WEBVTT - Bonus Episode: Is There A Bullish Case For Britain? 0:00:00.360 --> 0:00:04.279 Hello and welcome to this special program on the UK economy. 0:00:04.320 --> 0:00:08.680 I'm Caroline Hepcare. Last year was pretty difficult for Britain. 0:00:08.880 --> 0:00:11.799 If you were listening to our coverage, the message was 0:00:12.280 --> 0:00:16.439 pretty clear. The data and the mood among economists and 0:00:16.520 --> 0:00:22.520 business leaders was rock bottom. 0:00:22.640 --> 0:00:25.319 It looks broad based this weakness. It doesn't look like 0:00:25.360 --> 0:00:27.319 a said of one of factors. You know, we're not 0:00:27.360 --> 0:00:29.680 seeing the benefits of strong growth that we could be 0:00:29.720 --> 0:00:30.840 saying in the other countries. 0:00:30.720 --> 0:00:33.839 Say right now, Unfortunately, the United Kingdom is stuck in 0:00:33.880 --> 0:00:35.199 a low growth situation. 0:00:35.520 --> 0:00:37.360 The story of the year has just been, you know, 0:00:37.440 --> 0:00:38.400 one of stagnation. 0:00:38.840 --> 0:00:41.159 Still very grim in terms of the slow rate of 0:00:41.159 --> 0:00:41.960 economic growth. 0:00:42.159 --> 0:00:44.560 Jobs have gone unfortunately and have moved to the EU. 0:00:44.680 --> 0:00:46.720 So there's a definite impact already. 0:00:46.960 --> 0:00:49.760 Next YUK government, we'll need an additional one hundred and 0:00:49.840 --> 0:00:52.640 forty two billion pounds just to keep things going as 0:00:52.680 --> 0:00:53.040 they are. 0:00:53.200 --> 0:00:56.760 We are seeing a really declinism attitude amongst the British population. 0:00:57.400 --> 0:00:58.720 We are now we can confirm it. 0:00:58.760 --> 0:01:08.720 The UK is in recession. So the end of twenty 0:01:08.840 --> 0:01:12.920 twenty three did see the UK suffer two quarters of 0:01:13.080 --> 0:01:16.959 negative growth, a shallow recession. Add to that the long 0:01:17.080 --> 0:01:21.320 running problems of low growth and investment, the ingrained damage 0:01:21.319 --> 0:01:25.920 of Brexit, and more recently political instability, higher taxes and 0:01:26.000 --> 0:01:30.520 interest rates. Now Bloomberg's chief economics writer, Philip Aldrick and 0:01:30.560 --> 0:01:32.800 I summed this up in a long read and a 0:01:32.880 --> 0:01:37.280 radio program some months ago called Britain a drift. But 0:01:37.319 --> 0:01:39.600 by the time we got to the new year twenty 0:01:39.640 --> 0:01:42.679 twenty four, something seemed to have shifted, and so Phil 0:01:42.720 --> 0:01:46.120 and I are back with this special report on whether 0:01:46.200 --> 0:01:50.040 there is a more bullish case to be made for Britain. 0:01:50.320 --> 0:01:51.600 Philip Aldrick joins me. 0:01:51.680 --> 0:01:54.440 Now, Phil, by the time we got to the start 0:01:54.480 --> 0:01:58.240 of this year, the pushback against underestimating the UK economy 0:01:58.320 --> 0:02:01.440 was really quite broad. Wasn't just the sort of usual 0:02:01.760 --> 0:02:07.880 optimistic entrepreneurs or even the almost libertarian Brexit supporting businessman 0:02:08.320 --> 0:02:11.360 Tim Martin who's the chairman of the pub chain Weatherspoons 0:02:11.360 --> 0:02:14.000 that we also spoke to. There are a couple of 0:02:14.000 --> 0:02:17.480 things that really got my attention in terms of the 0:02:17.520 --> 0:02:20.919 positive case. So there was a conversation with Berenberg senior 0:02:20.919 --> 0:02:24.760 economist Callum Pickering and a note from Deutsche Bank senior 0:02:24.760 --> 0:02:29.200 economist Sanjay Raja about the eight silver linings for the 0:02:29.320 --> 0:02:33.360 UK economy. So I suppose I wonder, Phil, what got 0:02:33.400 --> 0:02:37.520 you thinking and focus also on this idea that maybe 0:02:37.560 --> 0:02:39.800 there's more of an upside for Breton. 0:02:40.840 --> 0:02:43.920 A couple of things is there's some fundamentals which are 0:02:43.919 --> 0:02:46.080 pretty good within the economy if we think of the 0:02:46.120 --> 0:02:50.079 economy distinct from the public finances. You've got household balance 0:02:50.080 --> 0:02:52.639 sheets at their best in their best conditions since two 0:02:52.639 --> 0:02:55.320 thousand and two, that's the Bank of England. Corporate balance 0:02:55.320 --> 0:02:57.799 sheets are better than they have been for more than 0:02:57.800 --> 0:03:01.480 twenty three years. Those two things are pretty reassuring. You've 0:03:01.520 --> 0:03:04.720 got lenders, banks have got their capital is pretty strong, 0:03:04.720 --> 0:03:08.320 so you've got these kind of underlying solid fundamentals. Plus, 0:03:08.360 --> 0:03:12.359 we've had six months of real wage growth that will continue. 0:03:12.560 --> 0:03:14.200 If you look at the Bank of Englands forecasts for 0:03:14.240 --> 0:03:17.160 the next couple of years, there is improvements in living 0:03:17.160 --> 0:03:20.399 standards and those improvements in living standards will come through 0:03:20.480 --> 0:03:24.679 quite quickly. In April when we have above inflation increases 0:03:24.800 --> 0:03:28.720 in both the national living wage, the working age benefits 0:03:28.880 --> 0:03:32.799 and in the state pension. Plus the expectation for pay 0:03:32.840 --> 0:03:35.560 settlements this year is above five percent and we're going 0:03:35.600 --> 0:03:37.840 to have inflation at about two percent in April May, 0:03:38.120 --> 0:03:40.000 and then you've got the prospects of these tax cuts 0:03:40.000 --> 0:03:42.280 coming through, plus the National insurance tax cut that's come 0:03:42.280 --> 0:03:45.640 in January. So you've got these fundamentals which are a 0:03:45.640 --> 0:03:50.000 lot more solid, plus the prospect of consumer spending because 0:03:50.080 --> 0:03:52.680 living standards are just generally going to feel a lot better. 0:03:53.040 --> 0:03:55.320 And so you know, twenty nineteen possibly was the last 0:03:55.480 --> 0:03:58.280 year that you could call normal before the pandemic. Then 0:03:58.280 --> 0:04:01.880 we've had a series of shocks, hopefully no more shocks 0:04:01.920 --> 0:04:04.760 this year, and this year will feel normal again and 0:04:04.800 --> 0:04:06.080 that should change the sentiment. 0:04:06.320 --> 0:04:09.480 So that's some of the evidence base then that we 0:04:09.560 --> 0:04:12.640 started out with a bit of a journey because Phil 0:04:12.640 --> 0:04:15.440 and I spoke to a number of perhaps the most 0:04:15.440 --> 0:04:19.920 important CEOs and chairs in UK business right now, from 0:04:19.960 --> 0:04:25.960 insurance to asset management, advertising to property and retail. And 0:04:26.360 --> 0:04:29.080 if you've noticed, it has been quite wet in the 0:04:29.200 --> 0:04:32.359 UK for the past few weeks. My producer was pretty 0:04:32.400 --> 0:04:41.600 determined to get me out there. He almost succeeded. In 0:04:41.640 --> 0:04:44.359 the UK, you learn to love the weather and you 0:04:44.440 --> 0:04:47.240 have to, but when the economy has been as clouded 0:04:47.279 --> 0:04:50.200 over as it has been recently, you start to long 0:04:50.360 --> 0:04:53.800 for any glimmer of sunshine. Last year, it was a 0:04:53.880 --> 0:04:56.720 drizzly day when I spoke to the Marks and Spencer 0:04:56.839 --> 0:05:00.480 chairman Archie Norman at the company's head office in Haddington. 0:05:00.960 --> 0:05:04.159 The drizzle rather matched his mood at the time. He 0:05:04.360 --> 0:05:09.800 was deeply concerned about post Brexit Britain. Since then we 0:05:09.839 --> 0:05:13.080 know the UK has gone into recession. So with that 0:05:13.200 --> 0:05:16.479 in mind and the rain of course still coming down, 0:05:17.040 --> 0:05:22.480 I asked if his forecast is just as downbeat. 0:05:21.640 --> 0:05:24.880 When you're running a business like M and as. Our 0:05:24.880 --> 0:05:28.680 philosophy is we row our own boat and the Caesar 0:05:28.760 --> 0:05:31.400 choppy or the Caesar calm, but our job is to 0:05:31.400 --> 0:05:34.440 make the boat go faster. Actually, our success is more 0:05:34.440 --> 0:05:36.640 to do with how successful we are and reshaping M 0:05:36.640 --> 0:05:40.080 and S than what happens in the market. And you 0:05:40.080 --> 0:05:43.200 know we've had a decent run, but a long long 0:05:43.240 --> 0:05:43.960 way further ago. 0:05:44.640 --> 0:05:48.320 While Norman puts the success of Marx and Spencer down 0:05:48.360 --> 0:05:51.160 to the way that it's run, he does see light 0:05:51.279 --> 0:05:54.480 on the horizon for the consumer and that will help 0:05:54.520 --> 0:05:56.880 his business and many others. 0:05:57.480 --> 0:06:03.360 Very importantly. Wages are now faster than inflation, faster than prices, 0:06:03.400 --> 0:06:06.160 so people are genuinely better off on. 0:06:06.240 --> 0:06:10.640 Everage from the iconic British retailer to one of the 0:06:10.640 --> 0:06:16.279 country's largest pension providers. Legal and General Investment Management manages 0:06:16.360 --> 0:06:21.040 pensions for five million people. Michelle Scrimjaw is the CEO. 0:06:21.720 --> 0:06:23.800 It's easier to focus on the challenges when you're looking 0:06:23.800 --> 0:06:26.240 outside the window of our UK headquarters and it's railing 0:06:26.279 --> 0:06:31.640 down and it's a great day here in London. Actually, 0:06:31.880 --> 0:06:35.159 the UK has been an amazing home for legal in 0:06:35.200 --> 0:06:36.960 general for over one hundred and eighty years. 0:06:37.200 --> 0:06:40.159 But what of this year or next year will the 0:06:40.279 --> 0:06:44.239 UK see significant improvements in growth and wealth? 0:06:45.240 --> 0:06:48.039 So if you think about where the world is today, 0:06:48.279 --> 0:06:51.960 there is a lot of uncertainty. There is geopolitical uncertainty, 0:06:52.000 --> 0:06:55.320 There is in certainty around interest rates. We're no different 0:06:55.440 --> 0:07:00.040 in the UK. We're part of that big ecosystem. So 0:07:00.120 --> 0:07:03.960 if I think about where things could go better, For sure, 0:07:04.279 --> 0:07:06.760 we're still in a post COVID environment. We're still in 0:07:06.880 --> 0:07:12.520 a post energy crisis environment that isn't going away, it 0:07:12.600 --> 0:07:16.320 is working through. So as things work through, there is 0:07:16.440 --> 0:07:20.240 certainly an opportunity for interest rates to come down. Yes, 0:07:20.280 --> 0:07:24.120 we're in a technical recession, but as rates come down 0:07:24.640 --> 0:07:28.600 and that frees up more capital and it actually has 0:07:28.600 --> 0:07:33.160 an impact on individuals and where they are, because don't 0:07:33.160 --> 0:07:35.280 forget this is if there's a cost of living challenge 0:07:35.320 --> 0:07:38.960 here at an individual level, not just an economic challenge 0:07:38.960 --> 0:07:42.400 for the country. I do think there is opportunity. 0:07:42.080 --> 0:07:46.600 L Jim's Michelle Scrimjaw seeing opportunities. So is it the 0:07:46.640 --> 0:07:50.400 start of a more bullish British economy? To know that? 0:07:50.520 --> 0:07:52.560 You also have to get at the heart of what 0:07:52.800 --> 0:07:56.800 drives economic sentiment for a large slice of the UK, 0:07:57.360 --> 0:07:58.520 the property market. 0:08:02.000 --> 0:08:04.880 If monetory is call my tail the yeah, that would 0:08:05.080 --> 0:08:08.920 almost certainly become a problem. 0:08:09.920 --> 0:08:13.200 Property prices well in July at their fastest pace since 0:08:13.200 --> 0:08:16.760 a global financial crisis for the third month in a row. 0:08:19.880 --> 0:08:22.120 The housing market is on track to see the lowest 0:08:22.200 --> 0:08:24.320 level of home sales since twenty twelve. 0:08:30.560 --> 0:08:35.800 But although house prices declined last year, they avoided predictions 0:08:35.840 --> 0:08:39.440 of a collapse, and while office rents in the US fell, 0:08:39.679 --> 0:08:43.199 in the UK that was not the case. British Land 0:08:43.280 --> 0:08:47.960 CEO Simon Carter told me he's now hopeful for us. 0:08:48.000 --> 0:08:52.080 What really matters is unemployment. If people have money in 0:08:52.120 --> 0:08:55.360 their pocket, they spended our retail assets. I think it's 0:08:55.520 --> 0:08:59.960 encouraging that we might see real wage growth that help, 0:09:00.120 --> 0:09:02.880 because we haven't seen a lot of that. And similarly, 0:09:02.880 --> 0:09:06.840 when we're leasing office space, what matters is we do 0:09:07.480 --> 0:09:11.960 top end office space and it's headquarter space where businesses 0:09:12.040 --> 0:09:14.840 are using it to attract and retain talent, and of 0:09:14.840 --> 0:09:18.400 course they want to attract and retain talent when unemployment 0:09:18.520 --> 0:09:20.720 is low. So I think if we can see a 0:09:20.800 --> 0:09:25.760 situation where unemployment remains relatively low, the economy grows a 0:09:25.800 --> 0:09:28.280 little bit and we see a bit of real wage growth, 0:09:28.520 --> 0:09:30.719 the momentum that we've seen over the last couple of 0:09:30.800 --> 0:09:33.040 years can continue, because that's been the odd thing in 0:09:33.080 --> 0:09:36.920 the property market that the investment market, because of higher 0:09:36.920 --> 0:09:40.679 interest rates, has struggled, But actually occupationally it's been very 0:09:40.760 --> 0:09:42.160 good and people have taken space. 0:09:42.920 --> 0:09:47.719 So momentum in the right direction. But what about some acceleration. 0:09:48.400 --> 0:09:51.199 To get that, you need to tap into the buzzword 0:09:51.400 --> 0:09:54.480 on every CEO's lips ay. 0:09:54.320 --> 0:09:55.720 I's going to be important. 0:09:55.840 --> 0:09:57.400 We believe, we're excited about it. 0:09:57.480 --> 0:10:01.360 We're addressing some of the most profound social or challenges 0:10:01.800 --> 0:10:03.959 with AI in ways they're transformative. 0:10:04.080 --> 0:10:06.720 AI is going to change the nature of jobs. 0:10:07.080 --> 0:10:12.080 We believe that AI is the most profound opportunity in 0:10:12.120 --> 0:10:12.959 our lifetimes. 0:10:13.000 --> 0:10:17.560 You heard executives mentioned the word AI about fifty times. 0:10:20.080 --> 0:10:25.360 Advertising giant wpp's CEO, Mark Read is focused on the 0:10:25.400 --> 0:10:30.280 benefits this once in a generation technology could deliver for Britain. 0:10:31.080 --> 0:10:33.120 I think it's a massive opportunity for us. I mean, 0:10:33.360 --> 0:10:35.720 at one level you could say, well, the large language models, 0:10:35.720 --> 0:10:39.640 they're all being created in America. But actually what you 0:10:39.679 --> 0:10:42.920 can do with AI is get access to these models 0:10:43.000 --> 0:10:46.040 extremely cheaply. You know, we're not investing billions of dollars 0:10:46.080 --> 0:10:48.720 at WPPNI we can't afford it, but we are using 0:10:48.800 --> 0:10:52.240 the models created by open AI and Microsoft and Google 0:10:52.240 --> 0:10:55.520 and others to power our work. And so it's really 0:10:55.559 --> 0:10:57.760 about applications of technology. And as you say, because we're 0:10:57.800 --> 0:11:02.040 a service based economy, it could our service structure much 0:11:02.160 --> 0:11:04.640 much more productive, much much more efficient, and I just 0:11:04.679 --> 0:11:07.160 think we have to lean into it and embrace it. 0:11:07.720 --> 0:11:11.160 WPP is planning to spend about two hundred and fifty 0:11:11.240 --> 0:11:16.199 million pounds a year on AI technology. Microsoft is investing 0:11:16.440 --> 0:11:20.520 two and a half billion pounds in UK AI data 0:11:20.559 --> 0:11:24.440 centers over three years, and the government says that it 0:11:24.600 --> 0:11:28.160 wants Britain to be focused on reaping the rewards from 0:11:28.160 --> 0:11:32.079 the AI gold rush. Here's the Deputy Prime Minister, Oliver 0:11:32.200 --> 0:11:37.320 Dowden speaking to Bloomberg at last year's AI summits. 0:11:37.480 --> 0:11:40.199 If you think about how financial services and the City 0:11:40.200 --> 0:11:43.480 of London have so enriched the United Kingdom over the 0:11:43.520 --> 0:11:47.160 past generation or two, I'm convinced that AI can do 0:11:47.240 --> 0:11:49.800 the same thing for the UK over generations to come. 0:11:50.200 --> 0:11:54.559 So the government is persuaded of the benefits of artificial intelligence. 0:11:55.360 --> 0:11:59.560 But John Neil, the CEO of Lloyd's of London, says 0:11:59.640 --> 0:12:03.400 better performance also needs political stability. 0:12:04.200 --> 0:12:07.200 I think we all need the confidence of the two 0:12:07.280 --> 0:12:11.199 term government, well whatever that government is, because I think 0:12:11.240 --> 0:12:13.960 the issues that we're grapping with, you know, and the 0:12:14.000 --> 0:12:16.240 need for confidence and the lack of the confidence that 0:12:16.320 --> 0:12:19.760 whether it's the public or whether it's business, we just 0:12:19.840 --> 0:12:22.520 need the sense that there is a plan and that 0:12:22.559 --> 0:12:24.960 plan is going to have to stretch beyond one term 0:12:24.960 --> 0:12:28.480 of government. So I would say we need change, and 0:12:28.520 --> 0:12:30.680 I'm not saying that has to be a labor government 0:12:30.760 --> 0:12:33.120 versus a conservative government. We do need to change. We 0:12:33.160 --> 0:12:35.320 cannot carry on the way we are. 0:12:36.120 --> 0:12:39.320 And he's concerned that even with the attempts by the 0:12:39.360 --> 0:12:43.080 big political parties to woo the city, too much is 0:12:43.120 --> 0:12:45.079 still being taken for granted. 0:12:45.800 --> 0:12:49.360 Our advantage in insurance is the only marketplace for insurance 0:12:49.600 --> 0:12:52.320 in the world is here. There isn't another one, and 0:12:52.360 --> 0:12:54.840 I think we are standing up and representing the best 0:12:54.840 --> 0:12:57.400 of that or doing our best to illustrate how that 0:12:57.520 --> 0:13:01.120 value can be. We're growing, We're profitable. We need to 0:13:01.160 --> 0:13:03.200 be profitable if we're going to innovate and reinvest in 0:13:03.240 --> 0:13:05.920 what the future looks like. I don't think the same 0:13:06.000 --> 0:13:08.719 is quite true everywhere in financial services. 0:13:09.360 --> 0:13:10.600 We've seen a. 0:13:10.480 --> 0:13:13.040 Wealth of delisting on the foot seat. We've seen real 0:13:13.160 --> 0:13:16.400 challenges around investment and funding in the UK. We need 0:13:16.559 --> 0:13:17.880 to get that back on track. 0:13:18.160 --> 0:13:18.360 You know. 0:13:18.440 --> 0:13:21.920 Part of the livelihood of wellbeing of UKPLC is as 0:13:21.960 --> 0:13:23.760 a global financial services center. 0:13:24.120 --> 0:13:26.440 There's a lot of ground to make up. Even with 0:13:26.600 --> 0:13:30.760 the Chancellor Jeremy Hunt's mansion House reforms, the Footy one 0:13:30.840 --> 0:13:34.560 hundred has lagged global markets since two thousand and eight. 0:13:35.080 --> 0:13:39.600 Investors pulled a record twenty nine billion dollars from UK 0:13:39.840 --> 0:13:44.439 equity funds last year, and Europe's too. He announced recently 0:13:44.720 --> 0:13:49.520 it will delist from London. Those numbers are not lost 0:13:49.600 --> 0:13:55.080 on other CEOs we spoke to. Here's wpp's mark read again. 0:13:56.080 --> 0:13:59.679 I've learned the CEO never really to comment on our 0:13:59.720 --> 0:14:02.520 share price, but I mean, you can but look at 0:14:02.559 --> 0:14:05.440 your valuation relative to your peers in other markets and think, 0:14:05.720 --> 0:14:08.920 you know, there are some possible attractions to being in 0:14:08.960 --> 0:14:11.080 the US that I think the complexities of it make 0:14:11.160 --> 0:14:15.040 it very difficult really in reality for most companies. And 0:14:15.120 --> 0:14:17.600 what we really need to do is get UK pension 0:14:17.679 --> 0:14:22.440 funds investing back in the UK market because you know, ultimately, 0:14:23.000 --> 0:14:25.880 you know, we have a sizable stock market and if 0:14:25.880 --> 0:14:30.160 it's not being supported by pension funds, you know, why 0:14:30.160 --> 0:14:32.120 would international pension funds support us. 0:14:34.640 --> 0:14:37.880 So the UK economy is still under a cloud and 0:14:37.920 --> 0:14:43.040 no one expects rapid growth tomorrow, but there is hope 0:14:43.400 --> 0:14:47.160 that it could stop being rained on and at last 0:14:47.680 --> 0:14:53.840 enjoy some sunshine. So those were some of our conversations 0:14:53.880 --> 0:14:57.760 with CEOs and chairs in the UK. Philip Aldrick, how 0:14:57.840 --> 0:15:01.320 much changed do you think there's been since the last 0:15:01.360 --> 0:15:03.280 big piece that we did on the UK economy in 0:15:03.320 --> 0:15:07.520 April last year? How much hope is there that companies 0:15:07.560 --> 0:15:09.120 will invest more in the UK. 0:15:09.680 --> 0:15:13.400 There has been real numbers supporting the change in sentiment. 0:15:13.800 --> 0:15:16.000 So there was the Global Investment Summit. We had thirty 0:15:16.000 --> 0:15:20.880 billion pounds worth of commitments from international investors and companies. 0:15:21.240 --> 0:15:23.720 Just a few days earlier, there'd been a twenty billion 0:15:23.800 --> 0:15:28.680 dollar commitment from South Korea for infrastructure and renewable investment. 0:15:29.080 --> 0:15:32.120 We had these big commitments from Tata and Nissan and 0:15:32.160 --> 0:15:34.320 Stillantis or the car makers that they are going to 0:15:34.360 --> 0:15:37.480 put money into the UK into the electric vehicle revolution, 0:15:37.840 --> 0:15:40.600 and all of this was happening shortly after we did 0:15:40.640 --> 0:15:42.640 our last piece. It all kind of started to come 0:15:42.640 --> 0:15:45.480 out and I spoke to the Investment Minister, Dominic Johnson, 0:15:45.720 --> 0:15:48.360 and he was saying there was real tepid tone about 0:15:48.360 --> 0:15:51.160 the UK overseas whenever we spoke to foreign investors, and 0:15:51.240 --> 0:15:55.320 that didn't really change until June July when the Tartar 0:15:55.440 --> 0:15:57.480 investment was made, and then since then there's been a 0:15:57.480 --> 0:15:59.040 pickup and you can see that in the number. You 0:15:59.080 --> 0:16:02.080 definitely get a sense that businesses are feeling a lot 0:16:02.120 --> 0:16:05.240 more confident about the UK's prospects and you are seeing 0:16:05.280 --> 0:16:06.840 a bit of that actually delivered on the ground in 0:16:06.840 --> 0:16:07.360 the numbers. 0:16:07.520 --> 0:16:10.840 So let's bring in Bloomberg's chief UK economist, Dan Hanson. 0:16:10.880 --> 0:16:15.320 Then on that point, what about recession? Does that get 0:16:15.400 --> 0:16:18.560 revised away? How much of a negative factor is it 0:16:18.600 --> 0:16:22.000 if we're talking about perhaps a more optimistic tone for 0:16:22.040 --> 0:16:22.520 the UK. 0:16:22.920 --> 0:16:24.560 Yeah, I mean we've run the numbers and if you look, 0:16:24.600 --> 0:16:26.680 because it was, as you've mentioned, it was so shallow, 0:16:26.920 --> 0:16:28.720 there is a pretty good chance it gets revised away. 0:16:28.720 --> 0:16:31.480 If we remember back to twenty eleven twenty twelve when 0:16:31.480 --> 0:16:33.920 we had the double dip, it was revised away. And 0:16:33.960 --> 0:16:35.560 if you look at the way the ONS tends to 0:16:35.600 --> 0:16:38.640 revise its data, we think there's a pretty decent chance 0:16:38.680 --> 0:16:41.760 it gets revised away. I mean, we don't forecast revisions. 0:16:42.000 --> 0:16:43.600 Some in the Bank of England has a bit of 0:16:43.600 --> 0:16:45.840 an industry in but there is a chance it happens. 0:16:46.480 --> 0:16:48.440 I mean, just for me sort of listening to everything. 0:16:48.520 --> 0:16:51.720 There one thing that's really striking about last year, and 0:16:51.720 --> 0:16:54.160 it's something that Andrew Bailey said actually recently, is that 0:16:54.240 --> 0:16:56.360 there was really strong real income growth in the UK 0:16:56.400 --> 0:16:58.760 and twenty twenty three so real income screw by nearly 0:16:58.800 --> 0:17:01.080 two percent, for the economy grew by zero point one 0:17:01.080 --> 0:17:04.359 percent and that's a very weird combination to have. It 0:17:04.440 --> 0:17:07.399 speaks to the idea that if you're going to get 0:17:07.400 --> 0:17:11.240 an upside surprise this year, it stems from consumers, so 0:17:11.240 --> 0:17:12.960 they're going to have to dip into their pockets. And 0:17:13.000 --> 0:17:15.679 I actually think all of what Phil said there, and 0:17:15.680 --> 0:17:18.720 a lot of the people you interviewed, this idea about 0:17:18.800 --> 0:17:21.679 another year of very strong reel income growth is really important. 0:17:21.840 --> 0:17:24.760 But I think the thing that is the difference is 0:17:24.800 --> 0:17:27.879 around uncertainty. You know, we had what appeared to be 0:17:27.920 --> 0:17:30.199 a big inflation problem over the spring. There's a lot 0:17:30.200 --> 0:17:33.320 of uncertainty about the inflation outlook, about the interest rate outlook, 0:17:33.359 --> 0:17:36.320 how high interest rates would need to go to sort 0:17:36.440 --> 0:17:38.960 the inflation problem out, and whether that would coincide with 0:17:38.960 --> 0:17:41.439 a massive rise in unemployment that would be the price? 0:17:42.080 --> 0:17:44.600 Was that going to be the price? And against that backdrop, 0:17:44.960 --> 0:17:47.439 it's not really surprising people were a bit worried and 0:17:47.440 --> 0:17:50.879 didn't spend too much money this year fingers crossed and 0:17:50.880 --> 0:17:53.600 Phil said it there hopefully no more shocks, but things 0:17:53.600 --> 0:17:57.439 look a bit more stable. Interest rates have probably peaked, 0:17:57.640 --> 0:18:01.159 inflation is coming down, and because these energy price effects, 0:18:01.200 --> 0:18:02.920 and it's going to come down quite sharply in the 0:18:02.960 --> 0:18:07.199 next few months, so the outlook looks more stable and 0:18:07.240 --> 0:18:11.960 that should shift sentiment, should shift confidence, particularly amongst consumers. 0:18:12.240 --> 0:18:14.560 And I think that was very much reflected in the 0:18:14.600 --> 0:18:17.320 conversations that we had with Archie Norman, the chairman of 0:18:17.600 --> 0:18:20.639 Marx and Spencer, who kindly enough spoke to us last 0:18:20.680 --> 0:18:23.560 year and then again this year, and he was really 0:18:23.640 --> 0:18:27.439 underlining that fact. You know that he talked about it 0:18:27.560 --> 0:18:30.560 not just being M and S customers who are benefiting 0:18:30.600 --> 0:18:34.159 from increased wages, but it was also his own staff 0:18:34.359 --> 0:18:37.600 Marks and Spencer's has increased wages for stuff and that's 0:18:37.600 --> 0:18:40.840 several million people, you know, plus their families. So I 0:18:40.840 --> 0:18:44.840 think that's an interesting thread. The other interesting thought that 0:18:44.880 --> 0:18:47.919 I think emerged from all of those many conversations that 0:18:47.960 --> 0:18:50.639 we had actually over a number of months Dan was 0:18:51.000 --> 0:18:54.840 the idea that economics is is relative, that the UK's 0:18:54.880 --> 0:18:58.920 performance is always relative, and then unfortunately the rest of 0:18:58.960 --> 0:19:03.040 the world is becoming more insecure and therefore the UK 0:19:03.200 --> 0:19:04.800 might look like a better bet. 0:19:04.840 --> 0:19:07.280 I mean, how good is that for the UK? 0:19:07.720 --> 0:19:09.840 Well, obviously on a global level it's not good that 0:19:09.920 --> 0:19:12.480 it looks a bit more insecure, but I think there 0:19:12.520 --> 0:19:14.840 is something in that in the sense that the UK 0:19:15.720 --> 0:19:16.959 we had a bit of a blip at the end 0:19:16.960 --> 0:19:19.640 of twenty twenty two, but generally the UK is seen 0:19:19.760 --> 0:19:23.560 as a pretty safe bet and amongst developed economies at least. 0:19:23.600 --> 0:19:25.320 You have to remember that we are in a slower 0:19:25.359 --> 0:19:27.879 growth world now, the us A side and all the 0:19:27.880 --> 0:19:31.119 fiscal expansion that's taken place there that's driven that growth, 0:19:31.119 --> 0:19:34.479 But the us A side, if you look across the 0:19:34.520 --> 0:19:36.720 rest of the G seven, we're sort of the middle 0:19:36.760 --> 0:19:38.520 of the pack. It's like we're lagging. 0:19:39.000 --> 0:19:39.199 You know. 0:19:39.240 --> 0:19:43.040 The sort of sentiment and narrative around the UK can 0:19:43.080 --> 0:19:44.639 be quite negative and maybe that's a bit of a 0:19:44.640 --> 0:19:47.560 British thing. I don't know, but look, I think that 0:19:47.760 --> 0:19:49.919 if there is a labor talk about it, don't they 0:19:49.920 --> 0:19:53.400 the stability premium that idea, I think there is something 0:19:53.480 --> 0:19:55.480 to that, to be honest with you, and I think 0:19:55.520 --> 0:19:57.680 the lesson we had at the end of twenty two 0:19:58.000 --> 0:20:01.600 was that it can go wrong very very quickly, So 0:20:01.720 --> 0:20:05.479 there is huge benefit in steering a steady ship. And 0:20:05.520 --> 0:20:08.720 the idea is about keeping the business tax regime very 0:20:09.080 --> 0:20:12.600 consistent and constant. That's really important. And I also think 0:20:12.760 --> 0:20:14.800 the idea that we're never going to get a two 0:20:14.880 --> 0:20:18.480 term parliament, but I think Parliament should think about the 0:20:18.560 --> 0:20:21.320 idea of having a ten year investment plan so that 0:20:21.400 --> 0:20:24.480 investment projects don't immediately get ditched when the government a 0:20:24.520 --> 0:20:26.639 new government comes in because you need, like there's no 0:20:26.640 --> 0:20:28.720 doubt you need more than five years to build most 0:20:28.720 --> 0:20:30.600 of these things. That that's just the reality of it. 0:20:30.680 --> 0:20:33.480 So I think one of the really important things is 0:20:33.520 --> 0:20:35.600 to ensure that we have this steady flow of investment 0:20:35.600 --> 0:20:38.520 because when there is a new government, it's one of 0:20:38.560 --> 0:20:40.720 the easiest things to ditch if you have to sort 0:20:40.720 --> 0:20:43.600 of put in a austerity plan or whatever it might be. 0:20:43.720 --> 0:20:46.239 Investment's just a really easy win. So that for me 0:20:46.359 --> 0:20:48.880 is something that it's not spoken about, and it's probably 0:20:49.119 --> 0:20:51.119 too optimistic to think it would ever come to pass, 0:20:51.720 --> 0:20:54.960 but I think it realistically, if you wanted something good 0:20:55.000 --> 0:20:56.840 on public investment, that's somewhere. 0:20:56.560 --> 0:20:57.439 To look well. 0:20:57.480 --> 0:20:59.879 A number of the seos did talk to us about that. 0:21:00.520 --> 0:21:03.239 I was quite surprised you and I were in on 0:21:03.280 --> 0:21:06.679 the very empty floor in the Lloyd's of London building 0:21:06.760 --> 0:21:08.720 speaking to John Neil, the CEO there. 0:21:08.720 --> 0:21:10.000 They were refurbishing one of the. 0:21:09.920 --> 0:21:14.280 Floors and actually He took us both by surprise because 0:21:14.320 --> 0:21:17.120 he said he wanted to see a two term government, 0:21:17.280 --> 0:21:21.920 whatever that government is, and so Phil we were quite 0:21:22.000 --> 0:21:24.800 surprised by just how warm a lot of the business 0:21:24.880 --> 0:21:28.080 leaders were towards Keir Starmer's Labor Party. 0:21:28.920 --> 0:21:31.080 Yeah, it wasn't just John who was talking about two 0:21:31.160 --> 0:21:34.119 terms or long term planning to your point exactly on 0:21:34.160 --> 0:21:37.520 the sort of investment needs of the country. Michelle Scrimmageer 0:21:37.720 --> 0:21:39.800 was talking about it as well, how you need to 0:21:39.840 --> 0:21:42.200 think in ten year cycles if you're going to try 0:21:42.240 --> 0:21:43.800 and build the country and actually if you're going to 0:21:43.800 --> 0:21:46.320 try and build these businesses. What was really striking was 0:21:46.359 --> 0:21:48.560