WEBVTT - Exclusive: Rachel Reeves on Iran Shock, US Trade and Inflation Risks 0:00:02.720 --> 0:00:09.080 Bloomberg Audio Studios, podcasts, radio news. Maren Talks Money listeners. 0:00:09.400 --> 0:00:12.680 Are you a Bloomberg subscriber? If you're not here is 0:00:12.760 --> 0:00:15.760 why you should be. You will get ad free episodes 0:00:15.800 --> 0:00:18.840 of this podcast and access to my Marin Talks Money newsletter, 0:00:19.079 --> 0:00:22.200 as well as access to John Steppeck's award winning newsletter 0:00:22.280 --> 0:00:26.000 Money Distilled. And you will also get access to subscriber 0:00:26.040 --> 0:00:28.159 only events such as the one we'll be hosting on 0:00:28.200 --> 0:00:30.600 March seventeenth. See the link in the show notes to 0:00:30.600 --> 0:00:33.400 sign up to that. And of course you will get 0:00:33.479 --> 0:00:36.760 unlimited access to Bloomberg dot com and the Bloomberg App, 0:00:36.920 --> 0:00:41.559 including exclusive stories, premium market tools. Subscribe now at Bloomberg 0:00:41.600 --> 0:00:55.320 dot com Slash podcast offer. Welcome to Maren Talks Money, 0:00:55.320 --> 0:00:57.480 the podcast to mes people who know the markets explain 0:00:57.520 --> 0:01:01.360 the markets. I am Marenzumzetweb Editor at Large Bloomberg Ukay Wealth. 0:01:01.440 --> 0:01:05.280 And I'm joined Stevig, Senior reporter and the Money Distilled. 0:01:04.920 --> 0:01:10.640 Newsletter John Afternoon. So today the Chancellor Rachel Reeves. She 0:01:10.680 --> 0:01:13.319 delivered a spring forecast in the Parliament and after that 0:01:13.400 --> 0:01:17.479 speech she actually traveled in person to the Bloomberg office 0:01:17.480 --> 0:01:19.520 and spoke to our colleague Stephanie Flanders, who is the 0:01:19.560 --> 0:01:21.800 head of Government and Economics here at Bloomberg. Now we 0:01:21.840 --> 0:01:24.120 are going to listen to that interview in just a 0:01:24.120 --> 0:01:27.280 few minutes, Luckier. But John, before that, did you make 0:01:27.480 --> 0:01:30.160 anything of the spring statement? I was there anything in 0:01:30.200 --> 0:01:31.759 there that you could even have a go at making 0:01:31.760 --> 0:01:32.320 anything of. 0:01:32.600 --> 0:01:35.160 The one thing I will see in the Chancellor's favor 0:01:35.600 --> 0:01:37.279 is that she wanted it to be an one event 0:01:37.480 --> 0:01:39.760 and it was at no one event. She didn't make 0:01:39.760 --> 0:01:43.600 any policy change announcements, and the whole thing was entirely 0:01:43.640 --> 0:01:47.840 overshadowed by the war and Ryan, so I'd say, yes, 0:01:47.880 --> 0:01:51.040 so we could ignored it because it's. 0:01:50.920 --> 0:01:55.040 Completely irrelevant, because any conversation about inflation or interest rates 0:01:55.160 --> 0:01:58.480 or anything like that is meaningless in the face of 0:01:58.560 --> 0:01:59.960 a possible spapulation recret. 0:02:00.800 --> 0:02:03.400 Yes, I mean, actually it's a good lesson in the 0:02:03.440 --> 0:02:07.640 whole pointlessness of this Office for Budget Responsibility, Forecast business. 0:02:08.160 --> 0:02:10.720 Where we sat the entreat these as if they're handed 0:02:10.760 --> 0:02:12.880 down on stone tablets. And to be fair, the OBR 0:02:12.960 --> 0:02:15.840 even they said when it came out, by the way, 0:02:16.000 --> 0:02:19.320 this could swing in absolutely any direction. Now, given what's 0:02:19.360 --> 0:02:22.360 happened in Iran. But here's something that got something an 0:02:22.400 --> 0:02:25.760 email from Berenberg earlier and they pointed out that the 0:02:25.800 --> 0:02:29.240 obr's forecasts are contingent on Brent Coruld being at sixty 0:02:29.280 --> 0:02:32.560 three dollars a barrow, which it was roughly two days ago. 0:02:32.919 --> 0:02:36.720 Now it's at eighty three a natural gas price sixty 0:02:36.720 --> 0:02:40.239 four pence a term. It's now one pound fifty a theirm. 0:02:40.639 --> 0:02:43.640 So so those numbers last. Then obviously inflation is going 0:02:43.680 --> 0:02:45.360 to be higher. Interest rates are not going to go 0:02:45.440 --> 0:02:48.080 down the way that we'd all actually been hoping for 0:02:48.120 --> 0:02:51.880 about a week ago, and that means growth is probably 0:02:51.880 --> 0:02:53.840 going to be worse. Inflation is going to be worse. 0:02:54.360 --> 0:02:57.639 The physical headroom the Chancellor keeps going on about will 0:02:57.639 --> 0:03:02.840 not exist and things will, yes, we'll deteriorate it quite significantly, 0:03:02.919 --> 0:03:05.200 so kind of lights hope that it's all actually over 0:03:05.480 --> 0:03:08.359 within a week, which also I'm struggling to see the 0:03:08.400 --> 0:03:09.160 path there. 0:03:09.480 --> 0:03:11.680 And if only we had a good long term domestic 0:03:11.720 --> 0:03:13.280 supply of oil and gassy. 0:03:13.280 --> 0:03:17.160 And weird could be faith so fair and such a thing. 0:03:17.400 --> 0:03:19.440 Now listen, I know you say how marvelous it is 0:03:19.440 --> 0:03:21.400 that it was a it was a non event. Then 0:03:21.440 --> 0:03:24.440 nothing happened, and I know that's what she wanted. But 0:03:25.040 --> 0:03:26.720 when I look at the state of the UK, I 0:03:26.720 --> 0:03:28.400 look at the state of the economy, I look at 0:03:28.400 --> 0:03:32.000 sixteen percent plus use unemployment, at all these things, I think, gosh, 0:03:32.040 --> 0:03:35.520 I don't know, maybe there's something, anything, that could be done. 0:03:35.560 --> 0:03:37.840 And in a way, while a period of silence is 0:03:37.880 --> 0:03:41.760 in many ways welcome, a real action plan to do 0:03:41.800 --> 0:03:46.640 something about these awful effects of previous policies on the 0:03:46.760 --> 0:03:48.400 UK economy would also be kind of useful. 0:03:48.920 --> 0:03:50.440 Yeah, I mean, the we had hopes that she may 0:03:50.520 --> 0:03:53.560 do something about the youth unemployment, if only delay in 0:03:53.640 --> 0:03:56.880 the rise in the minimum wage, for example. And who knows, 0:03:56.920 --> 0:03:58.880 I mean maybe that maybe there are things that she's 0:03:58.920 --> 0:04:01.400 planning to to. I mean that sort of feel that 0:04:02.000 --> 0:04:03.840 she was probably caught on the hop by all of 0:04:03.880 --> 0:04:07.120 this stuff and then hasn't come up with any replacement 0:04:07.200 --> 0:04:09.720 plan to tackle it. She's meant to be meeting by 0:04:09.960 --> 0:04:14.080 oil and gas industry, for example, tomorrow. Whether she'll actually 0:04:14.120 --> 0:04:17.000 do anything about the tax problems that are stopping them 0:04:17.040 --> 0:04:19.719 from exploding in the North Sea is quite another matter. 0:04:20.480 --> 0:04:23.400 But no, you're right, there's loads of messes. I mean, 0:04:23.440 --> 0:04:26.120 part of the problem, obviously, is that Rachel Reeves has 0:04:26.200 --> 0:04:30.240 compounded She's not responsible for them directly, but she certainly 0:04:30.279 --> 0:04:32.479 made them all a lot worse with the policies that 0:04:32.520 --> 0:04:36.160 she's pursued in her previous two budgets. So I'm not 0:04:36.240 --> 0:04:38.839 convinced that she's the one that can of fix things. 0:04:38.880 --> 0:04:39.760 But we shall see. 0:04:39.960 --> 0:04:40.920 We shall see. Well. 0:04:40.920 --> 0:04:44.360 On that happy note, let's get into the interview. Bloomberg 0:04:44.360 --> 0:04:48.000 Stephanie Flanders speaking with Chancellor Rachel Waves on Tuesday afternoon. 0:04:51.440 --> 0:04:53.920 Chancellor, thank you so much for doing this. You've come 0:04:53.920 --> 0:04:58.480 over to Bloomberg headquarters straight from the Treasury on a busy. 0:04:58.320 --> 0:04:59.920 Day, Okay, straight from the Chamber. 0:05:00.160 --> 0:05:02.719 From the Chamber of course. Yes, you want to talk 0:05:02.720 --> 0:05:06.080 about your thoughts about the state of the UK economy 0:05:06.360 --> 0:05:10.640 and the growth plan going forward, But obviously, given everything 0:05:10.640 --> 0:05:14.360 that's happening today in markets in the Middle East, I 0:05:14.400 --> 0:05:16.039 want to start with just asking you a few questions 0:05:16.080 --> 0:05:18.320 about that. I mean, you mentioned in your speech in 0:05:18.360 --> 0:05:21.279 the Commons that you were planning to talk tomorrow to 0:05:21.800 --> 0:05:25.200 Northsea oil producers. What are you hoping to get out 0:05:25.200 --> 0:05:25.960 of that conversation? 0:05:26.680 --> 0:05:29.080 So I said in the Chamber that some of the 0:05:29.120 --> 0:05:34.000 most affected industries I wanted to spend some time with 0:05:34.080 --> 0:05:36.120 and been in touch with over the last few days. 0:05:36.160 --> 0:05:41.320 And obviously developments in oil and gas markets are absolutely 0:05:41.360 --> 0:05:45.680 crucial for every family in every business in Britain. Now 0:05:46.279 --> 0:05:48.880 oil and gas production in the North Sea Council less 0:05:48.880 --> 0:05:51.920 than one percent of global supply of oil and gas, 0:05:52.320 --> 0:05:54.960 but it's still very important. It's important for jobs in 0:05:55.000 --> 0:05:58.520 the UK, it's important for investment, and it's important for 0:05:58.839 --> 0:06:01.680 every family in Britain. So I'm going to be meeting 0:06:01.800 --> 0:06:06.080 with them tomorrow to talk about their production plans and 0:06:06.160 --> 0:06:09.800 also to talk about how they see the situation evolving. 0:06:09.839 --> 0:06:13.279 Because every oil and gas company pretty much that operates 0:06:13.320 --> 0:06:15.679 in the North Sea will also operate in other parts 0:06:15.680 --> 0:06:18.520 of the world, whether that is Shell or BP or 0:06:18.520 --> 0:06:24.880 equinor or others, and so getting their insights into how 0:06:25.440 --> 0:06:28.760 oil and gas prices might evolve based on a number 0:06:28.760 --> 0:06:32.039 of different scenarios over the coming days and weeks will 0:06:32.080 --> 0:06:35.200 be very useful for me and for the government. 0:06:35.560 --> 0:06:37.520 We can give you our scenarios as well, but our 0:06:37.560 --> 0:06:40.520 economists are looking at this as you suggest, there's nothing 0:06:40.520 --> 0:06:42.960 that our norse to oil producers could do to affect 0:06:43.240 --> 0:06:46.680 a global or price hike, it is already up significantly. 0:06:47.320 --> 0:06:50.440 If it's sustained for any period, it seems like it 0:06:50.440 --> 0:06:53.719 would be much harder to get the headline inflation rate 0:06:53.800 --> 0:06:56.960 in the UK back to two percent as you were, 0:06:57.000 --> 0:06:58.160 as you were hoping it would be. You did a 0:06:58.200 --> 0:07:01.200 lot of things in the budget and courage shall we say, 0:07:01.240 --> 0:07:03.679 inflation to go back to two percent even by April. 0:07:03.880 --> 0:07:07.240 Has Donald Trump's wore in Iran taken that away from you? 0:07:07.440 --> 0:07:09.440 Well, the first thing I would say is that the 0:07:09.480 --> 0:07:12.600 action that I took in the budget will still happen. 0:07:13.200 --> 0:07:17.160 So the freezing prescription charges, the freezing rail fares, and 0:07:17.240 --> 0:07:20.240 also the one hundred and fifty pounds off of energy 0:07:20.240 --> 0:07:23.960 bills that I announced in the budget will take effect 0:07:24.080 --> 0:07:27.240 next month, and so people paying families paying their gas 0:07:27.280 --> 0:07:30.720 and electricity bills do not need to worry about the 0:07:30.720 --> 0:07:35.640 next three months. That price cap is set and they 0:07:35.640 --> 0:07:38.880 will get the benefit of those policies I announced in 0:07:39.000 --> 0:07:42.320 the budget. But of course, you know, we have to 0:07:42.360 --> 0:07:45.680 see how things evolve in terms of where oil and 0:07:45.720 --> 0:07:48.600 gas prices go going forward. But what the Office's Budget 0:07:48.640 --> 0:07:51.600 Responsibility confirmed today and what the Bank of England said 0:07:51.800 --> 0:07:56.680 when they published their most recent outlook for inflation in 0:07:56.720 --> 0:08:00.200 February was that the measures that we have taken as 0:08:00.240 --> 0:08:04.280 the government helping bring inflation back down to target much 0:08:04.320 --> 0:08:07.400 sooner than they anticipated. I think in the OBR numbers 0:08:07.440 --> 0:08:11.200 today inflation is likely to meet target at six months 0:08:11.200 --> 0:08:15.880 earlier than they previously envisaged. Now, of course that doesn't 0:08:15.880 --> 0:08:18.920 take into accounter developments over the last few days, but 0:08:18.960 --> 0:08:23.200 also we are only just into what is happening in 0:08:23.240 --> 0:08:26.160 the Middle East. We saw each other last week, Stephanie, 0:08:26.200 --> 0:08:29.080 and we were not talking about the Middle East or around. 0:08:29.120 --> 0:08:30.800 There was lots of other things to talk about in 0:08:30.840 --> 0:08:35.480 the economy, but this only really kicked off on Friday. 0:08:35.600 --> 0:08:39.760 So of course we're monitor developments very very closely and 0:08:39.760 --> 0:08:44.400 do everything in our power to protect businesses and families 0:08:44.600 --> 0:08:47.840 in the UK. And we are better placed to do 0:08:47.880 --> 0:08:51.680 that than we were just a few months and years 0:08:51.720 --> 0:08:54.120 ago because of the choices we've taken as the government. 0:08:54.600 --> 0:08:56.640 So what I was able to set out today in 0:08:56.640 --> 0:09:00.680 the OBR forecast is that both interest rates inflation have 0:09:00.720 --> 0:09:05.480 been falling faster than expected. Government borrowing and debt have 0:09:05.600 --> 0:09:10.680 been revised down since the budget last year G seven 0:09:10.920 --> 0:09:14.960 borrowing is not coming down at the same rate that 0:09:15.000 --> 0:09:17.200 it is in the UK. Our public sector net borrowing, 0:09:17.280 --> 0:09:19.600 forecast to be just four point three percent this year, 0:09:19.679 --> 0:09:22.360 is the lowest in six years and the first time 0:09:22.640 --> 0:09:26.560 in twenty two years that our borrowing has been lower 0:09:26.600 --> 0:09:30.520 than the G seven average. So welcome developments which put 0:09:30.600 --> 0:09:33.079 us in a stronger position to be able to withstand 0:09:33.120 --> 0:09:35.959 the shocks, including the shock that we are likely to 0:09:36.000 --> 0:09:39.559 be responding to in the weeks and months ahead, than 0:09:39.600 --> 0:09:41.520 we would have been without the action that we've taken 0:09:41.520 --> 0:09:44.280 as the government to secure and stabilize the public finances. 0:09:44.360 --> 0:09:46.440 But it is vulnerable. I mean even that fall in 0:09:46.480 --> 0:09:50.520 borrowing is driven in large part actually by lower than 0:09:50.559 --> 0:09:53.959 expected spending, which is actually in turn lower spending on 0:09:54.360 --> 0:09:56.960 guilt interest, which is a result of lower inflation. So 0:09:57.040 --> 0:10:00.680 that lower path for inflation that we were on even 0:10:00.720 --> 0:10:03.679 markets were assuming for this year, that was also going 0:10:03.720 --> 0:10:06.760 to potentially pave the way for another rate cut. You 0:10:06.880 --> 0:10:09.840 mentioned in your speech how proud you were that you've 0:10:09.880 --> 0:10:12.240 been part of the government at the Bank of England 0:10:12.240 --> 0:10:16.199 had been able to have six rate cuts since Lady King. 0:10:16.160 --> 0:10:18.440 Was going on. There's three things that are going on 0:10:18.679 --> 0:10:22.280 to put our public finances in a better position. First 0:10:22.280 --> 0:10:26.040 of all, tax revenues have come in stronger than anticipated, 0:10:26.080 --> 0:10:29.480 and we saw that particularly in the January January borrowing numbers. 0:10:29.800 --> 0:10:31.840 It was the biggest surplus on record. 0:10:32.040 --> 0:10:34.040 But year to date, isn't it still lower than the 0:10:34.080 --> 0:10:37.760 forecast than they abas's forecast, so that that month was 0:10:37.840 --> 0:10:38.480 very good. 0:10:38.559 --> 0:10:43.120 But borrowing has come in lower this revelue. The borrowing 0:10:43.160 --> 0:10:47.600 has come in lower than forecast. And spending we set 0:10:47.600 --> 0:10:50.679 out the spending review last summer, many people said, well 0:10:50.679 --> 0:10:53.360 we wouldn't be really able to live within those budgets. Well, 0:10:53.840 --> 0:10:56.319 this year we have not used all of the surplus 0:10:56.360 --> 0:10:59.240 that is put aside for genuine emergencies and instead we're 0:10:59.240 --> 0:11:03.000 able to roll that surplus forward, so spending is under control. Whereas, 0:11:03.000 --> 0:11:06.920 of course, when I became Chancellor, the reserve for the 0:11:07.000 --> 0:11:09.040 year that we were in and we were only three 0:11:09.080 --> 0:11:12.000 months into it had been spent four times over. So 0:11:12.000 --> 0:11:14.840 we haven't used a full reserve for this year. And 0:11:14.920 --> 0:11:18.959 also borrowing costs have come down. The OBR today forecast 0:11:19.080 --> 0:11:22.040 that borrowing costs next year will be four billion pounds 0:11:22.080 --> 0:11:24.880 lower than that even they thought in the budget last year. 0:11:25.000 --> 0:11:28.839 So tax revenue coming in a bit stronger spending coming 0:11:28.880 --> 0:11:30.880 in as planned and in fact not even using the 0:11:30.920 --> 0:11:34.800 full reserve, and also borrowing costs coming down because of 0:11:34.840 --> 0:11:38.640 that additional stability we've brought to the economy. Have all 0:11:38.720 --> 0:11:42.080 contributed to the better forecast or the public finances that 0:11:42.120 --> 0:11:43.320 I was able to set out today. 0:11:43.840 --> 0:11:46.600 But that good news, A lot of that was related 0:11:46.640 --> 0:11:49.280 to the falling guilt yields, A lot of some of 0:11:49.320 --> 0:11:52.160 that has been reversed even just today in the concerns 0:11:52.160 --> 0:11:55.640 in the markets and expectations of lower interest rates from 0:11:55.679 --> 0:11:58.440 the Bank of England, which traders in the market this 0:11:58.480 --> 0:12:02.160 week have decided again to certainly not happen in March 0:12:02.240 --> 0:12:04.640 now and where as they were expecting, and maybe not 0:12:04.679 --> 0:12:05.960 happen in the next few months. 0:12:06.280 --> 0:12:10.160 I won't comment on market movements over a day or two. 0:12:10.520 --> 0:12:14.000 I think it is too early to know what the 0:12:14.040 --> 0:12:18.080 market impact is. Obviously, the immediate concern for the government 0:12:18.280 --> 0:12:21.199 is trying to get the three hundred thousand British citizens 0:12:21.240 --> 0:12:23.800 who are in the Middle East back home if they 0:12:24.360 --> 0:12:27.440 want to come back to the UK. Think around one 0:12:27.520 --> 0:12:31.280 hundred thousand have always already registered for the scheme to 0:12:32.400 --> 0:12:36.920 say that you are there, and that is very welcome 0:12:36.960 --> 0:12:41.080 and that's our mediate goal, as well as protecting our 0:12:41.120 --> 0:12:44.880 personnel and our assets in the region. But of course 0:12:44.960 --> 0:12:50.480 the economic consequences of any extended military action, especially in 0:12:50.520 --> 0:12:54.320 the Middle East, which is so crucial for trade and 0:12:54.360 --> 0:12:57.079 for oil and gas, would have an impact on the 0:12:57.200 --> 0:12:59.840 UK economy, But it is too early to judge exactly 0:12:59.840 --> 0:13:02.320 what that will be and therefore what response would be needed. 0:13:02.640 --> 0:13:04.640 I mean, I'll focus on the economy today. I'm not 0:13:04.679 --> 0:13:07.680 going to go into the government's stance in relation to 0:13:07.760 --> 0:13:10.480 the support or not for what the President's doing. But 0:13:10.600 --> 0:13:14.480 judging from Donald Trump's posts in the last and interviews 0:13:14.480 --> 0:13:16.160 in the last twenty four hours, he does seem to 0:13:16.160 --> 0:13:19.480 be not very happy with the Prime Minister as a 0:13:19.520 --> 0:13:21.719 result of the last few days. Do you worry that 0:13:21.720 --> 0:13:26.160 that will make it harder to finalize, finally finalize the 0:13:26.200 --> 0:13:28.719 trade situation, the trade deal with the US, which was 0:13:28.760 --> 0:13:31.280 put into quite a lot of uncertainty by that Supreme 0:13:31.360 --> 0:13:33.160 Court judgment a few weeks ago. 0:13:33.720 --> 0:13:40.280 When it comes to decisions around using British armed forces 0:13:40.920 --> 0:13:45.600 to take part in conflicts around the world, it is 0:13:45.760 --> 0:13:50.240 very important that we judge those on whether it is 0:13:50.320 --> 0:13:53.319 legal and whether it is the right thing to do. 0:13:54.720 --> 0:13:58.040 You can't make a decision about whether to get British 0:13:58.160 --> 0:14:00.360 armed forces involved in a conflict because it may or 0:14:00.360 --> 0:14:02.920 may not make it more likely to get a trade deal. 0:14:03.400 --> 0:14:07.640 And we judged that there was not a legal basis 0:14:06.760 --> 0:14:14.880 for offensive action on Iran, but of course once Iran responded, particularly. 0:14:15.240 --> 0:14:17.400 Sorry, not a legal basis for the UK or but 0:14:17.480 --> 0:14:18.920 presumably not for the US either. 0:14:19.080 --> 0:14:23.120 We can only make judgments for ourselves and that was 0:14:23.160 --> 0:14:27.360 the judgment that we came to based on our legal advice, 0:14:27.400 --> 0:14:30.240 and it's up to other countries to explain what action 0:14:30.280 --> 0:14:34.120 they've taken and on what basis. But once Iran responded 0:14:34.640 --> 0:14:39.120 in the way that they did, including with missiles being 0:14:39.160 --> 0:14:41.880 launched into our allies who were not involved in the 0:14:41.960 --> 0:14:47.800 offensive action, and the risks to our military basis in Cyprus, 0:14:47.840 --> 0:14:51.840 of course it was right that we became involved in 0:14:51.880 --> 0:14:55.000 defensive action and we were involved in that from Saturday, 0:14:55.200 --> 0:14:58.720 and of course on Sunday we gave permission for US 0:14:59.040 --> 0:15:03.600 jets to use British assets from which to launch those 0:15:03.640 --> 0:15:07.280 defensive actions. And that's a decision that we've taken as 0:15:07.320 --> 0:15:10.240 a government on trade. I'm proud of what we've done 0:15:10.240 --> 0:15:13.760 as a government, we've secured a trade deal with India, 0:15:13.840 --> 0:15:16.040 I think probably the best trade deal that any country 0:15:16.040 --> 0:15:18.480 in the world has secured with India, and we hope 0:15:18.520 --> 0:15:20.320 to be able to bring that into an effect in 0:15:20.320 --> 0:15:24.240 the next couple of months. But in addition, improving our 0:15:24.320 --> 0:15:27.480 trade relations with our nearest neighbors and trading partners in 0:15:27.520 --> 0:15:29.920 the European Union, and I'm going to say more about 0:15:30.080 --> 0:15:32.800 our relations with the European Union in a speech I'm 0:15:32.800 --> 0:15:34.480 going to give in a couple of weeks time, because 0:15:34.520 --> 0:15:36.440 I think that that is one of the big bets 0:15:36.480 --> 0:15:38.760 that we can take as a country to change our 0:15:38.880 --> 0:15:44.920 trajectory for productivity and growth. We've already rejoining the Erasmus 0:15:44.920 --> 0:15:47.360 scheme to allow young people to be able to study 0:15:48.040 --> 0:15:50.480 in the European Union countries and for young people in 0:15:50.520 --> 0:15:52.400 those countries to be able to study in the UK. 0:15:53.080 --> 0:15:56.360 But we also want to deliver an energy and electricity 0:15:56.440 --> 0:16:00.280 trading deal, we want a food and farming agreement, an 0:16:00.320 --> 0:16:05.240 SPS agreement, and also we want to bring in a 0:16:05.320 --> 0:16:08.120 youth ability scheme so that young people in Britain can 0:16:08.160 --> 0:16:12.160 go and take advantage of opportunities in Europe and vice versa. 0:16:12.640 --> 0:16:14.880 Young people in the European Union can come and work 0:16:15.360 --> 0:16:17.560 in the UK. I know that some countries around the 0:16:17.600 --> 0:16:21.080 world are looking to pull up the drawbridge, but Britain 0:16:21.120 --> 0:16:24.320 benefits from being an open trading economy, open to trade, 0:16:24.400 --> 0:16:26.680 open to investment, and also open to talent. 0:16:27.120 --> 0:16:30.040 But for trade, it's enormously important just to have some 0:16:30.120 --> 0:16:32.760 kind of certainty about what the trade rules are. I mean, 0:16:32.760 --> 0:16:36.240 are you able to say to UK exporters to the 0:16:36.320 --> 0:16:40.280 US that you know currently what the trade rules are 0:16:40.360 --> 0:16:42.720 for going into the US, because it's not clear to us. 0:16:43.080 --> 0:16:46.040 Well, we've secured a trade deal with the US last 0:16:46.120 --> 0:16:49.080 year on the export of goods. Since then we've gone 0:16:49.120 --> 0:16:52.360 further and secured a deal around pharmaceuticals, which is obviously 0:16:52.400 --> 0:16:56.560 crucial for the UK given the importance are of our pharmaceuticals. 0:16:56.560 --> 0:16:59.440 As far as those things are not affected by the 0:16:59.480 --> 0:17:01.080 Supreme Court. As far as your. 0:17:01.000 --> 0:17:05.080 Concern, obviously we are in constant negotiation and dialogue with 0:17:05.160 --> 0:17:08.199 the US administration. But there's absolutely no reason why the 0:17:08.240 --> 0:17:11.760 trade deal that we secured last year can't be maintained. 0:17:11.800 --> 0:17:13.760 And of course there are other areas as well where 0:17:13.800 --> 0:17:15.840 we want to go further with our trade links with 0:17:15.880 --> 0:17:19.160 the US, whether that is on the future of capital markets, 0:17:19.600 --> 0:17:23.840 where we want to deepen and strengthen the capital market 0:17:24.400 --> 0:17:27.560 links between our economy, making it easier for British companies 0:17:27.920 --> 0:17:31.080 to raise finance in the US and US businesses to 0:17:31.119 --> 0:17:34.399 raise finance in London, as well as doing more in 0:17:34.480 --> 0:17:38.119 terms of mutual recognition of standards so that if you 0:17:38.200 --> 0:17:40.439 have a license for a product in the US, you 0:17:40.480 --> 0:17:42.879 can bring it to the UK and again vice versa, 0:17:43.000 --> 0:17:46.600 to help British businesses in financial services and elsewhere to 0:17:46.600 --> 0:17:49.359 be able to launch product products in the US, which 0:17:49.359 --> 0:17:52.720 is obviously hugely beneficial for UK firms. So there are 0:17:52.760 --> 0:17:55.640 other areas as well where we want to deepen those 0:17:55.640 --> 0:17:59.119 relations with the US, But our nearest neighbors and trading 0:17:59.119 --> 0:18:03.160 partners are countries in the EU, and the benefits from 0:18:03.600 --> 0:18:08.919 rebuilding trust between US and the European Union, and crucially 0:18:09.320 --> 0:18:12.280 those trade links in goods and our hope in services 0:18:12.280 --> 0:18:15.480 in due course is what will have the biggest impact 0:18:16.040 --> 0:18:19.520 on British businesses and jobs and living standards. 0:18:34.760 --> 0:18:38.200 Let's talk about that sort of broader approach to growth. 0:18:38.280 --> 0:18:40.000 I know you're going to talk about also in a 0:18:40.040 --> 0:18:43.000 speech in a couple of weeks you promise that today's 0:18:43.359 --> 0:18:46.760 spring statements being forecast would be a non event so 0:18:46.840 --> 0:18:48.840 I think I can say to you succeeded in making 0:18:48.920 --> 0:18:51.520 it not very eventful. We haven't had all this kind 0:18:51.520 --> 0:18:53.439 of speculation that we had leading up to the budget, 0:18:53.440 --> 0:18:55.760 so we haven't had that uncertainty. As you've mentioned, the 0:18:55.800 --> 0:18:58.040 economic news leading up to this, at least till this 0:18:58.080 --> 0:19:02.000 week was fairly positive. The political environment is, if anything, 0:19:02.080 --> 0:19:05.480 has deteriorated for the government, and we had a poll 0:19:05.560 --> 0:19:09.080 today that showed labor even potentially behind the Greens as 0:19:09.119 --> 0:19:13.439 well as reform. I guess I mean your economic mission, 0:19:13.960 --> 0:19:17.600 which was central to this government. A large chunk of voters. 0:19:17.640 --> 0:19:20.879 You look at the polling, are disappointed, feel that the 0:19:20.880 --> 0:19:23.199 government should have done better. Do you think that you 0:19:23.240 --> 0:19:24.119 could have done better? 0:19:24.800 --> 0:19:27.320 People voted for change at the general election a year 0:19:27.359 --> 0:19:29.720 and a half ago, and I'm deeply aware of my 0:19:29.800 --> 0:19:33.199 responsibility and helping to deliver that change. Now since I 0:19:33.280 --> 0:19:38.280 became chancellor, wages have increased faster than inflation every single month, 0:19:38.560 --> 0:19:41.240 and the six cuts in interest rates means that if 0:19:41.240 --> 0:19:45.359 you're taking out a mortgage, a typical mortgage, you'll be 0:19:45.400 --> 0:19:48.560 saving around three hundred pounds a year than if you'd 0:19:48.560 --> 0:19:51.040 have taken that mortgage out the day before I became 0:19:51.119 --> 0:19:55.000 Chancellor of the Exchequer. But the years leading up to 0:19:55.680 --> 0:19:58.520 that had been really tough for people. The last parliament 0:19:58.560 --> 0:20:01.520 was the first parliament ever where people were poorer on 0:20:01.560 --> 0:20:03.479 average at the end of it than they were at 0:20:03.520 --> 0:20:06.840 the start, and it takes time to unwind that legacy. 0:20:07.520 --> 0:20:10.600 We've made progress, but is there more to do? Absolutely 0:20:10.680 --> 0:20:14.159 there is, which is why I'm so focused on bringing 0:20:14.200 --> 0:20:17.720 down inflation and interest rates and returning that stability to 0:20:17.760 --> 0:20:20.960 the economy. But the other thing that makes people's lives 0:20:21.040 --> 0:20:24.920 better is having public services that function properly, being able 0:20:24.960 --> 0:20:27.560 to get a hospital appointment or a doctor's appointment when 0:20:27.560 --> 0:20:30.919 you need it, Ensuring your kid gets into the school 0:20:30.960 --> 0:20:34.720 they want to go to and has good qualified teachers. 0:20:35.760 --> 0:20:40.200 Buses and trains that run frequently and are affordable. All 0:20:40.240 --> 0:20:43.720 of those things that we're starting to make a difference, 0:20:44.160 --> 0:20:46.720 But there is more to do. I think that the 0:20:46.760 --> 0:20:48.800 next election, what people are going to ask is and 0:20:48.920 --> 0:20:51.359 me and my family better off? And I'm determined that 0:20:51.400 --> 0:20:54.040 the answer to that question is yes. By ensuring that 0:20:54.080 --> 0:20:57.000 people have more money in their pockets to spend on 0:20:57.040 --> 0:20:58.719 the things that they want to spend it on, not 0:20:58.800 --> 0:21:03.000 just the essentials the mortgage, the bills, the weekly food shop, 0:21:03.000 --> 0:21:05.040 but more money to spend on the things that they 0:21:05.119 --> 0:21:08.679 actually want to do that give them pleasure in their 0:21:08.760 --> 0:21:12.439 lives and are undetermined that people have more of that. 0:21:12.960 --> 0:21:14.959 But the first thing you need to do to achieve 0:21:15.000 --> 0:21:17.280 that is to bring stability back to the economy. And 0:21:17.320 --> 0:21:21.240 what the OBR forecasts showed today is that we have 0:21:21.400 --> 0:21:25.840 made great strides forward in returning that stability to the economy, 0:21:26.240 --> 0:21:29.639 which should pay dividends in terms of having money to 0:21:29.680 --> 0:21:32.480 spend on the priorities of working people and to make 0:21:32.480 --> 0:21:33.520 working people better off. 0:21:33.800 --> 0:21:35.399 There was quite a lot in the forecast. I mean, 0:21:35.600 --> 0:21:38.080 there is a slightly lower growth forecast for this year, 0:21:38.840 --> 0:21:42.000 and that's due to lower net migration, which the government 0:21:42.040 --> 0:21:44.320 has obviously taken a lot of measures on. But the 0:21:44.359 --> 0:21:48.000 OBI expects it and expects that fall in net migration, 0:21:48.119 --> 0:21:50.560 the increase in the labor force and people coming in 0:21:50.840 --> 0:21:53.359 to be permanent, but that that sort of half a 0:21:53.400 --> 0:21:56.480 percent of GDP loss and GDP growth will be made 0:21:56.560 --> 0:21:58.960 up for in productivity. Will actually get more out of 0:21:59.000 --> 0:22:02.320 the people we have working in this country. So is 0:22:02.320 --> 0:22:05.680