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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the boom Big Day BAQ podcast, available every

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Speaker 2: morning on Apples, Spotify or wherever you listen. It's Wednesday,

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Speaker 2: the twenty sixth of March in London. I'm Caroline HEPKEI and.

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Speaker 3: I'm Stephen Carroll. Coming up today, Chancellor Rachel Reeves gets

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Speaker 3: ready to slash billions in UK governments spending. In today's

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Speaker 3: spring statement.

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Speaker 2: Russia and Ukraine agree to a cease far in the

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Speaker 2: Black Sea, but Moscow and Washington send differing signals on

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Speaker 2: the terms.

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Speaker 3: Plus they call him the Sheriff. Why Switzerland's financial regulator

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Speaker 3: is facing off against ubs and the country's banking elite.

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Speaker 2: Let's start with a bound up of our top stories.

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Speaker 3: The UK's Chancellor, Rachel Reeves, is expected to announce ten

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Speaker 3: billion pounds of cuts to day to day government spending

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Speaker 3: today as part of efforts to shore up the public finances.

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Speaker 3: Higher borrowing costs have likely erased the narrow headroom left

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Speaker 3: by the Chancellor after October's budget offers for budget responsibility.

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Speaker 3: Is also expected to have its growth forecast for twenty

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Speaker 3: twenty five to around one percent, but Reeve says she

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Speaker 3: won't raise taxes or change her fiscal rules which required

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Speaker 3: day to day spending to be covered by taxes.

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Speaker 4: We will continue to meet the fiscal rules that I

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Speaker 4: set out in the budget next year. Economic stability is

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Speaker 4: non negotiable. I will never play fast and loose with

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Speaker 4: the public finances like the previous Conservative government did. I

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Speaker 4: have return stability to the UK economy.

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Speaker 3: Bloomberg Economics estimates that Reeve's faces an extra seventeen billion

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Speaker 3: pounds of borrowing needs since her budget in October, with

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Speaker 3: five billion saved through plans to cut welfare payments. The

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Speaker 3: looming spending cuts and plans to lower disability benefits have

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Speaker 3: already provoked a revolt within cabinet and the wider Labor Party.

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Speaker 2: Fresh doubts have been raised meanwhile about the accuracy of

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Speaker 2: official UK data. A new report by Oxford Economics warns

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Speaker 2: that the mistakes could end up contributing to a policy

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Speaker 2: error by the Bank of England. Bloomberg's tia ad A

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Speaker 2: Baio has more.

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Speaker 5: Russian's Office for National Statistics has already faced setbacks in

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Speaker 5: producing reliable labor market figures. Now some are saying those

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Speaker 5: issues are just the tip of the Iceberg. New analysis

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Speaker 5: by Oxford Economics points to potential issues with GDP retail

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Speaker 5: sales and wage growth estimates from the body, warning the

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Speaker 5: inaccuracies could throw the Bank of England off course as

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Speaker 5: it considers how quickly to cut rates. The news comes

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Speaker 5: just weeks after the OENS delayed the publication of its

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Speaker 5: trade and producer price estimates and regulators began looking into

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Speaker 5: its data collection methods. A spokesperson from the office defended

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Speaker 5: its wage growth figures, arguing that both survey based and

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Speaker 5: administrative data measures of earnings show similar levels of growth.

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Speaker 5: In London, Tea were at a bio Bloomberg Radio.

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Speaker 3: The United States says Russia and Ukraine have agreed to

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Speaker 3: a ceasefire in the Black Sea. The Kremlin confirmed the agreement,

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Speaker 3: but says it's additional lifting sanctions on banks and companies

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Speaker 3: involved in agricultural exports. While the White House did not

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Speaker 3: mention the stipulations, the US statement does say they will

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Speaker 3: help restore Russia's access to the world market and enhance

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Speaker 3: access to ports and payment systems for such transactions. Ukraine's

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Speaker 3: present Vla mar Zelenski says his forces would observe the

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Speaker 3: partial truth immediately, but in a video post on X

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Speaker 3: also sounded this warning.

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Speaker 6: If this agreement fails, if Russia does not fulfill the

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Speaker 6: terms of today's agreements and instead tries once again to

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Speaker 6: pressure the US, Europe and Ukraine, then I believe there

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Speaker 6: should be only one response. Definitely new sanctions, definitely more pressure.

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Speaker 6: How Russia behaves in the coming days will reveal a lot,

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Speaker 6: if not.

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Speaker 3: Everything, Zelenski's words, but thereby a translator comm as President

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Speaker 3: Trump conceded in an interview with Newsmax that Vladimir Putin

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Speaker 3: may be delaying a full sease fire agreement.

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Speaker 7: I think that Russia wants to see an end to it,

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Speaker 7: but it could be their drag in the feed. I've

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Speaker 7: done it over the years.

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Speaker 8: You know.

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Speaker 7: I don't want to sign a contract. I want to

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Speaker 7: sort of stay in the game. But maybe I don't

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Speaker 7: want to do it quite. I'm not sure, but no,

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Speaker 7: I think Russia would like to see an end, and

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Speaker 7: I think so Lensky would like to see it end.

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Speaker 3: At this point, bimbergunderstands the Trump administration is aiming to

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Speaker 3: reach a full sease fire as soon as the twentieth

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Speaker 3: of April, a timeline that's seen is overly ambitious by

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Speaker 3: Ukrainian and European officials.

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Speaker 2: The Trump administration says that it is investigating the addition

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Speaker 2: of journalist Jeffrey Goldberg to a group chat of top

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Speaker 2: US officials discussing plans for military strikes in Yemen. The

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Speaker 2: incident sparked a firestorm in Washington, with concerns over the

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Speaker 2: handling of sensitive information. The group was communicating through the

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Speaker 2: encryptied messaging app Signal. Speaking on Fox News, US National

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Speaker 2: Secure advise of Mike Waltz accepted his role in the breach.

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Speaker 8: I take responsibility. I built the I built the group.

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Speaker 7: Okay.

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Speaker 8: So but look that's the part that we have to

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Speaker 8: figure out, and that's the part that we were embarrassing. Yes,

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Speaker 8: we made a mistake. We're moving forward and we're going

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Speaker 8: to continue to knock it out of the park for

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Speaker 8: this President.

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Speaker 2: Mike Wiltz was speaking to Fox News's lawer Ingram. President

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Speaker 2: Trump said that he did not believe that the disclosures

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Speaker 2: demanded a criminal investigation or a directive banning the use

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Speaker 2: of signaled by officials.

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Speaker 3: US tariffs on copper imports could be coming within weeks.

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Speaker 3: According to sources we've spoken to Bloomberg, that will be

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Speaker 3: months earlier than had been expected, with Trump previously threatening

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Speaker 3: to impose a duty of twenty five percent on all

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Speaker 3: copper imports. The news comes as the US President told

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Speaker 3: Newsmax there would be limited exceptions to his tariff push.

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Speaker 7: Too many exceptions. Now, I don't want to have too

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Speaker 7: many exceptions. Look, we've been ripped off for forty five

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Speaker 7: years by other countries. Fifty years more. We always were

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Speaker 7: soft and weak. It's almost like we had people that

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Speaker 7: didn't know what they were doing. We were just ripped

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Speaker 7: as a country like nobody has ever seen before.

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Speaker 3: The comments on Newsmax offered the latest hint from pasident

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Speaker 3: Trump about next week's planned announcement of so called reciprocal

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Speaker 3: duties on global trading partners. The date is to be

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Speaker 3: headlined by levies for countries that impose their own tariffs

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Speaker 3: on US goods, though the exact size, scope and method

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Speaker 3: of those tariffs hasn't yet been disclosed.

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Speaker 2: Chinese banks are hiring staff have been laid off by

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Speaker 2: their international rivals in Hong Kong. Bloomberg analysis showed some

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Speaker 2: forty X bankers from the likes of UBS and BNP,

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Speaker 2: Pariba have found work at Chinese brokerages in the last year.

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Speaker 2: That's after a wave of layoffs in the financial hub.

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Speaker 2: Compensation though tends to be thirty to four twenty percent

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Speaker 2: lower than at global firms, but with job opening scarce,

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Speaker 2: many are drawn to the chance of a promotion. So

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Speaker 2: those are our top stories. Let's get to the markets.

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Speaker 2: This morning, US copper prices have surged to a record

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Speaker 2: high as Triad is priced in the possibility of hefty

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Speaker 2: import tariffs. New York copper futures, though, have seen a

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Speaker 2: divergence with LME copper that continues. Asian stocks are trading

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Speaker 2: at a tight range this morning. MCI Asia Pacific index

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Speaker 2: eking out a small gain of three tenths of one percent,

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Speaker 2: and then nick A two to five is the outperformer,

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Speaker 2: up by eight tenths of one percent. US and European

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Speaker 2: equity futures are steady. Ten year US treasury yields edging

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Speaker 2: up this morning. The S and P five hundred closes

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Speaker 2: in the green yesterday hire two tenths of one percent,

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Speaker 2: so actually three days of gains for that index the

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Speaker 2: first time since early February, and the index and investors

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Speaker 2: shrugged off a miss in US consumer confidence data. European

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Speaker 2: stocks also ended positively yesterday. US stock fifty features rose

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Speaker 2: by one percent. So those are the markets.

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Speaker 3: In a moment, we'll bring you more on our look

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Speaker 3: aheads the spring statement here in the UK. Plus I,

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Speaker 3: Switzerland's finance sheriff is facing off against its biggest lender UBS.

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Speaker 3: But another story that catterr eye this morning. If you're

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Speaker 3: a fan of using chat GPT, there's an update coming now.

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Speaker 3: Some of this does actually appeal, so's it's going to

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Speaker 3: be focused on changes to visuals. So our colleague Rachel

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Speaker 3: met has been writing about the open AI announcement yesterday,

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Speaker 3: So you could feed in more directions, for example, to

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Speaker 3: create things like charts. You can see that's being very

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Speaker 3: useful in the business environment as well, but also for images,

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Speaker 3: and the example that Rachel uses is a user might,

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Speaker 3: for example, request an image of a snail in a city,

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Speaker 3: then asked to change part of that backdrop and add

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Speaker 3: a hat, which is perhaps more indicative productivity actually amusing

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Speaker 3: for I don't know, hello, I would like a snail

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Speaker 3: on a city please?

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Speaker 1: Yeah, that's funny.

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Speaker 2: Well, that's the thing about about these AI tools, since

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Speaker 2: it depends on what you're going to use them for?

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Speaker 2: Is this going to be a huge help to advertising

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Speaker 2: executives or anybody else?

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Speaker 3: And yet again the question of the information that you

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Speaker 3: feed into it has to be good as well. There

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Speaker 3: have been errors highlighted than some of these charts, like,

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Speaker 3: for example, chattybt could make up things while generating images,

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Speaker 3: including text with fake country names for example search. The

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Speaker 3: company's actually made a blog coost about this, saying that

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Speaker 3: these errors can happen with less detailed prompts from users.

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Speaker 3: So perhaps a lesson that if you are easing chagpt

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Speaker 3: you do have to give it very clear instructions. Kelly's

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Speaker 3: for humans the way I look at it.

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Speaker 2: Yes, exactly, very good. Let's bring you more now on

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Speaker 2: what to expect from the Chancellor's Springs statement here in

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Speaker 2: the UK, Rachel Reeves is expected to announce billions of

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Speaker 2: pounds of spending cuts to put the country's fiscal trajectory

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Speaker 2: back on track, and our UK politics were port at.

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Speaker 2: James Walcock is with us for more on this. Good morning, James.

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Speaker 2: What policy announcements then are we expecting today?

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Speaker 9: Well, Karen, this is supposed to be the annual economic

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Speaker 9: outlook for the country, so arguably we shouldn't be expecting

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Speaker 9: many at all. That's certainly what rich Luis would like

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Speaker 9: you to think. However, she's going to be publishing the

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Speaker 9: forecast by the Office of Budget Responsibility which is expected

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Speaker 9: to harve its growth projection for twenty twenty five. That

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Speaker 9: leaves the Chancellor at lease Bloomberg Economics think it does

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Speaker 9: needing to find fifteen billion pounds in savings to shore

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Speaker 9: up her fiscal headroom. Now we know that there is

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Speaker 9: apparently five billion from welfare cuts. Now I say apparently

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Speaker 9: because there are press reports overnight that say the OBR

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Speaker 9: haven't been totally convinced by that five billion saving cut.

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Speaker 9: They put it more at three point four billion. Now,

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Speaker 9: the other sort of money is going to be coming

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Speaker 9: from fifteen percent of civil service admin costs are going

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Speaker 9: to be cut by the end of the decade that

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Speaker 9: we expect will be about ten thousand jobs. Where US

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Speaker 9: have said that publicly, and there again press reports overnight

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Speaker 9: saying that there's going to be a two point two

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Speaker 9: billion pound increase to defense spending on top of what

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Speaker 9: we've already seen coming from further cuts to foreign eight. Now,

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Speaker 9: a lot of that is press speculation until Reeves gets

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Speaker 9: up and say it's not true. However, there is a

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Speaker 9: lot of looming in sort of big spending cuts, plans

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Speaker 9: to lower disability bel ifits, and crucially, there is no

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Speaker 9: tax rises planned because Rachel Reeves has said this is

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Speaker 9: going to be not a major fiscal event. Having said that,

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Speaker 9: I'm going to give myself a bit of wiggle room

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Speaker 9: if that's all right. We've been hearing talks for the

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Speaker 9: past few weeks about potential tax change to the Digital

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Speaker 9: services tax as part of US trade negotiations. That wouldn't

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Speaker 9: be a rise, that would be a drop. So theoretically,

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Speaker 9: if something were like that to be there, there would

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Speaker 9: be a way of fitting that in. As well as policy.

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Speaker 9: A few other things to watch out for the Demo

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Speaker 9: Detiiciance Plan, which is going to be where the markets

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Speaker 9: be watching out where all this money is going to

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Speaker 9: be coming from, how it was issued, the obr's press

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Speaker 9: conference themselves about where they dig into the chromic outlook,

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Speaker 9: and also the impact assessment of these welfare reforms which

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Speaker 9: are going down very controversially with labor MPs. It's going

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Speaker 9: to be slipped out just as Rachel Reeves speaks.

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Speaker 3: Okay, so a busy day ahead. Let's talk about the politics. Then,

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Speaker 3: how will Rachel Reeves be trying to sell this to

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Speaker 3: her own MPs, some of whom are very unhappy with

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Speaker 3: the announcements already flagged and the public.

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Speaker 9: If you want to understand rich Reeves's thinking, Steven, you

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Speaker 9: need to go back to her Maid's lecture, which she

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Speaker 9: gave this time last year. The three words you need

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Speaker 9: are stability, investment reform, and that is Reeves's entire pitch

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Speaker 9: and has been ever since. She's going to bring back

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Speaker 9: stability by restoring her fiscal rules, that is rule number one.

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Speaker 9: She's going to bring back investments by restoring stability, and

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Speaker 9: then she's going to reform Britain's public services to bring

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Speaker 9: back growth. That is the pitch and it has not changed.

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Speaker 9: I think the one thing that is new will be

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Speaker 9: that there are tough choices. We live in a world

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Speaker 9: with higher defense spending now with more global trade uncertainties,

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Speaker 9: and you're going to see that played up. But the

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Speaker 9: core message has not shifted. Despite that. The Conservatives are

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Speaker 9: calling this an emergency budget. I mean, given it's a

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Speaker 9: pre plan fistal event, that is posentially a bit rich.

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Speaker 9: But Reeves has a lot of big headwinds here. In

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Speaker 9: just five days, You'll see council tax go up. You'll

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Speaker 9: see the water bills go up, energy bills, national insurance contributions.

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Speaker 9: There are a lot of very difficult messages she's going

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Speaker 9: to have to sell.

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Speaker 2: Yeah, absolutely, and yet concerns that perhaps even in the

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Speaker 2: October budget that taxes would once again be a focused

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Speaker 2: tax increases the message then, just lasting briefly for the

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Speaker 2: market and what she's going to try to say to investors.

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Speaker 9: She goes to try and say that she's still in

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Speaker 9: charge and things are all underhand. She's at hard numerical

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Speaker 9: physical rules. She left herself the third lowest fiscal room

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Speaker 9: on record, and now the forecast has moved. She's going

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Speaker 9: to say, I'm still the Iron Chancellor, I'm still a

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Speaker 9: labour chance at, but I'm pro business and you can

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Speaker 9: trust me.

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Speaker 1: Okay.

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Speaker 3: James WILCOCKO UK Politics Reporter, thank you very much. We'll

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Speaker 3: bring you the Chancellor of Spring statement live here on

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Speaker 3: Bloomberg Radio UK. Listeners can join us from twelve noon.

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Speaker 3: Raja Reeves, you've spook. At twelve thirty we'll have analysis

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Speaker 3: from our political and economics team here in London, and

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Speaker 3: there'll be a special episode of Bloomberg UK Politics podcast

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Speaker 3: to download later now.

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Speaker 2: A drive to disrupt the once cozy relationship between Switzerland's

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Speaker 2: banks and regulators has put the head of the country's

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Speaker 2: financial waterhdog on a collision course with its largest bank UBS.

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Speaker 2: Stefan Walter has been speaking to Bloomberg about his first

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Speaker 2: year in the job as CEO of Finnma, and our

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Speaker 2: senior finance reported Laura Noonan joins us now for more

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Speaker 2: on this. Laura, good morning. This is such an interesting story.

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Speaker 2: What has Stefan Walter done to shake up Swiss finance

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Speaker 2: so much in his first year?

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Speaker 1: Hi, good morning, Thank you for having me. So there

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Speaker 1: are two things he's done. First of all, the Swiss banks,

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Speaker 1: and particularly the largest Swiss bank by some measure, UBS

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Speaker 1: are noticing a much more they would say, intensive intrusive

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Speaker 1: data day supervision style, so they're hearing from Finman a

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Speaker 1: lot more. They're having to provide them with a lot

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Speaker 1: more information and that has been a hurdle for them

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Speaker 1: to get through. What the more material thing they've done

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Speaker 1: beyond that is they are part of this broader Swiss

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Speaker 1: debate about the two big to Fail rules that UBS

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Speaker 1: should have to follow, which would now that they have

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Speaker 1: bore credits, we which would see a significant capital increase

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Speaker 1: for UBS. So they are part of the contingent which

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Speaker 1: is advocating for UBS to have to hold one capital

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Speaker 1: backing for all of its foreign subsidiaries, which basically means

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Speaker 1: at twenty five billion dollar increase in capital for UBS,

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Speaker 1: and which would mean they would have a common effort

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Speaker 1: that they would have a key capital ratio of around

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Speaker 1: twenty percent, which is significantly higher than the other large

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Speaker 1: international banks and than basically any other bank that I

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Speaker 1: have ever covered. So the main thing that has put

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Speaker 1: FILM at odds with its right with its banks is

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Speaker 1: the very high capital requirement it is pushing for UBS

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Speaker 1: to have to maintain.

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Speaker 3: Okay, so this sounds like something that banks, you know,

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Speaker 3: could be fairly reluctant to get on board with. How

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Speaker 3: is Stephan Walter and his actions like this being viewed

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Speaker 3: by the financial community in Switzerland.

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Speaker 1: I think it's fair to say Stefan hasn't gone on

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Speaker 1: a charm offensive, was it. He's very much It's very

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Speaker 1: different to the climate in the UK and in the US,

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Speaker 1: where the regulators are very much trying to win over

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Speaker 1: their banks. In Switzerland, the dynamic is much more we

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Speaker 1: want you to do this, so do it. So it's

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Speaker 1: more of a combative, fracticious dynamic. So how it works

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Speaker 1: is FILMA doesn't actually decide on this major capital rule.

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Speaker 1: They just influence the politicians who decide. Finnmatt I don't

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Speaker 1: think has spent a huge amount of time trying to

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Speaker 1: convince the bank that this is the right thing, because

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Speaker 1: the bank fundamentally believes it is not. So you basically

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Speaker 1: have the two polls. FIMA says the bank should have

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Speaker 1: to do X and UBS says we should absolutely not

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Speaker 1: have to do X, and at some point in the

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Speaker 1: next couple of years the politicians are going to decide

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Speaker 1: the bank doesn't. There hasn't been a lot of There's

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Speaker 1: been a lot of productive dialogue between the bank and

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Speaker 1: the rug lader on this topic. But the backdrop is

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Speaker 1: very much that Switzerland is the only country which had

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Speaker 1: a globally systemic bank fail and that left a life

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Speaker 1: are scarring. So we are two years on from the

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Speaker 1: Credit Sweet failure. It might feel like quite a long

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Speaker 1: time in other parts of the world. In Switzerland, it

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Speaker 1: still feels quite recent, and that has really inspired a

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Speaker 1: dynamic where the regulator is much tougher and the regulator

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Speaker 1: wants to be seen to be much tougher. So it's

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Speaker 1: not really about building consensus with the bank. It's about

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Speaker 1: curtailing the bank and making sure that UBS can never

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Speaker 1: collapse in the way that Credit Swie did.

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Speaker 7: Yeah.

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Speaker 2: Absolutely, and the trauma of Credit Swite, as you point out,

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Speaker 2: I think perhaps is underlying this how much the port though,

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Speaker 2: does well to have then to push for stronger capital

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Speaker 2: requiments that UBS. I Where do we think this is

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Speaker 2: going next?

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Speaker 1: Well, we're going to be testing this in the kind month,

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Speaker 1: so there's meant to be a proposal in May, which

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Speaker 1: could possibly be June, which will show how the wind

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Speaker 1: is blowing from a political perspective, But then there'll be

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Speaker 1: another two years of trying to hammer this thing out

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Speaker 1: the best. Would they actually go and do all of

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Speaker 1: this It seems to me unlikely, but you couldn't entirely

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Speaker 1: rule it out. The other Intertian thing about Switzerland is

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Speaker 1: that if they can't reach a decision politically, they could

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Speaker 1: actually have a national vote. Switzerland loves a good vote,

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Speaker 1: and you could have a referendum on UBS's capital where

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Speaker 1: we find out what the man on the street thinks.

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Speaker 1: And I did speak to a few people outside Swiss

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Speaker 1: Finance when I was there last week to try to

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Speaker 1: get a sense of how much normal people care about this,

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Speaker 1: and the answer from the cross section I spoke was

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Speaker 1: really really varied. I mean, I met some people who

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Speaker 1: were completely unfamiliar with this entire debate and didn't seem

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Speaker 1: to care. But then I also met people who had

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Speaker 1: lost money on credit sweet and felt very strongly about this.

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Speaker 1: So I think it would be really interesting where to

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Speaker 1: go to an actual public vote and see how everybody

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Speaker 1: in Switzerland feels about it. But at this stage it

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Speaker 1: seems unlikely that they are going to go all in.

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Speaker 1: Some of our listeners might have seen a story that

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Speaker 1: we ran about the potential for UBS to move headquarters

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Speaker 1: in the event that they did go all in, and

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Speaker 1: the basic maths of that is being held to a

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Speaker 1: common eq To be held to a cet one ratio

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Speaker 1: of twenty twenty one percent is just very difficult to

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Speaker 1: reconcile with also acting in the best interest of shareholders

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Speaker 1: and also giving shareholders to return that shareholders need. So

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Speaker 1: if UBS. So it's with Land of Space worth a

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Speaker 1: situation where we do this to UBS, where if they

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Speaker 1: pursue this route they would lose UBS. It seems hard

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Speaker 1: to believe that they would actually do that. So my

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Speaker 1: best bed is that we get to some kind of

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Speaker 1: a compromise, but we are aware from that.

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