WEBVTT - Powell Signals Cut Delay, Bailey More Confident & Hunt On 'Feel-good Factor'

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<v Speaker 1>This is the Bloomberg Daybacurate podcast, available every morning on Apples,

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<v Speaker 1>Spotify or wherever you listen. It's Wednesday, the seventeenth of April.

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<v Speaker 1>Here in London. I'm Caroline Hepka and.

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<v Speaker 2>I'm Stephen Carroll.

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<v Speaker 3>Coming up today, The Fed's Jerome Pell concedes that ratecuts

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<v Speaker 3>will need to be delayed, as Andrew Bailey signals the

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<v Speaker 3>Bank of England may be able to move before the US.

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<v Speaker 1>The Chancellor Jeremy Hunt tells us that lower boring costs

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<v Speaker 1>could deliver a feel good factor for UK voters as

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<v Speaker 1>he hints at a possible autumn election. Let's start with

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<v Speaker 1>a roundup.

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<v Speaker 3>Of our top story, the Federal Reserve Charge your own pals,

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<v Speaker 3>as policymakers will likely have to wait longer than previously

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<v Speaker 3>anticipated to cut interest rates. His comments that follow a

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<v Speaker 3>series of surprisingly high inflation readings and jobs data that

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<v Speaker 3>suggests the US economy remains resilient. Speaking during a panel

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<v Speaker 3>discussion in Washington, Pal said rate setters need to see

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<v Speaker 3>more evidence that the pace of price rises is cooling.

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<v Speaker 4>So we've said that the FMC that will need greater

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<v Speaker 4>confidence that inflation is more sustainably toward two percent before

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<v Speaker 4>it be appropriate to ease policy. We took that cautious

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<v Speaker 4>approach and sought that greater confidence so as not to

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<v Speaker 4>overreact to the string of low inflation readings that we

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<v Speaker 4>had in the second half of last year.

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<v Speaker 3>Pal's remarks represent a shift and his message after a

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<v Speaker 3>third straight month in which a key measure of inflation

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<v Speaker 3>exceeded forecasts. Policymakers narrowly penciled in three interest rate cuts

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<v Speaker 3>and forecasts published last month, but investors are now betting

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<v Speaker 3>on just one to two cuts this year.

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<v Speaker 1>As for the Bank of England Governor Andrew Bailey, he

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<v Speaker 1>says that Britain is on a different inflation path to

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<v Speaker 1>the US. The comments imply that the Bank of England

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<v Speaker 1>might cut into est rates before the FED. Bailey says,

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<v Speaker 1>the US inflation is being led by demands.

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<v Speaker 5>I think the dynamics of inflation are rather different between

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<v Speaker 5>Europe and I mean you're geographically now and the US.

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<v Speaker 5>We're still seeing the extension of the process of coming

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<v Speaker 5>out of the big supply shocks that we had, the

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<v Speaker 5>impact of the war, the impact of coming out of COVID.

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<v Speaker 1>Bailey was speaking at the IMF Spring meetings in Washington,

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<v Speaker 1>In its latest economic outlook, the IMF predicted that AI

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<v Speaker 1>could boost the size of the UK economy by sixteen

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<v Speaker 1>percent in its first ten years of adoption, higher than

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<v Speaker 1>most other countries.

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<v Speaker 3>The chance of Jeremy hunt as the prospect of interest

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<v Speaker 3>rate CODs could lift the mood of voters and their

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<v Speaker 3>view of the Conservatives ahead of a general election. He

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<v Speaker 3>told Bloomberg. The economy will be in a better place

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<v Speaker 3>in the months ahead.

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<v Speaker 6>That situation we were in eighteen months ago with inflation

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<v Speaker 6>at eleven point one percent.

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<v Speaker 2>That is well and truly behind us.

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<v Speaker 6>We think we have very strong growth prospects, so a

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<v Speaker 6>feel good factor as interest rates start to come down,

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<v Speaker 6>as people start to feel higher, real disposable incomes will

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<v Speaker 6>be stronger in people's minds come the early autumn.

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<v Speaker 3>Hunts Carmen's backup speculation that the government is planning to

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<v Speaker 3>hold in a in the autumn. Markets are currently pricing

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<v Speaker 3>in a first reduction in the Bank of England's five

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<v Speaker 3>and a quarter percent rate in September.

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<v Speaker 1>The ECB president Christine Legarde has doubled down on the

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<v Speaker 1>message that she gave last week that the bank is

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<v Speaker 1>on a firm path to a first rate cut in June.

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<v Speaker 1>She told CNBC on Tuesday that as long as shocks

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<v Speaker 1>don't derail the slowdown in Eurozone inflation, it'll be time

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<v Speaker 1>to moderate the central Bank's restrictive stance in reasonably short order.

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<v Speaker 1>Legguard wouldn't comment on how many cuts in borrowing costs

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<v Speaker 1>so likely to materialize. Speaking in Washington, Leguard also highlighted

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<v Speaker 1>that the German economy may be starting to recover after

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<v Speaker 1>being rocked by a series of shocks in recent years.

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<v Speaker 3>Jamie Diamond has told Bloomberg that AI will transform banking,

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<v Speaker 3>but it will also lead to job losses. The JP

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<v Speaker 3>Morgan CEO's comments come after he devoted a chunk of

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<v Speaker 3>his annual shareholder letter to the importance of artificial intelligence

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<v Speaker 3>for the Wall Street Giants, business and for society at large,

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<v Speaker 3>likening its impact to that of the steam engine. Here's

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<v Speaker 3>what Diamond told Emily Chang on the latest episode of

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<v Speaker 3>The Circus.

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<v Speaker 7>But the way to think about for us is every

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<v Speaker 7>single process, so errors, trading, hedging, research, every app every database,

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<v Speaker 7>You're going to be applying AI. So it might be

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<v Speaker 7>as a copilot, it might be to replace humans. You know,

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<v Speaker 7>AI is doing all the equity hedging for us. For

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<v Speaker 7>the most part, it's idea generation, it's large language models.

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<v Speaker 7>It's no taking while you're talking to someone and while

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<v Speaker 7>it's taking notes and may actually say to you that,

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<v Speaker 7>you know, here's the thing of interest to Climbke Peterston

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<v Speaker 7>all error, all customer service is a little bit of everything.

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<v Speaker 8>But it is going to replace some jobs, of course.

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<v Speaker 7>Yeah, but I look, folks, people have to take a

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<v Speaker 7>deep breath. Okay, Technologies always replaced jobs. Your children will

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<v Speaker 7>live to one hundred and not have cancer because of technology,

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<v Speaker 7>and literally they'll probably be working three and a half

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<v Speaker 7>days a week.

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<v Speaker 3>And you can watch the full interview with Jamie Diamond

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<v Speaker 3>on the latest episode of The Circus with Emily Chang

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<v Speaker 3>on Bloomberg. Original is available on the app or YouTube

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<v Speaker 3>or as a podcast.

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<v Speaker 1>Now to some earnings, growth is stalling below expectations at

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<v Speaker 1>LVMH's consumers railing spending on high end goods. Organic growth

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<v Speaker 1>at the company's biggest division, that is its fashion and

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<v Speaker 1>leather goods unit, fell sixteen percent compared to twenty twenty four.

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<v Speaker 1>Bloommegg's Opinions luxury writer Andrew Felstad says that circumstances this

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<v Speaker 1>year are very different.

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<v Speaker 9>Now this time last year first quarter twenty three, both

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<v Speaker 9>of those were in the high teens and they were

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<v Speaker 9>about double what analysts expected. Now we're up against very

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<v Speaker 9>strong comparisons because this time last year, China was just reopening,

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<v Speaker 9>the US was starting to slow, but it hadn't really

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<v Speaker 9>turned down.

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<v Speaker 1>So that was bloombgg's Andrea Felsted speaking there. This is

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<v Speaker 1>the slowest first quarter for the retailer since twenty sixteen,

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<v Speaker 1>excluding the twenty twenty COVID period. LVMH's wine and Spirit's

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<v Speaker 1>divisions struggled with all revenue down twelve percent, while selective

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<v Speaker 1>retailing performed the best, led by its beauty retailer Sephora.

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<v Speaker 3>To some breaking news this aeron, the Dutch equipment maker

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<v Speaker 3>ASML has reported first quarter bookings that missed expectations. The

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<v Speaker 3>figure came in at three point six one billion euros

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<v Speaker 3>versus an expected four point sixty three billion. Other company

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<v Speaker 3>still sees its total net sales in twenty twenty four

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<v Speaker 3>to be similar to twenty twenty three. It's also expecting

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<v Speaker 3>a stronger second half to this year than the first half.

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<v Speaker 3>This as it confirms its midterm goals as it presented

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<v Speaker 3>in twenty twenty two.

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<v Speaker 1>The United States is set to place sanctions on Iran's

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<v Speaker 1>drone program after the country's attack on Israel. According to

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<v Speaker 1>the White House's National Security Advisor Jake Sullivan, Washington is

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<v Speaker 1>coordinating a comprehensive response alongside G seven countries. The US

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<v Speaker 1>Sector of State Janet Yellen, says that the measures will

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<v Speaker 1>come into play shortly.

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<v Speaker 8>Fully expect that we will take additional sanctions action against

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<v Speaker 8>Iran in the coming days. We don't preview our sanctions tools,

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<v Speaker 8>but in discussions I've fed all options to disrupt terrorist

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<v Speaker 8>financing of Iran continue to be on the table.

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<v Speaker 1>Janet Yellen speaking there. The US will also announce sanctions

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<v Speaker 1>against entities supporting the Islamic Revolutionary Guard Corps and Iran's

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<v Speaker 1>Defense Ministry, and expects allies to follow. Now in a moment,

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<v Speaker 1>we're going to dig into the world's top central bankers

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<v Speaker 1>who have been talking at the IMF and World Banker

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<v Speaker 1>meetings in Washington, and the major changes we've seen as

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<v Speaker 1>a result in markets. Plus also will bring you Blue

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<v Speaker 1>Begg's interview with the UK Chanceor Jeremy Hunt that in

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<v Speaker 1>just a moment. But another story that caughta Have you

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<v Speaker 1>seen all of the pictures the torrential reign. It's not

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<v Speaker 1>here in London, it's in Dubai.

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<v Speaker 3>Yeah, perhaps unexpected this time of the year, but it's

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<v Speaker 3>disrupted flights, schools have been shot, traffics and brought to

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<v Speaker 3>a standstill. In fact, the authorities into the UA recommending

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<v Speaker 3>people work from home today because it's been such a

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<v Speaker 3>disruption to the area. But this is after UA authorities

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<v Speaker 3>carried out a cloud seeding operation on Monday and Tuesday

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<v Speaker 3>to help create or at least augment the rainfall that

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<v Speaker 3>was in the clouds. And this is a practice they've

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<v Speaker 3>been undertaking since two thousand and two. They basically send

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<v Speaker 3>planes into the clouds, then plant chemicals and particles into

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<v Speaker 3>the atmosphere to coax more rain from the clouds. It's

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<v Speaker 3>meant to try and help with the water security issues

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<v Speaker 3>in Dubai. Now they've actually the media office actually in

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<v Speaker 3>the emirate dubbing the downpours rains of goodness, despite the

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<v Speaker 3>fact that people's homes have been flooded.

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<v Speaker 1>So yeah, I saw lots of images of luxury cars

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<v Speaker 1>being stuck in enormous torrential rain. But yes, it's interesting

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<v Speaker 1>though that it's actually more about kind of the weather.

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<v Speaker 1>And yeah, I suppose the infrastructure to buy than anything

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<v Speaker 1>else that's in part man made.

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<v Speaker 3>Yeah, it's certainly very interesting to see the effects that's

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<v Speaker 3>having on, particularly the airport in Dubaio, which is still

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<v Speaker 3>warning of some more disruption to come there too.

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<v Speaker 1>Okay, it's been a very busy week for central bankers

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<v Speaker 1>attending the IMF and World Bank meetings in Washington. The

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<v Speaker 1>Defense jer Own Powell is among them. He has signaled

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<v Speaker 1>that policymakers will wait longer than previously thought before cutting

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<v Speaker 1>interest rates. TVNCA pretty good to join this now for

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<v Speaker 1>more on this. Good to have you with us, Critty.

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<v Speaker 1>How significant a shift in language is this from Jerome Powell.

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<v Speaker 10>This is a pretty big shift of language, specifically when

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<v Speaker 10>he's kind of admitting that the work isn't fully done

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<v Speaker 10>on inflation. And this is in contrast to what he

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<v Speaker 10>said in prior iterations, which is that progress is being made,

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<v Speaker 10>that these kind of previous hot data prints that we've

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<v Speaker 10>seen in January or in February in the States are

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<v Speaker 10>perhaps one offs. It is he loves to say transitory

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<v Speaker 10>for example, so he say that this even uptick wasn't

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<v Speaker 10>something to be concerned about until now, and this is

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<v Speaker 10>rarely where you're starting to see the bond market really

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<v Speaker 10>react the comments where he specifically says that it's going

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<v Speaker 10>to likely take longer for confidence on inflation and that

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<v Speaker 10>recent data shows that lack of further progress. As you mentioned, Caroline,

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<v Speaker 10>this idea here simply that not only is the higher

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<v Speaker 10>for longer regime still at play, but rate cuts are

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<v Speaker 10>going to get pushed out further and further. And you've

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<v Speaker 10>already seen that in the bond market for sixty six

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<v Speaker 10>on the US ten yure this morning.

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<v Speaker 3>Yeah, and indeed the two year push about five percent

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<v Speaker 3>briefly after these comments as well. I mean, how are

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<v Speaker 3>markets taking this?

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<v Speaker 10>Not well clearly, And one of the concerns here is

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<v Speaker 10>less about the bond market, which we've kind of have

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<v Speaker 10>a forming consensus of in the last couple of weeks

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<v Speaker 10>slash months, that five percent yields are probably going to

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<v Speaker 10>arrive on at least a ten year benchmark in the

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<v Speaker 10>US before coming back down to kind of below four percent.

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<v Speaker 10>That was a big contrarian take last quarter. This quarter

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<v Speaker 10>seems to be what everyone is kind of growing around.

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<v Speaker 10>The bigger concern is the ripple effects here, because remember

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<v Speaker 10>the FX market has been fairly sanguine. People are positioned

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<v Speaker 10>long dollar. You haven't yet seen European currencies like the Euro,

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<v Speaker 10>like the pound really crack and the first kind of

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<v Speaker 10>line of a fence off this yield move and the

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<v Speaker 10>ripple effect is showing up in Asian currencies. We're already

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<v Speaker 10>having speakers come out from the BOJ from the Bank

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<v Speaker 10>of Korea as well, really concerned about that currency story.

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<v Speaker 10>Then you look at the stock market. Our five percent

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<v Speaker 10>yield not on the two year, but on the tenure

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<v Speaker 10>going to trigger some sort of sell off in the

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<v Speaker 10>broader stock market that accelerates the carnage you're already seeing.

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<v Speaker 1>Yeah. Meanwhile, other central banks have also been speaking at

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<v Speaker 1>these meetings and in a way sort of reacting. Andrew

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<v Speaker 1>Bailey of the Bank of England suggesting that the UK

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<v Speaker 1>could cut rates before the FED a vote of confidence.

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<v Speaker 1>Maybe the inflation in the UK and the trajectory here

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<v Speaker 1>is different and more confident about it in Britain.

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<v Speaker 10>It's a careful narrative to play with because and you

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<v Speaker 10>can hear contestancy in your voice as well. But the

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<v Speaker 10>resilience and inflation can be viewed in two ways. One

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<v Speaker 10>can be a result of supply chain shocks, which is

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<v Speaker 10>not necessarily a healthy part of the economy. The other

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<v Speaker 10>piece can be consumer resilience. A third piece can be

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<v Speaker 10>structural issues within a given economy. You're seeing that in Germany,

0:12:09.480 --> 0:12:12.520
<v Speaker 10>for example, or there is that persistent inflation, but some

0:12:12.600 --> 0:12:15.280
<v Speaker 10>of the kind of tackling of it ends up meaning

0:12:15.600 --> 0:12:18.679
<v Speaker 10>a weaker economic structure. It's a similar story right here

0:12:18.679 --> 0:12:20.320
<v Speaker 10>in the UK where you do start to see some

0:12:20.360 --> 0:12:23.199
<v Speaker 10>of the kind of more sticky parts of the economy

0:12:23.480 --> 0:12:26.960
<v Speaker 10>not being able to digest any sort of persistently higher

0:12:26.960 --> 0:12:29.640
<v Speaker 10>for longer story. So rate cuts can be insurance the

0:12:29.679 --> 0:12:31.439
<v Speaker 10>way that the US is kind of thinking about it

0:12:31.440 --> 0:12:33.800
<v Speaker 10>as some sort of normalization of rates, or they can

0:12:33.840 --> 0:12:36.360
<v Speaker 10>be a tool used to provide a little bit of

0:12:36.400 --> 0:12:39.480
<v Speaker 10>cushion for average consumers. And it kind of feels like

0:12:39.520 --> 0:12:42.679
<v Speaker 10>the UK is leaning towards the latter rather than the former.

0:12:42.679 --> 0:12:45.000
<v Speaker 10>And that's why Andrew Bailey's comments should be marked as

0:12:45.040 --> 0:12:48.440
<v Speaker 10>different than the federal reserves as a poise to the BOE.

0:12:48.600 --> 0:12:50.280
<v Speaker 10>Did a job all done?

0:12:50.640 --> 0:12:53.040
<v Speaker 3>Okay, Christy Gupta, thank you very much for joining us

0:12:53.160 --> 0:12:56.040
<v Speaker 3>this morning with talking us through some of the central

0:12:56.080 --> 0:12:58.920
<v Speaker 3>bank comments they're happening at the IMF and World Bank

0:12:58.920 --> 0:13:00.000
<v Speaker 3>Spring meetings in Washington.

0:13:00.520 --> 0:13:02.880
<v Speaker 1>Well, speaking of Washington, of course, we've got a big

0:13:02.880 --> 0:13:06.040
<v Speaker 1>interview for you this morning. The Chancellor, Jeremy Hunt, has

0:13:06.080 --> 0:13:10.520
<v Speaker 1>told Bloomberg that interest rate cuts would lift voter's mood

0:13:10.920 --> 0:13:14.400
<v Speaker 1>ahead of the general election. His comments add to speculation

0:13:14.480 --> 0:13:18.040
<v Speaker 1>that the Prime Minister won't call a vote until the autumn.

0:13:18.240 --> 0:13:21.880
<v Speaker 1>Jeremy Hunt has been speaking to Bloombo's Candy Lines in Washington.

0:13:22.280 --> 0:13:25.240
<v Speaker 6>I think the big message from today is that the

0:13:25.280 --> 0:13:27.480
<v Speaker 6>IMF is saying that inflation is going to be one

0:13:27.559 --> 0:13:30.880
<v Speaker 6>point two percent lower. There are people who are now

0:13:30.920 --> 0:13:34.280
<v Speaker 6>forecasting inflation will be lower in the UK than in

0:13:34.320 --> 0:13:38.240
<v Speaker 6>the US or possibly even the Eurozone. And so you

0:13:38.280 --> 0:13:41.480
<v Speaker 6>know that situation we're in eighteen months ago with inflation

0:13:41.600 --> 0:13:44.760
<v Speaker 6>at eleven point one percent, that is well and truly

0:13:44.800 --> 0:13:47.760
<v Speaker 6>behind us. And if you're looking forward in terms of

0:13:47.960 --> 0:13:51.360
<v Speaker 6>longer term growth prospects, the IMF today are saying that

0:13:51.400 --> 0:13:54.400
<v Speaker 6>the UK will grow faster than France, Germany or Italy

0:13:54.800 --> 0:13:56.040
<v Speaker 6>over the next six years.

0:13:56.520 --> 0:13:58.640
<v Speaker 2>So we think we have very strong growth.

0:13:58.400 --> 0:14:01.240
<v Speaker 11>Prospects, So you aren't controunded at all about what potentially could

0:14:01.320 --> 0:14:03.959
<v Speaker 11>happen two parts of the UK economy, like the labor

0:14:04.000 --> 0:14:06.520
<v Speaker 11>market if policy were to take stay too tight for

0:14:06.559 --> 0:14:08.360
<v Speaker 11>too much longer, given what you are saying as a

0:14:08.360 --> 0:14:09.720
<v Speaker 11>downward trajectory in inflation.

0:14:10.480 --> 0:14:13.280
<v Speaker 6>Well, obviously in the short term we looked at the

0:14:13.280 --> 0:14:16.840
<v Speaker 6>Bank of England to get that fine judgment right. But

0:14:17.240 --> 0:14:20.880
<v Speaker 6>what finance ministers like me can do is much more

0:14:20.880 --> 0:14:23.760
<v Speaker 6>about the longer term competitiveness.

0:14:22.920 --> 0:14:24.080
<v Speaker 2>Of the UK economy.

0:14:24.160 --> 0:14:27.680
<v Speaker 6>And we note that the IMF today say there's a

0:14:27.680 --> 0:14:31.440
<v Speaker 6>whole section about the impact of AI on the UK

0:14:31.600 --> 0:14:35.680
<v Speaker 6>economy because they recognize that London is now the world's

0:14:35.720 --> 0:14:40.600
<v Speaker 6>second largest epicenter for AI, R and D after San Francisco,

0:14:41.080 --> 0:14:43.280
<v Speaker 6>and there's a huge amount happening in our tech economy,

0:14:43.280 --> 0:14:47.280
<v Speaker 6>which is third only to the US and China globally,

0:14:47.400 --> 0:14:50.640
<v Speaker 6>and that is really where the big growth in the

0:14:50.640 --> 0:14:52.480
<v Speaker 6>future is going to come in the UK, and that's

0:14:52.480 --> 0:14:55.440
<v Speaker 6>where we think makes the very exciting bet for investors.

0:14:55.640 --> 0:14:57.640
<v Speaker 11>Well, and your point has taken, Chancellor, that you oversee

0:14:57.640 --> 0:14:59.760
<v Speaker 11>the fiscal side, not the monetary side. So on the

0:14:59.760 --> 0:15:02.720
<v Speaker 11>fifth side, you have suggested that an election could happen

0:15:02.760 --> 0:15:06.680
<v Speaker 11>potentially as soon as October. Should we expect another potential

0:15:06.720 --> 0:15:09.680
<v Speaker 11>fiscal event between now and then, or have we seen

0:15:09.720 --> 0:15:12.120
<v Speaker 11>all we're going to see on that front before the

0:15:12.160 --> 0:15:12.840
<v Speaker 11>votes are cast.

0:15:13.280 --> 0:15:16.200
<v Speaker 6>Well, it's certainly the case that, you know, the feel

0:15:16.200 --> 0:15:19.480
<v Speaker 6>good factor, as interest rates start to come down, as

0:15:19.560 --> 0:15:23.760
<v Speaker 6>people start to feel higher real disposable incomes, we'll be

0:15:23.800 --> 0:15:27.600
<v Speaker 6>stronger in people's minds come the early autumn than it

0:15:27.640 --> 0:15:31.160
<v Speaker 6>is now. People have been through a very bruising period. Obviously,

0:15:31.160 --> 0:15:33.760
<v Speaker 6>decisions about election timing are for the Prime Minister, and

0:15:34.440 --> 0:15:37.360
<v Speaker 6>were we to have an October election, as I've said before,

0:15:37.360 --> 0:15:39.960
<v Speaker 6>it would be possible to have a fiscal event in September,

0:15:40.400 --> 0:15:43.720
<v Speaker 6>but we would decide much nearer the time whether that

0:15:43.840 --> 0:15:45.120
<v Speaker 6>was the right thing to do well.

0:15:45.160 --> 0:15:47.280
<v Speaker 11>Of course, you've already delivered a lot fiscally in terms

0:15:47.280 --> 0:15:50.440
<v Speaker 11>of tax cuts, including personal tax cuts, and yet when

0:15:50.440 --> 0:15:52.960
<v Speaker 11>you look at polls, obviously the Conservative Party is still

0:15:53.040 --> 0:15:56.960
<v Speaker 11>running significantly behind Labor I believe by roughly twenty points.

0:15:57.120 --> 0:15:58.840
<v Speaker 11>What else may need to be done on that front

0:15:59.000 --> 0:16:02.520
<v Speaker 11>to convince you voters to keep the Conservatives in power?

0:16:02.560 --> 0:16:04.400
<v Speaker 11>What would you consider doing well?

0:16:04.440 --> 0:16:05.040
<v Speaker 2>I'd be very.

0:16:04.920 --> 0:16:08.840
<v Speaker 6>Cautious about looking at those polls because, first of all,

0:16:09.280 --> 0:16:12.560
<v Speaker 6>as we can see from the challenges facing incumbent governments

0:16:12.560 --> 0:16:16.320
<v Speaker 6>not just in the UK but in the US and Germany, France,

0:16:17.120 --> 0:16:20.560
<v Speaker 6>the electorate have been through a really difficult period with

0:16:20.840 --> 0:16:26.240
<v Speaker 6>an energy shock, with high inflation, with a pandemic. But

0:16:26.400 --> 0:16:28.760
<v Speaker 6>when it comes to a general election, it's a choice

0:16:28.760 --> 0:16:30.880
<v Speaker 6>about the future. It's not a referendum on how you

0:16:30.880 --> 0:16:34.320
<v Speaker 6>feel right now, and that becomes a very different decision

0:16:34.360 --> 0:16:36.600
<v Speaker 6>in people's minds. And we know in the UK that

0:16:36.680 --> 0:16:39.240
<v Speaker 6>around a fifth of voters have not yet made up

0:16:39.240 --> 0:16:40.720
<v Speaker 6>their mind who they're going to vote for, So we

0:16:40.720 --> 0:16:42.120
<v Speaker 6>think there's all to play for.

0:16:42.240 --> 0:16:43.320
<v Speaker 2>And what we're seeing.

0:16:43.000 --> 0:16:46.800
<v Speaker 6>Now is much more positive data beginning to come through,

0:16:48.000 --> 0:16:50.920
<v Speaker 6>very good prospects for the UK going forward, as confirmed

0:16:50.920 --> 0:16:54.040
<v Speaker 6>by the IMF today, And I think all that means

0:16:54.040 --> 0:16:57.320
<v Speaker 6>that our strongest argument to the British people is going

0:16:57.360 --> 0:17:00.400
<v Speaker 6>to be that having turned that corner and want to

0:17:00.400 --> 0:17:02.880
<v Speaker 6>take any risks going forward that would mean that we

0:17:02.920 --> 0:17:04.800
<v Speaker 6>don't have that exciting economic growth.

0:17:05.040 --> 0:17:07.720
<v Speaker 11>Well, something else the IMF warned about in its report

0:17:07.760 --> 0:17:11.119
<v Speaker 11>today was around something you've just mentioned, the idea of

0:17:11.160 --> 0:17:15.159
<v Speaker 11>potentially an energy shock, considering we are still seeing hot wars,

0:17:15.200 --> 0:17:16.920
<v Speaker 11>not just on the continent of Europe, but of course

0:17:16.960 --> 0:17:18.959
<v Speaker 11>in the Middle East. We are waiting to see what

0:17:19.040 --> 0:17:21.480
<v Speaker 11>kind of retaliation we might see from the Israelis after

0:17:21.520 --> 0:17:24.439
<v Speaker 11>the Iranian attack over the weekend. How concerned are you

0:17:24.600 --> 0:17:27.679
<v Speaker 11>about the way in which this conflict may escalate and

0:17:27.720 --> 0:17:30.919
<v Speaker 11>the ramifications it could have, not just for humanity but

0:17:31.040 --> 0:17:32.359
<v Speaker 11>for the economy.

0:17:32.960 --> 0:17:35.200
<v Speaker 6>Well, I think we all have to be very concerned.

0:17:35.920 --> 0:17:38.480
<v Speaker 6>But I think we should also take comfort from the

0:17:38.520 --> 0:17:39.840
<v Speaker 6>fact that the.

0:17:39.840 --> 0:17:41.680
<v Speaker 2>Two biggest shocks that.

0:17:41.640 --> 0:17:44.320
<v Speaker 6>We've seen in the last few years, the invasion of

0:17:44.440 --> 0:17:47.880
<v Speaker 6>Ukraine and the attack on Israel, have both been met

0:17:47.920 --> 0:17:51.960
<v Speaker 6>by a very united response from Western allies, much more

0:17:52.040 --> 0:17:55.840
<v Speaker 6>united than our opponents were expecting. And I think that

0:17:56.080 --> 0:17:58.480
<v Speaker 6>what that demonstrates is that when the chips are down,

0:17:59.000 --> 0:18:01.840
<v Speaker 6>we recognize the seria business of the situation. We work

0:18:01.880 --> 0:18:04.639
<v Speaker 6>together with our friends and allies, and the relationship between

0:18:04.760 --> 0:18:08.040
<v Speaker 6>the UK and the US is right at the center

0:18:08.160 --> 0:18:11.119
<v Speaker 6>of that Western response to the challenges we face.

0:18:11.880 --> 0:18:14.439
<v Speaker 11>Given that there are these still ongoing conflicts, would you

0:18:14.440 --> 0:18:18.479
<v Speaker 11>ever give consideration to raising defense spending or is your

0:18:18.480 --> 0:18:21.720
<v Speaker 11>focus really primarily on delivering tax cuts, and that has

0:18:21.760 --> 0:18:22.400
<v Speaker 11>to factor in.

0:18:22.920 --> 0:18:23.120
<v Speaker 2>Well.

0:18:23.119 --> 0:18:26.840
<v Speaker 6>I think it's possible to do both because tax cuts

0:18:26.880 --> 0:18:29.280
<v Speaker 6>can help grow the economy. That means you have more

0:18:29.320 --> 0:18:33.879
<v Speaker 6>resources for really important challenges like security. And what I

0:18:33.880 --> 0:18:37.399
<v Speaker 6>would say is that you know, the UK recognizes with

0:18:37.480 --> 0:18:41.040
<v Speaker 6>the biggest spender on defense in Europe, we recognize they're

0:18:41.040 --> 0:18:43.639
<v Speaker 6>going forward, we're likely to have to spend more. But

0:18:43.760 --> 0:18:46.760
<v Speaker 6>part of our job is also to persuade other NATO

0:18:46.840 --> 0:18:52.439
<v Speaker 6>European countries that they need to spend their proper amount.

0:18:53.040 --> 0:18:56.320
<v Speaker 6>We can't just depend on the United States to defend Europe.

0:18:56.359 --> 0:18:57.840
<v Speaker 2>We need to play our part well.

0:18:57.840 --> 0:19:00.199
<v Speaker 11>We've heard certainly a great deal of that messaging in

0:19:00.240 --> 0:19:02.840
<v Speaker 11>the US as well, where there has been a evolving

0:19:02.920 --> 0:19:07.920
<v Speaker 11>conversation as for funding for Ukraine, certainly on Capitol Hill

0:19:07.960 --> 0:19:09.800
<v Speaker 11>in Washington. It does seem that there will be a

0:19:09.880 --> 0:19:12.120
<v Speaker 11>legislative effort now that could hit the floor this week

0:19:12.160 --> 0:19:15.320
<v Speaker 11>that involves repot the idea of taking seized Russian assets

0:19:15.359 --> 0:19:18.720
<v Speaker 11>and using that to fund Ukraine's war effort. That's something

0:19:18.720 --> 0:19:21.080
<v Speaker 11>the US would like to pursue. Would you like to

0:19:21.080 --> 0:19:23.359
<v Speaker 11>see the UK pursue that? Would you pursue? Would you

0:19:23.359 --> 0:19:25.000
<v Speaker 11>ask your colleagues that you were going to see at

0:19:25.040 --> 0:19:27.800
<v Speaker 11>the IMF World Bank meetings down in Washington this week

0:19:27.880 --> 0:19:29.600
<v Speaker 11>to congregate around that idea.

0:19:29.720 --> 0:19:32.800
<v Speaker 6>Well, I think it's a very intriguing proposal. I'll be

0:19:32.920 --> 0:19:35.719
<v Speaker 6>meeting Secretary Yellen in the next couple of days and

0:19:35.760 --> 0:19:37.840
<v Speaker 6>I'll certainly be talking to her about it and getting

0:19:37.880 --> 0:19:40.440
<v Speaker 6>some more detail on that. But I think we should

0:19:40.480 --> 0:19:43.920
<v Speaker 6>be thinking about anything we possibly can to come.

0:19:43.760 --> 0:19:45.199
<v Speaker 2>To the support of Ukraine.

0:19:45.280 --> 0:19:49.560
<v Speaker 6>This is an absolutely existential battle, not just for Ukraine itself,

0:19:49.680 --> 0:19:53.680
<v Speaker 6>but for a global order in which you know, since

0:19:53.720 --> 0:19:57.520
<v Speaker 6>the Second World War, we have largely stopped large countries

0:19:57.600 --> 0:20:00.160
<v Speaker 6>thinking they can just invade their neighbors and get away

0:20:00.160 --> 0:20:04.000
<v Speaker 6>with it. And if we were to let Russia get

0:20:04.040 --> 0:20:07.679
<v Speaker 6>away with invading Ukraine, the ramifications would be huge, not

0:20:07.760 --> 0:20:10.159
<v Speaker 6>just in Europe but all over the world. So I

0:20:10.160 --> 0:20:12.320
<v Speaker 6>think this is a proposal we should look at very carefully.

0:20:13.280 --> 0:20:16.000
<v Speaker 3>This is Bloomberg Daybreak Europe, your morning brief on the

0:20:16.080 --> 0:20:19.120
<v Speaker 3>stories making news from London to Wall Street and beyond.

0:20:19.400 --> 0:20:22.600
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0:20:22.720 --> 0:20:23.560
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