31,280
Speaker 1: I was really interested speaking to the chairman of Marks

506
00:27:31,320 --> 00:27:34,120
Speaker 1: and Spensers, who is talking about how AI is being

507
00:27:34,160 --> 00:27:37,320
Speaker 1: diffused really across the whole of the Marks of Spencer's business.

508
00:27:37,840 --> 00:27:40,560
Speaker 1: Does the UK need to do that be more positive

509
00:27:40,560 --> 00:27:42,960
Speaker 1: about receiving this what could be a huge revolution.

510
00:27:43,280 --> 00:27:46,040
Speaker 13: I think that's absolutely key that there's a sort of

511
00:27:46,640 --> 00:27:50,359
Speaker 13: unified strategy across government, big business and small business to

512
00:27:50,359 --> 00:27:52,840
Speaker 13: make sure that we get adoption. If you think about

513
00:27:53,000 --> 00:27:55,680
Speaker 13: what that's going to take, there's a few things. I mean,

514
00:27:55,720 --> 00:27:58,000
Speaker 13: one is we need to make the UK the best

515
00:27:58,000 --> 00:28:00,720
Speaker 13: place in the world to build AI infrastructure. You know,

516
00:28:00,840 --> 00:28:05,120
Speaker 13: it's really striking how much the AI revolution is really

517
00:28:05,240 --> 00:28:08,520
Speaker 13: a computational revolution. It's about being able to marshal enormous

518
00:28:08,520 --> 00:28:12,720
Speaker 13: amounts of computational power into these models, both when we

519
00:28:12,760 --> 00:28:14,000
Speaker 13: train them when we use them.

520
00:28:14,119 --> 00:28:16,399
Speaker 14: And so I think the UK has to get serious.

521
00:28:16,040 --> 00:28:18,480
Speaker 13: About whether it wants to be an AI superpower. If

522
00:28:18,480 --> 00:28:21,560
Speaker 13: it does, that's going to need, you know, really tough

523
00:28:21,600 --> 00:28:24,480
Speaker 13: decisions about things like planning, about things like energy. This

524
00:28:24,520 --> 00:28:26,960
Speaker 13: is a very energy intensive revolution. But I think there's

525
00:28:26,960 --> 00:28:30,280
Speaker 13: also a big education piece about how to use AI.

526
00:28:30,520 --> 00:28:32,800
Speaker 13: The real challenge today is like can humans use AI

527
00:28:32,920 --> 00:28:35,000
Speaker 13: well enough to make a difference to their own productivity.

528
00:28:35,000 --> 00:28:36,040
Speaker 13: It's not easy, which.

529
00:28:35,880 --> 00:28:37,639
Speaker 1: Is exactly where I want to bring you into the

530
00:28:37,680 --> 00:28:41,440
Speaker 1: CBI rain the skills gat in the UK, or simply

531
00:28:41,560 --> 00:28:44,320
Speaker 1: the skills that the workforce has. Do we have those

532
00:28:44,360 --> 00:28:47,600
Speaker 1: skills the willingness to learn to adapt to this new technology.

533
00:28:47,760 --> 00:28:49,520
Speaker 6: Are we training people quickly enough?

534
00:28:50,520 --> 00:28:52,520
Speaker 9: We absolutely need to do more.

535
00:28:52,600 --> 00:28:55,160
Speaker 4: I think we've got the willingness and the capability, and

536
00:28:55,200 --> 00:28:58,080
Speaker 4: I think, as Mark was saying, it's some you know,

537
00:28:58,280 --> 00:29:00,880
Speaker 4: there is the broader infrastructure need to see in place.

538
00:29:00,880 --> 00:29:02,680
Speaker 4: So one of the things we've been talking with the

539
00:29:02,800 --> 00:29:05,320
Speaker 4: Chancellor and with the Shadow chanswer is we need to

540
00:29:05,520 --> 00:29:09,640
Speaker 4: now be focused on implementing planning reform to allow some

541
00:29:09,760 --> 00:29:12,560
Speaker 4: of these infrastructure and data centers to be here in

542
00:29:12,600 --> 00:29:15,800
Speaker 4: the UK. We also need the grid connections right to

543
00:29:16,240 --> 00:29:17,840
Speaker 4: power that, and we need to make sure that that

544
00:29:17,960 --> 00:29:20,720
Speaker 4: is powered as well by renewable energy. And when it

545
00:29:20,760 --> 00:29:24,000
Speaker 4: comes to the skills to deliver not just that, but

546
00:29:24,120 --> 00:29:26,400
Speaker 4: how we adopt AI and I think one of the

547
00:29:26,400 --> 00:29:29,280
Speaker 4: ways is making it understand understandable in the sense that

548
00:29:29,400 --> 00:29:32,200
Speaker 4: this is just really increasing our compute, you know, our

549
00:29:32,240 --> 00:29:34,920
Speaker 4: computing power. It is an evolution from some of the

550
00:29:34,960 --> 00:29:38,520
Speaker 4: technologies that have existed before. But what we need to

551
00:29:38,560 --> 00:29:41,400
Speaker 4: make sure is that we have capability that we have.

552
00:29:41,520 --> 00:29:43,880
Speaker 4: We're open to talent from around the world where some

553
00:29:43,920 --> 00:29:46,640
Speaker 4: of the best, you know, we're attracting some of the

554
00:29:46,640 --> 00:29:49,720
Speaker 4: best entrepreneurs here into the UK and allowing them to

555
00:29:49,800 --> 00:29:53,040
Speaker 4: set up businesses and bring some of that know how, Ronnie.

556
00:29:53,160 --> 00:29:55,640
Speaker 1: Another piece of the puzzle is that the Chancellor has

557
00:29:55,680 --> 00:29:59,080
Speaker 1: been talking about creating this britt ISA that would actually

558
00:29:59,080 --> 00:30:02,240
Speaker 1: funnel money from pension funds into some of these growth

559
00:30:02,560 --> 00:30:04,920
Speaker 1: UK businesses. Is that something that you think is going

560
00:30:05,000 --> 00:30:06,720
Speaker 1: to make a big difference. Would you like to see

561
00:30:06,720 --> 00:30:09,120
Speaker 1: it adopted at the budget? Well, I think the brid

562
00:30:09,400 --> 00:30:12,240
Speaker 1: er could definitely make a difference. It's again one of

563
00:30:12,240 --> 00:30:15,840
Speaker 1: those initiatives that puts consumers in the driving seed of

564
00:30:15,960 --> 00:30:19,080
Speaker 1: choosing the kinds of investments that they want to be

565
00:30:19,440 --> 00:30:23,040
Speaker 1: selecting to save for retirement, and it will enable them

566
00:30:23,080 --> 00:30:26,200
Speaker 1: to put their money to good work within the UK economy,

567
00:30:26,640 --> 00:30:30,280
Speaker 1: possibly with some additional tax incentives. So it's very hard

568
00:30:30,360 --> 00:30:33,160
Speaker 1: to find something not to like about it, other than

569
00:30:33,240 --> 00:30:35,640
Speaker 1: the fact that perhaps it makes the ISO regime a

570
00:30:35,680 --> 00:30:39,200
Speaker 1: little bit more complicated than it already is. So if

571
00:30:39,200 --> 00:30:42,320
Speaker 1: we can simplify isers a little bit more and offer

572
00:30:42,400 --> 00:30:45,680
Speaker 1: some extra incentives for investing in the UK economy, it

573
00:30:45,720 --> 00:30:48,240
Speaker 1: does feel like a win win situation. Rain I was

574
00:30:48,240 --> 00:30:52,000
Speaker 1: speaking to the e Llowys of London CEO John Neil.

575
00:30:52,120 --> 00:30:54,520
Speaker 1: He says, and he's adamant about this, we need a

576
00:30:54,560 --> 00:30:56,800
Speaker 1: two term government in order to deliver the sort of

577
00:30:56,800 --> 00:31:00,280
Speaker 1: stability to create that economic growth in the UK.

578
00:31:00,480 --> 00:31:01,240
Speaker 5: Do you agree?

579
00:31:02,040 --> 00:31:03,960
Speaker 4: Look, I think what we are trying to do is

580
00:31:04,000 --> 00:31:06,920
Speaker 4: build those areas of political consensus and I think there

581
00:31:07,000 --> 00:31:10,080
Speaker 4: is a clear focus on driving sustainable growth in the

582
00:31:10,200 --> 00:31:14,160
Speaker 4: UK and we absolutely need to see some of that stability.

583
00:31:14,640 --> 00:31:17,280
Speaker 4: So one example of that is we saw the chance

584
00:31:17,360 --> 00:31:21,240
Speaker 4: to make a bold move in the autumn statement around

585
00:31:21,840 --> 00:31:25,960
Speaker 4: allowing full expensing around on capital. So that's making our

586
00:31:26,000 --> 00:31:30,760
Speaker 4: business tax landscape really competitive for investment here in the

587
00:31:30,840 --> 00:31:33,800
Speaker 4: UK and we've seen the Shadow Chancellor also back that policy,

588
00:31:33,840 --> 00:31:38,080
Speaker 4: so that means whoever is in charge after the general election,

589
00:31:38,560 --> 00:31:41,200
Speaker 4: we've businesses have the confidence that that is a policy

590
00:31:41,240 --> 00:31:44,520
Speaker 4: that will remain. So I see our job and from

591
00:31:44,560 --> 00:31:47,080
Speaker 4: any business leaders to really help to build where there

592
00:31:47,080 --> 00:31:50,520
Speaker 4: are areas of political consensus to really drive some of

593
00:31:50,560 --> 00:31:52,840
Speaker 4: that long term stability. And I think we do need

594
00:31:52,880 --> 00:31:56,200
Speaker 4: to celebrate some of the capability the UK has, So

595
00:31:56,280 --> 00:31:58,160
Speaker 4: where are some of the areas we're really going to

596
00:31:58,200 --> 00:31:58,760
Speaker 4: lead the world?

597
00:31:58,880 --> 00:32:01,120
Speaker 1: Man, do you think that it's net three for artificial

598
00:32:01,160 --> 00:32:04,000
Speaker 1: intelligence and for the developments there that we have?

599
00:32:04,200 --> 00:32:06,320
Speaker 6: Stability and government are two term government.

600
00:32:06,440 --> 00:32:08,360
Speaker 13: But I think right now AI is not a part

601
00:32:08,360 --> 00:32:10,920
Speaker 13: of aan issue and that's a really positive thing and

602
00:32:10,960 --> 00:32:13,280
Speaker 13: I hope it stays that way. You know, I do

603
00:32:13,360 --> 00:32:16,120
Speaker 13: think this is going to be the fundamental technology of

604
00:32:16,160 --> 00:32:18,560
Speaker 13: the of the next decade, and.

605
00:32:18,800 --> 00:32:22,360
Speaker 14: I think the thing that's important to understand is by

606
00:32:22,440 --> 00:32:27,400
Speaker 14: default the UK, the UK will you know, neither benefit

607
00:32:27,480 --> 00:32:30,520
Speaker 14: nor software because of AI is entirely in our hands.

608
00:32:30,520 --> 00:32:33,640
Speaker 13: What happens, you know, AI is being developed, you know,

609
00:32:33,760 --> 00:32:38,800
Speaker 13: as we speak, by very large, very capable organizations.

610
00:32:38,880 --> 00:32:40,200
Speaker 14: Actually partly in the UK.

611
00:32:40,240 --> 00:32:41,760
Speaker 13: We're very lucky to have one of the two top

612
00:32:41,800 --> 00:32:44,200
Speaker 13: AI organizations in the world right here in London, in

613
00:32:44,280 --> 00:32:47,560
Speaker 13: Google Deep Mind, the other beat Open Ai. And you know,

614
00:32:47,800 --> 00:32:51,040
Speaker 13: they're going to continue to develop this tech regardless of

615
00:32:51,080 --> 00:32:53,960
Speaker 13: what we do. It's going to almost certainly develop in

616
00:32:53,960 --> 00:32:57,280
Speaker 13: capabilities very quickly. And really the question is doesn't just

617
00:32:57,360 --> 00:32:59,440
Speaker 13: the UK want to be an AI maker or an

618
00:32:59,440 --> 00:33:02,000
Speaker 13: AI take over this decade? Are we willing to make

619
00:33:02,040 --> 00:33:05,040
Speaker 13: whoever's in government the long term investments needed, both in

620
00:33:05,040 --> 00:33:08,720
Speaker 13: into education and skills, in infrastructure, in adoption are required

621
00:33:08,760 --> 00:33:09,880
Speaker 13: to harmash that power.

622
00:33:10,080 --> 00:33:13,880
Speaker 1: Robbie in terms of you know, we're thinking about whether

623
00:33:13,920 --> 00:33:16,120
Speaker 1: there is a more positive case in the UK. I

624
00:33:16,160 --> 00:33:18,640
Speaker 1: think part of the AI story is about the strength

625
00:33:18,640 --> 00:33:20,880
Speaker 1: of the consumer, Whether the consumer and the worker in

626
00:33:20,920 --> 00:33:24,600
Speaker 1: Britain you know, wants to take AI force, wants to

627
00:33:24,640 --> 00:33:29,280
Speaker 1: adopt it, wants to grow. What's your sentiment around consumer

628
00:33:29,320 --> 00:33:32,600
Speaker 1: confidence and therefore business confidence in Britain. Now, do you

629
00:33:32,640 --> 00:33:35,600
Speaker 1: see the green shoots that you mentioned. Absolutely. I think

630
00:33:36,200 --> 00:33:40,760
Speaker 1: the UK is a consumer economy. Consumption accounts for about

631
00:33:40,800 --> 00:33:44,479
Speaker 1: sixty percent of GDP, and so the UK consumer is

632
00:33:44,640 --> 00:33:48,000
Speaker 1: the British economy, and therefore I think it's important to

633
00:33:48,080 --> 00:33:52,400
Speaker 1: have that alignment that if consumers do well, ultimately business.

634
00:33:51,960 --> 00:33:54,719
Speaker 9: Will do well as well. And so the green shoots

635
00:33:54,720 --> 00:33:59,120
Speaker 9: that we're seeing are very much on the consumer confidence side.

636
00:33:59,280 --> 00:34:03,400
Speaker 9: We can see that sentiment is improving about future prospects.

637
00:34:03,680 --> 00:34:06,760
Speaker 9: It feels like the cost of living crisis is easing.

638
00:34:07,200 --> 00:34:10,920
Speaker 9: There is an expectation that inflation will come down further,

639
00:34:11,320 --> 00:34:14,760
Speaker 9: that interest rates will come down, and ultimately that life

640
00:34:14,800 --> 00:34:19,080
Speaker 9: will be more affordable and enjoyable. And it's that consumer

641
00:34:19,239 --> 00:34:22,680
Speaker 9: promise that ultimately must be delivered for everyone to thrive.

642
00:34:23,080 --> 00:34:25,160
Speaker 9: So I think that's really the issue that we need

643
00:34:25,200 --> 00:34:28,680
Speaker 9: to keep investing in making the UK consumer better off

644
00:34:28,680 --> 00:34:33,040
Speaker 9: financially and I think better equipped. Because this is a

645
00:34:34,040 --> 00:34:38,360
Speaker 9: high skills, a high services economy. There is absolutely every

646
00:34:38,440 --> 00:34:40,359
Speaker 9: reason that everyone should thrive here.

647
00:34:41,080 --> 00:34:45,399
Speaker 1: Rain. I hear so much positive rhetoric from economists from

648
00:34:45,520 --> 00:34:50,279
Speaker 1: business people. The data is not quite there yet, is

649
00:34:50,320 --> 00:34:51,640
Speaker 1: it more than rhetoric.

650
00:34:52,440 --> 00:34:54,600
Speaker 4: I do think this year will be a better year,

651
00:34:54,640 --> 00:34:57,400
Speaker 4: and it's building on what Rommy was saying. And inflation

652
00:34:58,480 --> 00:35:01,839
Speaker 4: is coming down, it will down further. And what we're

653
00:35:01,880 --> 00:35:04,360
Speaker 4: also seeing what has made it so difficult for so

654
00:35:04,480 --> 00:35:07,960
Speaker 4: many households has been the fact that pay growth hasn't

655
00:35:08,040 --> 00:35:10,040
Speaker 4: kept pace with that high inflation.

656
00:35:10,760 --> 00:35:12,120
Speaker 9: But as inflation comes.

657
00:35:11,960 --> 00:35:14,640
Speaker 4: Down and we're now seeing that, we should see some

658
00:35:14,680 --> 00:35:18,320
Speaker 4: positive movement in pay in real terms. So essentially people's

659
00:35:18,360 --> 00:35:21,640
Speaker 4: pay will reach further this year and that will help

660
00:35:21,719 --> 00:35:27,120
Speaker 4: to drive households and give them more resources. So I

661
00:35:27,160 --> 00:35:28,920
Speaker 4: think that is one of the reasons why people are

662
00:35:28,960 --> 00:35:31,080
Speaker 4: seeing green shoots in the economy.

663
00:35:31,120 --> 00:35:32,839
Speaker 9: But of course that for.

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00:35:32,840 --> 00:35:36,560
Speaker 4: Pay growth to be matched, you know, to outpace inflation

665
00:35:36,840 --> 00:35:40,479
Speaker 4: in real terms over time. What do we need productivity growth,

666
00:35:40,560 --> 00:35:43,720
Speaker 4: and that is about how we help our businesses invest

667
00:35:44,120 --> 00:35:49,400
Speaker 4: in people, in skills, in innovation and in technologies like

668
00:35:49,480 --> 00:35:52,560
Speaker 4: AI and you and show how that helps all of

669
00:35:52,640 --> 00:35:55,560
Speaker 4: us be more productive at work, rather than seeing it

670
00:35:55,600 --> 00:35:58,560
Speaker 4: as a technology that is to be feared. We are

671
00:35:58,719 --> 00:36:02,120
Speaker 4: very lucky in the UK to have low employment unemployment

672
00:36:02,320 --> 00:36:05,640
Speaker 4: and that has really been a bedrock for the UK economy.

673
00:36:05,800 --> 00:36:08,120
Speaker 4: So if we can start to see pay growth picking

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00:36:08,200 --> 00:36:12,759
Speaker 4: up in real terms and maintain that low unemployment, that

675
00:36:12,800 --> 00:36:15,800
Speaker 4: will mean that the prospects feel brighter for the UK economy.

676
00:36:16,120 --> 00:36:21,799
Speaker 1: Okay, a last thought romy on the demographic challenges for

677
00:36:21,880 --> 00:36:25,000
Speaker 1: the UK. I mean, you know, you have more than

678
00:36:25,000 --> 00:36:28,080
Speaker 1: what two one hundred and fifty thousand customers or thereabouts

679
00:36:28,120 --> 00:36:32,160
Speaker 1: you're plugged into the UK saver. In terms of the

680
00:36:32,200 --> 00:36:36,480
Speaker 1: demographic challenges, there is you know, concern about whether people

681
00:36:36,480 --> 00:36:41,320
Speaker 1: have enough savings. What is your view on those challenges

682
00:36:41,320 --> 00:36:45,920
Speaker 1: around demography in Britain, the aging population that Britain does have.

683
00:36:46,600 --> 00:36:50,680
Speaker 9: Well, I think again there are positive sheots to look at.

684
00:36:50,800 --> 00:36:54,040
Speaker 9: I think that large parts of the UK population have

685
00:36:54,239 --> 00:36:58,240
Speaker 9: accumulated wealth that can serve them well into retirement, whether

686
00:36:58,280 --> 00:37:01,440
Speaker 9: that's housing wealth or whether that is pension wealth. Pension

687
00:37:01,480 --> 00:37:06,120
Speaker 9: wealth is actually an incredibly important constituent of the UK's

688
00:37:06,200 --> 00:37:09,200
Speaker 9: overall wealth. So I think that there are savings that

689
00:37:09,239 --> 00:37:12,279
Speaker 9: are absolutely in place. And I think again, if you

690
00:37:12,320 --> 00:37:16,000
Speaker 9: look at the younger aspects of the population, the younger demographics,

691
00:37:16,320 --> 00:37:19,560
Speaker 9: they will be going through automatic enrollment, meaning they will

692
00:37:19,600 --> 00:37:23,040
Speaker 9: be automatically saving every year and by the time they

693
00:37:23,080 --> 00:37:26,520
Speaker 9: do retire, they are likely to have a good nest egg.

694
00:37:26,800 --> 00:37:30,080
Speaker 9: It could be better, we could increase contribution rates further

695
00:37:30,480 --> 00:37:33,799
Speaker 9: through automatic enrollment, but we are definitely on the right

696
00:37:33,920 --> 00:37:38,160
Speaker 9: track for retirement income provision. For those who have not

697
00:37:38,320 --> 00:37:41,800
Speaker 9: yet made the retirement provision that they know that they need,

698
00:37:41,880 --> 00:37:46,600
Speaker 9: there are personal saving solutions, and our view this year

699
00:37:46,600 --> 00:37:53,120
Speaker 9: in particular is with consumer expenditure needs kind of easing,

700
00:37:53,880 --> 00:37:56,920
Speaker 9: that there is more room for saving and we're certainly

701
00:37:56,960 --> 00:37:59,560
Speaker 9: seeing that in the contributions that people are making into

702
00:37:59,600 --> 00:38:00,680
Speaker 9: their penntry this quarter.

703
00:38:01,239 --> 00:38:05,319
Speaker 1: MA the wvpco party, was telling me that he is

704
00:38:05,480 --> 00:38:07,440
Speaker 1: using AI tools, but there are all tools that have

705
00:38:07,440 --> 00:38:10,120
Speaker 1: been created in the United States. He doesn't really need

706
00:38:10,160 --> 00:38:14,160
Speaker 1: to invest that much money because those tools are there.

707
00:38:14,320 --> 00:38:18,240
Speaker 1: And and so that question about the low investment issue

708
00:38:18,239 --> 00:38:20,080
Speaker 1: that Britain does have.

709
00:38:20,520 --> 00:38:22,839
Speaker 13: I do think planning is a huge lever. I think

710
00:38:22,880 --> 00:38:24,920
Speaker 13: there's lots of reasons why this is a great place

711
00:38:24,960 --> 00:38:27,640
Speaker 13: to build AI infrastructure. But you know, planning and energy

712
00:38:27,680 --> 00:38:30,279
Speaker 13: are a big bottlenecks. And then the other big one

713
00:38:30,320 --> 00:38:32,560
Speaker 13: is talent, and you know everyone's brought this up. You know,

714
00:38:32,920 --> 00:38:34,719
Speaker 13: if you want to make the positive case for the UK.

715
00:38:35,160 --> 00:38:37,600
Speaker 13: Then the obvious starting point is talent. We do have

716
00:38:37,920 --> 00:38:40,920
Speaker 13: the best universities in the world outside the United States.

717
00:38:41,120 --> 00:38:43,200
Speaker 13: We have you know, one of the best, maybe the

718
00:38:43,239 --> 00:38:46,920
Speaker 13: best staffsp ecosystem in the world outside the United States.

719
00:38:47,280 --> 00:38:50,480
Speaker 13: We have you know, really extraordinary range of tech companies.

720
00:38:51,000 --> 00:38:53,200
Speaker 13: But the lifeboard of all those things is topped and

721
00:38:53,239 --> 00:38:55,960
Speaker 13: we have to be willing and able to not just

722
00:38:56,120 --> 00:38:57,920
Speaker 13: let the best and the bright sist from around the

723
00:38:57,920 --> 00:38:59,920
Speaker 13: world coin in, but you know actively, you know, core

724
00:39:00,120 --> 00:39:02,279
Speaker 13: and welcome them. That's the fuel that's going to make

725
00:39:02,560 --> 00:39:03,480
Speaker 13: the UK investable.

726
00:39:04,280 --> 00:39:09,320
Speaker 1: That was Matt Clifford, AI expert CEO of Entrepreneur First,

727
00:39:09,600 --> 00:39:13,480
Speaker 1: the Pension b CEO Rommy Savava, and the Confederation of

728
00:39:13,520 --> 00:39:17,400
Speaker 1: British Industry Director General Raine Newton Smith. My thanks to

729
00:39:17,480 --> 00:39:19,800
Speaker 1: all of them for speaking to me here at the

730
00:39:19,840 --> 00:39:23,560
Speaker 1: Bloomberg headquarters. I thought they made the positive case for

731
00:39:23,600 --> 00:39:27,839
Speaker 1: the UK really well, because the sobering fact is that

732
00:39:28,040 --> 00:39:33,680
Speaker 1: many are still deeply skeptical. We surveyed investors for this

733
00:39:33,840 --> 00:39:37,640
Speaker 1: program and ask them what their expectation is for living

734
00:39:37,719 --> 00:39:41,960
Speaker 1: standards in the UK in five years time. Out of

735
00:39:42,080 --> 00:39:46,560
Speaker 1: four hundred and sixty three investors, forty eight percent say

736
00:39:46,719 --> 00:39:51,120
Speaker 1: they expect living standards in the UK to decline versus

737
00:39:51,200 --> 00:39:55,520
Speaker 1: G seven peers over the next five years. Thirty five

738
00:39:55,560 --> 00:39:59,680
Speaker 1: percent see no change, but only seventeen percent say that

739
00:39:59,680 --> 00:40:05,399
Speaker 1: britain living standards will improve. The UK must surely do

740
00:40:05,520 --> 00:40:10,000
Speaker 1: better than that to turn around the economic picture more

741
00:40:10,040 --> 00:40:15,800
Speaker 1: decisively and the rhetoric into reality. Would I take away though,

742
00:40:15,920 --> 00:40:19,120
Speaker 1: from all of my interviews over the past two months,

743
00:40:19,280 --> 00:40:24,960
Speaker 1: is still really hopeful. Britain is fundamentally a high skills economy.

744
00:40:25,040 --> 00:40:29,799
Speaker 1: Inflation is coming down, There's a political consensus around the

745
00:40:29,840 --> 00:40:33,600
Speaker 1: need for economic growth. The Chancellor Jeremy Hunt's changes in

746
00:40:33,640 --> 00:40:38,080
Speaker 1: the autumn statement for business investment taxes and possibly this

747
00:40:38,200 --> 00:40:42,520
Speaker 1: new British ISA in the March budget are being welcomed.

748
00:40:43,239 --> 00:40:46,719
Speaker 1: Business leaders like the CEO of Lloyd's of London, John Neil,

749
00:40:47,160 --> 00:40:51,040
Speaker 1: do think there could be an economic benefit from a new,

750
00:40:51,480 --> 00:40:56,040
Speaker 1: more stable government and this wild new technology that is

751
00:40:56,200 --> 00:41:00,480
Speaker 1: AI is full of possibilities and it's in our hands now.

752
00:41:00,719 --> 00:41:04,920
Speaker 1: As Matt Clifford said, So I hope that the next

753
00:41:04,960 --> 00:41:08,200
Speaker 1: time Philip Aldrick and I ask whether there is a

754
00:41:08,400 --> 00:41:12,000
Speaker 1: bullish case to be made for Britain, the answer might

755
00:41:12,080 --> 00:41:17,800
Speaker 1: be an even more resounding yes in London. I'm Caroline

756
00:41:17,800 --> 00:41:19,240
Speaker 1: Hepker for Bloomberg Radio