Speaker 1: Welcome to In the City, Bloomberg's podcast, connecting you to
Speaker 1: the conversations of the stories shaping the world of finance.
Speaker 1: I'm David Merritt in our London studio with Franci Maquar
Speaker 1: and Allegra Stratton, and we've all just healed ourselves away
Speaker 1: from watching Jeremy Hunt deliver He's our or so long
Speaker 1: autumn statement. So we're going to be reacting to that,
Speaker 1: seeing how business is feeling, how the city is reacting,
Speaker 1: and so with us. Also today is our City editor
Speaker 1: Katherine Griffiths. Welcome to In the City again.
Speaker 2: Catherine, thank you very much.
Speaker 1: So you've pulled yourself away like the rest of us.
Speaker 1: We've just watched Jerry Hunt and Rachel Reeves responding to
Speaker 1: his awesome statement. What are your takeaways?
Speaker 2: Well, my main takeaway, quite honestly, was to be extremely
Speaker 2: annoyed not to have got the story that they were
Speaker 2: going to spring a retail share offering in that west
Speaker 2: in US and down and then the share anyone, my goodness.
Speaker 2: Although I am going to take a little bit of
Speaker 2: credit for this amazing policy because a few weeks ago
Speaker 2: I literally did I don't think anyone had thought of it,
Speaker 2: and at the Conservative Party conference, I was on a
Speaker 2: panel with Andrew Griffith, who's obviously been moved on since
Speaker 2: being City minister. The griff The griff the Griffiths. This
Speaker 2: is like to stick together. I'm related. Disclaimer not yes,
Speaker 2: disclaimer very important. And I said, how about you do
Speaker 2: a retail share offer because he was saying how it
Speaker 2: would be great if we had more of a share
Speaker 2: owning culture. I don't think he said yes. I think
Speaker 2: he may have said no, or you know, didn't say
Speaker 2: very much at the time, just kind of gave a
Speaker 2: negative sense. But yeah, and so I do think perhaps
Speaker 2: that's that's down to me, guys original.
Speaker 1: So how is it going to go down more broadly
Speaker 1: outside of the square mark. We're going to have a
Speaker 1: big offerer of network stock and the government is going
Speaker 1: to completely sell down their state. Yeah.
Speaker 2: Yeah, so they'll probably sell some other ways as well.
Speaker 2: To institutions. They have this thing weirdly called a dribble
Speaker 2: out where they when the shares are at a certain price,
Speaker 2: they sort of very gradually do dribble the shares out
Speaker 2: into the market. But the retail offer will be you know,
Speaker 2: it will be a really eye catching story and it's
Speaker 2: amazing really that they're going to do it, because they
Speaker 2: will make an enormous loss on what they sell the
Speaker 2: shares for compared to all those years ago during the
Speaker 2: financial crisis, what they bought them for. And I must
Speaker 2: say I'm of the view that that's a bit of
Speaker 2: an unfair criticism because they bought nat West at that
Speaker 2: time to save the banking system, and that's one thing,
Speaker 2: but it will be ugly that the big loss and a.
Speaker 1: Weird time as well for that West. I mean, they're
Speaker 1: going through a leadership. I mean, they've had this crisis
Speaker 1: over Rose having to step down and the whole cutes
Speaker 1: thing is tall.
Speaker 2: Yeah, a really weird time, and I think in some
Speaker 2: ways I wonder if that partly kind of sharpened their
Speaker 2: resolve on this because having all forty percent of that
Speaker 2: West during this whole Nigel Farrage fiasco has been just
Speaker 2: a horrible nightmare for the government. And you know, it
Speaker 2: looked like they stepped in a very direct way to
Speaker 2: get rid of Allison Rose as chief exec So just
Speaker 2: it's sort of highlighted I suppose that really isn't the
Speaker 2: best idea for governments to own big banks and maybe
Speaker 2: it's best for everyone to have a parting of ways,
Speaker 2: and it genuinely is a way for people out there
Speaker 2: perhaps to think, you know, they will have heard of
Speaker 2: that West if you are going to try to get
Speaker 2: people interested in owning shares. Famously, of course the tel
Speaker 2: sid campaign from the eighties, which it yeah about British gas,
Speaker 2: then it's you could you can see why if they
Speaker 2: if they've come to terms with the fact they're going
Speaker 2: to get criticized over the loss, it's probably quite a
Speaker 2: good idea.
Speaker 3: And that is one of the interesting philosophical ideas bubbling
Speaker 3: around at the moment when you see how they're trying
Speaker 3: to increase investment in startups and so on. Is this
Speaker 3: idea of why are Brits particularly why do we seem
Speaker 3: to be sort of averse or think it's a slightly
Speaker 3: kind of dirty pastime to get involved in capitalism and
Speaker 3: supporting companies and so on. So that is one of
Speaker 3: the interesting things that Andrew Griffis was trying to do
Speaker 3: when he was city minister. He is city minister no more.
Speaker 3: After you interviewed him, he was moved on, yes, sorry, promotion, Yeah,
Speaker 3: but that was one of the things he was trying
Speaker 3: to do. It was a springboard. They heard it and
Speaker 3: they said, get that man up further up the notches
Speaker 3: of government.
Speaker 4: How political overall was this, you know, Budget Catherine.
Speaker 2: I think it was definitely political, and there was some
Speaker 2: I thought there was some quite sharp jibes at labor.
Speaker 2: Obviously that's part of the sport normally, but I thought
Speaker 2: it was particularly sharp today. But I guess it was
Speaker 2: also quite expected. It was for business certainly. The kind
Speaker 2: of the big hundred percent expensing on captain investment was
Speaker 2: they were in a tricky place because everyone expected it,
Speaker 2: but they had to make a big deal of it
Speaker 2: because it's really expensive to to give businesses that. But
Speaker 2: it is a pretty significant thing, so that was good.
Speaker 2: I think there was some stuff on housing and planning
Speaker 2: which was broadly seen to be pretty positive. National insurance.
Speaker 2: I'm not the expert, but it seems like timing wise,
Speaker 2: announcing it now might suggest they're trying to kind of
Speaker 2: get themselves into a position to go earlier on an
Speaker 2: election maybe rather than later.
Speaker 1: He was accelerating it to January as well, right, there
Speaker 1: was going to be so rather than waiting until the
Speaker 1: end of the tax shit. So yeah, trying to get
Speaker 1: that money in people's pockets potential ahead of a spring election.
Speaker 3: Well, we we always talk about looking for the rabbits
Speaker 3: in the hat and in the redoubt. I have said,
Speaker 3: this is a slightly fatter rabbit than we expected. We
Speaker 3: expected the penny, we didn't expect the two piece. In
Speaker 3: the Bloomberg newsroom, there was a tiny, tiny and as
Speaker 3: much as he's cool, exactly, especially cool cats at Bloomberg
Speaker 3: are surprised by many things, there was this like kind
Speaker 3: of oh, two p not one piece. Well raise, yeah, exactly,
Speaker 3: that's right, So slight whimper. It's a funny kind of
Speaker 3: politics because I think that there's a number of things
Speaker 3: that they've announced today that labor will probably back, like
Speaker 3: full expensing, So it's sort of very political. You're right, Catherine,
Speaker 3: because it's definitely sort of, if not the last then
Speaker 3: one of the last big fiscal financial moments before in
Speaker 3: general election. So clearly, of course, maybe off their rocker.
Speaker 3: Not to make it political. I think the other politics
Speaker 3: and themes that I'm starting to hear are around Sunak
Speaker 3: and Hunt talking about being businessmen and contrasting themselves with
Speaker 3: Reeves and Starmer, who for all that Rachel's incredibly impressive
Speaker 3: and has had that period in the Bank of England.
Speaker 3: It isn't running your own company and taking that kind
Speaker 3: of risk. And certainly the Chancellor Hunt today and he
Speaker 3: now takes the mickey out of himself for doing it
Speaker 3: because he did it a lot during the leadership race,
Speaker 3: but talks about fourteen years running his own business. So
Speaker 3: I think we'll probably start to see quite a bit
Speaker 3: of that to come full circle to this point about
Speaker 3: you know, Britain and this kind of do we quite
Speaker 3: understand setting up your own business, the risk you take
Speaker 3: and then wanting to keep equity and control and not
Speaker 3: being able to and so decamping to the States and
Speaker 3: so on. How do we start to reverse that cult
Speaker 3: or change that culture in the UK.
Speaker 4: But and actually to both of you, I mean this
Speaker 4: at the margin won't make a huge difference. I know
Speaker 4: there were tax cuts, but they're still the highest in
Speaker 4: seventy years. So it's giving I guess something for people
Speaker 4: to say, oh, maybe you know, maybe I'm not that
Speaker 4: badly off, or maybe I'll it'll get better, But it's
Speaker 4: not really a game changer, and it's all been possible
Speaker 4: thanks to higher inflation. So the ober found this money.
Speaker 4: I mean, they didn't really find the money, but they said, look,
Speaker 4: you have more physical space because inflation has gone up
Speaker 4: and so tax revenues have increased because they froze the bands.
Speaker 4: So it's not really new money there no.
Speaker 2: And on the sort of investment side, and as Alego says,
Speaker 2: there's this incredible kind of push to try and get
Speaker 2: the UK more investible. There had been all sorts of
Speaker 2: ideas floating around. So they have said they're creating a
Speaker 2: growth fund, but they don't seem to be putting any
Speaker 2: kind of government backing behind it. And they had considered
Speaker 2: that they'd considered creating something a bit like Canada's Growth
Speaker 2: Fund and actually sort of trying to make it more
Speaker 2: enticing by there being some co investment. And that side
Speaker 2: of the announcements were pretty mealy mouthed and maybe a
Speaker 2: little bit underwhelming.
Speaker 1: I mean I actually wrote down the quote because it's
Speaker 1: so striking when he said this is delivering. This budget
Speaker 1: delivers the biggest business tax cut in modern British history.
Speaker 3: I mean, is that once you're counting is it post war?
Speaker 2: Yeah?
Speaker 1: Exactly what is modern British history, I suppose is debatable
Speaker 1: but is that credible? I mean, does it stand up
Speaker 1: to your point? Ran seeing about where this money has
Speaker 1: come from? Is it just because of inflation it has
Speaker 1: been so high? I mean, what is it really going
Speaker 1: to goose the economy? Is it really going to goose investment?
Speaker 1: And you know, is this I mean, we didn't see
Speaker 1: the pound really moved.
Speaker 4: You're probably relieved it wasn't the budget of last year
Speaker 4: those traders.
Speaker 3: Right, we which we forget, don't we?
Speaker 4: I was just twelve months ago.
Speaker 3: We're anything that.
Speaker 1: Not so many budget and I haven't checked in the
Speaker 1: last few minutes.
Speaker 4: But I think everything stable.
Speaker 3: Well. I think they would say, if they were here,
Speaker 3: that it's about the supply cide reforms.
Speaker 1: So you use that phrase, right, yeah, you're complete?
Speaker 3: Right? How are they defining modern history just to pick
Speaker 3: the easy ones? And there is a kind of credit.
Speaker 3: I think our reporters are going to be writing about
Speaker 3: this right now. They're kind of you know, taking from
Speaker 3: Paul to pay Peter. Rachel Reeves stood up and she
Speaker 3: said this is pickpocketing. It wasn't a phrase I particularly
Speaker 3: loved at the time, but her point was, you know, yes,
Speaker 3: yes you're giving, but you've done it by taking through
Speaker 3: fiscal drag and so on. So I think that's what
Speaker 3: the question will be today day. If that's what right
Speaker 3: now everyone be working out when they write their newspaper
Speaker 3: headlines into tomorrow morning and so on.
Speaker 1: But I think what the.
Speaker 3: Government would say is that this is a moment about firstly,
Speaker 3: they are now starting the tax cutting that they have
Speaker 3: been promising they will do. But secondly, this is about
Speaker 3: for me, less interesting than the planning elements, but certainly
Speaker 3: the changes around trying to get more investment into the city,
Speaker 3: trying to make London more attractive to list in, trying
Speaker 3: to make sure that pensions are actually being invested in
Speaker 3: something that's risky rather than not risky, the full expensing,
Speaker 3: and some one I think they think that that's what's
Speaker 3: going to get it going. Now, does it get it
Speaker 3: going quickly enough? Does it get going you know, for
Speaker 3: next the next year. Because it is interesting, we've talked
Speaker 3: about it before. Labor back a lot of this because
Speaker 3: if they come into government, this is this is.
Speaker 1: This is the list of things aren't there. We've we've
Speaker 1: we've analyzed these on this podcast over the month, So
Speaker 1: like what is with London? What is up with the
Speaker 1: London Stock Exchange, What are the rules that need to change?
Speaker 1: What can we do about the appetite for risk among
Speaker 1: institutional investors here? So that I think, you know, Jamie
Speaker 1: Hunt's been listening to our.
Speaker 4: Podcast, but I guess if you put growth measures in place,
Speaker 4: and the Ober put out a useful tweet moments ago
Speaker 4: basically saying, look, if you look at how the Chancellor
Speaker 4: is spending the fiscal improvements in twenty twenty seven twenty
Speaker 4: twenty eight, he's just targeting three main measures right which
Speaker 4: we mentioned, which is a two pea cut in the
Speaker 4: National Insurance contribution, the permanent upfront tax right after business investment,
Speaker 4: then welfare and health reforms. But is that going to
Speaker 4: be inflationary because if they're creating a problem. So if
Speaker 4: they're growing but creating a problem for the Bank of England,
Speaker 4: who still had that two percent target, then it could
Speaker 4: go south quite quickly in terms of the economy.
Speaker 2: Another thing in the lead up, there was a lot
Speaker 2: of talk about harnessing retail investors, wasn't there And okay,
Speaker 2: so we've got the nut West thing, but he certainly
Speaker 2: didn't mention anything to do with ices that was going
Speaker 2: to be a big part of this budget, and in
Speaker 2: the last few days, certainly among the banks, there was
Speaker 2: a so a sort of slight sense of concern that
Speaker 2: there could be some kind of problems with how these
Speaker 2: products might be sold to people in terms of making
Speaker 2: people understand fully about risk. And I think there was
Speaker 2: some concerns raised and maybe at the last minute some
Speaker 2: of that stuff got put.
Speaker 3: On to winkle out. Catherine helved it.
Speaker 2: Yes, yes, exciting, yes.
Speaker 1: And how do we think Rachel Reeves did standing up
Speaker 1: and responding to the speech. I mean she attacked the
Speaker 1: downgrades and growth of the BAT, didn't she she did?
Speaker 3: I mean I think there is complexity to the downgrades
Speaker 3: and growth, I think, and they're not quite as kind
Speaker 3: of pro the labor positions as Reeves would have liked.
Speaker 3: It's the most difficult job in politics responding no, no, no, no, no,
Speaker 3: get up on your feet immediately. And I thought she
Speaker 3: had some good repasts and I think, you know, her
Speaker 3: attack of earlier in the year is probably going to
Speaker 3: be the main one, which is, Okay, yes, you're giving
Speaker 3: money away, but how have you paid for it? It's
Speaker 3: from these people over there you're giving it. Well, it's
Speaker 3: a kind of shuffling around accountancy rather than necessarily a
Speaker 3: bonanza and giveaway, and I think that will be where
Speaker 3: most people are right now as we as we speak,
Speaker 3: are kind of winkling out the small print.
Speaker 1: And they're sitting on a twenty point lead. Let's not
Speaker 1: forget nothing is budged that up to this point. So
Speaker 1: they're in a kind of position of strength here. It's
Speaker 1: unclear whether any of these measures that hunters and an
Speaker 1: ounces day is going to break through to those people
Speaker 1: or quickly enough.
Speaker 3: But I think I think labor will know that things
Speaker 3: will will start to change closer to an election. But
Speaker 3: you're completely right, they're sitting pretty right now.
Speaker 4: Do you think there's another budget before before the next
Speaker 4: election or Dave, I mean this, you know, the timing
Speaker 4: of the election can be quite crucial.
Speaker 1: I mean, I thought it was telling as we as
Speaker 1: we said that they're rushing through the tax cut on
Speaker 1: an I to January. And to your point about the
Speaker 1: sort of the political positioning of this around the business,
Speaker 1: the very pro business points. So it does feel like
Speaker 1: they're laying out what the campaign when it comes is
Speaker 1: going to be full and it's not far away.
Speaker 3: I mean, they have to do it January twenty twenty five. So,
Speaker 3: and the thing that we always have to bear in
Speaker 3: mind is that you know, it takes a while for
Speaker 3: these things to be felt in people's pockets. So I think, yes,
Speaker 3: you know, rushing forward to January is significant and interesting,
Speaker 3: not least because the one p was trailed and sort
Speaker 3: of trailed or scooped who knows what anymore. But so
Speaker 3: I think it is definitely substantial and interesting. But I think, come, what,
Speaker 3: may you do it quickly because you want to say
Speaker 3: you want to say, okay, for the last however many months,
Speaker 3: you guys have had a bit more money in your pocket.
Speaker 3: You're right, Fran, you know money in pocket can mean inflationary.
Speaker 3: What I think we know about this lot is because
Speaker 3: of what happened to Liz Trust and how it was
Speaker 3: such a catastrophic end for her and for all her
Speaker 3: followers and so on. I think we know that they
Speaker 3: are almost setting store by by being so different. So
Speaker 3: I suspect all the relevant authorities and so on will
Speaker 3: have been sense checked on this well.
Speaker 1: One of the other things that, of course, which was
Speaker 1: drowned out a bit by some of these measures, was
Speaker 1: a cut in the forecast for growth next year as well,
Speaker 1: So there might be a sense that the longer they
Speaker 1: leave it for the election, you know, maybe the economic
Speaker 1: news isn't as good next year as the months pass,
Speaker 1: and maybe the spring. I mean, best guesses are the
Speaker 1: autumn at this point, aren't they for the poll?
Speaker 3: But you know, I'm really laughing because we focus on
Speaker 3: the economics and you're right there sort of they sort
Speaker 3: of sort of switch around quite a lot. But also
Speaker 3: there's two of those other pledges on the NHS and
Speaker 3: on stop the boats, which are.
Speaker 4: Are are tricky, yes, tricky.
Speaker 3: So we're talking about economics and thinking about the timing
Speaker 3: of an election, but actually there's there's other aspects to
Speaker 3: think about that that are that are proving elusive.
Speaker 4: Make people richer, they'll forget the rest if you look
Speaker 4: at the bond sale, also a program that they put
Speaker 4: in place, so they kind it compared to last year.
Speaker 4: And again, this just feels like they think they have
Speaker 4: more fiscal room right because they don't have to go
Speaker 4: to the market so much because of what the OBR
Speaker 4: announced a couple of weeks ago. So it just it
Speaker 4: does feel like we're in a more stable footing. I
Speaker 4: don't know, for how long, certainly compared to twelve months ago.
Speaker 2: Yeah, it does, and then it's and then it's sort
Speaker 2: of how they're kind of distributing their the goods, and
Speaker 2: so yes, it's kind of quite sort of popular move
Speaker 2: on tax cuts rather than while the sort of rhetoric,
Speaker 2: and certainly some of the measures are around investment and
Speaker 2: business investment, but they they definitely haven't gone as far
Speaker 2: on that side as people might have hoped. And you
Speaker 2: can obviously see why they as they head for an election.
Speaker 3: And I think that the full expensing is great, as
Speaker 3: they said, you know, bet Semens, these huge companies are saying, fantastic,
Speaker 3: this is Christmas.
Speaker 1: But bet shares rocketed right right, But you know, we are.
Speaker 3: A service economy, so there's there is also a question
Speaker 3: the extent to which it necessarily will help will help
Speaker 3: people who can you know, once they've full expense the
Speaker 3: laptop or five and what does it do for them?
Speaker 3: So I think, you know, it's obviously they are trying
Speaker 3: to work out. They know they're in the doghouse with
Speaker 3: business because corporation tax, so they're trying to do something
Speaker 3: that shows that they are quote unquote the party of
Speaker 3: business because I think you are seeing in this and
Speaker 3: in other statements recently, this dividing line, which is Hunt Sunak,
Speaker 3: we have done business. We know what it's like to
Speaker 3: run businesses versus the others. Let's see if that's something
Speaker 3: that cuts through with the electorate. So they want to
Speaker 3: position themselves as the party of business, whether or you know,
Speaker 3: they don't feel that cutting corporation tax was the right
Speaker 3: thing to do. Rich she Stu next talked about that
Speaker 3: in loads and loads, not least because it didn't help
Speaker 3: with productivity. So they try something else. It's a different lever.
Speaker 3: And is it Is it a lever that comes through
Speaker 3: with results anytime quickly?
Speaker 1: Yeah?
Speaker 3: And Catherine does it like, does it come through in
Speaker 3: the next two years, three years?
Speaker 1: Yeah?
Speaker 2: I think very hard to tell, but you know, in
Speaker 2: terms of sort of the messaging in the restoric of course.
Speaker 2: So next week they're going to get all these big
Speaker 2: names in from around the world, Jamie Diamond, David Solomon
Speaker 2: from God sets to this big let's see investigation in
Speaker 2: the UK, investment.
Speaker 4: Steve Schwartzman, anyone. You know, we just have a couple
Speaker 4: of Wall Street Titans showing up and just the odd
Speaker 4: one or two or may not come on the airwave.
Speaker 3: I'm sure they will, and then they'll say none of
Speaker 3: this is enough, we want more.
Speaker 2: But it will give I guess the hope if for
Speaker 2: for Hunt and Sunak is some of these things today
Speaker 2: will give them sort of some nice things to talk
Speaker 2: about next week amidst the splendor of Hampton Court.
Speaker 1: And that's all. The narrative is all part of this
Speaker 1: narrative rights we've been saying. This is like, it's amazing,
Speaker 1: isn't it. Just a year ago we had the the
Speaker 1: implosion of that budget, we had the you know, the
Speaker 1: attacking of the bean counters and all of this narrative,
Speaker 1: and now it's like we're on another planet now and
Speaker 1: that every action, whether it's convening Titans of Wall Street
Speaker 1: in Hampton Court Palace or the messaging in this budget
Speaker 1: seems to be wearing the square mar right and getting
Speaker 1: them on side.
Speaker 4: And he was quite need the Chancellor. I don't know
Speaker 4: whether people become funny when the House of Commons. I
Speaker 4: loved one of his jokes, which one he did a couple,
Speaker 4: I mean there was one.
Speaker 1: Then I stopped myself to tell the listeners what the
Speaker 1: joke is there's a plagiar that the Shadow Chancellor has
Speaker 1: been caught red handed by a newspaper investigation, and that
Speaker 1: some passages from her book seemed to be lifted from
Speaker 1: Wikipedia and other places.
Speaker 3: Which is just the gift for which is us.
Speaker 1: So he teased her about copy and pasting stuff, which
Speaker 1: again I raised a raise a snigger from my which.
Speaker 3: There was also a good joke about his way both
Speaker 3: of us. There's his wife, but also I'm now like
Speaker 3: channelling Jeremy Hunt. Both of us have tried to get
Speaker 3: people called Jeremy elected and that was obviously kissed arm
Speaker 3: trying to get Corbyn elected. And it's always nice where
Speaker 3: the Telly does the cutaway, you know there's a swallowing
Speaker 3: a wasp as they try not to kind of.
Speaker 1: Fry all laugh jokes.
Speaker 4: Yeah, the Brits are very good at theatrics.
Speaker 1: Yeah, I think, yeah, I think we wanted to get
Speaker 1: out more if we're laughing too much for the chances. Great.
Speaker 1: Thank you so much Catherine and everyone for listening to
Speaker 1: this week's in the City. We will be back next
Speaker 1: week and in the meantime, if you like our show,
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Speaker 1: and rate, review and subscribe. It helps people bind the show.
Speaker 1: This episode was hoped by me David Merritt with Francie
Speaker 1: Laquar and Allegra Stratton. It was produced by Soasadi, with
Speaker 1: additional editing by Blake Maples and special thanks again to
Speaker 1: Katherine Griffiths