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Speaker 1: H'm Stephen Carroll and here are your top stories. UK

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Speaker 1: pension funds that oversee more than three hundred billion pounds

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Speaker 1: in assets have fired back against a move to loosen

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Speaker 1: listing rules in Britain. Writing in The Times, the ten funds,

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Speaker 1: including schemes for BT and HSBC, say the plan would

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Speaker 1: damage the city's reputation and risk reducing investor returns. The

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Speaker 1: criticism comes ahead of today's City UK annual conference. Their CEO,

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Speaker 1: Miles Seleek, double down on the need for reform.

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Speaker 2: There's no magic bullet that New York could fire, or

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Speaker 2: that Brussels could fire for any of its centers, or

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Speaker 2: Hong Kong or Singapore. This is always a case of

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Speaker 2: making sure that you're refining regulation, refining practice, ensuring that

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Speaker 2: you've got the right talent in place, and making sure

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Speaker 2: that you're moving forward with a sensible set of reforms.

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Speaker 1: That's a UK CEO, Miles Selek speaking there to Caroline

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Speaker 1: Hepcro and we'll be joining Caroline in a moment live

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Speaker 1: from that conference with more coverage on the future of

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Speaker 1: the City of London. Meanwhile, This picked London as the

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Speaker 1: home of its first corporate office outside the United states.

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Speaker 1: Boomberg's New and Parts has the story.

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Speaker 3: Chut gpt tell me where I should open my next office? Well,

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Speaker 3: the answer for open Ai, the sab Francisco based company

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Speaker 3: behind the AI chatbots, is London. The move is a

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Speaker 3: boost for the UK in its growing rivalry with France

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Speaker 3: to become the tech center of Europe. While in London,

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Speaker 3: the open Ai CEO Sam Altman met with PM Richie

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Speaker 3: Sunac and later criticized the European Union's approach to artificial

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Speaker 3: intelligence regulation. The company, which has raised more than ten

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Speaker 3: billion dollars, has been on a hiring speed recently as

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Speaker 3: it works to turn its costly AI research into a

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Speaker 3: business in London. Not yet replaced by a bot, i'm

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Speaker 3: ew and Potts bloom Book day Break.

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Speaker 4: Europe.

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Speaker 1: Wall Street's biggest banks have all passed the Federal Reserve's

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Speaker 1: annual stress test. The results determine how much capital banks

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Speaker 1: need to set aside as a cushion, and potentially clear

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Speaker 1: the way for additional dividends and stock buybacks. Bloomberg's Wall

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Speaker 1: Street correspondent Shinali Basek says that many banks hold off

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Speaker 1: may hold on announcing potential payouts.

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Speaker 5: You also have to think about the other constraints these

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Speaker 5: banks are facing as well. They've already guided that with

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Speaker 5: international rules Basil three endgame that there could be a

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Speaker 5: sense that there's really a lot more on the horizon

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Speaker 5: that these banks might face when it comes to future

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Speaker 5: regulation that could really start to constrain capital.

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Speaker 1: Chanali Bask says Will the FAD hasn't yet published its proposals.

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Speaker 1: Jerome Power has suggested that the biggest banks could face

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Speaker 1: a twenty percent increase in capital requirements. The Bank of

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Speaker 1: England Governor Andrew Bailey suggested that markets are underestimating how

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Speaker 1: long rates will need to stay high. Here's what he

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Speaker 1: told the ECB Forum on Central Banking in CenTra.

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Speaker 4: There are two parts to this. There's where the peak

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Speaker 4: is and then how long it's sustained beyond that. I

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Speaker 4: think both of those are relevant. Both of those are

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Speaker 4: things that will I mean, sorry to state the blant

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Speaker 4: and the obvious will emerge with time. But I've always

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Speaker 4: been interested that the market thinks that the peak will

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Speaker 4: be quite short lived in a world where we're dealing

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Speaker 4: with more persistent inflation.

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Speaker 1: Bailey's comments are at odds with money markets. Traders are

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Speaker 1: betting the benchmark Bank of England rate will peak below

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Speaker 1: six and a quarter percent by February and remain on

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Speaker 1: hold for six months. However, Schroeders is now up its

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Speaker 1: forecast for the BOE. They say the UK is heading

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Speaker 1: for interest rates of six and a half percent this year.

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Speaker 1: With the Bank of England firmly set on prioritizing inflation

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Speaker 1: over growth. Andrew Bailey wasn't the only one using the

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Speaker 1: centro form to push back against the market narrative. Federal

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Speaker 1: Reserve Chief Jerown Power left the door open to two

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Speaker 1: consecutive rate hikes following this month's pause.

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Speaker 6: We're going to move the decisions a little bit, make

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Speaker 6: them a little bit with a little bit more time

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Speaker 6: in between them, in an effort to get more information

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Speaker 6: from the data, to see how much restraint is really

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Speaker 6: coming from these, you know, through the pipeline from rate

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Speaker 6: hikes that we only made now in many cases six

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Speaker 6: to eight nine months ago. But I wouldn't take, you know,

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Speaker 6: moving at consecutive meetings off the table at all.

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Speaker 1: Powell and his FAD colleagues will get another reading on

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Speaker 1: inflation on Friday with the release of May's p data.

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Speaker 1: The Center Bank's favorite price measure, and the Katari group,

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Speaker 1: led by Sheik jasanbil Binhammad Altani, is increasingly confident that

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Speaker 1: it has won the bidding war from Manchester United. Bloomberg

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Speaker 1: understands the rival offer from British billionaire Jim Ratcliffe has

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Speaker 1: been opposed by some shareholders. The sale of the English

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Speaker 1: Premier League club has been hit with delays as the

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Speaker 1: bids failed to meet expectations of the current owners. The

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Speaker 1: Glazers could make a last minute decision to keep hold

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Speaker 1: of the football club, accepting funds from an outside investor.

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Speaker 1: So those are our top stories on the program this morning.

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Speaker 1: Beyonce back in the inflation news the new BW newsletter

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Speaker 1: from our colleagues at Bloomberg BusinessWeek highlighting again this effect

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Speaker 1: that Beyonce concert tickets may have had on inflation. Of course,

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Speaker 1: we've talked about the story in relation to Sweden, but

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Speaker 1: there's also interesting research out from UBS, highlighted by our

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Speaker 1: colleague and decurrent, about how this might have impacted inflation

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Speaker 1: in the UK, where Beyonce's World Renaissance tour tickets read

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Speaker 1: reached as much as one hundred and seventy pounds per person.

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Speaker 1: Now this is an interesting detail that pulled on from

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Speaker 1: Ubs is making in this commentary saying that Beyonce's ticket

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Speaker 1: price can be compared to the price of whatever concerts

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Speaker 1: took place in April, regardless of the caliber of the artists,

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Speaker 1: so that a price increase for a Beyonce ticket is

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Speaker 1: actually being compared as a like for like price increase,

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Speaker 1: whereas actually it doesn't reflect the subjective nature of how

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Speaker 1: good an artist is and what they can command in

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Speaker 1: terms of ticket prices. As well, pulled on pointing out

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Speaker 1: the complication of how a clean price in increase can

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Speaker 1: be calculated. It's worth pointing out the concert tickets don't

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Speaker 1: have the same weight in UK inflation readings as elsewhere,

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Speaker 1: so perhaps not entirely down to Beyonce the increase in

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Speaker 1: inflation rather than sticky inflation here in the UK. Of course,

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Speaker 1: that's one of the big challenges being discussed at the

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Speaker 1: City UK conference. We've also reporting this morning. Pension funds

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Speaker 1: representing twenty two million UK savers say that loosening the

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Speaker 1: City of London's listing rules will roll back fundamental investor

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Speaker 1: protections and the ability of penance schemes to act as

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Speaker 1: robust stewards of their members assets they want the Financial

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Speaker 1: Conduct Authority, which put forward the plan to pause on

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Speaker 1: the listing reforms another big topic being discussed at the

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Speaker 1: City UK conference. That's where Caroline Hepker is this morning.

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Speaker 1: Good morning to you, Caroline.

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Speaker 7: Good morning, bright and early. We are in the center

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Speaker 7: of London. We're only a stone swow from Westminster Abbey

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Speaker 7: and from the Houses of Parliament and this is where

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Speaker 7: some of the biggest names in finance are going to

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Speaker 7: be gathering for the annual conference of the City UK,

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Speaker 7: the Lobby Group. The idea of this story in The

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Speaker 7: Times I think is quite interesting. It's a specific question

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Speaker 7: around rule changes that I think we're going to explore

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Speaker 7: the annual conference today. I'm chairing the opening panel and

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Speaker 7: I think it is part of Ridio schism at the moment.

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Speaker 7: How consequential are the Edinburgh reforms. This is the package

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Speaker 7: of reforms that the Chancellor Jeremy Hunt announced in December

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Speaker 7: that includes changes to listing rules, other ideas like relaxing

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Speaker 7: ring fencing rules and much more. Besides, actually how much

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Speaker 7: is that going to move the needle for London? Because

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Speaker 7: there are many critics and many people who are concerned

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Speaker 7: about you know, powers taking over in terms of the

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Speaker 7: largest stock market trading venue in Europe. The UK, you know,

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Speaker 7: going into recession potentially at the end of this year

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Speaker 7: according to Blueberg Economics, and the hit that the UK

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Speaker 7: has taken in terms of loss of competitiveness and the

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Speaker 7: investment gap.

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Speaker 8: That the UK has.

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Speaker 7: So I was speaking to Marles Selleck, who's the CEO

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Speaker 7: of the City UK. He spoke to me just ahead

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Speaker 7: of the events that are starting in just a few

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Speaker 7: minutes in the UK. He's talked about there being a

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Speaker 7: lot of political and policy uncertainty in the UK in

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Speaker 7: recent years, but that it's right that the government is

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Speaker 7: moving forwards in a measured and consultative manner when it

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Speaker 7: comes to these reforms, the Edinburgh Reforms Financial Services and

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Speaker 7: Markets Bill being he says, arguably the most consequential piece

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Speaker 7: of financial services legislation for the last two decades. One

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Speaker 7: of the bigger context though, as I say, is this

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Speaker 7: question mark around the solidity of the UK economically and

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Speaker 7: also in terms of the political decisions that we've had.

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Speaker 7: So I asked Miles Selik whether he actually thinks that

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Speaker 7: the UK is in a mess or not, which is

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Speaker 7: what some people allege have I listened to his view.

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Speaker 2: So, look, that was something of a shock to the system.

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Speaker 2: It was something of a shock and a surprise to

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Speaker 2: many of our international accountants. In terms of how that

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Speaker 2: was taken forward. The government appears to be absolutely focused

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Speaker 2: on reassuring people that international investors, in particular, that the

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Speaker 2: UK is a stable, predictable kind of place to do business.

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Speaker 2: It's something that we've done extremely well for decades, and

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Speaker 2: this is why the mini budget last year got the

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Speaker 2: focus that it did. It was very unusual compared to

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Speaker 2: what international investors would normally expect from the UK. Certainly

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Speaker 2: in the conversations that I've had with international counterparts I've

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Speaker 2: been over the course of the last few weeks in India,

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Speaker 2: in the US, in Hong Kong and elsewhere, I think

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Speaker 2: there is absolutely a sense that the UK is back

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Speaker 2: towards its more traditional, more long term approach of having

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Speaker 2: a more technocratic, more stable, more predictable approach to policymaking.

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Speaker 2: And I go further, you know, this is not just

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Speaker 2: about what happened last summer. The UK has been unpredictable

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Speaker 2: for a little while, and that's partly Brexit, It's partly

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Speaker 2: in fact, some people go as far back as the

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Speaker 2: Scottish independence referend You know, I think everybody is looking

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Speaker 2: forward to the UK continuing to show that it is

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Speaker 2: perhaps a little boring in some ways, a little predictable

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Speaker 2: in political circumstances, but exciting and innovative in terms of

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Speaker 2: the kind of economic environment that we can offer.

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Speaker 8: I just want to press you on one last point.

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Speaker 8: Right at the beginning, I asked you whether the UK

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Speaker 8: was a mess or not. I mean there is some

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Speaker 8: foundation for that, in the sense the weight of the

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Speaker 8: number of people who have talked about issues in the UK,

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Speaker 8: from James Diis, the M and S chairman Arty Normal

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Speaker 8: that I was speaking to in a few weeks ago,

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Speaker 8: the UK CEO of sax Bank saying that the UK

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Speaker 8: was in a financial straight jacket. It does feel like

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Speaker 8: this is a very difficult moment for the UK and

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Speaker 8: that we do need to chart a course out of this.

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Speaker 8: This is a kind of a moment where there's been

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Speaker 8: a lot of criticism about the UK and how it's

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Speaker 8: been run.

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Speaker 2: So I'm certainly not underestimating the short term challenges. Well,

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Speaker 2: I would say I would happily admit that I am

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Speaker 2: long term, medium to long term. I'm an optimist about

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Speaker 2: the UK. I think there are a variety of factors

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Speaker 2: both strong long term advantages the UK has got as

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Speaker 2: an economy and as an international financial center that will

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Speaker 2: play extremely well. The quality of the people that we've

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Speaker 2: got here, the quality of the institutions, the English and

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Speaker 2: Welsh law that we have here, language etc. All of

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Speaker 2: the universities, education, all of which point to a number

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Speaker 2: of long term advantages. There are absolutely challenges that we

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Speaker 2: need to address and that the financial services markets build.

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Speaker 2: The Edinburgh reforms and others are pointing towards, But I'm

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Speaker 2: a big believer in revealed preference and the reality is

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Speaker 2: that we have got hundreds of thousands of highly talented,

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Speaker 2: highly skilled individuals who are coming to the UK. We

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Speaker 2: could have even more, frankly, if we continue to work

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Speaker 2: with the government and the regulators to get the senior

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Speaker 2: manager regime in the right place and immigration in the

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Speaker 2: right place. People don't tend to flock to places they

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Speaker 2: think don't have a future, and I think it's important

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Speaker 2: to manage the difference between short term challenges that the

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Speaker 2: UK has had in the past, that France, Germany the

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Speaker 2: United States have had in the past versus what are

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Speaker 2: the fundamentals And for me, the fundamentals are encouraging.

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Speaker 1: So that was Miles Salek, the CEO of the City UK,

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Speaker 1: speaking to Caroline.

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Speaker 4: There.

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Speaker 1: Caroline, you'll be back more with more coverage from the

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Speaker 1: conference too.

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Speaker 3: Yeah.

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Speaker 1: Absolutely.

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Speaker 7: So later on this morning, I'm going to be speaking

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Speaker 7: to John Hayward, who is the Corporation of London's policy chief.

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Speaker 7: Also will be hearing from the FCA, the Financial Conduct Authorities.

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Speaker 7: I think that'll be very interesting. And at nine thirty

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Speaker 7: am we will bring you the panel that I'm hosting

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Speaker 7: at the start of the City UK's event, with Gareth

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Speaker 7: Davies who's the Exchequer Secuary for the Treasury, Judi Hoggart

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Speaker 7: who's the CEO of the London Stock Exchange, Chris Lay

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Speaker 7: who's the CEO of Marsh mcclennan, and Tina Lee, the

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Speaker 7: CEO for the Uken Ireland of Deutsche Banks. So they'll

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Speaker 7: be joining us this morning and that'll be life on

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Speaker 7: Blueberg Radio.

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Speaker 1: Stephen Okay, plenty to watch out for for now, Caroline,

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Speaker 1: thank you very much. Up next, A River of Debt

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Speaker 1: sings Thames Water and PwC tells staff to expect smaller

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Speaker 1: pay rises.

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Speaker 3: Now the paper review on blue Bird Daybreak Europe the

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Speaker 3: news you need to know from today's papers, and.

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Speaker 1: Leanne Garrinson is with us in studio to look through

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Speaker 1: some of the stories in today's paper. Is Thames Water

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Speaker 1: on a lot of front pages this morning, lean the

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Speaker 1: headline and the Guardian Thameswater and crisis over potential ten

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Speaker 1: billion pounds black hole.

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Speaker 9: Pol Stephen. This has been a worrying prospect for so

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Speaker 9: many people as Thames Water is so prevalent, a lot

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Speaker 9: of us do use it and a lot of households

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Speaker 9: reliant on Thames Water. Now, according to the Guardian, rescue

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Speaker 9: measures are under discussion among ministers and also regulators, and

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Speaker 9: this includes placing Thames Water into temporary national ownership, and

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Speaker 9: that's in order to secure a refinancing package. The paper

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Speaker 9: says the package would need public funds and could also

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Speaker 9: lead to higher bills for customers, so that's something difficult

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Speaker 9: as we are struggling with the cost of living crisis.

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Speaker 9: It quotes an unnamed minister who says the government has

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Speaker 9: no true grasp on the cost or how much support

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Speaker 9: might ultimately be needed from the taxpayer for Thames Water,

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Speaker 9: so concerning news coming out of the Guardian there. The

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Speaker 9: newspaper also reveals the company could be facing a whole

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Speaker 9: of ten billion pounds in its finances and Thames Water,

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Speaker 9: as I said earlier, England's largest water company providing water

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Speaker 9: to ten million customers and wastewater treats meant to fifteen

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Speaker 9: million people. But we must remember that plans are in

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Speaker 9: place to avert a crisis according to the government at

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Speaker 9: the moment.

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Speaker 7: Yeah, that's right.

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Speaker 1: In our colleagues Alex wickhaman Alamelegan report this morning on

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Speaker 1: how this is a danger for Rishi Sunak as well

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Speaker 1: and the government's record and handling these sorts of crises.

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Speaker 1: Let's go next, lean to the Financial Times. PwC tells

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Speaker 1: UK staff to expect smaller pay rises and bonuses.

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Speaker 9: Yeah, exactly so PwC. Of course, Stephen, one of the

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Speaker 9: Big Four, has told it's twenty five thousand UK staff

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Speaker 9: to expect smaller pay rises and bonuses, if not freezes

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Speaker 9: this year because of the challenging market conditions that the

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Speaker 9: company is facing. Now. This news comes despite industry calls

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Speaker 9: to catch up with the stubbornly high inflation that we

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Speaker 9: are seeing some salary bands are to be frozen for

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Speaker 9: some junior auditors, despite calls, as I said, to really

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Speaker 9: catch up with inflation. Junior auditors we're told on a

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Speaker 9: webcast if they salaries aren't frozen, they'll see an increase

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Speaker 9: of three or six percent and that is of course

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Speaker 9: resulting in a real terms pay cut. So one of

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Speaker 9: the big four there with the warning.

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Speaker 1: Yeah, interesting stuff in the Financial Times, Lean Goerrens. Thank

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Speaker 1: you very much for that review of the newspapers. This

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Speaker 1: is Bloomberg Daybreak Europe, your morning brief on the stories

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Speaker 1: making news from London to Wall Street and beyond.

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Speaker 7: Look for us on your podcast feed every morning, on Apple,

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Speaker 7: Spotify and anywhere else you get your podcasts.

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Speaker 1: You can also listen live each morning on London DAB Radio,

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Speaker 1: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 7: Our flagship New York station is also available on your

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Speaker 7: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.

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Speaker 1: I'm Caroline Hepka and I'm Stephen Carroll. Join us again

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Speaker 1: tomorrow morning for all the news you need to start

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Speaker 1: your day right here on Bloomberg Daybreak Europe.