1 00:00:02,960 --> 00:00:07,280 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,920 --> 00:00:10,520 Speaker 2: Right now back in our New York Studios, Bloomberg Balance 3 00:00:10,560 --> 00:00:12,639 Speaker 2: of Power co host Kaylee Lines sitting down to talk 4 00:00:12,680 --> 00:00:15,680 Speaker 2: with the UK Chancellor of the Exchequer, Jeremy Hunt. Let's 5 00:00:15,680 --> 00:00:17,040 Speaker 2: toss it over to Kaylee. 6 00:00:16,800 --> 00:00:19,920 Speaker 1: Kayley, Carol, thank you. I am indeed joined by Jeremy Hunt, 7 00:00:19,920 --> 00:00:22,400 Speaker 1: the Chancellor of the Exchequer. Chancellor, thank you so much 8 00:00:22,400 --> 00:00:24,160 Speaker 1: for being here. It's great to have you on Bloomberg 9 00:00:24,160 --> 00:00:27,960 Speaker 1: Television and Radio. Just moments ago, we finished hearing remarks 10 00:00:27,960 --> 00:00:30,520 Speaker 1: from the FED Chairman Jerome Powell suggesting that it might 11 00:00:30,520 --> 00:00:32,879 Speaker 1: be a little longer until they're confident that the economy 12 00:00:32,920 --> 00:00:34,920 Speaker 1: is going to be ready for rate cuts. Is this 13 00:00:34,960 --> 00:00:37,640 Speaker 1: economy is still running pretty hot in the UK. There 14 00:00:37,680 --> 00:00:40,919 Speaker 1: are some signs that things are cooling, an unemployment rate 15 00:00:41,000 --> 00:00:43,320 Speaker 1: that jump to four point two percent in today's data. 16 00:00:43,360 --> 00:00:46,559 Speaker 1: The IMF today downgraded its growth forecast for the year, 17 00:00:46,640 --> 00:00:49,400 Speaker 1: suggesting the UK economies running about three tens of a 18 00:00:49,440 --> 00:00:53,640 Speaker 1: percent below its potential, which could suggest policy is too tight. 19 00:00:53,720 --> 00:00:56,040 Speaker 1: How soon will the UK be ready for a rate cut? 20 00:00:56,560 --> 00:00:59,280 Speaker 2: Well, that's a decision for the Independent Bank of England. 21 00:00:59,320 --> 00:01:02,920 Speaker 2: Just like in the US, that decision is taken independently 22 00:01:03,360 --> 00:01:04,920 Speaker 2: and they have to look at lots of things. I mean, 23 00:01:04,920 --> 00:01:08,080 Speaker 2: we've still got very strong wage growth data. It's been 24 00:01:08,120 --> 00:01:11,160 Speaker 2: going up for nine months in a row in real terms. 25 00:01:12,000 --> 00:01:14,959 Speaker 2: But I think the big message from today is that 26 00:01:15,040 --> 00:01:17,240 Speaker 2: the IMF is saying that inflation is going to be 27 00:01:17,240 --> 00:01:20,640 Speaker 2: one point two percent lower. There are people who are 28 00:01:20,640 --> 00:01:24,039 Speaker 2: now forecasting inflation will be lower in the UK than 29 00:01:24,120 --> 00:01:27,720 Speaker 2: in the US or possibly even the Eurozone. And so 30 00:01:28,080 --> 00:01:30,880 Speaker 2: you know that situation we're in eighteen months ago with 31 00:01:30,959 --> 00:01:34,360 Speaker 2: inflation at eleven point one percent, that is well and 32 00:01:34,400 --> 00:01:35,240 Speaker 2: truly behind us. 33 00:01:35,360 --> 00:01:35,959 Speaker 3: And if you're. 34 00:01:35,840 --> 00:01:40,039 Speaker 2: Looking forward in terms of longer term growth prospects, the 35 00:01:40,080 --> 00:01:42,640 Speaker 2: IMF today are saying that the UK will grow faster 36 00:01:42,720 --> 00:01:45,959 Speaker 2: than France, Germany or Italy over the next six years. 37 00:01:46,400 --> 00:01:48,880 Speaker 3: So we think we have very strong growth prospects. 38 00:01:49,000 --> 00:01:51,160 Speaker 1: So you aren't concerned at all about what potentially could 39 00:01:51,240 --> 00:01:54,160 Speaker 1: happen two parts of the UK economy, like the labor market, 40 00:01:54,240 --> 00:01:56,640 Speaker 1: if policy were to take stay too tight for too 41 00:01:56,680 --> 00:01:58,640 Speaker 1: much longer. Given what you are saying as a downward 42 00:01:58,640 --> 00:02:00,720 Speaker 1: trajectory in inflation, well. 43 00:02:00,600 --> 00:02:03,400 Speaker 2: Obviously in the short term we look to the Bank 44 00:02:03,400 --> 00:02:07,360 Speaker 2: of England to get that fine judgment right. But what 45 00:02:07,720 --> 00:02:11,080 Speaker 2: finance ministers like me can do is much more about 46 00:02:11,080 --> 00:02:15,160 Speaker 2: the longer term competitiveness of the UK economy. And we 47 00:02:15,240 --> 00:02:18,240 Speaker 2: note that the IMF today say there's a whole section 48 00:02:18,480 --> 00:02:23,000 Speaker 2: about the impact of AI on the UK economy because 49 00:02:23,040 --> 00:02:27,040 Speaker 2: they recognize that London is now the world's second largest 50 00:02:27,240 --> 00:02:31,080 Speaker 2: epicenter for AI, R and D after San Francisco, and 51 00:02:31,120 --> 00:02:33,440 Speaker 2: there's a huge amount happening in our tech economy, which 52 00:02:33,480 --> 00:02:37,440 Speaker 2: is third only to the US and China globally, and 53 00:02:37,520 --> 00:02:40,920 Speaker 2: that is really where the big growth in the future 54 00:02:41,000 --> 00:02:42,640 Speaker 2: is going to come in the UK, and that's where 55 00:02:42,639 --> 00:02:45,359 Speaker 2: we think makes the very exciting bet for investors. 56 00:02:45,560 --> 00:02:47,560 Speaker 1: Well, and your point has taken, Chancellor, that you oversee 57 00:02:47,560 --> 00:02:49,760 Speaker 1: the fiscal side, not the monetary side. So on the 58 00:02:49,760 --> 00:02:52,640 Speaker 1: fiscal side, you have suggested that an election could happen 59 00:02:52,680 --> 00:02:56,600 Speaker 1: potentially as soon as October. Should we expect another potential 60 00:02:56,639 --> 00:02:59,600 Speaker 1: fiscal event between now and then or have we seen 61 00:02:59,600 --> 00:03:02,000 Speaker 1: all works going to see on that front before the 62 00:03:02,080 --> 00:03:02,760 Speaker 1: votes are cast. 63 00:03:03,200 --> 00:03:06,080 Speaker 2: Well, it's certainly the case that you know, the feel 64 00:03:06,120 --> 00:03:09,399 Speaker 2: good factor as interest rates start to come down, as 65 00:03:09,480 --> 00:03:13,680 Speaker 2: people start to feel higher real disposable incomes. We'll be 66 00:03:13,720 --> 00:03:17,480 Speaker 2: stronger in people's minds come the early autumn than it 67 00:03:17,560 --> 00:03:21,080 Speaker 2: is now. People have been through a very bruising period. Obviously, 68 00:03:21,080 --> 00:03:23,680 Speaker 2: decisions about election timing are for the Prime Minister, and 69 00:03:24,360 --> 00:03:27,280 Speaker 2: were we to have an October election, as I've said before, 70 00:03:27,280 --> 00:03:29,880 Speaker 2: it'd be possible to have a fiscal event in September, 71 00:03:30,320 --> 00:03:33,640 Speaker 2: but we would decide much nearer the time whether that 72 00:03:33,760 --> 00:03:35,040 Speaker 2: was the right thing to do well. 73 00:03:35,080 --> 00:03:37,200 Speaker 1: Of course, you've already delivered a lot fiscally in terms 74 00:03:37,200 --> 00:03:40,360 Speaker 1: of tax cuts, including personal tax cuts, and yet when 75 00:03:40,360 --> 00:03:42,880 Speaker 1: you look at polls, obviously the Conservative Party is still 76 00:03:42,960 --> 00:03:46,880 Speaker 1: running significantly behind Labor I believe by roughly twenty points. 77 00:03:47,040 --> 00:03:48,760 Speaker 1: What else may need to be done on that front 78 00:03:48,920 --> 00:03:52,440 Speaker 1: to convince UK voters to keep the Conservatives in power? 79 00:03:52,480 --> 00:03:54,320 Speaker 1: What would you consider doing well? 80 00:03:54,360 --> 00:03:57,440 Speaker 2: I'd be very cautious about looking at those polls, because, 81 00:03:58,120 --> 00:04:01,240 Speaker 2: first of all, as we can see from the challenges 82 00:04:01,280 --> 00:04:03,960 Speaker 2: facing incumbent governments, not just in the UK but in 83 00:04:04,000 --> 00:04:07,960 Speaker 2: the US and Germany, France, the electorate have been through 84 00:04:08,000 --> 00:04:13,480 Speaker 2: a really difficult period with an energy shock, with high inflation, 85 00:04:14,120 --> 00:04:17,840 Speaker 2: with a pandemic. But when it comes to a general election, 86 00:04:18,120 --> 00:04:20,440 Speaker 2: it's a choice about the future, it's not a referendum 87 00:04:20,440 --> 00:04:22,400 Speaker 2: on how you feel right now, and that becomes a 88 00:04:22,480 --> 00:04:25,839 Speaker 2: very different decision in people's minds. And we know in 89 00:04:25,880 --> 00:04:28,479 Speaker 2: the UK that around a fifth of voters have not 90 00:04:28,600 --> 00:04:29,800 Speaker 2: yet made up their mind. 91 00:04:29,560 --> 00:04:31,000 Speaker 3: Who they're going to vote for. So we think there's 92 00:04:31,040 --> 00:04:32,039 Speaker 3: all to play for. 93 00:04:32,160 --> 00:04:35,080 Speaker 2: And what we're seeing now is much more positive data 94 00:04:35,160 --> 00:04:39,240 Speaker 2: beginning to come through, very good prospects for the UK 95 00:04:39,440 --> 00:04:42,960 Speaker 2: going forward, as confirmed by the IMF today, And I 96 00:04:42,960 --> 00:04:45,640 Speaker 2: think all that means that our strongest argument to the 97 00:04:45,680 --> 00:04:49,000 Speaker 2: British people is going to be that having turned that corner, 98 00:04:49,640 --> 00:04:52,159 Speaker 2: we don't want to take any risks going forward that 99 00:04:52,200 --> 00:04:54,720 Speaker 2: would mean that we don't have that exciting economic growth. 100 00:04:54,960 --> 00:04:57,640 Speaker 1: Well, something else the IMF warned about in its report 101 00:04:57,680 --> 00:05:01,040 Speaker 1: today was around something you've just mentioned, the idea of 102 00:05:01,080 --> 00:05:05,080 Speaker 1: potentially an energy shock. Considering we are still seeing hot wars, 103 00:05:05,120 --> 00:05:06,840 Speaker 1: not just on the continent of Europe, but of course 104 00:05:06,880 --> 00:05:08,880 Speaker 1: in the Middle East. We are waiting to see what 105 00:05:08,960 --> 00:05:11,400 Speaker 1: kind of retaliation we might see from the Israelis after 106 00:05:11,440 --> 00:05:14,359 Speaker 1: the Iranian attack over the weekend. How concerned are you 107 00:05:14,520 --> 00:05:17,599 Speaker 1: about the way in which this conflict may escalate and 108 00:05:17,640 --> 00:05:20,840 Speaker 1: the ramifications it could have, not just for humanity but 109 00:05:20,960 --> 00:05:22,279 Speaker 1: for the economy. 110 00:05:22,880 --> 00:05:25,120 Speaker 2: Well, I think we all have to be very concerned, 111 00:05:25,839 --> 00:05:28,400 Speaker 2: but I think we should also take comfort from the 112 00:05:28,440 --> 00:05:32,159 Speaker 2: fact that the two biggest shocks that we've seen in 113 00:05:32,200 --> 00:05:35,479 Speaker 2: the last few years, the invasion of Ukraine and the 114 00:05:35,480 --> 00:05:38,560 Speaker 2: attack on Israel, have both been met by a very 115 00:05:38,839 --> 00:05:42,840 Speaker 2: united response from Western allies, much more united than our 116 00:05:42,880 --> 00:05:47,120 Speaker 2: opponents were expecting. And I think that what that demonstrates 117 00:05:47,200 --> 00:05:49,719 Speaker 2: is that when the chips are down, we recognize the 118 00:05:49,720 --> 00:05:52,800 Speaker 2: seriousness of the situation. We work together with our friends 119 00:05:52,800 --> 00:05:55,680 Speaker 2: and allies, and the relationship between the UK and the 120 00:05:55,800 --> 00:05:59,600 Speaker 2: US is right at the center of that Western response 121 00:05:59,800 --> 00:06:01,000 Speaker 2: to the challenges we face. 122 00:06:01,800 --> 00:06:04,359 Speaker 1: Given that there are these still ongoing conflicts, would you 123 00:06:04,360 --> 00:06:08,400 Speaker 1: ever give consideration to raising defense spending or is your 124 00:06:08,400 --> 00:06:11,640 Speaker 1: focus really primarily on delivering tax cuts and that has 125 00:06:11,680 --> 00:06:12,320 Speaker 1: to factor in. 126 00:06:12,839 --> 00:06:16,440 Speaker 2: Well, I think it's possible to do both, because tax 127 00:06:16,480 --> 00:06:17,960 Speaker 2: cuts can help grow the economy. 128 00:06:18,320 --> 00:06:19,080 Speaker 3: That means you have. 129 00:06:19,000 --> 00:06:23,720 Speaker 2: More resources for really important challenges like security. And what 130 00:06:23,720 --> 00:06:27,039 Speaker 2: I would say is that you know, the UK recognizes 131 00:06:27,240 --> 00:06:30,800 Speaker 2: with the biggest spender on defense in Europe, we recognize 132 00:06:30,800 --> 00:06:33,040 Speaker 2: that going forward, we're likely to have to spend more. 133 00:06:33,440 --> 00:06:36,160 Speaker 2: But part of our job is also to persuade other 134 00:06:36,320 --> 00:06:42,360 Speaker 2: NATO European countries that they need to spend their proper amount. 135 00:06:42,960 --> 00:06:46,279 Speaker 2: We can't just depend on the United States to defend Europe. 136 00:06:46,279 --> 00:06:47,760 Speaker 3: We need to play our part well. 137 00:06:47,760 --> 00:06:50,120 Speaker 1: We've heard certainly a great deal of that messaging in 138 00:06:50,160 --> 00:06:52,760 Speaker 1: the US as well, where there has been a evolving 139 00:06:52,839 --> 00:06:57,839 Speaker 1: conversation as for funding for Ukraine, certainly on Capitol Hill 140 00:06:57,880 --> 00:06:59,680 Speaker 1: in Washington. It does seem that there will be a 141 00:06:59,760 --> 00:07:01,600 Speaker 1: legend sleight of effort now that could hit the floor 142 00:07:01,680 --> 00:07:04,440 Speaker 1: this week that involves reper the idea of taking seized 143 00:07:04,480 --> 00:07:08,160 Speaker 1: Russian assets and using that to fund Ukraine's war effort. 144 00:07:08,200 --> 00:07:10,720 Speaker 1: That's something the US would like to pursue. Would you 145 00:07:10,800 --> 00:07:12,760 Speaker 1: like to see the UK pursue that? Would you pursue? 146 00:07:12,960 --> 00:07:14,640 Speaker 1: Would you ask your colleagues that you were going to 147 00:07:14,640 --> 00:07:17,280 Speaker 1: see at the IMF World Bank meetings down in Washington 148 00:07:17,320 --> 00:07:19,520 Speaker 1: this week to congregate around that idea. 149 00:07:19,640 --> 00:07:22,720 Speaker 2: Well, I think it's a very intriguing proposal. I'll be 150 00:07:22,840 --> 00:07:25,640 Speaker 2: meeting Secretary Yellen in the next couple of days and 151 00:07:25,680 --> 00:07:27,760 Speaker 2: I'll certainly be talking to her about it and getting 152 00:07:27,800 --> 00:07:30,360 Speaker 2: some more detail on that, but I think we should 153 00:07:30,400 --> 00:07:33,760 Speaker 2: be thinking about anything we possibly can to come to 154 00:07:33,840 --> 00:07:37,400 Speaker 2: the support of Ukraine. This is an absolutely existential battle, 155 00:07:38,040 --> 00:07:41,720 Speaker 2: not just for Ukraine itself, but for a global order 156 00:07:42,320 --> 00:07:44,520 Speaker 2: in which you know, since the Second World War, we 157 00:07:44,560 --> 00:07:48,840 Speaker 2: have largely stopped large countries thinking they can just invade 158 00:07:48,840 --> 00:07:50,920 Speaker 2: their neighbors and get away with it. And if we 159 00:07:50,920 --> 00:07:55,880 Speaker 2: were to let Russia get away with invading Ukraine, the 160 00:07:56,040 --> 00:07:58,640 Speaker 2: ramifications would be huge, not just in Europe but all 161 00:07:58,680 --> 00:07:59,320 Speaker 2: over the world. 162 00:07:59,360 --> 00:08:01,480 Speaker 3: So I think this is a proposal we should look 163 00:08:01,520 --> 00:08:02,560 Speaker 3: at very carefully. 164 00:08:02,240 --> 00:08:04,240 Speaker 1: Well, and you'll speak with Secretary Yellen about that. But 165 00:08:04,280 --> 00:08:05,920 Speaker 1: of course the US can only do so much in 166 00:08:05,920 --> 00:08:08,120 Speaker 1: this regard. A lot of these frozen assets are not 167 00:08:08,200 --> 00:08:10,360 Speaker 1: held by the United States. They're held on the continent 168 00:08:10,400 --> 00:08:12,800 Speaker 1: of Europe. What kind of conversations have you had with 169 00:08:12,880 --> 00:08:15,800 Speaker 1: your European counterparts around this idea and whether it could 170 00:08:15,800 --> 00:08:18,040 Speaker 1: actually work as well in reality as it may seem 171 00:08:18,240 --> 00:08:21,280 Speaker 1: like it could when just thinking about the idea, Well. 172 00:08:21,200 --> 00:08:22,600 Speaker 3: Kayley, that is the point, isn't it. 173 00:08:22,640 --> 00:08:25,840 Speaker 2: Everyone has to do their bit, and the US has 174 00:08:26,320 --> 00:08:29,320 Speaker 2: taken the lead in terms of the military support for Ukraine. 175 00:08:29,360 --> 00:08:32,640 Speaker 2: The UK has taken the lead in Europe, but countries 176 00:08:32,720 --> 00:08:36,440 Speaker 2: like France and Germany have also given tremendous economic support 177 00:08:36,480 --> 00:08:39,480 Speaker 2: to Ukraine. Everyone has to do their bit, so on 178 00:08:39,480 --> 00:08:44,280 Speaker 2: this particular issue there is a particular role for EU countries, 179 00:08:44,400 --> 00:08:45,600 Speaker 2: but we'll be having. 180 00:08:45,440 --> 00:08:46,480 Speaker 3: A very open discussion. 181 00:08:46,480 --> 00:08:48,040 Speaker 2: One thing I can assure you is that the G 182 00:08:48,160 --> 00:08:52,280 Speaker 2: seven countries, the leading democracies in the world, are absolutely 183 00:08:52,400 --> 00:08:54,360 Speaker 2: united in our support for Ukraine. 184 00:08:54,720 --> 00:08:57,640 Speaker 1: All right, UK Chancellor of the Exchequer, Jeremy Hunt, thank 185 00:08:57,679 --> 00:08:59,720 Speaker 1: you so much for joining us here in New York 186 00:08:59,760 --> 00:09:02,400 Speaker 1: ahead of your trip to Washington. We appreciate you joining 187 00:09:02,480 --> 00:09:04,160 Speaker 1: us on Bloomberg Television and Radio.