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Speaker 1: Good morning. It's Tuesday, the twelfth of December in London.

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

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Speaker 2: I'm Lizzie Burden. Coming up today. Not too hot, not

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Speaker 2: too cold. UK wage growth slows at a Goldilocks rate.

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Speaker 2: In good news for the Bank of England.

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Speaker 1: Tory rebels say soon ax Rwanda plan needs significant changes

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Speaker 1: ahead of today's make or break vote and.

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Speaker 2: Risking a cop out, Negotiators look for a deal on

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Speaker 2: fossil fuels as the end of the Climate summit nears.

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Speaker 3: Let's start with a round up of our top stories.

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Speaker 2: UK wage growth slowed in the three months through October

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Speaker 2: and a further sign that the country's labor market is cooling.

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Speaker 2: Have rejournings excluding bonuses rose seven point three percent from

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Speaker 2: a year earlier, down from an upwardly revised seven point

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Speaker 2: eight percent in the period through September. Bloomberg's senior UK

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Speaker 2: economist Dan Hanson says the figure suggests the Bank of

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Speaker 2: England may have done enough to rain in inflationary pressures

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Speaker 2: coming from the labor market.

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Speaker 4: It's a little bit of a Goldie Loots report in

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Speaker 4: some ways, and that you haven't got this huge deterioration

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Speaker 4: or a huge increase or third deterioration i should say,

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Speaker 4: in unemployment and in the quantity side of the labor market.

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Speaker 4: You've also got this cooling in wage growth that will

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Speaker 4: obviously please the policy makers over at thread Needle Street,

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Speaker 4: over at the Bank of England. So this is something

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Speaker 4: that we've been waiting for for a while really in

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Speaker 4: the UK. It's the one thing that has been the

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Speaker 4: difference really in the UK compared to the US and

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Speaker 4: the EU area is how fast and how high wage

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Speaker 4: growth has been.

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Speaker 2: The data come ahead of the Bank of England decision

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Speaker 2: on Thursday, when policymakers are expected to keep rates at

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Speaker 2: a fifteen year high of five and a quarter percent.

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Speaker 2: For a third Street meeting.

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Speaker 1: MP's will vote on the government's Rwanda bill later in

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Speaker 1: a key test for Rishie Sunak. The Prime Minister is

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Speaker 1: trying to win over rebels like Mark Francois from the

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Speaker 1: right wing European Research Group, who thinks the deportation plan

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Speaker 1: needs to be tougher.

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Speaker 3: We all want to stop the votes.

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Speaker 5: There have been two legislative attempts at this already, the

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Speaker 5: Nationalities and Borders.

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Speaker 3: Act, didn't quite work.

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Speaker 4: The Illegal Immigration Act that didn't quite work.

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Speaker 3: So this is kind of three strikes, You're out, isn't it.

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Speaker 1: FRANSWOI needs twenty nine Conservatives to vote against the bill

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Speaker 1: to wreck the government's majority. The delay in Westminster casts

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Speaker 1: doubt over the Prime Minister's pledge to reduce illegal immigration.

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Speaker 2: The Prime Minister also apologized for actions taking during the pandemic.

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Speaker 2: Is Rishisunak, speaking at the COVID inquiry.

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Speaker 6: Just wanted to start by saying how deeply sorry I

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Speaker 6: am to all of those who lost loved ones, family

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Speaker 6: members through the pandemic and also all those who suffered

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Speaker 6: in the various different ways throughout the pandemic and as

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Speaker 6: a result of the actions were taken.

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Speaker 2: However, the then Chancellor defended his signature eat out to

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Speaker 2: help out scheme after it emerged Government scientists hadn't been

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Speaker 2: consulted on it at the time. Sunak argued it was

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Speaker 2: quote long standing practice not to discuss economic or fiscal

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Speaker 2: events with healthy fare.

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Speaker 1: Talks are ongoing to secure an agreement in the final

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Speaker 1: day of the COP twenty eight climate summit in Dubai.

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Speaker 1: The current draft tech suggests countries could reduce their consumption

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Speaker 1: and production of fossil fuels for many nations who want

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Speaker 1: to see a timeframe for a phase out that doesn't

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Speaker 1: go nearly far enough Coachair at the Voluntary Carbon Markets

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Speaker 1: Integrity Initiative, Rachel Kite says, the summit is a mixed bag.

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Speaker 5: At the end of the day, what delegates were talking

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Speaker 5: about was a report that they have all authored that

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Speaker 5: said that we are not on track, and the text

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Speaker 5: before delegates right now does not put us back on track.

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Speaker 5: And I think that therein is the problem that we've

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Speaker 5: made progress. But I think until we're closer to being

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Speaker 5: on track to really wrestle with global heating, I don't

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Speaker 5: think we could call it a success.

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Speaker 1: Rachel Kite says the only solution to climate change is

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Speaker 1: the rapid phase out of emitting fuels. The clash over

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Speaker 1: fossil fuels has dominated the Fortnite of talks after countries

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Speaker 1: failed to reach an agreement at last year's COP twenty

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Speaker 1: seven in Egypt.

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Speaker 2: Alphabet has lost a legal battle to video game developer

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Speaker 2: Epic Games. A federal jury in San Francisco decided that

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Speaker 2: the company's mobile app store has a monopoly over the

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Speaker 2: distribution of programs and payments on its Android software. A

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Speaker 2: US district judge will now decide whether the Google parent

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Speaker 2: must allow payment and up distribution methods outside its own

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Speaker 2: app store. Epic Games lost a similar case with Apple

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Speaker 2: two years ago. Alphabet says it plans to challenge the

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Speaker 2: decision and the trouble.

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Speaker 1: Chinese property developer Country Garden is likely to avoid its

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Speaker 1: first default on yuan bonds after most of the holders

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Speaker 1: of a local note agreed not to demand repayment this week.

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Speaker 1: Bloomberg understands that the Shenja and Stock Exchange met last

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Speaker 1: week with some of the holders of the eight hundred

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Speaker 1: million yuan security in a bid to secure the outcome.

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Speaker 1: The builder, which defaulted on a dollar bond for the

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Speaker 1: first time in October, is also prepared cash to repay

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Speaker 1: at least a co couple of holders of the local

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Speaker 1: notes who booked the trend and still planned to exercise

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Speaker 1: their options.

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Speaker 2: Seven am this morning, we've got the latest reading of

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Speaker 2: the UK jobs market. Wage growth has accelerated the most

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Speaker 2: in almost two years, which should technically lessen the need

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Speaker 2: for more monetary tightening from the Bank of England on

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Speaker 2: it Thursday. Traders are looking for three cuts next year

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Speaker 2: from Threadneedle Street, the betting the bank will need to

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Speaker 2: move to boost the economy, and that first decrease is

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Speaker 2: expected in June.

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Speaker 6: Well.

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Speaker 2: For analysis, we're joined now by Bloomberg's senior UK economist

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Speaker 2: Dan Hanson.

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Speaker 7: Dan.

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Speaker 2: Even though wage growth has slowed, former Bank of England

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Speaker 2: policymaker Andrew Sentence has reacted to these numbers in a

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Speaker 2: Times column this morning. He says, the wage increases are

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Speaker 2: worrying and you can't bet on rates having peaked until

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Speaker 2: they're under control. You've taken this print as good news, though,

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Speaker 2: So what's your response to what he says?

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Speaker 3: Yeah?

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Speaker 4: I mean, I think in fairness Standrew's sentence. I think

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Speaker 4: his article was written before these numbers this morning. But

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Speaker 4: I think look, I think the broad on the big

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Speaker 4: point here is that, yes, the data is good, and

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Speaker 4: it looks like wage growth is slowing and by faster

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Speaker 4: than we expect it and also by faster than the

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Speaker 4: Bank of England expected. But the point I think he

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Speaker 4: is making is that at seven point three percent, depending

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Speaker 4: on which measure you look at above seven percent, let's

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Speaker 4: say that is still way too fast for inflation to

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Speaker 4: get back to two percent. You need wage growth probably

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Speaker 4: at about three percent to get inflation consistently at two percent.

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Speaker 4: So we're a long way from that level, clearly, but

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Speaker 4: obviously good news this morning. At the margin, there's been

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Speaker 4: more progress than we thought would be that was going

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Speaker 4: to be made over October, so you know, I think

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Speaker 4: that's why we've seen it as good news. But I

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Speaker 4: think the big picture is that there's still a long

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Speaker 4: way to go to come down to the levels that

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Speaker 4: are consistent with two percent inflation.

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Speaker 1: Okay, so some optimism to be taken from that and

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Speaker 1: the can't text of the broader labor market, though, what

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Speaker 1: else did we learn about the picture facing?

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Speaker 3: What is still a very tight Marcus? Yeah it is.

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Speaker 4: I mean I think, and I think you've answered your

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Speaker 4: own question Stephen, that it is still very tight. I mean,

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Speaker 4: there was some good news on vacancies. They continued to

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Speaker 4: drop back, and when I say good news, I mean

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Speaker 4: this is in the context of how the Bank of

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Speaker 4: England will look at this. You know, vacancy is coming

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Speaker 4: down means there's slightly less labor demand in the economy,

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Speaker 4: so that puts less upward.

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Speaker 3: Pressure on wages.

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Speaker 4: There's obviously a bit of uncertainty, or quite a lot

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Speaker 4: of uncertainty actually, if I'm honest about the state of

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Speaker 4: the quantity side of the labor market because of these

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Speaker 4: all these changes that are taking place with the labor

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Speaker 4: Force survey, which is the survey that measures the amount

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Speaker 4: of unemployment and the amount of employment.

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Speaker 3: In the economy.

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Speaker 4: But take if you take the data at face value,

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Speaker 4: what we've had today is a jobs market there's only

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Speaker 4: loose and marginally more relative to what we knew previously,

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Speaker 4: and you've had a bigger foot slow down in pay

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Speaker 4: grow So obviously that's a sort of like a bit

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Speaker 4: of a Goldilock scenario for the Bank of England. But

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Speaker 4: as I say, the big picture on pay is that

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Speaker 4: it's still too high to get to two percent inflation,

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Speaker 4: and the lave market is still tight, albeit it is

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Speaker 4: loosening from the extreme tightness that we had sort of

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Speaker 4: over the course of twenty twenty two and early twenty

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Speaker 4: twenty three.

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Speaker 2: Dam just thinking about Thursday's BOE decision. When you've got

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Speaker 2: market's so convinced that the Bank of England's going to

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Speaker 2: cut rates next year, how much realistically can Andrew Bailey

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Speaker 2: continue with the higher for longer narrative.

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Speaker 3: Yeah, I mean it's really hard, isn't it.

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Speaker 4: Lizzie Like the they just don't believe what they say

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Speaker 4: so and we don't believe it either. We think they'll

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Speaker 4: cut in we think they'll cut in the summer as well,

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Speaker 4: So I think, I mean, if you're just looking at

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Speaker 4: the meeting this week, you know, our best guess is

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Speaker 4: that they'll just toe the party line and continue to

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Speaker 4: keep the guidance that they've had. The policy is going

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Speaker 4: to remain restricted for it ended period of time. They're

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Speaker 4: just going to keep that and stick with that. I mean,

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Speaker 4: I think this is going to be quite an uneventful meeting,

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Speaker 4: would be my best guess. Though the Bank of England

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Speaker 4: does like to surprise, so I don't put too much

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Speaker 4: weight on that comment. But you know, I think there

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Speaker 4: is some talk in the market that they could push

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Speaker 4: back more strongly on rate expect what's going on with

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Speaker 4: market pricing and the extent of rate cuts. I don't

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Speaker 4: think they will, just because there's this big risk that

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Speaker 4: they'll turn out to be very very wrong and they

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Speaker 4: will have to end up cutting rates. So I think

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Speaker 4: it's going to be more of the same. But I

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Speaker 4: very much doubt they'll say anything that really shifts the

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Speaker 4: dial on market pricing and leads the market to believe

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Speaker 4: that all of a sudden they're at what is being

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Speaker 4: priced is suddenly very wrong in the Bank of England,

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Speaker 4: doesn't really shift the need all that.

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Speaker 2: From the unreliable boyfriend to the uncredible boyfriend. Perhaps, Bloomberg's

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Speaker 2: senior UK economist Dan Hanson, thanks for that analysis.

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Speaker 1: Well, let's turn next to Asman's and MPs are voting

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Speaker 1: on Richie Sinac's flagship immigration policy later today, with a

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Speaker 1: serious chance the Prime Minister could lose. Saxon backbencher spent

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Speaker 1: Monday debating the bill with someone the right, arguing it

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Speaker 1: doesn't go far enough. We've got our UK political edsure

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Speaker 1: Kitty Donalds and with us this morning for more Kitty,

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Speaker 1: good morning to you. What is the scale of the

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Speaker 1: rebellion that Rishie Sunac faces today?

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Speaker 3: Could he really lose this vote?

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Speaker 7: Good morning, And yes he could. But that's the kind

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Speaker 7: of million dollar question of all trying to work out

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Speaker 7: is what is the strength of the rebellion. And there's

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Speaker 7: sort of a few key numbers you need to keep

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Speaker 7: in mind today. One is twenty nine twenty nine is

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Speaker 7: the number of rebels. If they vote against the government

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Speaker 7: will crash the bill at second reading. Second reading is

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Speaker 7: a technical term for the first vote on the bill.

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Speaker 7: But also you need to we need to watch out

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Speaker 7: for extensions as well. People who who just don't vote

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Speaker 7: either way on the bill. Around fifty seven people don't vote,

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Speaker 7: then that could also bring it down, or a mixture

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Speaker 7: of both people voting against an abstensions.

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Speaker 2: But to anyone who's just coming to this story and

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Speaker 2: looking at how many prime ministers the UK has had,

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Speaker 2: they'll surely be thinking that the rebels must know that

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Speaker 2: their own party will face electoral oblivion if this is

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Speaker 2: treated as a vote of confidence in the Prime minister

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Speaker 2: and he loses.

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Speaker 7: Yeah. Absolutely, But they're using it as the way of

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Speaker 7: holding his feet to the fire right. But I think

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Speaker 7: we're back in back in Brexit wars again. They don't

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Speaker 7: They the rebels, the hard line pro Brexit rebels, And

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Speaker 7: this is the same bunch of people who rebelled against

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Speaker 7: Theresa May and eventually brought her down. They they almost

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Speaker 7: don't care, right because they think it's an existential point.

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Speaker 7: They think that the Victorian Party will lose the election

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Speaker 7: if they don't show to voters that the rounded plan works,

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Speaker 7: and they think that by tufting it up they will

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Speaker 7: show that to voters. The Prime Minister argues that it's

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Speaker 7: as tough as it can be and that if they

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Speaker 7: voted down, basically it won't go through and it will

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Speaker 7: break international law. Some on the Tory factions are critical

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Speaker 7: of the updated plan, and because on the right thing

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Speaker 7: at risks being blocked by the courts. Again, well, those

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Speaker 7: on the left, the wets, the one Nation as we

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Speaker 7: call them, saying it could ignore international law.

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Speaker 1: How much or how coherent is that position from the

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Speaker 1: One Nation toy group as well, because there are much

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Speaker 1: larger group than the ERG, and how much sway do

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Speaker 1: they hold within the broader party?

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Speaker 7: Yes, you're right, Well, the interesting point about them is

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Speaker 7: they clear they have one hundred and six members, which

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Speaker 7: they do, but of those only thirty are on the

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Speaker 7: back benches and therefore could rebel against the government without

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Speaker 7: losing their government positions. The strength of the ERG is

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Speaker 7: another question up for debate. Basically, it's not just the EERG,

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Speaker 7: it's the EOG plus friends, the New Conservatives, the Northern

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Speaker 7: Research Group and another couple of smaller groupings. Whether they

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Speaker 7: combine to make one caucuses is unclear At the moment.

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Speaker 7: They've got into see some of them have gone into

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Speaker 7: see Reshisunak for breakfast and down the street this morning.

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Speaker 7: I think they're having smoked salmon and.

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Speaker 3: Yeah, and they're.

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Speaker 7: Discussing whether to whether they can back the bill at

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Speaker 7: this stage. And if what's so extraordinary all this is

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Speaker 7: that is that it's second reading. Right, A government hasn't

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Speaker 7: been defeated on second reading since Margaret Thatcher and the

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Speaker 7: suddenly trading rules in the eighties. Most people tend to

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Speaker 7: hold their fire until committee stage, which is when the

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Speaker 7: amendments go down. So if he's defeated tonight, we're into

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Speaker 7: kind of has he lost the confidence of the party

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Speaker 7: for Kirstam will probably stand up and say the sky

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Speaker 7: can't govern.

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Speaker 5: You know.

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Speaker 7: It's really high stake stuff basically.

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Speaker 2: But if the bill actually passes because of the support

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Speaker 2: of the One Nation Conference, are we to conclude that

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Speaker 2: since the return of David Cameron to top off being

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Speaker 2: a Foreign secretary, that there's been a mark shift to

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Speaker 2: the center ground.

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Speaker 7: I think these people are always there, it's just there

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Speaker 7: quite quiet, right. They don't make as much noise as

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Speaker 7: the right wing of the party. I think the other

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Speaker 7: thing is is even if the bill passes tonight, and

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Speaker 7: I'm going to go out on a limbit, I think

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Speaker 7: it probably will. Even if it does, then you know,

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Speaker 7: the reprieve is only to laughter Christmas when the bill

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Speaker 7: comes back for its committee stages I think on January eighth,

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Speaker 7: and that's when loads of amendments will get put down.

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Speaker 7: So even if Richie seen that winster tonight, it doesn't

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Speaker 7: mean that he's one outright. He's got more skirmishes to come.

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Speaker 3: How is Labor playing all of this kitty?

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Speaker 7: They're basically like sitting back with their feet up, going,

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Speaker 7: oh my goodness, look at that lot right as you.

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Speaker 7: Because Some's got a speech today in which he will

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Speaker 7: do his I'm the sensible, safe pair of hands stick

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Speaker 7: that he does all the time as a kind of

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Speaker 7: march contrast to the sort of infighting that going on

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Speaker 7: in the Tory Party.

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