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Speaker 1: This is Bloomberg Daybreak here for this Wednesday, the twenty

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Speaker 1: second of March in London. Coming up today, No Good Choices.

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Speaker 1: Your Own Powell to unveil the Fed's next move on

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Speaker 1: rates after weeks of market turmoil. Two mid size to fail.

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Speaker 1: The rescue of First Republic may need US government support.

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Speaker 1: Solid foundations, The Chancellor says, UK banks are immensely stronger

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Speaker 1: than in two thousand and eight. Boris Johnson's reckoning age

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Speaker 1: is just a number, and the EU Clear's house. Those

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Speaker 1: of the stories we're looking at in today's papers. I'm

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Speaker 1: James Walcock. Plus credit suis, pay pain authorities, freeze deferred

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Speaker 1: bonuses for bankers. That's all straight ahead on Bloomberg Daybreak Europe.

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Speaker 1: The business news you need to start your day in

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Speaker 1: just one fifteen minute podcast on Apple, Spotify, the Bloomberg

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Speaker 1: Business App and everywhere you get your podcasts. Good morning.

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Speaker 1: I'm Stephen Carroll and I'm Caroline Hecker. Here all the

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Speaker 1: stories that we're following today. The eyes of the financial

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Speaker 1: world are on Washington today. With the FED charge, your

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Speaker 1: own Powell will seek to balance the twin threats of

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Speaker 1: inflation and banking instability. Markets are currently pricing in a

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Speaker 1: quarter point interest rate hike. However, uncertainty over the path

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Speaker 1: forward is at its highest level since the pandemic. Former

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Speaker 1: World Bank Chief economist Carmen Reinhart says she expects the

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Speaker 1: FED to opt for right rise. I think it is

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Speaker 1: too soon to expect that the Fed will throw in

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Speaker 1: the towel, so to speak, on their inflation fighting. I

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Speaker 1: think also not a complete pause may not only be

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Speaker 1: counterproductive from the vantage point of the medium term inflation objectives,

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Speaker 1: but also could say the signal that they know something

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Speaker 1: worse that the markets are yet to learn. Well, if

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Speaker 1: we'll find out if Carmen Reinhart is right when the

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Speaker 1: decision and forecasts are released at six pm UK time.

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Speaker 1: Trump Power will hold a press conference thirty minutes later,

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Speaker 1: which we'll bring you live here on Blinberg Radio. Former

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Speaker 1: Bank of England policymaker Danny blanche Flower says that it

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Speaker 1: would be reckless for the Federal Reserve and the Bank

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Speaker 1: of England to raise interest rates at their meetings this week.

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Speaker 1: He told us that on Blueberg Daybreak Europe that the

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Speaker 1: FED is to blame for the recent volatility in the

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Speaker 1: banking sector. The best I suspect we can hope for

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Speaker 1: is that they potentially will pause, but the reality is

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Speaker 1: that they should be cutting. That any move upwards would

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Speaker 1: be an enormous error, and what you'll end up seeing

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Speaker 1: is screeching U turns. And I just have to look

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Speaker 1: at what markets are pricing in. Markets today in the

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Speaker 1: United States are pricing in by the end of the

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Speaker 1: year three rate cuts. So the pricing in three rate

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Speaker 1: cuts suggest that the rate rises today would be foolishness

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Speaker 1: at best and disastrous at worst. So that was the

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Speaker 1: former Bank of England policymaker Danny blanche Flower. Will have

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Speaker 1: more of that interview a little later on. Banks are

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Speaker 1: pulling out of risky debt deals in the wake of

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Speaker 1: financial failures around the world. Bloomberg's market supporter Valerie title

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Speaker 1: as the details Ineos eight hundred and eighty million dollars,

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Speaker 1: Agility Health one billion, Russell Investments one point one billion,

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Speaker 1: all loans that have been pulled from the market in

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Speaker 1: the past week. Underwriters are yanking sales and pausing future

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Speaker 1: ones as the turmoil from Silicon Valley Bank and Credit

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Speaker 1: Suite ripple through the market. The rising volatility and borrowing

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Speaker 1: costs are hitting a junk debt market, which already had

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Speaker 1: the lowest issuance in years. In London, Valerie Title, Bloomberg, Daybreak, Europe,

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Speaker 1: Well Will Street leaders and US officials are looking at

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Speaker 1: the possibility of government support in a deal to rescue

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Speaker 1: First Republic Bank. Bloomberg understands that this could include lifting

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Speaker 1: assets out of First Republic that have eroded its balance sheet.

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Speaker 1: The news comes as the Treasury Secretary, Janet Yellen said

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Speaker 1: that the government is prepared to repeat the drastic actions

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Speaker 1: that it took recently to protect bank depositors. Our intervention

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Speaker 1: was necessary to protect the broader US banking system, and

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Speaker 1: similar actions could be warranted if smaller institutions suffered deposit

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Speaker 1: runs that pose the risk of contagion. Janet Yellen. They're

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Speaker 1: speaking at the American Bankers Association's summit in Washington. After

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Speaker 1: Silicon Valley Bank and Signature Bank failed, regulators took the

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Speaker 1: unusual step of covering uninsured deposits here in the UK

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Speaker 1: chanswer of the Excheco, Jeremy Hunt was also asked if

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Speaker 1: he was concerned about growing financial risks and the government

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Speaker 1: does recognize that there is some volatility in the market,

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Speaker 1: but we believe the UK financial system is fundamentally strong

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Speaker 1: and UK banks are well capitalized. They now have core

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Speaker 1: capital ratios that there three times higher than before the

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Speaker 1: two thousand and eight global financial crisis. But we continue

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Speaker 1: to monitor the situation carefully. Jeremy Hunt, speaking to He's

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Speaker 1: in Parliament. When asked if he had issues with Swiss

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Speaker 1: authorities changing their rules to allow Credit Sweezes takeover by

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Speaker 1: UBS group, Hunt said he wholly supported the decision and

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Speaker 1: finally deferred bonuses for Credit Swee bankers have been frozen

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Speaker 1: by the Swiss government. The news pas more pain on

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Speaker 1: awards that were already decimated when the lender's share price

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Speaker 1: plunged after the UBS takeover. Authorities have the power to

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Speaker 1: implement the measure when systematically important banks receive state aid.

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Speaker 1: Bloomberg understands that the bank can pay cash bonuses still

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Speaker 1: for last year as planned. Those are a few of

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Speaker 1: our top stories this morning, Caroline, I always learned something

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Speaker 1: when I read our Bloomberg opinion. Economist Andrea Felsted's pieces

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Speaker 1: this morning. It's her coining of the phrase big bling

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Speaker 1: to describe the luxury industry look. She's writing about how

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Speaker 1: the downturn around banking could affect big luxury, big luxury companies.

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Speaker 1: In her words, when a butterfly flaps us wings on

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Speaker 1: a Gucci bag in San Francisco, shoppers in Shanghai feel

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Speaker 1: the breeze effects. Yeah. Absolutely. Look I think that openly line,

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Speaker 1: you know, gets best quote of the day. Frankly, Yeah,

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Speaker 1: they're super wealthy. They don't have the kind of ordinary

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Speaker 1: concerns about inflation that perhaps others do in cost of

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Speaker 1: living and so on. But actually banking crises, it can,

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Speaker 1: or at least some way that it will put those

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Speaker 1: very very wealthy, high end consumers off frankly, buying anything

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Speaker 1: really expensive and flash. And that's what we saw in

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Speaker 1: two thousand and eight, and it's also what we saw

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Speaker 1: in China when they had their crackdown and conspicuous consumption

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Speaker 1: in twenty fifteen as well. And there's also pointing the

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Speaker 1: fact that things like job blasses and finance and tech

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Speaker 1: are actually also going to effect the brands that are

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Speaker 1: more skewed towards middle class shoppers. The likes of Hugo

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Speaker 1: Bass is the sort of one that she points to

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Speaker 1: as being potentially vulnerable as well, and she says that

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Speaker 1: one indicator we should be looking at as the price

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Speaker 1: of rolex watchers on the secondary market, they have stabilized

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Speaker 1: along with Bitcoin, which is an idea of how the

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Speaker 1: richest are feeling about the squeeze. Sort of upper middle

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Speaker 1: I'll put it that way. Yeah, lovely piece by Andrew

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Speaker 1: Fel said. So let's also talk though about really what

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Speaker 1: is going to be most important today the Fed court,

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Speaker 1: between this sudden banking crisis and inflation, how will they respond.

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Speaker 1: Let's bring in Blue Beggs, Executive editor for Asia Markets,

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Speaker 1: Paul Dobson. Paul, super to have you on the program

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Speaker 1: this morning. The expectation for this Fed rate decision has

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Speaker 1: been wild, frankly for a couple of weeks. What do

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Speaker 1: we think is going to happen? What will the FMC

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Speaker 1: deliver today? Do we think? Yeah, good morning, Caroline. So

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Speaker 1: the base case, after all of the turmoil that we've

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Speaker 1: had over the last two weeks or six weeks, is

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Speaker 1: for the Fed to proceed with the twenty five basis

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Speaker 1: point hike, you know, but I think that there's a

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Speaker 1: lot more toward and a lot more to consider than that.

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Speaker 1: So the market pricing is for an eighty percent probability

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Speaker 1: that they will hike by twenty five basis points. The

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Speaker 1: range of estimates is broad, though, from a cut of

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Speaker 1: twenty five basis points to a hike of fifty basis points,

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Speaker 1: And that tells you the spectrum of views among analysts,

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Speaker 1: some of whom are very worried about the banking crisis

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Speaker 1: that we've had, some others who are very worried about

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Speaker 1: the inflation that we're seeing. And you know, the FED

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Speaker 1: has to balance those two risks. And I think what

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Speaker 1: will be more key than what they actually do in

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Speaker 1: terms of the rate decision will be what that dot

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Speaker 1: plot looks like, what the forward forecast for the peak

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Speaker 1: of the Feds are hiking cycle, and when it comes,

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Speaker 1: how much further do they think that they've got to go?

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Speaker 1: Be really interesting. And then, of course, you know Powell

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Speaker 1: has got a difficult balancing act to pull off in

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Speaker 1: the press conference as well, to reassure people about the

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Speaker 1: banking risks and that the FED can also get inflation

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Speaker 1: under control and that we're not just in the middle

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Speaker 1: of a nosedive towards a very hard landing. Yeah, I mean,

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Speaker 1: it'd be interesting, as you say, to watch what happens

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Speaker 1: in terms of for a guidance given what the ECB

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Speaker 1: said about at last as well. But I want you

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Speaker 1: to ask you about the credit markets and all of this.

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Speaker 1: You know, does the US regional bank crisis cause a

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Speaker 1: credit contraction and art or when will we know what

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Speaker 1: the broader effect of that is. You probably probably won't

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Speaker 1: know until it's too late. I was arguing with my

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Speaker 1: colleagues all morning about which is more important for macro

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Speaker 1: markets right now. Is it the FED decision on what

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Speaker 1: they say and do today, Is it whether the US

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Speaker 1: can get to grips with the trouble that's are racking

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Speaker 1: the banks at the moment. My view is the latter.

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Speaker 1: I think you know that everybody has now tried to

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Speaker 1: really draw a line with First Republic. The big banks

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Speaker 1: have all put deposits in there to try to boost confidence.

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Speaker 1: That hasn't necessarily worked. We're still seeing, you know, kind

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Speaker 1: of people are considering the need for more aid or

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Speaker 1: more action to kind of give it that prop And

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Speaker 1: the concern is that, you know, even if that one solved,

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Speaker 1: then the market focus just moves on to the next one.

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Speaker 1: So I think being able to short circuit that get

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Speaker 1: the credit risks on to control before there's too much

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Speaker 1: of a contraction before bank borrowing costs is so high

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Speaker 1: that it starts to really spill into the real economy.

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Speaker 1: Is probably the number one thing to be worried about

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Speaker 1: right now, and in fact, in the in the recent

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Speaker 1: Bank of America survey of market participants, that credit risk

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Speaker 1: and the risk of a contagion from bank to bank

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Speaker 1: is really what investors number one our concern is right now. Okay,

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Speaker 1: So in terms of the dot plot and projections, the

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Speaker 1: last of which came in December, the data out forward guidance,

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Speaker 1: will we know anymore today? I mean, that is the

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Speaker 1: expectation that we get that, that's the that's the expectation.

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Speaker 1: Here's a hilarious statistic for you, Caroline, which is that

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Speaker 1: the two year yield on US treasuries is actually pretty

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Speaker 1: much exactly where it was at the time of the

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Speaker 1: last FED meeting. In the interim, of course, we've gone

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Speaker 1: shooting higher and then we blazed lower, and now we're

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Speaker 1: back where we where we started again. You know, as

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Speaker 1: we were getting towards this, we had some pretty frothy

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Speaker 1: looking inflation data, and the concern was that they'd need

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Speaker 1: to get more aggressive, would need to push the peak

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Speaker 1: rate much higher still. Probably the dop plot has got

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Speaker 1: to indicate some concern about that. But at the same time,

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Speaker 1: you know, I would expect that there might be a

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Speaker 1: big range of views, and maybe that gives Powell enough

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Speaker 1: space to hide and say, look, the future, our path

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Speaker 1: is pretty uncertain. The other option for him is just

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Speaker 1: to take a skip on it altogether, which is what

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Speaker 1: they did two years ago during our COVID. You know,

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Speaker 1: it's too much uncertainty for us to see, so we're

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Speaker 1: not going to give you any any path here, but

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Speaker 1: that of course risks causing its own panic and concerns

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Speaker 1: as well. Paul, we will let you go back to

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Speaker 1: arguing with your colleagues. Thank you very much for your

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Speaker 1: time on the program this morning. That's Bloomberg's executive editor

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Speaker 1: for Asia Markets, Paul Dobson. The former bank having the

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Speaker 1: policymaker Danny blanche Flier says it would be madness for

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Speaker 1: central banks to raise rates now after the volatility we've

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Speaker 1: seen in the banking sector. Lass Flowers, now a professor

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Speaker 1: of economics at Dartmouth. He told us that raising rates

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Speaker 1: further would be reckless. The volatility and the activities around

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Speaker 1: the globe have essent resulted in about probably two hundred

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Speaker 1: basis points equivalent of tightening. So this volatilely has done

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Speaker 1: the fed's work for it. And I actually think if

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Speaker 1: you have to think of one place, one organization that's

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Speaker 1: responsible for this volatility, that essentially is the cause of

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Speaker 1: this volatility, it's the FIT Wrongly raised rates, didn't really

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Speaker 1: think of the implications, thought everything would be just fine,

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Speaker 1: and tried to tell everybody, including themselves, that there was

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Speaker 1: going to be a soft landing based upon absolutely no

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Speaker 1: evidence whatsoever, and now we see the consequences. Was the

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Speaker 1: goal of fighting inflation not necessary that they would try

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Speaker 1: raising rates to bring down inflation. There was a lot

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Speaker 1: of evidence that actually the inflation was essentially transitory in

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Speaker 1: one sense that there was a supply shock from COVID

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Speaker 1: and then a second supply shock from the Ukraine War.

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Speaker 1: So the idea that you want to be like Vulca

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Speaker 1: of exploding wages and because of rising demand was really

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Speaker 1: for the birds. And the group think amongst these central

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Speaker 1: bankers was pretty interesting. Essentially really no descents on the FED,

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Speaker 1: only in the last meeting or two some descents on

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Speaker 1: the MPC. So this was really about we think we're

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Speaker 1: going to fight inflation. Inflation sort of inevitably was going

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Speaker 1: to fall away as all the prices fell and things

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Speaker 1: came back to normal. But the whole, in a sense,

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Speaker 1: this was I called it guessonomics. This was essentially a

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Speaker 1: wing and a prayer without really thinking about what the

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Speaker 1: potential consequences on the real economy were. Let's think about

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Speaker 1: what the driver was of the Silicon Valley Bank. It

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Speaker 1: was the tech companies that have been used to relatively

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Speaker 1: low interest rates were suddenly faced with higher interest it

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Speaker 1: as was the Silicon Valley Bank that had bought long bonds.

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Speaker 1: So the idea not only that you raised rates, but

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Speaker 1: you write raised rates in a dizzying way and convince

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Speaker 1: yourself that it was all absolutely wonderful and the banking

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Speaker 1: system was absolutely fine, given that we had history of that.

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Speaker 1: In two thousand and seven and two thousand and eight,

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Speaker 1: Professor Blanchflower I was speaking to Lord Adair Turner, who

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Speaker 1: was head of the FCA, the UK regulator at the time.

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Speaker 1: It's just a few days after the demon collapse, and

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Speaker 1: I asked him this question, are we returning to two

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Speaker 1: thousand and eight or is this an extension of the

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Speaker 1: two thousand and eight global financial crisis in some ways revisited.

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Speaker 1: You're saying that it is he disagreed with that entirely,

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Speaker 1: bless a dear, or maybe maybe I mean I mean,

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Speaker 1: I can remember Northern Rock, and Northern Rock failed in

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Speaker 1: a particular week. The website crashed as people pulling money out,

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Speaker 1: and essentially the government had to decide what to do

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Speaker 1: on the Monday morning whether they would guarantee all deposits,

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Speaker 1: and they had to. And that was exactly a precursor

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Speaker 1: to what happened with Silicon Valley. Janet Yellen sat over

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Speaker 1: the weekend and thought to himself, what I do? Can

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Speaker 1: I allow this run on the banks to occur? So

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Speaker 1: the answer was, well, they did exactly the same as

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Speaker 1: they did at Northern Rock. So there's an analogy already.

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Speaker 1: And remember then on October the eighth, two thousand and eight,

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Speaker 1: the world's central banks acted together as they did this week.

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Speaker 1: So the Canadian Central Bank, the Japanese Central Bank, the

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Speaker 1: Swiss Central Back, the ECB, and the Bank of England

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Speaker 1: acted together to try and calm down global markets. So

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Speaker 1: a dare can say there's no analogy, but we can

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Speaker 1: think of analogies all over the place. Then you see

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Speaker 1: more concerning air is more shoes to drop, if you will,

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Speaker 1: but more bank contagion, more problems in other parts of

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Speaker 1: the US, European UK economies. Then well that's the worry.

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Speaker 1: I think of the right strategy. The right strategy is

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Speaker 1: to say I have concerns about the potential contagion and

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Speaker 1: I have to do everything I can to prevent that contagion.

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Speaker 1: The right tactic is to prepare for the worst and

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Speaker 1: hope for the best the strata. Now what we're seeing

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Speaker 1: regulators doing though, is that not what they're doing in

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Speaker 1: this moment? Well, to some degree we are, and obviously

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Speaker 1: the response of yelling is an appropriate one. We need

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Speaker 1: to make sure that the system is backstop. But what

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Speaker 1: have we what have we actually not learned? We learned

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Speaker 1: with Credits Sweet and the rescue there that first bondholders

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Speaker 1: we're going to got wiped out, so that's raised the

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Speaker 1: risk premier around the world. But also that UBS demanded

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Speaker 1: nine billion dollar fund, that Swiss Bank fund to basically

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Speaker 1: deal with the with the surprises that we're in the

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Speaker 1: Credit Sweet books. And I think we have to look

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Speaker 1: back in the UK and say, well, what happened after

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Speaker 1: trust anomics? Trust and Boating introduced a budget on the Friday,

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Speaker 1: and on Monday the UK pension industry collapsed. Them on

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Speaker 1: Tuesday the mortgage markets closed. So not only is the

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Speaker 1: worry that that there is contagion, the difficulty is that

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Speaker 1: this contagion and the consequences of it spread very fast.

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Speaker 1: And in a sense, the great football analogy is appropriate.

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Speaker 1: You get your retaliation in first. Here you prepare for

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Speaker 1: this and try and prevent it. Prevent it. The idea

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Speaker 1: that central banks would raise rates this week is well,

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Speaker 1: I think it would generate a disaster. I would say

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Speaker 1: that's the danger. Do you think that that is what

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Speaker 1: the FED and the Bank of England and a host

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Speaker 1: of other central banks who make decisions this week are

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Speaker 1: actually going to do. Though, do you think that they

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Speaker 1: are going to continue raising rates as we've discussed to

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Speaker 1: try to control inflation, Well, there is obviously considerable probability

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Speaker 1: that they will do that, and markets are still pricing

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Speaker 1: that in. But there are considerable voices now being raised.

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Speaker 1: I mean Richard Murphy and I wrote a response to

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Speaker 1: the Treasury Select Committee arguing that basically that they should

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Speaker 1: be cutting by probably one fifty at this meeting to

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Speaker 1: try and get retaliation in early. So the issue is

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Speaker 1: if they're going to raise. The best I suspect we

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Speaker 1: can hope for is that they potentially will will pause,

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Speaker 1: and I think pausing is probably the best you can

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Speaker 1: hope for. But the reality is that they should be

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Speaker 1: cutting that any any move upwards would be an enormous error,

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Speaker 1: and what you'll end up seeing is screeching U turns.

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Speaker 1: And I just have to look at what markets are

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Speaker 1: pricing in. Markets today in the United States are pricing

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Speaker 1: in by the end of the year three rate cuts.

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Speaker 1: So if the pricing in three rate cuts suggest that

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Speaker 1: the rate rises today would be foolishness at best and

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Speaker 1: disastrous at worst. That's Danny Blantire, professor of economics at

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Speaker 1: Dartmouth and a former member of the Bank of England's

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Speaker 1: Monetary Policy Committee. Up next, Bois Johnson's reckoning Age is

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Speaker 1: just a number and the EU Clear's House Now the

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Speaker 1: paper Review on blue Bird day Break Europe. The news

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Speaker 1: you need to know from today's papers. Well, Baris Johnson's

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Speaker 1: testimony to a party gas is on the front of

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Speaker 1: most papers this morning here in the UK, except for

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Speaker 1: the Telegraph, which caused Kirstarmer a hippocrite, and the Financial Times,

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Speaker 1: which is writing about pensiance. James Willcocker's with us for

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Speaker 1: the details of what's in the papers today. James, let's

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Speaker 1: start then with Boris Johnson. Yes, Steven, I don't want

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Speaker 1: to sort of relstigate the ins and outs of party Gate,

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Speaker 1: mostly because Kitty Johnson does that on the UKA Politics

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Speaker 1: podcast yesterday with Carol and Hepke. But today Boris Johnson

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Speaker 1: has submitted a fifty page submission to the Commons Privileges

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Speaker 1: Committee arguing why he didn't break the ruled last year.

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Speaker 1: Now it's given all the papers to covering this. There

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Speaker 1: are many different angles to explore, but I want to

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Speaker 1: get to the Times because they really break this down

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Speaker 1: into Boris Johnson said on the first of December that

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Speaker 1: all the guidance were followed at all times. Now, Martin Reynolds,

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Speaker 1: who was the Private Principal principal Private Secrety story at

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Speaker 1: the time, sent over what's up. You shouldn't say that, Boris,

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Speaker 1: because we should say no rules were broken. Now it's

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Speaker 1: an important distinction, but they were kind of trying to

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Speaker 1: caveats quite how it happened, So even in their testimony

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Speaker 1: there is this kind of distinction here. And what this

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Speaker 1: hearing comes down to today, after about a year of

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Speaker 1: waiting for sort of various Sue Gray reports and inquiries,

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Speaker 1: is did Boris Johnson light of Parliament? And if that

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Speaker 1: is found to have happened, there are serious consequences for him.

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Speaker 1: He might lose his seats, he might lose the Tory whip.

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Speaker 1: But what is more important for the Government of the

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Speaker 1: day now is this is almost serving to be a

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Speaker 1: bit of a lightning rod for criticism of Richie Sunac.

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Speaker 1: You're seeing sort of a wave of sort of anti

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Speaker 1: Suonac sentiment this week from the EARG having a go

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Speaker 1: his Brexit deal, Todup saying that they also won't back it,

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Speaker 1: and now Johnson has set to sort of steal the

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Speaker 1: thunder and make the attention all on him again. And

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Speaker 1: as a reminder, Richie Sunac was fine for Party eight two,

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Speaker 1: so this isn't a topic that he particularly wants to

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Speaker 1: be revisiting. No, absolutely, do listen to Kitty Donaldson because

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Speaker 1: we had a long conversation on the UK Politics podcast,

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Speaker 1: as you mentioned James yesterday about it she's just absolutely fascinating,

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Speaker 1: and she was saying that there perhaps is an element

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Speaker 1: of chardon freuder amongst the allies. She says that basically

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Speaker 1: the Prime Minister is going to try to keep his

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Speaker 1: head down, perhaps you know, re emerge at the weekend

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Speaker 1: once all of this Boris Johnson drama is out of

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Speaker 1: the way. And yet, you know, she says, it's sort

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Speaker 1: of revisiting an immensely painful period in Britain's past, you know,

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Speaker 1: going back to kind of party getting what officials. Although

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Speaker 1: she was quite sympathetic about what the officials were doing

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Speaker 1: at the time, you know, they didn't realize how it

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Speaker 1: was going to look, was her view. Anyway, that aside,

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Speaker 1: let's move on and talk about pensions, the story in

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Speaker 1: the ft We will watch Boris Johnson a bit later,

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Speaker 1: But what about the pension. I mean the thing right,

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Speaker 1: it's all encompassing that Boris Johnson story, But what it's

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Speaker 1: fascinating is pensions as well. The Telegraph when they called

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Speaker 1: Starer hypocrit was all about his pension's cap So it

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Speaker 1: is really starting to dominate the headlines where the ft

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Speaker 1: R state ministers have delayed plans to raise the state

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Speaker 1: pension age to sixty eight and mid falling life expectancy

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Speaker 1: in the UK now that review comes up at May seventh,

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Speaker 1: then maybe they're looking to France where we've been covering

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Speaker 1: from their age going up from sixty two to sixty

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Speaker 1: four and seeing this caused massive discontent. As well as

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Speaker 1: that this raises the question of where the government finds

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Speaker 1: its money. If it's not going to up the pension aide,

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Speaker 1: how is it going to guess it. John steppec at

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Speaker 1: sort of fiscal whiz guru, points out here that maybe

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Speaker 1: it's fiscal drag that gets you, because by freezing income

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Speaker 1: tax and national insurance thresholds, the government's set to raise

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Speaker 1: nearly thirty billion pounds a year in taxes by twenty

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Speaker 1: twenty seven. So maybe what the calculation here is, well,

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Speaker 1: we're actually taxing you in other ways where it's not

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Speaker 1: caused this political bomb by raising the state pension aide.

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Speaker 1: But that's certainly what the ft think is going on

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Speaker 1: behind the scenes. Certainly we're all being dragged by the

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Speaker 1: taxman in some way or another. James, let's go to

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Speaker 1: the Telegraph next, writing about brexits the impact of Brexit

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Speaker 1: on the City of London in some colorful language. Yes,

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Speaker 1: I look at our reporting of how Brexit has shifted

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Speaker 1: a lot of the Crowns of London's finance over to

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Speaker 1: the EU, and then compared to some of the Telegraph's wording,

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Speaker 1: they call it a plot by Brussels to shift the

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Speaker 1: City of London's lucrative clearing market of the concert. It's

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Speaker 1: anti competitive and it will increase costs, European investors have warned.

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Speaker 1: So the reason why this is interesting and not just

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Speaker 1: a plot is that it is European fund and asset

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Speaker 1: managers who have written to Europe's authorities saying, actually putting

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Speaker 1: in place barrows to trade it won't help the bottom

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Speaker 1: line and won't be good for business, so it won't

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Speaker 1: do so. But what rather than just worrying about it

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Speaker 1: and calling it a plot, what is fascinating here is

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Speaker 1: the block is looking to try and reassure risk. There's

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Speaker 1: a great piece on Bloomberg by it come fat out

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Speaker 1: this morning saying all the people who have moved over

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Speaker 1: to Europe are being asked by European regulators to check

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Speaker 1: that their regulations are up to scratch in the wave

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Speaker 1: of this financial risk, because actually it's not about just

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Speaker 1: money moving. It's about European regulations being certain that their

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Speaker 1: money is safe because they don't have as much control

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Speaker 1: over them. This is Bloomberg Daybreak Europe. You're a morning

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