1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,920 --> 00:00:13,080 Speaker 2: This is the Bloomberg Daybreak, heurate podcast, available every morning 3 00:00:13,160 --> 00:00:16,639 Speaker 2: on Apple, Spotify or wherever you listen. It's Thursday, the 4 00:00:16,720 --> 00:00:20,000 Speaker 2: eighth of May in London. I'm Stephen Carroll. Coming up today. 5 00:00:20,360 --> 00:00:23,560 Speaker 2: Bloomberg understands that a UK US trade agreement will be 6 00:00:23,600 --> 00:00:27,760 Speaker 2: announced by President Trump later today. The possibility of a 7 00:00:27,760 --> 00:00:31,040 Speaker 2: deal could hand British Prime Minister cair Starmer a political win, 8 00:00:31,440 --> 00:00:34,640 Speaker 2: but the devil will be in the details. Plus threading 9 00:00:34,680 --> 00:00:37,080 Speaker 2: the needle on thread Needle Street, the Bank of England 10 00:00:37,080 --> 00:00:40,320 Speaker 2: prepares to cut interest rates as a potential tariff deal 11 00:00:40,360 --> 00:00:43,960 Speaker 2: adds complexity to the inflation outlook. Let's start with the 12 00:00:44,040 --> 00:00:47,320 Speaker 2: roundup of our top stories. US President Donald Trump is 13 00:00:47,360 --> 00:00:50,760 Speaker 2: expected to announce a trade agreement with the UK later today. 14 00:00:51,040 --> 00:00:54,040 Speaker 2: Details of the agreement remain unclear, but it is believed 15 00:00:54,040 --> 00:00:56,440 Speaker 2: to be a framework deal that could serve as a 16 00:00:56,480 --> 00:01:00,560 Speaker 2: starting point for further negotiations. Trump hinted at the announcement 17 00:01:00,560 --> 00:01:02,960 Speaker 2: and a social media post on Wednesday night saying he 18 00:01:03,000 --> 00:01:05,760 Speaker 2: would hold an Oval Office news conference to discuss a 19 00:01:05,880 --> 00:01:09,520 Speaker 2: major trade deal with representatives of a quote big and 20 00:01:09,640 --> 00:01:12,880 Speaker 2: highly respected country. The New York Times first report of 21 00:01:12,880 --> 00:01:15,440 Speaker 2: the deal would be with the UK, with sources later 22 00:01:15,520 --> 00:01:19,200 Speaker 2: confirming the prospect to Bloomberg. Speaking last month, when President 23 00:01:19,200 --> 00:01:22,679 Speaker 2: Trump announced his first global tariffs, Prime Minister Kirs starmer 24 00:01:22,720 --> 00:01:25,160 Speaker 2: It said getting a deal was his plan. 25 00:01:25,600 --> 00:01:28,800 Speaker 3: Nobody wins in a trade war that is not in 26 00:01:28,840 --> 00:01:32,120 Speaker 3: our national interest. We have a fair and balanced trade 27 00:01:32,160 --> 00:01:37,240 Speaker 3: relationship with the US. Negotiations on an economic prosperity deal, 28 00:01:37,920 --> 00:01:43,800 Speaker 3: one that strengthens our existing trading relationship they continue and 29 00:01:43,840 --> 00:01:46,080 Speaker 3: we will fight for the best deal for. 30 00:01:45,959 --> 00:01:49,120 Speaker 2: Britain, Kis starmer There, speaking last month. Now, the UK 31 00:01:49,160 --> 00:01:51,920 Speaker 2: and US have been an intensive discussions about an economic 32 00:01:51,960 --> 00:01:55,440 Speaker 2: agreement that would reduce the impact of some tariffs, with 33 00:01:55,480 --> 00:01:58,880 Speaker 2: a team of British officials in Washington negotiating terms. This 34 00:01:58,960 --> 00:02:02,440 Speaker 2: week has strengthened and stop futures have risen after those 35 00:02:02,440 --> 00:02:05,040 Speaker 2: reports emerged. Investors will be watching closely to see the 36 00:02:05,120 --> 00:02:08,680 Speaker 2: extent to which Trump is willing to backtrack from his 37 00:02:08,960 --> 00:02:11,600 Speaker 2: sweeping tariffs. The UK has been pushing to strike a 38 00:02:11,639 --> 00:02:14,640 Speaker 2: deal with Donald Trump to shield British industry from tariff's, 39 00:02:14,639 --> 00:02:18,160 Speaker 2: including twenty five percent duties on steel and car exports. 40 00:02:18,480 --> 00:02:21,040 Speaker 2: Kirs Starmer's government has also been worried about the tariffs 41 00:02:21,080 --> 00:02:23,960 Speaker 2: the US may impose on the pharmaceuticals sector and the 42 00:02:23,960 --> 00:02:27,120 Speaker 2: British film industry. A key sticking point for the US 43 00:02:27,200 --> 00:02:30,720 Speaker 2: is Britain's two percent digital services tax on revenues from 44 00:02:30,840 --> 00:02:34,280 Speaker 2: UK users of platforms like Google, Meta and Amazon. The 45 00:02:34,360 --> 00:02:37,880 Speaker 2: taxes unpopular in Washington, and UK ministers have been weighing 46 00:02:37,919 --> 00:02:40,080 Speaker 2: whether to cut or scrap it in a bid to 47 00:02:40,120 --> 00:02:42,519 Speaker 2: secure an agreement. A deal with the US would be 48 00:02:42,520 --> 00:02:45,000 Speaker 2: a welcome boost for Kirstarmer's government here, but as You 49 00:02:45,120 --> 00:02:47,720 Speaker 2: and Parts explains, the detail will be all important. 50 00:02:48,040 --> 00:02:49,920 Speaker 4: A deal with the United States has long been the 51 00:02:49,919 --> 00:02:53,760 Speaker 4: holy grail of UK trade policy. Imports from and exports 52 00:02:53,800 --> 00:02:56,400 Speaker 4: to the world's biggest economy total more than three hundred 53 00:02:56,520 --> 00:02:59,600 Speaker 4: billion dollars, an account for one pounds in six of 54 00:02:59,720 --> 00:03:03,519 Speaker 4: all UK trade, but politically a deal has always been 55 00:03:03,520 --> 00:03:06,240 Speaker 4: fraught with risk, with many fearing a lowering of food 56 00:03:06,240 --> 00:03:09,280 Speaker 4: standards leading to the imports of American hormone treated beef 57 00:03:09,600 --> 00:03:13,040 Speaker 4: and chlorine washed chicken. US healthare companies have also long 58 00:03:13,080 --> 00:03:16,079 Speaker 4: pushed for fuller access to the UK market, causing concern 59 00:03:16,480 --> 00:03:19,200 Speaker 4: for many in Starmer's own party, and if the PM's 60 00:03:19,280 --> 00:03:22,800 Speaker 4: expecting unqualified support from those in other parties, well, the 61 00:03:22,880 --> 00:03:25,560 Speaker 4: FARI pushback to the India trade deal should serve as 62 00:03:25,560 --> 00:03:28,919 Speaker 4: something of a warning in London, I'm unepots Bloomberg Radio. 63 00:03:29,120 --> 00:03:33,440 Speaker 2: The prospect of a potential economic and political win for 64 00:03:33,639 --> 00:03:36,440 Speaker 2: the UK government comes as a new forecast suggests the 65 00:03:36,520 --> 00:03:39,640 Speaker 2: Chancellor Rachel Reeves will miss her fiscal rules by tens 66 00:03:39,680 --> 00:03:43,480 Speaker 2: of billions of pounds in the upcoming utumn budget. According 67 00:03:43,520 --> 00:03:46,080 Speaker 2: to the National Institute of Economic and Social Research, Reeves 68 00:03:46,120 --> 00:03:49,680 Speaker 2: is projected to fall fifty seven billion pounds short of 69 00:03:49,800 --> 00:03:53,840 Speaker 2: meeting her primary fiscal stability rule, has nearly thirty billion 70 00:03:53,880 --> 00:03:57,680 Speaker 2: pounds short on her investment rule. The prominent economic think 71 00:03:57,720 --> 00:04:00,440 Speaker 2: tank warrants of the resulting fiscal black hole will leave 72 00:04:00,440 --> 00:04:03,160 Speaker 2: the government with little choice but to raise taxes or 73 00:04:03,280 --> 00:04:06,040 Speaker 2: cut spending in the year ahead, with Reeves facing what 74 00:04:06,200 --> 00:04:09,800 Speaker 2: it caused difficult choices come the autumn, while the uncertain 75 00:04:09,840 --> 00:04:12,080 Speaker 2: fiscal backdrop comes as the Bank of England is widely 76 00:04:12,080 --> 00:04:14,680 Speaker 2: expected to cut interest rates by a quarter percentage point 77 00:04:14,720 --> 00:04:15,680 Speaker 2: later today with May. 78 00:04:15,720 --> 00:04:17,160 Speaker 5: Here's Boomberg's Crispit. 79 00:04:17,080 --> 00:04:21,320 Speaker 6: All thirty two economists surveyed by Bloomberg anticipate the policy 80 00:04:21,360 --> 00:04:24,960 Speaker 6: makers will lower the benchmark rate by twenty five basis 81 00:04:25,000 --> 00:04:29,080 Speaker 6: points to four point two five percent. Markets are also 82 00:04:29,200 --> 00:04:32,520 Speaker 6: pricing in a quarter point reduction as a near certainty, 83 00:04:32,920 --> 00:04:36,520 Speaker 6: with strong odds of another cut when policy makers reconvene 84 00:04:36,560 --> 00:04:41,040 Speaker 6: next month. What remains less certain is the longer term path. 85 00:04:41,400 --> 00:04:45,520 Speaker 6: The potential for a UK US agreement on reducing tariffs 86 00:04:45,839 --> 00:04:49,880 Speaker 6: could further complicate the inflation outlook. Just as the Bank 87 00:04:49,960 --> 00:04:53,760 Speaker 6: prepares to unveil its first full assessment of the impact 88 00:04:53,800 --> 00:04:59,360 Speaker 6: of President Trump's trade levies in London, Christopher Pitt Bloomberg Radio. 89 00:04:59,279 --> 00:05:02,479 Speaker 2: Federal Reserve Charge your own Powells says policymakers aren't in 90 00:05:02,520 --> 00:05:06,440 Speaker 2: a hurry to alter interest rates. Officials voted unanimously yesterday 91 00:05:06,440 --> 00:05:09,640 Speaker 2: to keep borrowing costs unchanged for a third straight meeting. 92 00:05:10,000 --> 00:05:12,919 Speaker 2: Speaking after the decision, Powell warned that the Trump administration 93 00:05:13,040 --> 00:05:16,240 Speaker 2: tariffs could lead to higher inflation and unemployment. 94 00:05:16,600 --> 00:05:19,720 Speaker 7: Near term measures of inflation expectations have moved up, as 95 00:05:19,800 --> 00:05:23,880 Speaker 7: reflected in both market and survey based measures. Survey respondents, 96 00:05:23,920 --> 00:05:28,240 Speaker 7: including consumers, businesses, and professional forecasters, point to tariffs as 97 00:05:28,240 --> 00:05:29,480 Speaker 7: the driving factor. 98 00:05:29,360 --> 00:05:30,680 Speaker 5: The federal reserves to your own Powells. 99 00:05:30,680 --> 00:05:33,719 Speaker 2: Speaking there, several officials have signals they would not support 100 00:05:33,800 --> 00:05:38,640 Speaker 2: lowering interest rates preemptively to protect against a slowing economy. Meanwhile, 101 00:05:38,640 --> 00:05:41,360 Speaker 2: President Donald Trump is repeatedly called on the Central Bank 102 00:05:41,440 --> 00:05:45,279 Speaker 2: to cut borrowing costs immediately. Now, President Trump is planning 103 00:05:45,320 --> 00:05:49,400 Speaker 2: to rescind Biden era US AI chip curbs in a 104 00:05:49,400 --> 00:05:54,480 Speaker 2: bid to revise semiconductor trade restrictions. Bloomberg understands the existing 105 00:05:54,520 --> 00:05:57,760 Speaker 2: measures have been heavily criticized by major tech companies and 106 00:05:57,800 --> 00:06:01,719 Speaker 2: foreign governments. The repeal, yet to be finalized, aims to 107 00:06:01,800 --> 00:06:05,840 Speaker 2: abolish the tiered system to create created to regulate chip 108 00:06:05,880 --> 00:06:09,320 Speaker 2: exports Nvidia and other firms. Our senior Tech editor Michael 109 00:06:09,320 --> 00:06:12,760 Speaker 2: Shepherd says the decision is a win for big tech's win. 110 00:06:12,760 --> 00:06:15,839 Speaker 8: For in Nvidia, which is pressed for a total repeal 111 00:06:15,960 --> 00:06:18,720 Speaker 8: of these chips curves. It's known as AI diffusion rule, 112 00:06:18,920 --> 00:06:21,240 Speaker 8: and it really has caused a lot of consternation in 113 00:06:21,279 --> 00:06:23,480 Speaker 8: the industry because they see it as something that will 114 00:06:24,240 --> 00:06:28,520 Speaker 8: have the perverse effect of throwing countries and their companies 115 00:06:28,560 --> 00:06:32,360 Speaker 8: into China's arms seeking access to advanced AI technology. 116 00:06:32,440 --> 00:06:35,640 Speaker 2: Bloomberg's Michael Shepherd, speaking their sources say the Trump administration 117 00:06:35,720 --> 00:06:38,880 Speaker 2: won't enforce the curb known as the AI Diffusion Rule 118 00:06:39,200 --> 00:06:42,920 Speaker 2: when it takes effect on May fifteenth, And those are 119 00:06:42,920 --> 00:06:46,200 Speaker 2: your top stories on the markets. The pound is trading 120 00:06:46,440 --> 00:06:48,919 Speaker 2: at the moment a quarter of one percent stronger against 121 00:06:48,920 --> 00:06:51,279 Speaker 2: the dollar. One thirty three twenty five is. The Bloomberg 122 00:06:51,279 --> 00:06:54,080 Speaker 2: Dollar Spot Index is flat, driven by some of those 123 00:06:54,080 --> 00:06:56,320 Speaker 2: trade headlines. We're looking at foot SYE one hundred features 124 00:06:56,360 --> 00:06:58,719 Speaker 2: up by eight tenths of one percent, eurostocks fifty features 125 00:06:58,720 --> 00:07:01,440 Speaker 2: are nine tenths higher. On Wall Street, SMP minis are 126 00:07:01,520 --> 00:07:03,360 Speaker 2: up by eight tens and NASDAK futures are up by 127 00:07:03,600 --> 00:07:07,400 Speaker 2: one point one percent. This as the tenure treasury yield 128 00:07:07,560 --> 00:07:11,320 Speaker 2: is up three basis points to four point three percent. 129 00:07:11,640 --> 00:07:13,720 Speaker 2: In a moment, will a full coverage of the expected 130 00:07:13,800 --> 00:07:17,080 Speaker 2: USUK trade deal due to announced later today, but just 131 00:07:17,120 --> 00:07:19,680 Speaker 2: a word first on a transatlantic deal of a different kind. 132 00:07:19,800 --> 00:07:22,520 Speaker 2: A British made watch that's become a prized possession of 133 00:07:22,520 --> 00:07:25,240 Speaker 2: one of the biggest names in American finance. In his 134 00:07:25,320 --> 00:07:28,280 Speaker 2: latest Watch Club newsletter, Bloomberg Pursuits editor Chris Ross are 135 00:07:28,360 --> 00:07:31,680 Speaker 2: spoken to Pershing Square founder Bill Ackman, and it turns 136 00:07:31,720 --> 00:07:34,880 Speaker 2: out that he owns a particularly important timepiece to those 137 00:07:34,920 --> 00:07:38,120 Speaker 2: in the know. It's Roger Smith's pocket watch number two, 138 00:07:38,240 --> 00:07:42,360 Speaker 2: the watch that started the legendary watchmaker's career making pieces 139 00:07:42,400 --> 00:07:44,840 Speaker 2: which can sell for millions of dollars at auction now 140 00:07:45,160 --> 00:07:47,680 Speaker 2: and Chris has a great summary of that story in 141 00:07:47,720 --> 00:07:51,120 Speaker 2: his newsletter, plus some pictures of the beautiful craftsmanship in 142 00:07:51,160 --> 00:07:53,600 Speaker 2: that pocket watch, which Ackman bought for four point nine 143 00:07:53,640 --> 00:07:57,000 Speaker 2: million dollars in twenty twenty three. Now Acman's right to 144 00:07:57,040 --> 00:07:59,800 Speaker 2: get Roger Smith's first watch, which has an even more 145 00:07:59,840 --> 00:08:03,440 Speaker 2: in story about how it led to that month's particular success. 146 00:08:03,480 --> 00:08:05,520 Speaker 2: You can read the details in the watch Club newsletter 147 00:08:05,880 --> 00:08:09,880 Speaker 2: Bloomberg dot com slash Newsletters. Okay, well, let's dig into 148 00:08:09,880 --> 00:08:12,000 Speaker 2: our top story. Then, Donald Trump going to announce a 149 00:08:12,000 --> 00:08:14,800 Speaker 2: trade deal with the UK later today, according to Bloomberg sources. 150 00:08:14,840 --> 00:08:17,640 Speaker 2: Charlie Weills is here with some more details for us. 151 00:08:17,640 --> 00:08:20,080 Speaker 2: First of what we've heard out of the US. Charlie, 152 00:08:20,120 --> 00:08:22,120 Speaker 2: good morning. What do we know that about what's coming 153 00:08:22,120 --> 00:08:22,840 Speaker 2: in this announcement? 154 00:08:23,080 --> 00:08:25,400 Speaker 1: Steven, So, the details so far are hazy, but we 155 00:08:25,440 --> 00:08:27,880 Speaker 1: can definitely view this as a win for both the 156 00:08:28,000 --> 00:08:30,080 Speaker 1: US and the UK. If you want to start with 157 00:08:30,120 --> 00:08:32,679 Speaker 1: the US, you know, the White House certainly needs an 158 00:08:32,720 --> 00:08:36,280 Speaker 1: off ramp as these trade tensions ratchet up. Trump's selling 159 00:08:36,280 --> 00:08:39,160 Speaker 1: point to American voters had been his stewardship for the 160 00:08:39,200 --> 00:08:42,880 Speaker 1: American economy, and we're seeing in polling numbers that trend down, 161 00:08:42,960 --> 00:08:45,920 Speaker 1: and not just on that broader economic point, but also 162 00:08:46,000 --> 00:08:48,959 Speaker 1: on the issue of tariffs, Americans having a more negative view, 163 00:08:49,000 --> 00:08:51,360 Speaker 1: and a lot of this polling for the UK, you know, 164 00:08:51,480 --> 00:08:54,080 Speaker 1: the country has been searching for a trade deal since Brexit. 165 00:08:54,360 --> 00:08:56,880 Speaker 1: Starmar of course announced this week a major trade deal 166 00:08:56,920 --> 00:08:59,160 Speaker 1: with India and this just kind of builds on that 167 00:08:59,280 --> 00:09:02,400 Speaker 1: story there. But as far as specifics, we don't have 168 00:09:02,640 --> 00:09:05,440 Speaker 1: a lot yet. But what we know about where things 169 00:09:05,440 --> 00:09:08,160 Speaker 1: stand right now, you know, the US is the UK's 170 00:09:08,240 --> 00:09:11,760 Speaker 1: largest single export market. They are the UK is subject 171 00:09:11,760 --> 00:09:15,480 Speaker 1: to that ten percent global baseline that Trump announced, as 172 00:09:15,520 --> 00:09:17,720 Speaker 1: well as a lot of these sectoral tariffs, that twenty 173 00:09:17,760 --> 00:09:20,680 Speaker 1: five percent tariff on steel and autos, and then this 174 00:09:20,880 --> 00:09:23,080 Speaker 1: looming threat of pharma tariff. So I think the big 175 00:09:23,160 --> 00:09:27,680 Speaker 1: question is how would a potential deal change that dynamic. 176 00:09:27,520 --> 00:09:30,000 Speaker 2: And indeed, of course trade deals normally take many years 177 00:09:30,080 --> 00:09:32,600 Speaker 2: to negotiate as well, So the prospect of what we 178 00:09:32,640 --> 00:09:35,880 Speaker 2: will get will be very interesting to see what detail 179 00:09:36,000 --> 00:09:38,000 Speaker 2: or how much detailed there will be, or what this 180 00:09:38,120 --> 00:09:41,920 Speaker 2: perhaps sets the stage for further negotiations down the line. 181 00:09:42,720 --> 00:09:45,320 Speaker 2: Where does the power line Washington in this as well? 182 00:09:45,360 --> 00:09:47,480 Speaker 2: What can the White eyes do? Where does Congress get 183 00:09:47,520 --> 00:09:49,240 Speaker 2: involved in the process as we go forward? 184 00:09:49,440 --> 00:09:51,640 Speaker 5: So you know that has been incredibly hazy as well. 185 00:09:51,720 --> 00:09:54,920 Speaker 1: Right there has been so much coming from the executive branch, 186 00:09:54,960 --> 00:09:57,160 Speaker 1: and I think a big question has been, you know, 187 00:09:57,360 --> 00:10:01,440 Speaker 1: how much power does the president have versus the legislative branch. 188 00:10:01,480 --> 00:10:03,199 Speaker 1: And I think you know, there have been concerns on 189 00:10:03,240 --> 00:10:06,040 Speaker 1: the Democratic side about this happening, and so I think, 190 00:10:06,240 --> 00:10:07,920 Speaker 1: you know, this is one of the questions where you 191 00:10:07,960 --> 00:10:11,960 Speaker 1: can announce, say a top line deal between countries, but 192 00:10:12,000 --> 00:10:15,080 Speaker 1: then the specifics just takes so long to hammer out. 193 00:10:15,240 --> 00:10:17,920 Speaker 1: We know that the US and the UK have formally 194 00:10:17,960 --> 00:10:21,160 Speaker 1: been talking about a trade deal since twenty twenty, and 195 00:10:21,200 --> 00:10:23,040 Speaker 1: I think one concern, you know, we're seeing a lot 196 00:10:23,080 --> 00:10:26,440 Speaker 1: of optimism in the market right now, but as that 197 00:10:26,520 --> 00:10:29,080 Speaker 1: starts to digest as the fact that these deals take 198 00:10:29,160 --> 00:10:31,920 Speaker 1: so long, that this potential one has you know, been 199 00:10:31,920 --> 00:10:33,640 Speaker 1: in the works for a very long time. That could 200 00:10:33,720 --> 00:10:35,200 Speaker 1: dampen some of the positivity. 201 00:10:35,679 --> 00:10:39,360 Speaker 2: What about the prospect beyond the UK then, could this 202 00:10:39,480 --> 00:10:41,800 Speaker 2: be as it would be the first a template for 203 00:10:41,880 --> 00:10:44,280 Speaker 2: deals to come for other countries down the line, Stephen. 204 00:10:44,320 --> 00:10:46,920 Speaker 1: I think that's why there is a lot of optimism 205 00:10:47,080 --> 00:10:49,440 Speaker 1: we're seeing across the globe right now, the fact that 206 00:10:49,480 --> 00:10:51,960 Speaker 1: you know, this could provide an off ramp, not just 207 00:10:52,040 --> 00:10:53,679 Speaker 1: for the US and the UK, and in a lot 208 00:10:53,679 --> 00:10:56,560 Speaker 1: of ways that relationship has been strong. We knew when 209 00:10:56,559 --> 00:10:59,000 Speaker 1: those initial tariffs the UK was targeted much less in 210 00:10:59,080 --> 00:11:02,359 Speaker 1: other countries. But yes, this could provide something of a framework, 211 00:11:02,640 --> 00:11:06,320 Speaker 1: a starting point that other countries could use. That could signal, 212 00:11:06,480 --> 00:11:08,280 Speaker 1: you know, an end to a lot of the uncertainty 213 00:11:08,320 --> 00:11:10,200 Speaker 1: that we're seeing because we have an idea of a 214 00:11:10,240 --> 00:11:10,960 Speaker 1: way forward. 215 00:11:11,240 --> 00:11:14,439 Speaker 2: Okay, Charlie Wells, thank you very much. What an agreement 216 00:11:14,520 --> 00:11:17,000 Speaker 2: that would lower US tariffs and UK and boards would 217 00:11:17,000 --> 00:11:18,920 Speaker 2: be a big win for the British government, as Charlie 218 00:11:18,960 --> 00:11:20,960 Speaker 2: was saying, it could also bring some good economic news 219 00:11:20,960 --> 00:11:22,760 Speaker 2: on a day when we're expecting the Bank of England 220 00:11:22,960 --> 00:11:25,280 Speaker 2: to cut interest rates, So let's bring in our UK 221 00:11:25,320 --> 00:11:28,240 Speaker 2: politic supporter James Wilcock and our UK correspondent Lizzie Burden, 222 00:11:28,280 --> 00:11:30,640 Speaker 2: who's covering the Bank of England decision today as well. 223 00:11:30,800 --> 00:11:32,040 Speaker 5: James, I want to start with you. 224 00:11:32,600 --> 00:11:35,600 Speaker 2: Charlie pointed to some of the strength of the relationship 225 00:11:35,679 --> 00:11:37,719 Speaker 2: or the history between the UK and the US there, 226 00:11:37,760 --> 00:11:40,560 Speaker 2: but how significant would it be for the UK to 227 00:11:40,640 --> 00:11:42,920 Speaker 2: be first with a deal on trade. 228 00:11:43,160 --> 00:11:46,199 Speaker 9: It would be a genuine coup for Prime Minister Kissed 229 00:11:46,240 --> 00:11:49,439 Speaker 9: Arma and one he would hold over all opposition parties 230 00:11:49,480 --> 00:11:51,800 Speaker 9: for the duration of his prime ministership. I mean, look 231 00:11:52,160 --> 00:11:55,000 Speaker 9: back in the Brexit referendum, even before any referend was 232 00:11:55,080 --> 00:11:57,840 Speaker 9: voted on, people talking up a US UK trade deal. 233 00:11:58,080 --> 00:12:00,200 Speaker 9: Theresa May in twenty eighteen went to Trump to go 234 00:12:00,240 --> 00:12:02,920 Speaker 9: and try and get one signed. Boris Johnson went again, 235 00:12:03,040 --> 00:12:06,000 Speaker 9: went to Biden. These negotiations contigued all through twenty twenty 236 00:12:06,440 --> 00:12:09,200 Speaker 9: and then it faded, and then we had COVID and 237 00:12:09,200 --> 00:12:11,079 Speaker 9: then by the time of Richies Sunak and this Trust, 238 00:12:11,080 --> 00:12:13,000 Speaker 9: they were just talks of sort of odd deals with 239 00:12:13,040 --> 00:12:15,920 Speaker 9: the odd US states. So to go from that to 240 00:12:16,120 --> 00:12:19,160 Speaker 9: having a deal be back on the table and potentially 241 00:12:19,160 --> 00:12:22,600 Speaker 9: having one there that it would validate Starmer's approach to 242 00:12:22,640 --> 00:12:25,760 Speaker 9: how he's a conducting negotiations and to an extent five 243 00:12:25,840 --> 00:12:28,520 Speaker 9: years after the UK left the EU gives Breggs it 244 00:12:28,679 --> 00:12:30,640 Speaker 9: is some backing as well in terms of being able 245 00:12:30,679 --> 00:12:33,680 Speaker 9: to negotiate with the US outside of the EU. 246 00:12:34,240 --> 00:12:37,200 Speaker 2: Okay, so there's plenty of positives to focus on. But 247 00:12:37,280 --> 00:12:40,360 Speaker 2: what could be the sensitive issues at play. We don't know, 248 00:12:40,520 --> 00:12:43,880 Speaker 2: as Charlie was outlining, what the details of the agreement 249 00:12:43,960 --> 00:12:46,600 Speaker 2: will contain, but there are some hot button issues that 250 00:12:46,760 --> 00:12:48,880 Speaker 2: could come up in that that perhaps might give the 251 00:12:48,920 --> 00:12:51,160 Speaker 2: opposition some food for criticism. 252 00:12:51,280 --> 00:12:53,480 Speaker 9: Yes, I mean, as Charlie was saying, we're quite like 253 00:12:53,480 --> 00:12:55,080 Speaker 9: to go what's called like a head of terms agreements 254 00:12:55,080 --> 00:12:56,839 Speaker 9: going to the press speculation, which is where you get 255 00:12:56,840 --> 00:12:59,040 Speaker 9: a preliminary deal rather than the full thing. So the 256 00:12:59,120 --> 00:13:01,600 Speaker 9: question then is how long will the full fat deal 257 00:13:01,679 --> 00:13:04,280 Speaker 9: take to negotiate on when will it take effects? The 258 00:13:04,400 --> 00:13:07,560 Speaker 9: key areas though, are will this base ten percent tariff 259 00:13:07,559 --> 00:13:10,400 Speaker 9: that's been applied globally be rolled back in any way, 260 00:13:10,440 --> 00:13:13,960 Speaker 9: shape or form. And then we seen reporting in previous 261 00:13:14,000 --> 00:13:16,439 Speaker 9: weeks that were likely some sort of movement on steel 262 00:13:16,480 --> 00:13:19,880 Speaker 9: and cars, both which phase twenty five percent tariffs. Let's 263 00:13:19,960 --> 00:13:23,160 Speaker 9: see what happens with pharmaceuticals, which is another key area, 264 00:13:23,440 --> 00:13:26,319 Speaker 9: especially for the UK with big farmer giants. Now the 265 00:13:26,360 --> 00:13:30,439 Speaker 9: political hot topics for the UK at least are the NHS, 266 00:13:30,559 --> 00:13:34,720 Speaker 9: any talk about healthcare or privatize healthcare, farmers and agriculture 267 00:13:34,720 --> 00:13:37,520 Speaker 9: where there have been big fears around chlorinated chicken. But 268 00:13:37,640 --> 00:13:39,880 Speaker 9: also farmers have been hit by the UK labor government 269 00:13:40,000 --> 00:13:42,439 Speaker 9: last year, so any further pain for them would be 270 00:13:42,520 --> 00:13:45,679 Speaker 9: politically difficult. And migration, which as we saw with the 271 00:13:45,720 --> 00:13:48,920 Speaker 9: UK India deal just this week, it's a very hot topic, 272 00:13:49,000 --> 00:13:52,600 Speaker 9: so any changes there may get picked up by rival parties, So. 273 00:13:52,720 --> 00:13:55,040 Speaker 2: Some of the political strands at play here as well. 274 00:13:55,120 --> 00:13:57,680 Speaker 2: Let's think about the economics then, with you, Lizzie Burden. 275 00:13:57,920 --> 00:14:01,160 Speaker 2: A trade deal that lessens the impact of tariff's surely 276 00:14:01,200 --> 00:14:03,800 Speaker 2: good news for the Bank of England. How worried have 277 00:14:03,920 --> 00:14:06,400 Speaker 2: policymakers been about this issue? 278 00:14:06,600 --> 00:14:09,600 Speaker 10: Really worried, Stephen, because today we were expecting to get 279 00:14:09,600 --> 00:14:13,000 Speaker 10: the Trump cut from the Bank of England because of 280 00:14:13,040 --> 00:14:15,920 Speaker 10: this growing consensus that the tariff war was going to 281 00:14:15,960 --> 00:14:19,960 Speaker 10: weigh on UK growth and weigh on UK inflation as well. 282 00:14:20,480 --> 00:14:23,160 Speaker 5: But the expectation of a deal. 283 00:14:23,240 --> 00:14:27,240 Speaker 10: Throser Spanner in the works about the path ahead for rates, 284 00:14:27,280 --> 00:14:29,960 Speaker 10: because we were expecting that the signaling around the decision 285 00:14:30,000 --> 00:14:32,560 Speaker 10: today was going to be potentially very very duvish. We 286 00:14:32,600 --> 00:14:35,120 Speaker 10: could have had a vote split with more than one 287 00:14:35,200 --> 00:14:38,200 Speaker 10: member going for a jumbo cut, not just swatted Ingrad 288 00:14:38,240 --> 00:14:41,120 Speaker 10: the arched of, but maybe even Deputy Governor Dave Ramsden 289 00:14:41,200 --> 00:14:44,160 Speaker 10: and Alan Taylor as well, the newest member of the 290 00:14:44,160 --> 00:14:47,680 Speaker 10: Monitary Policy Committee. We were expecting maybe the guidance around 291 00:14:47,680 --> 00:14:50,960 Speaker 10: the decision would be dubvish as well. At the moment, 292 00:14:51,000 --> 00:14:53,680 Speaker 10: they say that the path ahead for rates is gradual 293 00:14:53,720 --> 00:14:56,840 Speaker 10: and careful, careful because they wanted to assess the impact 294 00:14:56,880 --> 00:14:59,640 Speaker 10: of Trump's trade war, and if that had been dropped, 295 00:14:59,680 --> 00:15:02,760 Speaker 10: it was suggests that the balance of risks was tilted 296 00:15:02,800 --> 00:15:07,080 Speaker 10: to a slow down in growth, not inflation rising. And 297 00:15:07,120 --> 00:15:10,440 Speaker 10: if they took away careful, gradual, sorry, it would suggest 298 00:15:10,480 --> 00:15:12,800 Speaker 10: that maybe a June cut was on the table as well, 299 00:15:12,840 --> 00:15:14,680 Speaker 10: and that'd be the first back to back rate cut 300 00:15:15,040 --> 00:15:18,200 Speaker 10: since COVID and before that the financial crisis. 301 00:15:18,440 --> 00:15:20,440 Speaker 5: But this changes things, Liz. 302 00:15:20,480 --> 00:15:22,320 Speaker 2: I'm going to ask you an impossible question, given that 303 00:15:22,320 --> 00:15:24,360 Speaker 2: we don't know what's going to be in this announcement 304 00:15:24,480 --> 00:15:27,360 Speaker 2: later on. But what potentially could a trade deal with 305 00:15:27,440 --> 00:15:30,960 Speaker 2: the US do for Britain's economic trajectory. We know that, 306 00:15:31,000 --> 00:15:33,480 Speaker 2: for example, there are plenty of fiscal challenges facing the 307 00:15:33,560 --> 00:15:35,920 Speaker 2: Chancellor which are to do with slow and growth. 308 00:15:35,920 --> 00:15:38,040 Speaker 10: Well, let me pick up where James left off. We 309 00:15:38,160 --> 00:15:40,240 Speaker 10: don't know what the terms of this deal will be, 310 00:15:40,360 --> 00:15:42,400 Speaker 10: but we do know that Primier secure style has been 311 00:15:42,440 --> 00:15:46,680 Speaker 10: focused on mitigating those twenty five percent steal and car tariffs. 312 00:15:47,000 --> 00:15:49,240 Speaker 10: It may be that the UK still faces this ten 313 00:15:49,280 --> 00:15:53,960 Speaker 10: percent baseline tariff, but even if they were successful on 314 00:15:54,040 --> 00:15:58,040 Speaker 10: those fronts, the UK would still be impacted by global 315 00:15:58,280 --> 00:16:02,960 Speaker 10: lower demand. Oil is lower, that's disinflationary. You don't know 316 00:16:03,000 --> 00:16:06,240 Speaker 10: what they're going to achieve on US China talks at 317 00:16:06,320 --> 00:16:09,040 Speaker 10: this weekend and beyond, so it may still be that 318 00:16:09,080 --> 00:16:12,000 Speaker 10: the UK's flooded with cheap goods, as may be the 319 00:16:12,040 --> 00:16:15,400 Speaker 10: rest of Europe. That would be disinflationary, and we've still 320 00:16:15,440 --> 00:16:19,360 Speaker 10: got a stronger pound. So there are lots to factor in, 321 00:16:19,840 --> 00:16:22,720 Speaker 10: as well as the fact which is hopeful that this 322 00:16:22,800 --> 00:16:24,840 Speaker 10: trade deal, if we get one, opens the door to 323 00:16:24,960 --> 00:16:28,640 Speaker 10: more trade deals, lowering the impact of that Tarifar. 324 00:16:28,240 --> 00:16:31,080 Speaker 2: Overall okay, and of course look ahead to in the 325 00:16:31,080 --> 00:16:32,880 Speaker 2: short term. Something we do know about, which is the 326 00:16:32,880 --> 00:16:35,280 Speaker 2: Bank of England decision that's happening at twelve o two 327 00:16:36,200 --> 00:16:38,680 Speaker 2: today and well, of course have full coverage across Bloomberg. 328 00:16:38,760 --> 00:16:39,000 Speaker 5: James. 329 00:16:39,040 --> 00:16:41,640 Speaker 2: The final thought from you this would be an agreement 330 00:16:41,720 --> 00:16:43,720 Speaker 2: coming after the India trade deal and now it's just 331 00:16:43,760 --> 00:16:46,760 Speaker 2: a couple of days ago. Is this going to help 332 00:16:46,880 --> 00:16:51,680 Speaker 2: broadly the government to convince voters that they are making 333 00:16:51,760 --> 00:16:54,520 Speaker 2: progress on their plan to grow the UK economy, which 334 00:16:54,560 --> 00:16:57,160 Speaker 2: we know is this big and main priority that they have. 335 00:16:57,600 --> 00:17:00,840 Speaker 9: I mean to state the obviously, then voters don't look 336 00:17:00,880 --> 00:17:03,040 Speaker 9: at trade deals when they go to the polls. They 337 00:17:03,200 --> 00:17:05,400 Speaker 9: look at how much cut things are on the shelves. 338 00:17:05,680 --> 00:17:08,080 Speaker 9: They look at how they feel about their quality of life. 339 00:17:08,080 --> 00:17:10,160 Speaker 9: And that's why what Lizzie was saying is so important 340 00:17:10,160 --> 00:17:13,959 Speaker 9: in terms of global demand. Imagine a world, for example, 341 00:17:13,960 --> 00:17:16,640 Speaker 9: where this trade deal creates big economic growth, but then 342 00:17:16,720 --> 00:17:19,720 Speaker 9: broadly the UK still suffers from a high inflation, low 343 00:17:19,800 --> 00:17:21,280 Speaker 9: growth global picture. 344 00:17:21,720 --> 00:17:23,760 Speaker 5: Do people feel better off? 345 00:17:24,040 --> 00:17:26,440 Speaker 9: So that's the challenge that kir starmer Face is coming 346 00:17:26,440 --> 00:17:30,080 Speaker 9: into today in communicating the benefits of this deal and 347 00:17:30,119 --> 00:17:33,480 Speaker 9: any gains from it. It's not enough for the average 348 00:17:33,560 --> 00:17:36,040 Speaker 9: voter just to have the great economic headlines, which are 349 00:17:36,080 --> 00:17:38,440 Speaker 9: a good new economic used and potentially the good print 350 00:17:38,520 --> 00:17:41,480 Speaker 9: sort of media noise around this. It also has to 351 00:17:41,520 --> 00:17:44,640 Speaker 9: translate to quite literally the penny in your pocket, and 352 00:17:44,720 --> 00:17:47,199 Speaker 9: that kind of varies sort of retail politics site, so 353 00:17:47,320 --> 00:17:50,080 Speaker 9: that will be for him, I think the key judge 354 00:17:50,080 --> 00:17:53,480 Speaker 9: of political success. How this deal is then sold to 355 00:17:53,520 --> 00:17:54,280 Speaker 9: the general public. 356 00:17:55,800 --> 00:17:57,320 Speaker 5: This is Bloomberg Daybreak Europe. 357 00:17:57,359 --> 00:17:59,679 Speaker 2: You're a morning brief on the stories making news from 358 00:17:59,720 --> 00:18:01,640 Speaker 2: London to Wall Street and beyond. 359 00:18:01,920 --> 00:18:05,080 Speaker 11: Look for us on your podcast feed every morning, on Apple, 360 00:18:05,240 --> 00:18:07,920 Speaker 11: Spotify and anywhere else you get your podcasts. 361 00:18:07,960 --> 00:18:11,000 Speaker 2: You can also listen live each morning on London DAB Radio, 362 00:18:11,040 --> 00:18:13,760 Speaker 2: the Bloomberg Business app, and Bloomberg dot Com. 363 00:18:13,760 --> 00:18:16,560 Speaker 11: Our flagship New York station is also available on your 364 00:18:16,560 --> 00:18:21,280 Speaker 11: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 365 00:18:21,520 --> 00:18:23,560 Speaker 5: I'm Caroline Hepka and I'm Stephen Carroll. 366 00:18:23,640 --> 00:18:26,000 Speaker 2: Join us again tomorrow morning for all the news you 367 00:18:26,040 --> 00:18:28,720 Speaker 2: need to start your day right here on Bloomberg day 368 00:18:28,720 --> 00:18:33,400 Speaker 2: Break Europe.