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

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Speaker 2: Hello. I'm Caroline Hepka, Bloomberg Radio anchor, and I want

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Speaker 2: to tell you about the City's verdict on the Labor

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Speaker 2: government's first one hundred days in office. Voices from across

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Speaker 2: private equity, venture capital and finance say that whilst they

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Speaker 2: appreciate Keir Starmer and Rachel Reeves's rhetoric on economic growth,

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Speaker 2: they're still waiting for them to deliver. UK investors and

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Speaker 2: business leaders who have been speaking to me in the

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Speaker 2: last few weeks are sounding a bit unimpressed and perhaps

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Speaker 2: even frustrated. Let's start with the Phoenix Group, which is

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Speaker 2: the UK's largest long term savings and retirement provider, and

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Speaker 2: their chief investment officer, Mike Eakins. I asked him what

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Speaker 2: he thinks the new UK Labor Government has been able

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Speaker 2: to do and to deliver so far.

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Speaker 3: The UK Government have been very clear that economic growth

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Speaker 3: and economic sustainability he is an absolute priority for the

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Speaker 3: government and that will bring about a path to greater

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Speaker 3: prosperity and fiscal sustainability. Phoenix, we absolutely welcome that and

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Speaker 3: as the UK's largest long term savings and retirement provider,

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Speaker 3: we absolutely stand ready to work alongside the government to

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Speaker 3: build a key key requirements for that economic growth.

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Speaker 2: Has there been evidence that the idea of crowding in

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Speaker 2: investment into the UK is actually working.

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Speaker 3: Significant progress has been made in the recent weeks, you know,

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Speaker 3: and we've got the upcoming Investment Summit, and that's a

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Speaker 3: really important opportunity to bring together all the key players,

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Speaker 3: domestic and non investor non domestic investors, and our ask

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Speaker 3: is that the government should be really bold in outlining

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Speaker 3: what it wants to achieve from that investment summit.

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Speaker 2: The government has been without an Investment Minister though that's

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Speaker 2: usually a key figure to drive inward investment. Is that

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Speaker 2: a missed opportunity? As you say, the all important investment

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Speaker 2: summit is coming.

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Speaker 3: We don't think it's a missed opportunity. Investing in the

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Speaker 3: UK and the attractiveness of the UK isn't down to

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Speaker 3: one single individual in the government or outside the government.

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Speaker 3: I mean, for sure the appointment of an investment Minister

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Speaker 3: will come in due course, but that should not hold

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Speaker 3: up progress.

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Speaker 2: What's been the biggest win in your view in terms

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Speaker 2: of this new administration in economic and market terms, as

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Speaker 2: far as you're concerned.

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Speaker 3: It is the transparency and ambition to really prioritize economic growth,

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Speaker 3: recognizing that you know, the government, as indeed many other

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Speaker 3: developed market economies are in a tight spot from a

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Speaker 3: fiscal perspective, and working with the private sector coming up

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Speaker 3: with pipeline of investable assets that long term investors such

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Speaker 3: as Phoenix and other pension funds insurance companies can invest in,

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Speaker 3: we think is absolutely key.

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Speaker 2: Have Labour been two per somistic on the economy and

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Speaker 2: cause a hit to sentiment and therefore to the investors

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Speaker 2: that you're talking about.

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Speaker 3: The fundamentals of the UK economy are absolutely sound. I mean,

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Speaker 3: the UK economy you know, is expected to grow at

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Speaker 3: just over a percent this year.

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Speaker 2: You know.

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Speaker 3: That's you know, that's in contrast to you know, our

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Speaker 3: European neighbors where economic growth is not so robust. We

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Speaker 3: now have political stability, you know, and so with political

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Speaker 3: stability combined with the rule of common law, amazing sectors

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Speaker 3: like venture capital early stage growth. So we think that

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Speaker 3: the fundamentals are absolutely sound.

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Speaker 2: Thinking about the budget, the most dramatic point maybe of

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Speaker 2: the first one hundred days was the Labor statement around

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Speaker 2: finding this twenty two billion pound black hole in government finances.

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Speaker 2: Do you expect an austerity budget? How do you think

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Speaker 2: that whole might be filled?

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Speaker 3: Yeah, I think it's widely recognized. Again, the UK, like

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Speaker 3: many other developed market economy these faces, is in a

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Speaker 3: tight spot from a fiscal perspective. Debt to GDP the

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Speaker 3: UK and indeed with many of other of our developed

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Speaker 3: market peers, are all time high. It's not since the

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Speaker 3: end of the Second World War. The main problem facing

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Speaker 3: the UK economy over the past fifteen years is chronic

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Speaker 3: glow productivity since the global financial crisis of two thousand

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Speaker 3: and eight. In order to raise productivity and to create

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Speaker 3: a resilience, a resilient, growing economy, the UK does need

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Speaker 3: a substantial capital expenditure in key areas such as housing, infrastructure, energy,

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Speaker 3: and what we would say to the government is the

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Speaker 3: private sector can partner with the government to achieve significant

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Speaker 3: long term investment in those areas of capital expenditure. Noting

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Speaker 3: that the UK, like many other developed market economies, is

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Speaker 3: constrained from a fiscal perspective.

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Speaker 2: There are high expectations in some senses for the labor

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Speaker 2: government despite the kind of difficult backdrop in the UK.

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Speaker 2: Do you think that they've managed to deliver at least

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Speaker 2: on the start of that down payment for the UK.

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Speaker 3: Again, it's about delivering that economic growth that delivers that

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Speaker 3: path the greater prosperity and fiscal sustainability. And I think

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Speaker 3: again there's been areas of focus from the government which

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Speaker 3: should be applauded as they will give us that path

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Speaker 3: to strong economic growth. Some of the announcements that we've

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Speaker 3: heard on planning is really really key. I mean there's

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Speaker 3: today in the UK, the UK has a a chronic

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Speaker 3: housing shortage and more can be done to alleviate that

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Speaker 3: housing shortage by creating and building new social and affordable housing.

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Speaker 3: And again the Phoenix we've invested you know, billions of

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Speaker 3: pounds in social housing, social and affordable housing in recent

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Speaker 3: years and we stand ready to to do more of

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Speaker 3: that and building that new stock of affordable social housing

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Speaker 3: that is economically stimulating in of itself, but it also

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Speaker 3: helps other key aspirations that the UK has as a

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Speaker 3: nation state, and that Phoenix also has as a large

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Speaker 3: corporate in the UK, which is the move to carbon

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Speaker 3: net zero. So yeah, absolutely, the initiatives around planning and

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Speaker 3: increasing the building rate of new homes to alleviate the

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Speaker 3: housing shortage. It will be an economic stimulant, it will

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Speaker 3: be good for the part of carbon net zero and

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Speaker 3: I think that the second point we'd note in delivering

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Speaker 3: that path to strong economic growth is investing in key

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Speaker 3: drivers of growth and technology and in AI. Hopefully we'll

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Speaker 3: see more of this come through from the Investment Summit,

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Speaker 3: but it should not be lost on people that the

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Speaker 3: UK has ten of the top twenty five globally ranked

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Speaker 3: universities and we absolutely need to be harnessing the intellectual

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Speaker 3: property and the new technology that's coming from that.

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Speaker 2: That was the Phoenix Group CIO Mike Eakins saying it

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Speaker 2: stands ready to invest more, but calling for bold action

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Speaker 2: from this government now. One hundred days, of course is

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Speaker 2: a bit of an imported US idea, given that he

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Speaker 2: doesn't have much meaning in the UK's parliamentary system, but

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Speaker 2: the Labor Party used it as a yardstick for delivery

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Speaker 2: on various of their legislative plans and the run up

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Speaker 2: to the election, and given the need to improve economic

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Speaker 2: growth in Britain, which looks to be cooling according to

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Speaker 2: the latest monthly GDP data, time is of the essence.

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Speaker 2: So I was speaking to the veteran investor Anne Glover,

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Speaker 2: co founder of Amadaeus Capital Partners. She's just the sort

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Speaker 2: of person that Labor courted ahead of their Landslide election victory.

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Speaker 2: She's also a member of the Bank of England's Court

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Speaker 2: of Directors, and so I asked Anne Glover whether the

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Speaker 2: government has delivered on its first big pledge of bringing

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Speaker 2: stability to Britain.

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Speaker 4: It's too early to tell on stability. Stability means a

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Speaker 4: much longer time period than we've had, but I mean

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Speaker 4: they have they I do think the markets have reacted

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Speaker 4: reasonably calmly. They've stayed very clear about things like Bank

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Speaker 4: of England independence, and you know, their pledges on the

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Speaker 4: taxes that they're not changing. I think that there's a

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Speaker 4: lot coming in the budget that we don't know about,

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Speaker 4: and there's quite a bit of speculation, and there's so

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Speaker 4: much speculation, I don't think we have a clue what's

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Speaker 4: actually going to land. So I think it's too early

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Speaker 4: to tell. I think that will be a big moment.

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Speaker 4: I think if they're going to do their work thoughtfully

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Speaker 4: and well, they needed the time, so I'm personally giving

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Speaker 4: them the benefit of the doubt. I think the National

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Speaker 4: Wealth Fund. At least the commitment to infrastructure is positive

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Speaker 4: and needed, and that was announced quickly but not yet

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Speaker 4: fully implemented, so I think we've got to wait and

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Speaker 4: see how that will pan out. Infrastructure is clear, I

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Speaker 4: think the equity side is really unclear yet. And I

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Speaker 4: do think and I hope they continue to support the

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Speaker 4: British Business Bank and they attract foreign direct equity investment,

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Speaker 4: not just project investment into the UK. So this Investment

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Speaker 4: Summit's going to be a really important occasion because it's

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Speaker 4: sort of a continuation of what the last two were

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Speaker 4: under the Tory administration, and they were very high profile

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Speaker 4: and they did announce some very big deals as a

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Speaker 4: result of it. It'll be interesting to see if Labor

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Speaker 4: is able to do that.

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Speaker 2: The Investment Summit, though, doesn't seem to be well timed no,

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Speaker 2: because it's right before the budget. What can the government

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Speaker 2: really get done or get from that event.

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Speaker 4: I think there's a lot of work that goes in

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Speaker 4: in preparation, and I hope that there are some big

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Speaker 4: foreign direct deals that are happening that could be announced

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Speaker 4: at that something that are not dependent on the budget.

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Speaker 4: But I agree it's not great timing.

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Speaker 2: Have Labor been too pessimistic on the economy as one

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Speaker 2: of those early tests, Well, if that's a big yes.

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Speaker 4: Yes, I think so absolutely. I mean, of course the

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Speaker 4: economy isn't growing fast, but it's stable, and it wasn't

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Speaker 4: stable for the last four years. No, I mean, I

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Speaker 4: think it's it's not particularly due to them, it's due

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Speaker 4: to macro factors. It's the fact that inflation has been subdued.

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Speaker 4: Interest rates will come down.

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Speaker 5: There.

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Speaker 4: There are worries about obviously conflicts around the world that

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Speaker 4: are pretty awful, but in general, most of the economies

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Speaker 4: are now bottoming out and beginning to recover, and that

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Speaker 4: cycle is it's going to happen almost no matter who's

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Speaker 4: in government. So I do think they're a little bit

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Speaker 4: more pessimistic than they need to be.

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Speaker 2: The tax changes that could affect the non doms and

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Speaker 2: private equity in the former carried interest. Do you see

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Speaker 2: that threat forcing talent out of the UK? The non

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Speaker 2: doms issue and the issue around private equity taxation.

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Speaker 4: At the very senior levels, I do. I think some

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Speaker 4: non doms will leave.

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Speaker 2: They have seen non doms going already.

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Speaker 4: Not recently, but even under the Tory announcements. Yes, that Yeah,

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Speaker 4: there are global citizens who can cite themselves anywhere, and

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Speaker 4: some will leave. It's a small number. It's people with

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Speaker 4: incredible wealth and incredible flexibility, So you know, I don't.

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Speaker 4: I mean that is one of the consequences. Is it

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Speaker 4: going to be droves? Probably not. I do think there

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Speaker 4: are a lot of people thinking about it. It's not

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Speaker 4: going to affect venture as bad as badly as it

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Speaker 4: will affect private equity because private equity tends to be

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Speaker 4: a global market. It won't be everybody, but it will

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Speaker 4: be a few high profile people for sure.

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Speaker 2: Do you think that the government will alter its budget

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Speaker 2: plans on the basis of those concerns or that it should.

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Speaker 4: I hope they will be sensible and phase in or

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Speaker 4: manage the taper of whatever is being implemented so that

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Speaker 4: people don't have to suddenly relocate, and that would be

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Speaker 4: true for any change. I would basically caution against cliff edges.

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Speaker 4: They're really bad for any industry.

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Speaker 2: What do you think has been the biggest win of

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Speaker 2: the new government?

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Speaker 4: Gosh, that's an interesting question. I think it's Darma handled

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Speaker 4: the riots reasonably well. Actually I think I didn't. I

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Speaker 4: don't think people expected him to be so tough on

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Speaker 4: law and order. That's always been a Tory positioning and

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Speaker 4: obviously it went into his power alley of understanding the

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Speaker 4: law and how to handle it. And I do think

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Speaker 4: that was noticed both domestically and globally, and it characterized

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Speaker 4: him as a little bit more of a tough leader

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Speaker 4: than just a sort of slightly gray, not quite sure

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Speaker 4: who he is. So I think that was a small

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Speaker 4: important win in terms of media and domestic profile. I

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Speaker 4: don't think there's been a major economic win yet.

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Speaker 2: Amadeis is and Glover there so still giving the government

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Speaker 2: the benefit of the doubt, but weary of budget cliff edges. Indeed,

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Speaker 2: warnings about rising taxes in the budget is spooking investors.

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Speaker 2: Lloyd Lee is managing partner and co founder of Capital,

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Speaker 2: which has invested two and a half billion pounds into

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Speaker 2: the UK since twenty ten. His business is behind the

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Speaker 2: redevelopment of Olympia in West London and is planning a

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Speaker 2: big new redevelopment the Camden Film Quarter in North London.

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Speaker 2: I kicked off our conversation by asking whether U Capital

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Speaker 2: is planning new investment in London as a direct result

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Speaker 2: of the new labor government.

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Speaker 6: Absolutely. If you look at U Capital for both macro

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Speaker 6: reasons but also London reasons and real estate reasons, we

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Speaker 6: see strong positive fundamentals in our business where we are

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Speaker 6: now inclined to step forward and invest more.

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Speaker 2: U Capitals involved in one of the biggest regeneration projects

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Speaker 2: in London at Olympia. So I'm interested to hear that

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Speaker 2: you are so positive about increasing investment. How concrete are

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Speaker 2: those plans really?

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Speaker 6: We were long London in twenty fifteen twenty sixteen, when

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Speaker 6: we were already at a unique precipice in the history

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Speaker 6: of the country, and we acquired Olympia and are now

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Speaker 6: investing one point three plus billion sterling into it, and

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Speaker 6: that's all post breaks it. So even before today we

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Speaker 6: were long London. The fact that we've now gone forward

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Speaker 6: and launched the camin Film Quarter, We've obviously acquired Shepherd's Bushmark,

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Speaker 6: which we're now turning into a revitalized market with the

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Speaker 6: original market traders, but also investing heavily into the life

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Speaker 6: sciences in partnership with Imperial College London, means we are

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Speaker 6: genuinely genuinely investing more into central London.

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Speaker 2: What would you like to see from the labor government

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Speaker 2: to do in order to sort out the planning system

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Speaker 2: and make the UK more investible.

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Speaker 6: If you look at the history of where we've been

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Speaker 6: since twenty fifteen twenty sixteen, you could probably say we

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Speaker 6: have been one of the key leading private sector investors

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Speaker 6: who partners with local government. And so for us, the

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Speaker 6: fact that you now have labor at the council level

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Speaker 6: in many cases, certainly labor at the mayoral level and

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Speaker 6: at the central government level. We'd really like to see

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Speaker 6: continued increases in the coordination between all levels of government.

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Speaker 6: We are already starting to see those signs, which is

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Speaker 6: positive and I think what we're finding at the local

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Speaker 6: level in London is people are just cracking on with

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Speaker 6: business and growth and that for us, again is another

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Speaker 6: reason why we're long London.

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Speaker 2: How challenging our planning delays really when it comes to

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Speaker 2: arranging financing for the kinds of projects that you're doing,

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Speaker 2: you know, as you say in the Billions, it.

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Speaker 6: Is difficult, There's no question about it. The question is

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Speaker 6: what are we going to do about it? Because you cannot,

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Speaker 6: on the one hand, allow progress to be impeded by

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Speaker 6: the organizational structure of the system, but Equally, I think

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Speaker 6: it'd be dangerous to just get rid of the system

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Speaker 6: because you think, well, I'm just going to pave the

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Speaker 6: raid for anything I want. We cannot do that either.

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Speaker 6: Any vision in London has to be public private together

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Speaker 6: as one.

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Speaker 2: How concerned are you then about the budget? This is

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Speaker 2: something also that we've reported on extensively in terms of

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Speaker 2: the UK's status as a magnet for wealth and for investors.

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Speaker 2: Is that at risk given the concerns around taxation, the

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Speaker 2: potential implications for the attractiveness of the capital as a

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Speaker 2: destination for capital.

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Speaker 6: I mean, I think you have to call a spae displade.

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Speaker 6: If you raise the specter of significant increases in taxes

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Speaker 6: anywhere in the world, people get nervous, and I mean

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Speaker 6: people at all levels get nervous. If you're going to

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Speaker 6: raise the specter of more taxes, you have to show

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Speaker 6: what you're doing with the money and why. And I accept,

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Speaker 6: and I think we all accept that there have been

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Speaker 6: some black holes that need to be filled in over

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Speaker 6: the last several years. What people don't want to hear

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Speaker 6: is you kept collecting taxes, you didn't invest it back

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Speaker 6: into the country and it didn't grow, so you just

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Speaker 6: keep more black holes coming down the road. The key

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Speaker 6: that I think Labor needs to do now is to

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Speaker 6: basically focus the world on their growth strategy, which they

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Speaker 6: have said they would do, and I think that's exciting.

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Speaker 2: In terms of you Capital itself. I was reading about

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Speaker 2: the deal and we reported on it on Bloomberg in

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Speaker 2: twenty twenty. The loan from Goldman Sachs to you Capital

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Speaker 2: eight hundred and seventy five million pounds in twenty twenty,

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Speaker 2: maturity perhaps coming up soon. Is that something you're thinking

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Speaker 2: about about it?

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Speaker 6: I would say we always think about our capital structure

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Speaker 6: way ahead of time, so we've got time that the

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Speaker 6: loan was made with enough ample time to create buffer

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Speaker 6: in the system. That's how we like it. But we're

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Speaker 6: already looking at that now and I think, frankly, we're

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Speaker 6: in good shape.

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Speaker 2: And you're confident you can deal with the.

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Speaker 6: I think the lending market today has some question marks

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Speaker 6: over it. I would say, relatively speaking, it has fewer

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Speaker 6: question markets today than it did when we were placing

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Speaker 6: the loan originally back in twenty twenty.

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Speaker 2: A last thought for the budget and Rachel Reeves, what

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Speaker 2: would be you know, your biggest ask, your biggest request.

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Speaker 6: Focus on growth. Focus the whole October thirtieth on growth.

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Speaker 6: Forget sort of the past and what's been happening over

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Speaker 6: the last ninety days of the twenty two billion Focus

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Speaker 6: on how this country is going to focus on private

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Speaker 6: public partnerships to create growth, to create housing, to create jobs,

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Speaker 6: to attract foreign direct investment, to make sure that we're

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Speaker 6: opening up this country. I think the minute that she

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Speaker 6: says that the door is already open for all of

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Speaker 6: those businesses to come in, they're just wanting to make

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Speaker 6: sure that leadership is there to open the door. And

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Speaker 6: as long as she says the door is wide open,

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Speaker 6: I think she's going to find quite a good reception.

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Speaker 2: So Lloyd Lee's warning coming ahead of the budget on

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Speaker 2: the thirtieth of October, during which Chance of Rachel re

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Speaker 2: Yeves will announce how she plans to fill that twenty

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Speaker 2: two billion pound hole in the public finances. The investors

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Speaker 2: who spoke to Bloomberg Radio expressed concerns about tax changes.

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Speaker 2: The British Chambers of Commerce says that the fundamentals of

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Speaker 2: the UK economy are great, but it's quote fragile conditions

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Speaker 2: are difficult. In their words, their Director General Chevorn Haveland

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Speaker 2: says that the small and medium sized businesses that she

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Speaker 2: represents are worried that when the Chancellor talks of those

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Speaker 2: with the broader's shoulders carrying the burden, she might mean them.

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Speaker 7: The Chancellor needs to find the money she needs in

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Speaker 7: the right places that don't impact economic growth, but she

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Speaker 7: also needs to tell the story, the wider story. The

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Speaker 7: UK is a really great place to start growing and

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Speaker 7: invest in a business.

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Speaker 2: That was the BCC Director General Chevorn Haveland. And taxes

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Speaker 2: of particular concern for private equity investors. Bill Curtin, head

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Speaker 2: of M and A at Hogan Levels, says that proposed

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Speaker 2: tax increases in the budget are very worrying and that

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Speaker 2: if there's increasing cost through taxation, in his words, it

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Speaker 2: doesn't paint a pretty picture for private equity. He says,

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Speaker 2: how the budget is resolved is going to be a

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Speaker 2: very important test of confidence in the UK. Here is

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Speaker 2: speaking to me Andrew Bloomberg anchor Tom McKenzie on his

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Speaker 2: view about whether the Labor government has delivered stability and

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Speaker 2: has proved better for the UK economy so far.

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Speaker 1: I think it's too early to say. I think it

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Speaker 1: remains too early to say.

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Speaker 2: So once it depends only well, I think it's.

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Speaker 1: First we're going to see what happens with finance, right,

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Speaker 1: we have a big question looming here in the UK

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Speaker 1: on the budget side. I actually think the unemployment numbers

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Speaker 1: in the UK, if you look at them, are very

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Speaker 1: much in check. I think inflation now has come to

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Speaker 1: a three year low in the United Kingdom, right, So

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Speaker 1: that's very promising as well.

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Speaker 2: So I remain.

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Speaker 1: Hopeful for the UK. I think the geopolitical environment will

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Speaker 1: be very important for this government.

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Speaker 8: Right.

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Speaker 1: How how we're going to deal with the Ukrainian situation

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Speaker 1: We now head into another winter there, right, what are

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Speaker 1: the positions that the NATO allies are going to take

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Speaker 1: for the United States. What's going to happen with the

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Speaker 1: US presidential election, How that impacts what the United Kingdom

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Speaker 1: needs to do internationally will be very important also in

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Speaker 1: the in the Middle East. So I think Caroline, it's

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Speaker 1: too early to say with this government. I'm very focused

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Speaker 1: on what's going to happen with budget and how that

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Speaker 1: gets resolved or unresolved. Right, That's going to be very

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Speaker 1: important in terms of confidence in this government.

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Speaker 2: Will it damage M and A activity if we see

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Speaker 2: those non dom tax hikes. If we see any other

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Speaker 2: tax hikes capital carried interest for private equity, is that worrying?

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Speaker 1: It is worrying clearly, and not in I'm not in.

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Speaker 1: There's no ambiguity about that. Here's an interesting statistic, Caroline,

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Speaker 1: in that regard, the whole period right now for private

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Speaker 1: equity funds has eclipsed seven years on their assets. Just

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Speaker 1: a year ago, the trillion average was just over five years.

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Speaker 1: It's now moved this year towards seven plus years that

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Speaker 1: the private equity firms are holding their assets because evaluation

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Speaker 1: gaps and the cost of capital right, and so if

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Speaker 1: there's increasing cost through taxation, interest rates and the like,

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Speaker 1: then it doesn't paint a pretty picture for private equity.

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Speaker 2: Do you think that Rachel reaves the chance there is

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Speaker 2: listening to that sort of feedback from industry that is

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Speaker 2: obviously getting more acute in the days that we get

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Speaker 2: closes she listening, Will it just be scrapped from the budget.

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Speaker 1: I think it will be difficult not to listen to

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Speaker 1: that because of the forces, the economic forces behind that,

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Speaker 1: and how integral. Remember now, private equity accounts for more

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Speaker 1: than thirty percent of business transactions that occur in this arena,

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Speaker 1: and so it's very difficult for the ministers not to

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Speaker 1: pay attention to those voices and to their concerns going forward.

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Speaker 5: Yes, that inherent, isn't it, between attracting those kind of

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Speaker 5: those kind of investments whilst also trying to repair the

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Speaker 5: balance sheet of the UK. In terms of when you

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Speaker 5: speak to your clients in the US and elsewhere and

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Speaker 5: they're looking at UK assets, is there's still a sense

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Speaker 5: that there's a valuation play here, that there's you wait

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Speaker 5: for some clarity on the budget and other measures and

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Speaker 5: then you put some some cash to work. Is that

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Speaker 5: the sense you're getting when you speak to clients very much.

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Speaker 1: So there's opportunity in the UK, and there's reason for

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Speaker 1: optimism in the UK, but we do have a new

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Speaker 1: government that's still playing out its story and it's so

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Speaker 1: it's a fair sweep. As the French would say, we're

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Speaker 1: watching and following as this unfolds. But there's certainly opportunity

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Speaker 1: in the UK, and it's across multiple sectors here and

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Speaker 1: also with continental Europe there's opportunity as well again aerospace

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Speaker 1: and defense. In the banking sector, there's opportunity to the

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Speaker 1: private credit market is very significant here, so they don't

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Speaker 1: have to just go to the right. So private credit

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Speaker 1: is increasingly germane to what can happen here in the UK.

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Speaker 1: So there's reason for measured up optimism even as I

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Speaker 1: said earlier, meaningful optimism, it just hasn't taken hold yet.

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Speaker 1: And you remember with M and A unpredictability as anathema.

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Speaker 1: We like predictability. We can deal with all sorts of predictability, good, predictability, medium,

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Speaker 1: even bad. We just need predictability to know where we're going.

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Speaker 1: And when you have a government that's been in power

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Speaker 1: just over three months, it's hard for us to have

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Speaker 1: the confidence in perfect predictability.

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Speaker 5: Yeah, and it's hard to find predictability more generally in

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Speaker 5: this in this current environment, isn't it given that given

439
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Speaker 5: what's happening in the Middle East, Ukraine, Russia, even predictability

440
00:25:31,840 --> 00:25:34,439
Speaker 5: around the next steps in terms of interest rate cuts,

441
00:25:34,520 --> 00:25:36,640
Speaker 5: we thought we knew what the path was, and now

442
00:25:36,720 --> 00:25:37,520
Speaker 5: it seems that's been.

443
00:25:37,480 --> 00:25:39,800
Speaker 1: Questioned and we have and we have a US presidential

444
00:25:39,840 --> 00:25:43,080
Speaker 1: election and a congressional election, and foreign policy that will

445
00:25:43,119 --> 00:25:45,440
Speaker 1: be markedly different under the two regimes.

446
00:25:45,440 --> 00:25:48,760
Speaker 5: Touch defense, AI banks, you touched on banks, you touched

447
00:25:48,760 --> 00:25:50,920
Speaker 5: on the continent, and I'm not going to down pin

448
00:25:51,000 --> 00:25:53,679
Speaker 5: you down on names at Bilbert for obvious reasons. But

449
00:25:53,760 --> 00:25:55,840
Speaker 5: in terms of this question around whether or not you

450
00:25:55,880 --> 00:25:59,200
Speaker 5: see more banking consolidation, we've got this potential bid UNIQ

451
00:25:59,240 --> 00:26:02,440
Speaker 5: credit build up stake in Commos Bank. Do you think

452
00:26:02,440 --> 00:26:04,320
Speaker 5: that is that genuinely is a sect to what you're

453
00:26:04,320 --> 00:26:05,240
Speaker 5: going to see more activity?

454
00:26:05,520 --> 00:26:08,600
Speaker 1: I think in the regional see in the United States,

455
00:26:08,600 --> 00:26:10,720
Speaker 1: we have a more regionalized system of banking than you

456
00:26:10,760 --> 00:26:12,439
Speaker 1: have in Europe, so it makes it a little bit

457
00:26:12,440 --> 00:26:15,199
Speaker 1: more difficult in Europe to see as much activity. And

458
00:26:15,240 --> 00:26:18,680
Speaker 1: of course there's the regulatory constraints that we face in Europe,

459
00:26:18,920 --> 00:26:22,679
Speaker 1: so it's relative, right. It won't be as significant as

460
00:26:22,720 --> 00:26:25,400
Speaker 1: what I think we'll see an aerospace and defense, particularly

461
00:26:25,440 --> 00:26:27,879
Speaker 1: through the supply chain on the aerospace and defense side,

462
00:26:27,960 --> 00:26:29,960
Speaker 1: but I do think you'll see some activity in the

463
00:26:30,000 --> 00:26:32,360
Speaker 1: European theater in the banking sector as well.

464
00:26:32,680 --> 00:26:36,560
Speaker 2: HM. Okay, that's interesting in terms of AI. Does it

465
00:26:36,600 --> 00:26:38,760
Speaker 2: affect M and A in and of itself? We've talked

466
00:26:38,760 --> 00:26:44,200
Speaker 2: about AI coming for the jobs of trade as or well,

467
00:26:44,280 --> 00:26:48,400
Speaker 2: let's rephrase that assisting in terms of pricing for things

468
00:26:48,520 --> 00:26:51,520
Speaker 2: like for on exchange, and therefore the roles of those

469
00:26:51,560 --> 00:26:54,600
Speaker 2: traders changing. Is your role changing, your industry changing.

470
00:26:55,040 --> 00:26:58,199
Speaker 1: It's a great question, Caroline, It's a tremendous question. We

471
00:26:58,320 --> 00:27:00,200
Speaker 1: think about it all the time, and we don't don't

472
00:27:00,200 --> 00:27:02,280
Speaker 1: have an answer to it except to say that I

473
00:27:02,359 --> 00:27:06,199
Speaker 1: don't believe anytime acute AI is going to tackle the

474
00:27:06,280 --> 00:27:10,920
Speaker 1: element of judgment. And I think for trusted advisors who

475
00:27:10,920 --> 00:27:15,760
Speaker 1: are dealing with highly confidential and highly consequential actions like

476
00:27:15,800 --> 00:27:18,960
Speaker 1: big ticket M and A, you desperately need good judgment.

477
00:27:19,400 --> 00:27:23,840
Speaker 1: So the AI piece becomes, Caroline, a facilitator. It becomes

478
00:27:24,640 --> 00:27:28,320
Speaker 1: a mechanic to make things more efficient. But I don't

479
00:27:28,359 --> 00:27:30,679
Speaker 1: think it's going to take away the role of a

480
00:27:30,680 --> 00:27:34,600
Speaker 1: trusted investment banker or a trusted m and a lawyer

481
00:27:34,600 --> 00:27:35,200
Speaker 1: in the market.

482
00:27:35,960 --> 00:27:39,719
Speaker 2: But are you experimenting with it with AI programs for efficiency?

483
00:27:39,760 --> 00:27:40,840
Speaker 2: Are you using them?

484
00:27:40,920 --> 00:27:41,200
Speaker 3: Is this?

485
00:27:41,280 --> 00:27:45,199
Speaker 1: Yes, it is, Caroline. We are because we're required to

486
00:27:45,200 --> 00:27:49,480
Speaker 1: do so, because the clients expect us to pursue every

487
00:27:49,920 --> 00:27:54,600
Speaker 1: means of increased efficiency, and so AI is now becoming

488
00:27:54,680 --> 00:27:58,240
Speaker 1: part of our norm. The piece that I don't think

489
00:27:58,280 --> 00:28:02,159
Speaker 1: AI will replace is the voice in the boardroom that

490
00:28:02,280 --> 00:28:06,560
Speaker 1: says there's too much regulatory doubt around this type of

491
00:28:06,600 --> 00:28:12,200
Speaker 1: transaction or there's not enough financial confidence in the ability

492
00:28:12,280 --> 00:28:15,639
Speaker 1: to execute this transaction. And I think the trusted advisor

493
00:28:15,760 --> 00:28:16,959
Speaker 1: will remain very relevant.

494
00:28:17,119 --> 00:28:21,120
Speaker 2: So my thanks to Bill Curtin from Hogan levels there. Meanwhile,

495
00:28:21,359 --> 00:28:24,679
Speaker 2: Michael Moore, the CEO of the British Private Equity and

496
00:28:24,800 --> 00:28:29,360
Speaker 2: Venture Capital Association, is the top lobbyist for the industry

497
00:28:29,400 --> 00:28:33,000
Speaker 2: overall here in the UK. Moore tells me the ideas

498
00:28:33,000 --> 00:28:36,680
Speaker 2: from the new government are good, but the industry wants

499
00:28:36,720 --> 00:28:40,479
Speaker 2: more detail, especially whether the Chancellor intends to boost the

500
00:28:40,600 --> 00:28:44,840
Speaker 2: tax rate on carried interest, that is fund manager's portion

501
00:28:45,080 --> 00:28:48,680
Speaker 2: of profits on asset sales, whether that will go up

502
00:28:48,960 --> 00:28:52,040
Speaker 2: to forty five percent or close to forty five percent

503
00:28:52,360 --> 00:28:55,800
Speaker 2: from the current level of twenty eight percent. I began

504
00:28:56,080 --> 00:28:59,920
Speaker 2: by asking the BVCA's Michael Moore whether the Laboor gov

505
00:29:00,360 --> 00:29:03,560
Speaker 2: has delivered on a more stable environment for his industry

506
00:29:03,880 --> 00:29:06,480
Speaker 2: after fourteen years of Conservative rule.

507
00:29:07,160 --> 00:29:10,720
Speaker 8: Stability has been the watchword of both the Prime Minister

508
00:29:10,760 --> 00:29:14,600
Speaker 8: and the Chancellor for the last couple of years, and

509
00:29:14,640 --> 00:29:18,480
Speaker 8: of course initially that was as a counterpoint to what

510
00:29:18,520 --> 00:29:22,720
Speaker 8: they were suggesting was instability from the previous government, but

511
00:29:22,760 --> 00:29:25,760
Speaker 8: it has to mean something, and now that they're in government,

512
00:29:26,240 --> 00:29:29,080
Speaker 8: I think the key to it has been to really

513
00:29:29,320 --> 00:29:34,120
Speaker 8: quickly establish that they are going to follow the longstanding

514
00:29:34,400 --> 00:29:38,719
Speaker 8: best practices of using the Office for Budget Responsibility to

515
00:29:38,800 --> 00:29:41,440
Speaker 8: mark their homework when it comes to the budget, set

516
00:29:41,520 --> 00:29:45,560
Speaker 8: out spending plans on the regular pattern and I think

517
00:29:45,680 --> 00:29:49,920
Speaker 8: that has ticked the first of many boxes and saying yep,

518
00:29:50,080 --> 00:29:52,280
Speaker 8: this is going to be done by the rules. It's

519
00:29:52,320 --> 00:29:57,360
Speaker 8: going to be a traditional small c conservative approach to

520
00:29:57,400 --> 00:30:01,160
Speaker 8: all this and that does help g confidence that this

521
00:30:01,200 --> 00:30:04,480
Speaker 8: will be a stable approach. As a starting point, I

522
00:30:04,480 --> 00:30:08,400
Speaker 8: think people would say the move from opposition to government

523
00:30:08,760 --> 00:30:12,400
Speaker 8: has been consistent and has set the store out in

524
00:30:12,440 --> 00:30:13,320
Speaker 8: the right kind of way.

525
00:30:13,760 --> 00:30:17,400
Speaker 2: Is there any evidence that the pledge to crowd in

526
00:30:17,400 --> 00:30:21,520
Speaker 2: investment into the UK is working? Is it too soon?

527
00:30:21,800 --> 00:30:23,280
Speaker 2: What evidence do you see?

528
00:30:23,480 --> 00:30:28,760
Speaker 8: I think this remains to be seen. That we need

529
00:30:28,880 --> 00:30:32,000
Speaker 8: to have the budget, we need to have the Investment Summit,

530
00:30:32,160 --> 00:30:35,640
Speaker 8: we need to have the Industrial strategy, all of the

531
00:30:35,680 --> 00:30:40,200
Speaker 8: big bits of the jigsaw, not least the budget, to

532
00:30:40,240 --> 00:30:45,080
Speaker 8: see if the good intentions and the strong messages are

533
00:30:45,120 --> 00:30:47,160
Speaker 8: born out by the substance.

534
00:30:47,120 --> 00:30:51,040
Speaker 2: Of particular interest to the industry that you represent the

535
00:30:51,120 --> 00:30:55,000
Speaker 2: idea of carried interests of a crackdown on that particular

536
00:30:55,160 --> 00:30:58,480
Speaker 2: benefit for the industry to increase the tax take for

537
00:30:58,520 --> 00:31:01,480
Speaker 2: the chancellor. Do you think will do it or back down?

538
00:31:01,800 --> 00:31:05,160
Speaker 8: We'll obviously see the budget what the Chancellor proposes to do.

539
00:31:05,200 --> 00:31:10,680
Speaker 8: But in recent times, her language, her approach has said

540
00:31:10,800 --> 00:31:14,640
Speaker 8: things that give us some confidence that she's entering the

541
00:31:14,640 --> 00:31:18,560
Speaker 8: conversation in the right way. Namely, she understands the contribution

542
00:31:18,800 --> 00:31:21,480
Speaker 8: the industry can make to growth. That's a top priority

543
00:31:21,520 --> 00:31:24,720
Speaker 8: for her, and she is been sending out a little

544
00:31:24,720 --> 00:31:28,320
Speaker 8: bit more clearly what it is she believes matters for

545
00:31:28,480 --> 00:31:31,200
Speaker 8: carried and just namely you know that there's some skin

546
00:31:31,240 --> 00:31:35,360
Speaker 8: in the game and contribution from individuals into the fund.

547
00:31:35,880 --> 00:31:40,160
Speaker 2: Have labor in government been too pessimistic on the economy

548
00:31:40,560 --> 00:31:42,800
Speaker 2: and cause the hit to sentiment.

549
00:31:43,200 --> 00:31:48,080
Speaker 8: The confidence monitors and the like tell a story of

550
00:31:48,360 --> 00:31:51,760
Speaker 8: people perhaps being weary at the moment. At the moment

551
00:31:52,800 --> 00:31:56,720
Speaker 8: we are dependent on the messaging about being committed to

552
00:31:56,800 --> 00:31:59,920
Speaker 8: growth and sorting out different aspects of the public. By now,

553
00:32:01,000 --> 00:32:03,640
Speaker 8: after the budget, I think we get to a crunch moment.

554
00:32:04,040 --> 00:32:07,840
Speaker 8: Having said all that, the government continues to say a

555
00:32:07,880 --> 00:32:11,120
Speaker 8: lot of the right things, but we can't live without

556
00:32:11,160 --> 00:32:13,440
Speaker 8: the details indefinitely.

557
00:32:13,760 --> 00:32:17,200
Speaker 2: Two new public bodies have been created by the government,

558
00:32:17,320 --> 00:32:21,160
Speaker 2: gb Energy and the National Wealth Fund. What do you

559
00:32:21,240 --> 00:32:25,760
Speaker 2: expect from those organizations in terms of ushering in investment

560
00:32:25,800 --> 00:32:28,160
Speaker 2: into the UK. Have they delivered anything so far?

561
00:32:29,200 --> 00:32:32,880
Speaker 8: Many of these ideas are still at kind of high

562
00:32:33,000 --> 00:32:36,760
Speaker 8: level conceptual stage and we do need to see quite

563
00:32:36,760 --> 00:32:42,560
Speaker 8: a lot more detail. Investors, international investors certainly want to

564
00:32:42,640 --> 00:32:46,960
Speaker 8: see them develop because the principles are important ones. Making

565
00:32:47,000 --> 00:32:51,280
Speaker 8: it easier to allocate capital to the UK. Have it

566
00:32:51,480 --> 00:32:55,479
Speaker 8: managed and deployed in the UK is fundamentally important. It's

567
00:32:55,520 --> 00:32:59,520
Speaker 8: a very very competitive world out there. What we want

568
00:32:59,560 --> 00:33:02,400
Speaker 8: to see is that we get the delivery on that

569
00:33:02,520 --> 00:33:05,840
Speaker 8: and that we get slightly more straightforward ways to deploy

570
00:33:06,240 --> 00:33:10,040
Speaker 8: capital into the startup businesses in the UK the scale up.

571
00:33:10,280 --> 00:33:13,360
Speaker 2: Yeah, and so to return to the budget, then the

572
00:33:13,360 --> 00:33:17,200
Speaker 2: temptation will be to raise what the government thinks might

573
00:33:17,200 --> 00:33:20,040
Speaker 2: be five hundred million pounds or more per year from

574
00:33:20,240 --> 00:33:24,320
Speaker 2: private acty individuals through this, you know, scrapping the carried

575
00:33:24,440 --> 00:33:28,160
Speaker 2: interest regime. Do you think that that's going to happen.

576
00:33:28,680 --> 00:33:32,720
Speaker 8: Having a capital commitments skin in the game is really

577
00:33:32,800 --> 00:33:36,960
Speaker 8: important to getting some version of the existing treatment or

578
00:33:37,120 --> 00:33:42,840
Speaker 8: carry to continue. All of that has been pretty substantively explored,

579
00:33:43,240 --> 00:33:46,400
Speaker 8: so I you know, the area of scrapping it, I

580
00:33:46,440 --> 00:33:50,800
Speaker 8: think is not what is there and facing us, but

581
00:33:50,920 --> 00:33:53,680
Speaker 8: there's clearly and needs to ensure that the government is

582
00:33:53,720 --> 00:33:56,600
Speaker 8: satisfied that the approach is good.

583
00:33:57,440 --> 00:34:00,480
Speaker 2: Is there some middle ground whereby the share of offits

584
00:34:00,480 --> 00:34:04,080
Speaker 2: made by private acuity managers and how they're taxed on

585
00:34:04,200 --> 00:34:06,960
Speaker 2: those deals, there could be a middle ground Right now

586
00:34:07,000 --> 00:34:09,080
Speaker 2: it's TAXI twenty eight percent, could it be rather than

587
00:34:09,080 --> 00:34:11,600
Speaker 2: forty five percent which is the top rate of income tax?

588
00:34:12,040 --> 00:34:13,560
Speaker 2: Something in the middle.

589
00:34:13,480 --> 00:34:17,439
Speaker 8: We've not been talking about it rates. Nobody negotiates their

590
00:34:17,480 --> 00:34:20,440
Speaker 8: tax rates or tax arrangestes with the government in this

591
00:34:20,520 --> 00:34:23,920
Speaker 8: kind of situation. But I do think and one of

592
00:34:23,920 --> 00:34:26,400
Speaker 8: the things that the government asked and the consultation was

593
00:34:26,600 --> 00:34:30,200
Speaker 8: how does it look elsewhere? What is the international benchmarks

594
00:34:30,320 --> 00:34:35,560
Speaker 8: against which the UK is competing. I'm hopeful that the

595
00:34:35,960 --> 00:34:38,880
Speaker 8: really serious engagement we've had in recent times, the recognition

596
00:34:38,960 --> 00:34:41,920
Speaker 8: of the value the industry creates, will allow us to

597
00:34:42,000 --> 00:34:46,480
Speaker 8: get a solution that allows the government to meet its

598
00:34:46,480 --> 00:34:50,680
Speaker 8: political commitments and its manifesto promises and allows us to

599
00:34:50,719 --> 00:34:52,279
Speaker 8: sustain ourselves in the UK.

600
00:34:52,840 --> 00:34:55,200
Speaker 2: So that was Michael Moore, the CEO of the British

601
00:34:55,239 --> 00:34:58,799
Speaker 2: Private Acuity and Venture Capital Association. So my thanks to

602
00:34:59,040 --> 00:35:02,160
Speaker 2: all of those individuals for speaking to me ahead of

603
00:35:02,200 --> 00:35:05,960
Speaker 2: what are two big tests for this new government, the

604
00:35:06,000 --> 00:35:09,640
Speaker 2: Investments Summit and then the budget. And I just go

605
00:35:09,800 --> 00:35:13,360
Speaker 2: back to what Anne glovert Amadair's Capital partners told me

606
00:35:13,560 --> 00:35:16,600
Speaker 2: that there has been so much speculation that no one

607
00:35:17,000 --> 00:35:19,719
Speaker 2: has a clue what is actually going to land in

608
00:35:19,760 --> 00:35:23,040
Speaker 2: the budget, which is unusual given the recent history of

609
00:35:23,080 --> 00:35:28,160
Speaker 2: intense pre budget briefings. Three months into the new UK

610
00:35:28,360 --> 00:35:31,560
Speaker 2: labor government, many people in the city don't feel we

611
00:35:31,600 --> 00:35:36,479
Speaker 2: can judge yet on their economic impact, but they do

612
00:35:36,840 --> 00:35:42,799
Speaker 2: also want more clarity, more detail the industrial strategy and

613
00:35:42,840 --> 00:35:45,880
Speaker 2: they are starting to get a bit more nervous about

614
00:35:46,000 --> 00:35:50,520
Speaker 2: what Starmer and Reefs and their team can deliver for

615
00:35:50,600 --> 00:35:51,000
Speaker 2: Bretain