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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybreak podcast, available every morning on Apple, Spotify or wherever

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Speaker 1: you listen. It's Tuesday, the second of July in London.

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Speaker 1: I'm Caroline Hepkiff.

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Speaker 2: And I'm Stephen Carroll. Coming up today, Christine Legoud says

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Speaker 2: the ECB needs more time to weigh the risk of

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Speaker 2: inflation uncertainties.

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Speaker 1: The US Supreme Court rules Trump has some immunity from prosecution,

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Speaker 1: with a pre election trial now increasingly unlikely.

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Speaker 2: Plus, as new data shows employers doubling down on the

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Speaker 2: importance of degrees, Britain's famed universities titter on a financial cliff.

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Speaker 2: We have a special report.

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Speaker 1: Let's start with a round up of our top story.

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Speaker 2: Christin Legoud says the European Central Bank doesn't yet have

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Speaker 2: sufficient evidence the threat of inflation has passed. The ECB

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Speaker 2: president's comments comes to rather suggest a preference for keeping

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Speaker 2: rates on home at this month's meeting. Speaking at the

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Speaker 2: Central Bank's annual retreat in Central and Portugal, Leguard said

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Speaker 2: the robust jobs market means there is time to assess

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Speaker 2: incoming data.

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Speaker 3: We are still facing several uncertainties regarding future inflation, especially

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Speaker 3: in terms of how the nexus of profits, wages and

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Speaker 3: productivity will evolve and whether the economy will be hit

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Speaker 3: by new supply side shocks. And it will take time

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Speaker 3: for us to gather sufficient data to be certain that

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Speaker 3: the risks of above target inflation have passed.

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Speaker 2: Christian Laguard's comments come ahead of new Eurozone inflation data

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Speaker 2: set to be released at ten am London time today.

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Speaker 1: President Macron's centrist alliance and the left wing New Popular

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Speaker 1: Front are considering pulling candidates from the French legislative election

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Speaker 1: in a bid to stop the far right. The National

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Speaker 1: Rally and its allies came top in the first round

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Speaker 1: of voting with just over thirty three percent of the vote.

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Speaker 1: An outright majority for Marine La Penn's party or a

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Speaker 1: hung parliament are now the most likely outcomes. Speaking to Bloomberg,

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Speaker 1: Sebastian Redler, head of European Ecty Strategy at Bank of

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Speaker 1: America Global Research, says that markets aren't convinced by either possibility.

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Speaker 4: It's hard to argue that you've got a good outcome.

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Speaker 4: Maybe you block a majority by the hard ride, but

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Speaker 4: in the best case scenario you get a hung Parliament

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Speaker 4: that effectively means very little decision making, no ability to

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Speaker 4: deal with a very wide budget deficit, and also the

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Speaker 4: European integration story effectively put on hold.

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Speaker 1: Bank of America Sebastian Redler there on Bloomberg Television now.

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Speaker 1: Despite an early rally, gains on French stocks and the

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Speaker 1: euro paired back yesterday as investors doubts returned. A second

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Speaker 1: round of French voting is expected to take place on

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Speaker 1: the seventh of July.

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Speaker 2: Inflation in UK shops has fallen to nearly zero. Data

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Speaker 2: from the British Retail Consortium shows prices in June were

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Speaker 2: zero point two percent higher than last year. That's the

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Speaker 2: slowest rise since twenty twenty one. It's the latest sign

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Speaker 2: of easing price pressures as markets expect the Bank of

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Speaker 2: England to cut interest rates as early as August.

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Speaker 1: Now, there is a growing concern about the precarious finances

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Speaker 1: of UK universities, hit by inflation, frozen fees and a

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Speaker 1: drop in international students. David Willets, the former Universities minister

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Speaker 1: who oversaw the last big fee increase in twenty twelve,

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Speaker 1: has told Bloomberg that the next government needs to start

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Speaker 1: increasing fees in line with inflation every year. Will It says,

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Speaker 1: although some individual universities are in very tough circumstances, he

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Speaker 1: doesn't expect widespread university bankruptcies.

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Speaker 5: The secretary is certainly under pressure. Overall, it is still

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Speaker 5: the case that they've got reasonable financial reserves, though those

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Speaker 5: are diminishing. There are some special cases. There are some

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Speaker 5: universities that are people are looking at nervously that may

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Speaker 5: be on the edge. Yes, so there are some specific

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Speaker 5: risks plus a general financial pressure.

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Speaker 1: Lord will It speaking to us for a special podcast

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Speaker 1: on whether Britain's university funding model is broken. While Kirstarmer's

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Speaker 1: Labor Party has promised crisis hits universities a quote secure future,

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Speaker 1: the party's manifesto offers no details on how that might

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Speaker 1: be financed. The ruling Conservatives have made no new commitments

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Speaker 1: for UK universities in their policy platform under Ishitunak.

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Speaker 2: The US Supreme Court has rule Donald Trump is immune

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Speaker 2: from some criminal charges. The decision is a major blow

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Speaker 2: to prosecutors hoping to take the former president to trial

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Speaker 2: before the November election. Chicago Kent College of Law professor

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Speaker 2: Harold Krent explains the court's thinking on if US presidents

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Speaker 2: can be charged for crimes.

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Speaker 6: The court split the baby in a sense by saying

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Speaker 6: that there was going to be absolute immunity for some

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Speaker 6: kind of presidential expos x that fall within the court

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Speaker 6: of his executive and for other rects. It's presumptive immunity,

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Speaker 6: which means that the lower court will have to go

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Speaker 6: through the indictment and the triallence will separate out all

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Speaker 6: the acts.

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Speaker 2: Professor Harald Krant adds the decision means major delays to

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Speaker 2: the three ongoing criminal cases against the former president. Trump

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Speaker 2: was convicted in New York State Court on the thirtieth

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Speaker 2: of May for falsifying business records to conceal a hush

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Speaker 2: money payment to adult film star Stormy Dnalds before the

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Speaker 2: twenty sixteen election.

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Speaker 1: Joe Biden meanwhile, has called on voters to render a

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Speaker 1: judgment on Donald Trump. After the ruling, the president told

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Speaker 1: the nation, the US Supreme Court has undone more than

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Speaker 1: two hundred years of American law.

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Speaker 7: It's a terrible disservice to the people of this nation.

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Speaker 6: So now now the American people will have to do

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Speaker 6: what the court should have.

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Speaker 7: Been willing to do but willnot.

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Speaker 4: The America, we will have to render a judgment about

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Speaker 4: Donald Trump's behavior.

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Speaker 1: Biden's address comes as his own party are considering formally

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Speaker 1: nominating him. Early Bloomberg has learned that key Democrats are

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Speaker 1: weighing the move to try to stamp down on conversations

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Speaker 1: about replacing Biden after a disastrous debate performance. Now in

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Speaker 1: a moment, we're going to talk about our special report

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Speaker 1: on the challenges facing UK universities. We'll also hear about

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Speaker 1: what ECB policy makers have been saying that their annual

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Speaker 1: Central Banking Forum in CenTra. But another story also caught

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Speaker 1: our I this morning. You've heard of shrink flation. Now

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Speaker 1: get ready for upflation.

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Speaker 2: So this is a strategy that consumer goods companies are

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Speaker 2: employing to try and keep shoppers spending. Is there walle

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Speaker 2: It's been squeezed by the cost of living crisis as

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Speaker 2: many parts of the world. The result of this from

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Speaker 2: a company point of view is that they're seeing people

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Speaker 2: buying fewer things at higher prices. So to try and

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Speaker 2: win those people back and get them to spend more,

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Speaker 2: companies have come up with this new tactic becoming known

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Speaker 2: as upflation, which is to try and create new uses

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Speaker 2: for things that consumers have decided they know no longer

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Speaker 2: need as much of, and then charging them more for it.

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Speaker 2: So one example, the all over body deodorant from Procter

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Speaker 2: and Gamble. It's double the cost of a standard stick

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Speaker 2: of deodorant. Most people, according to one of the excess

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Speaker 2: quoted in this Peace Buy Our colleagues, don't need it,

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Speaker 2: but it is something that companies are now marketing to consumers.

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Speaker 2: Same goes for razors that use on different parts of

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Speaker 2: your body, so people are marketing those in different ways

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Speaker 2: and charging more of them as well. For the moment,

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Speaker 2: this does seem to be a mostly American phenomenon. Unilever,

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Speaker 2: of course, London based company, did introduce one of these

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Speaker 2: all over body deodrants, but they're only marketing in the

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Speaker 2: US for in the moment. In China, people are trying

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Speaker 2: to get more for their money by gravitating to products

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Speaker 2: that have multiple benefits. For example, the three minute Miracle

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Speaker 2: conditioner for damaged hair. That's one of the products as well.

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Speaker 2: So it's a new strategy consumer goods companies are trying

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Speaker 2: to take to get people to keep spending on a

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Speaker 2: product by essentially just marketing it in a different way.

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Speaker 1: So, hang on, does the body spray replace expensive perfume?

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Speaker 1: Is that the idea?

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Speaker 2: No, I think it's supposed to.

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Speaker 1: In addition, in addition to question, all right, well then

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Speaker 1: I'm not sure how much money you say from that?

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Speaker 1: But okay, interesting. I love learning a new word, so

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Speaker 1: I will definitely be using.

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Speaker 2: That inflator, use it in a sentence.

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Speaker 3: Okay.

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Speaker 1: So from that to the ECB this morning, President Christine

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Speaker 1: Lagarde says that policymakers don't yet have sufficient evidence that

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Speaker 1: inflation threats have actually passed. In her opening speech to

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Speaker 1: the European Central Banks annual meeting in the Portuguese town

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Speaker 1: of Cintra, Legard didn't mention the political upheaval in France.

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Speaker 1: That is so royal markets our your area. Economy reporter

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Speaker 1: Alex Webber joins us now from Cintra for more. Good morning, Alex.

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Speaker 7: Morning.

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Speaker 1: So Legard has set quite a cautious tone, it would

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Speaker 1: seem this ECB forum, saying that it's too soon to

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Speaker 1: claim victory over inflation. Is that the prevailing view? Do

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Speaker 1: you think of the policymakers who are gathered there?

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Speaker 7: Yes, indeed it seems so.

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Speaker 8: So you know, we've heard very little recently from officials

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Speaker 8: in terms of what might have next, they've really struck

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Speaker 8: a cautious tone because while inflation has indeed slowed closer

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Speaker 8: towards the two percent target, there are still some bids

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Speaker 8: that are caused for concern. And yes, the ECB has

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Speaker 8: a forecast that shows two percent inflation next year, but

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Speaker 8: officials really want to see that the economy does indeed

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Speaker 8: develop along those lines, and that's why they're taking a

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Speaker 8: step by step. Because the labor market is so strong,

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Speaker 8: there's not really a risk that the economy is the railing,

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Speaker 8: so they have the luxury of being able to take

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Speaker 8: this rather slowly. Also, they don't want to get too

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Speaker 8: far away from other central banks maybe, and therefore it

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Speaker 8: seems indeed like July is not going to be an

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Speaker 8: option for another cut Alex.

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Speaker 2: This gathering in Center always really interesting because it's a

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Speaker 2: chance to see central bankers relaxing while also working. And

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Speaker 2: these are high level policy discussions too. I do wonder

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Speaker 2: in the conversations that are happening there though, how much

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Speaker 2: are people talking about the situation in France, the political

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Speaker 2: term all there, which has been having an impact on markets.

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Speaker 7: Yeah, we've been asking officials.

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Speaker 8: Of course, it is an important thing for the ECB

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Speaker 8: to consider France's second biggest Eurozone economy. That said, central

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Speaker 8: bankers are usually quite hesitant to talk about politics in

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Speaker 8: the Eurozone, especially they don't want to talk about individual countries,

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Speaker 8: rather talk about the impact on the aggregate economy. We

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Speaker 8: haven't been too much of that yet. Of course, there's

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Speaker 8: been this fallout on financial markets and investors being quite

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Speaker 8: nervous there.

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Speaker 7: Officials have said quite.

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Speaker 8: Clearly that they don't see a need for concern at

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Speaker 8: the moment. So there's been speculation that the ECB might

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Speaker 8: have to have to activate its crisis tool with which

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Speaker 8: it could sort of calm investors and rain in bond spreads.

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Speaker 7: But that really not a discussion at the moment. Before

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Speaker 7: away from that.

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Speaker 1: Okay, that's interesting. Meanwhile, you've also got the latest your

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Speaker 1: inflation print which comes out later today. What's that expected then,

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Speaker 1: to add to the view in terms of the rate

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Speaker 1: path ahead.

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Speaker 8: You should see a slight downtick in both the headline

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Speaker 8: and the core inflation, so that should give the ECB

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Speaker 8: a peace of mind. We saw an optic last month,

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Speaker 8: so that all confirms the view that there is some

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Speaker 8: fluctuation in the inflation path ahead, but that the general

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Speaker 8: trend is intact, and as long as that is intact,

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Speaker 8: then officials will be quite confident.

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Speaker 7: That said, at the moment, it's quite a lot about

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Speaker 7: the details.

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Speaker 8: So we're looking at services inflation, which is still running

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Speaker 8: around twice the ECBs two percent target, so and that's

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Speaker 8: where people are going to look closely to see whether

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Speaker 8: there's any slowdown to be seen there.

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Speaker 2: Alex, I know this for a job like yours, when

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Speaker 2: you're talking to central bankers all the time, this is

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Speaker 2: a different environment to be following them around kind of

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Speaker 2: fairytale castles in the Portuguese hills. What else are you

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Speaker 2: keen to learn from those policymakers when you speak to

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Speaker 2: them during this event?

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Speaker 8: So you know, this is a really sort of academic event,

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Speaker 8: an opportunity to dive into topics on a on a

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Speaker 8: more academic basis, and this is really much about sort

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Speaker 8: of understanding what really happened over the last two to

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Speaker 8: three years because this has been such an unusual interest

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Speaker 8: rate cycle. There's going to be a really interesting paper

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Speaker 8: to be discussed this morning about the drivers of the

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Speaker 8: inflation shock, whether it was really driven by supply whether

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Speaker 8: it was demand that a really controversial issue actually, and

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Speaker 8: then we also have a panel on geopolitics, which is

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Speaker 8: a really interesting theme and didn't used to be this

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Speaker 8: prominent in the past, but now it's some that central

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Speaker 8: Bengos really have to contend with. So these are really

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Speaker 8: interesting topics to be followed here.

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Speaker 1: Yeah, okay, very interesting, Alex, thank you so much for

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Speaker 1: being with us. Then from CenTra this morning, are your

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Speaker 1: area economy report, Alex Webber.

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Speaker 2: We're going to turn now though to the situation facing

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Speaker 2: UK universities an existential crisis. Stagnant fees and inflation are

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Speaker 2: squeezing higher education institutions. The sector is also losing valuable

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Speaker 2: international students, and yet government and business are touting it

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Speaker 2: as key to the UK economy. Caroline, you have a

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Speaker 2: special podcast out today looking at this subject, whether the

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Speaker 2: UK's university's funding model is broken.

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Speaker 1: Yeah. Look, there are a lot of areas in the

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Speaker 1: UK that perhaps require overhaul, but education may be key.

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Speaker 1: It's seen as indispensable in terms of skills and therefore

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Speaker 1: building the economic growth that the UK really needs. Fees

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Speaker 1: have been stagnant though, children and fifty pounds is what

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Speaker 1: undergraduates have to pay per year in the UK domestic

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Speaker 1: ones at least that figure has not moved since twenty seventeen,

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Speaker 1: so inflation and has made it worth so much less

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Speaker 1: than it was only a few years ago. There's also

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Speaker 1: been this dramatic decline in foreign students, who pay much

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Speaker 1: higher fees after the Conservative government clamp down on visas.

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Speaker 1: So the Office for Students has warned that forty percent

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Speaker 1: of England's universities are expected to run budget deficits this

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Speaker 1: year and therefore they need to do more work to

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Speaker 1: secure their long term sustainability. So I put together this

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Speaker 1: podcast interviewing a whole host of players in higher education

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Speaker 1: along with my colleague Helen Chandler Wilde, who's been researching

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Speaker 1: this too. And I've called the podcast University Challenge because

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Speaker 1: I know because of the challenges that the next government

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Speaker 1: is going to face on higher education.

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Speaker 2: Well, what thinking about the next government? What is in

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Speaker 2: the manifestos for universities? Is there money on the way?

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Speaker 1: No? No new money. The manifestos really promised very little labor, outlines,

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Speaker 1: a larger role for institutions in terms of skills training,

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Speaker 1: promising them a quote secure future. They do say that

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Speaker 1: the sector is crisis here, but they actually don't talk

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Speaker 1: about any new money. They have scrapped and moved away

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Speaker 1: from the twenty nineteen idea of the Labor Party committing

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Speaker 1: to scrapping all tuition fees. They don't want to do that.

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Speaker 1: The Conservative Party has made no new commitments in terms

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Speaker 1: of universities, and the CEO of University's UK has made

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Speaker 1: some statements saying that the Labor Party needs swift action,

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Speaker 1: not just a kind of review of higher education that

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Speaker 1: could take months. So I've been speaking to David Willets,

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Speaker 1: who is the former university's minister who oversaw the switch

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Speaker 1: to nine thousand pound tuition fees. He says, look, you

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Speaker 1: need those fees. You know they are much protested against.

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Speaker 1: He regrets not having index the fees to inflation. He

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Speaker 1: doesn't expect a large number of UK universities to go bankrupt.

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Speaker 1: He told me that the next government will have to

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Speaker 1: do a major overhaul.

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Speaker 5: Though it's an absolute minimum. We need to start increasing

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Speaker 5: the fees in line with inflation year after year, and

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Speaker 5: of course once again getting across this isn't money that

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Speaker 5: students have to pay up front. This is a basis

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Speaker 5: of a graduate repayment scheme. However, I think we probably

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Speaker 5: also do need a step change up from nine thousand

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Speaker 5: and who knows by a thousand and two thousand or something,

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Speaker 5: and for that there needs to be a wider settlement

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Speaker 5: with whichever party is the new government starts.

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Speaker 2: David Weller's forming University's Minister now President of the Resolution

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Speaker 2: Foundation Karen how worried are universities about their future?

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Speaker 1: They are very worried. There's been a real chorus. It's

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Speaker 1: very noticeable the number of vice chancellors who've talked about this,

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Speaker 1: but they're also adapting. So I speak to Professor Francis Corner,

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Speaker 1: who's the warden of Goldsmith's, which is part of the

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Speaker 1: University of London. She says that university fees have always

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Speaker 1: been a political hot potato, going back to Nick Clegg.

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Speaker 1: I mean remember also the Prime Minister of Ishisunak talking

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Speaker 1: very pointedly about clamping down on ripoff degrees. I mean,

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Speaker 1: you know that sort of language didn't go down very

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Speaker 1: well with the organization or universities that is. Corner says

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Speaker 1: that goldsmith has made very difficult and painful changes. They've

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Speaker 1: slashed courses, they brought in new models like a two

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Speaker 1: year degree for example. She tells me why she thinks

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Speaker 1: actually the UK funding model has not kept pace.

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Speaker 9: There's been a sort of political ambivalence, perhaps one way

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Speaker 9: of describing it. How many people should be in higher education?

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Speaker 9: You know, do we want to have the fifty percent?

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Speaker 9: I mean, I would argue that we should be moving

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Speaker 9: towards a universal aspect of higher education, you know, because

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Speaker 9: of the knowledge based economy, because of AI, because of

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Speaker 9: the global impact, the teaching of creative subjects has been

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Speaker 9: undermined in schools. So what you have now a fewer

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Speaker 9: students coming through to study GCSE and A level as

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Speaker 9: a consequence, which then has affected the application rate to

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Speaker 9: institutions like Goldsmith's and has made across the UK the

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Speaker 9: funding of some of the human courses really quite perilous.

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Speaker 1: So that was Professor Corner. She ads that goldsmith is

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Speaker 1: now as efficient as it can be and that they're

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Speaker 1: on the right track for the next year. All of this,

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Speaker 1: of course, admits the government and business pushing in recent

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Speaker 1: years for a lot more vocational training. There was something

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Speaker 1: about that in the manifestos, and Richie Snak in the

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Speaker 1: past has promised one hundred thousand new apprenticeships and yet

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Speaker 1: also out today from Bloomberg new analysis by my colleague

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Speaker 1: Arena Angel that looks at the REED recruitment data and

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Speaker 1: it shows at a time when employment in the UK

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Speaker 1: is ticking lower, it's still university graduates who have got

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Speaker 1: the edge. And so it's going to be a very

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Speaker 1: difficult time I think for the next government. With little

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Speaker 1: money and all of these pressures to build skills. You

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Speaker 1: know you've got AI, You've got the need for economic

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Speaker 1: success in the UK. The finances are going to be

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Speaker 1: really quite tricky.

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Speaker 2: This is Bloomberg Daybreak Europe. You're morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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Speaker 2: I'm Caroline Hepka and I'm Stephen.

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Speaker 8: Carol.

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Speaker 2: Join us again tomorrow morning for all the news you

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Speaker 2: Europe