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

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Speaker 2: This is the Bloomberg Daybreaker podcast, available every morning on Apple,

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Speaker 2: Spotify or wherever you listen. It's Thursday, the twenty sixth

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Speaker 2: of June in London. I'm Stephen Carroll. Coming up today.

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Speaker 2: Donald Trump recommits to NATO after European leaders agree to

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Speaker 2: hike spending on defense. Reports suggests the US presidents considering

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Speaker 2: naming Jerome Powell's replacement as FED chair early and.

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Speaker 3: I'm Caroline hepkeat live at the City UK conference where

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Speaker 3: the industry body is warning that London's future as a

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Speaker 3: financial center is not guaranteed.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: A landmark NATO summit has ended with a bold commitment

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Speaker 2: to all thirty two allies will raise military spending to

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Speaker 2: five percent of GDP. On his flight to the Hague,

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Speaker 2: President Trump voiced doubts about his willingness to honor the

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Speaker 2: alliance's commitment to collective defense. However, he later said the

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Speaker 2: discussions with other leaders had changed his view.

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Speaker 4: When I saw the passion they had for the country.

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Speaker 4: Almost everyone and you probably have the tapes. It was

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Speaker 4: very public, but almost every one of them said, thank

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Speaker 4: God for the United States. Without the United States, it

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Speaker 4: couldn't really have NATO. It wouldn't work. It wouldn't work.

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Speaker 4: It will in the future because now they're paying much

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Speaker 4: more money, but it wouldn't work. It was great, and.

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Speaker 1: I left here differently.

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Speaker 4: I left here saying that these people really love their countries.

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Speaker 4: It's not a ripoff, and we're here to help them

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Speaker 4: protect their country.

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Speaker 2: Whether all member states eventually reached the spending goal remains

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Speaker 2: an open question. Spain and Slovakia have already expressed doubts

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Speaker 2: about allocating that much money to defense. Spain's reluctance to

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Speaker 2: meet the five percent targets dree direct threats of economic

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Speaker 2: retaliation from President Trump. Thattro Spain's IBEX thirty five index

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Speaker 2: to its biggest decline since early April, closing down one

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Speaker 2: point six percent. President Trump meanwhile says that America will

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Speaker 2: hold talks with Iran next weeks. Came as the US

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Speaker 2: leader also cast doubt on the necessity of a diplomatic

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Speaker 2: agreement regarding Iran's nuclear program. Meanwhile, Donald Trump again disputed

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Speaker 2: an intelligence assessment from his own government which stated that

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Speaker 2: Tehran's nuclear program.

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Speaker 1: Had only been delayed by a matter of months.

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Speaker 2: His message was echoed yesterday by his Defense secretary Pete Hegseth.

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Speaker 5: When you actually look at the report, by the way,

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Speaker 5: it was a top secret report, it was preliminary, it

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Speaker 5: was low confidence, all right, So this is a you

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Speaker 5: make assessments based on what you.

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Speaker 1: Know that it said.

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Speaker 5: It could be very devastating, very severe, and we believe

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Speaker 5: far more likely severe and obliterated.

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Speaker 2: Pete Hesath speaking there is, Iran issued a statement claiming

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Speaker 2: its nuclear facilities had in fact been badly damaged, though

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Speaker 2: no further details were provided. The Wall Street Journal is

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Speaker 2: reporting that in recent weeks, the US President has toyed

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Speaker 2: with the idea of selecting an announcing Pal's replacement by

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Speaker 2: September or October. Yesterday, Trump publicly mused over who could

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Speaker 2: succeed Powell.

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Speaker 4: Yeah, I know within three or four people who are

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Speaker 4: going to pick. I mean, he goes out pretty soon, unfortunately,

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Speaker 4: because I think he's terrible. We have no inflation, we

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Speaker 4: have a tremendous economy.

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Speaker 2: The US President has referred to the Fed share as

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Speaker 2: too late Powell due to his reluctance to lower rates.

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Speaker 2: The Wall Street Journal says former Fed Governor Kevin Warsh

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Speaker 2: and any C director Kevin Hassett or on Trump's shortlist,

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Speaker 2: alongside former World Bank President David Malpass and the current

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Speaker 2: FED Governor Christopher Waller. Jerom Powell was back on Capitol

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Speaker 2: Hill for a second day of congressional testimony yesterday. He

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Speaker 2: said the US Center Bank is still struggling to determine

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Speaker 2: the impact of tariffs on consumer prices. In Vidia share

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Speaker 2: sorry to a record high on Wednesday, overtaking Microsoft to

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Speaker 2: become the world's most valuable company. The stock rose by

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Speaker 2: more than four percent, lifting the chip giants market cap

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Speaker 2: to three point seven seven trillion dollars. In Video has

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Speaker 2: gained sixty three percent since April, fueled by massive demand

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Speaker 2: for AI hardware and strong earnings. The Director General of

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Speaker 2: the British Chambers of Commerce has warned against raising taxes

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Speaker 2: further on UK companies. Speaking to Bloomberg, Chavon Havland said

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Speaker 2: a high could lead to an economic slowdown. In a

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Speaker 2: message to the Chancellor ahead of the BCC's annual conference today.

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Speaker 6: We want the government to look at how they can

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Speaker 6: ease that cost of doing business. Taxes are really dragging

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Speaker 6: our businesses down. We need them to be released to grow.

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Speaker 6: So where's the long term roadmap forul is in the

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Speaker 6: cost of doing.

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Speaker 2: Business, Chavon Havlan speaking there. Her warning comes as Rachel

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Speaker 2: Reeves faces pressure from her own party over planned benefit

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Speaker 2: cuts while also seeking to revive the country's flagging growth.

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Speaker 2: Taxes are raised by forty billion pounds in Reeve's last budget,

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Speaker 2: including a twenty six billion pounds height to the National

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Speaker 2: Insurance Payroll Tax which took effect in April, and as

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Speaker 2: the UK searches for fresh sources of economic growth. The

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Speaker 2: government says it's seeking to increase the recognition of British

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Speaker 2: professional certifications abroad and parts has more.

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Speaker 7: With services making up more than eighty percent of the

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Speaker 7: country's GDP, the government is turning his attention to boosting

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Speaker 7: the sector's exports. It wants to make it easy if

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Speaker 7: highly skilled employees to work for clients overseas. Number ten

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Speaker 7: says it wants to use trade deals to expand acceptance

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Speaker 7: of professional accreditations outside the UK, opening up new markets

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Speaker 7: for law, accounting and other highly regulated sectors. Meanwhile, a

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Speaker 7: new report lays bare the economic challenges facing the government,

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Speaker 7: saying the twenty twenties are on course to be the

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Speaker 7: worst decade for living standards in the past sixty years.

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Speaker 7: According to the Resolution Foundation, a typical UK family's real

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Speaker 7: disposable income in the five years to twenty thirty is

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Speaker 7: set to rize just one percent after adjusting for housing costs.

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Speaker 7: Over the whole decade, the Think Tanks says, real disposable

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Speaker 7: incomes are set to see no growth whatsoever. In London,

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Speaker 7: I'm youwing pots Bloomberg Radio.

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Speaker 2: Those are your tap stories on the markets this morning.

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Speaker 2: The Mascio specific endex up by four tenths of one percent.

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Speaker 2: We're watching marcus reaction though to that report that Donald

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Speaker 2: Trump is considering naming the FED chair early to replace

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Speaker 2: Jerome Powell in eleven months time when his term ends.

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Speaker 2: The Bloomberg Dollar Spot Index two tenths weeker this morning.

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Speaker 2: The ten year Treasury eel down to basis points four

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Speaker 2: point two seven percent is where that's trading. European stock

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Speaker 2: futures pointing slightly higher this morning, up a tenth of

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Speaker 2: one percent for eurostock's fifty futures.

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Speaker 1: Nasdaq futures two tenths higher as well.

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Speaker 2: Of course, in focus after the rally in Nvidia shares

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Speaker 2: yesterday as well well. In a moment, we will bring

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Speaker 2: you more on what came out of the NATO Defense

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Speaker 2: Summit as EU leaders meet in Brussels today. Plus Caroline

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Speaker 2: is at the City UK's annual conference. Will speak to

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Speaker 2: her in just a moment. Bought another story that caught

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Speaker 2: our eye this morning. The new director of the next

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Speaker 2: Bond film has been announced, the French Canadian Danny Villenev,

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Speaker 2: who has been announced by Amazon MGM Studios as the

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Speaker 2: director of the next Bond film as well. Of course,

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Speaker 2: he's the director and co writer of the June films

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Speaker 2: as well as Arrival, Blade Runner twenty forty nine in Prisoners.

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Speaker 2: He's been nominated for an Oscar for three of his

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Speaker 2: last four films. His appointment part of a shakeup of

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Speaker 2: the Bond franchise. The longtime producers, Barbara broccoley and Michael G.

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Speaker 2: Wilson had sold creative control of a too Amazon MGM

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Speaker 2: earlier this year, a deal report at the time to

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Speaker 2: be worth a billion dollars.

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Speaker 1: Film of for his part, it says he's a.

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Speaker 2: Die hard Bond fan that he intends to honor the

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Speaker 2: tradition and open the path for many new missions to come,

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Speaker 2: so plenty to watch out for in the next highly

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Speaker 2: awighted Bond film to come in the franchise. European leaders

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Speaker 2: are meeting in Brussels today after yesterday's NATO summits, where

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Speaker 2: many of them agreed to new defense spending targets a

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Speaker 2: five percent of GDP, and US President Donald Trump renewed

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Speaker 2: his commitment to the Alliance's collective defense principle. Let's speak

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Speaker 2: to our correspondent Oliver Crook, who was at the NATO summit.

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Speaker 1: He's in Brussels today.

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Speaker 2: Oliver, let's start with what happened at NATO then, A

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Speaker 2: win for Donald.

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Speaker 1: Trump, but also for European leaders present.

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Speaker 8: I think that in a sort of rare transaction between

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Speaker 8: European leaders and Donald Trump, this was really a good

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Speaker 8: win for everybody, with potentially the exception of Spain. But

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Speaker 8: you Donald Trump came in with this demand in the

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Speaker 8: sort of up to his inauguration for NATO to spend

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Speaker 8: five percent of their GDP on defense. Again, this is

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Speaker 8: a concept I think that was initially kind of shrugged off.

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Speaker 8: It was written as impractical, impossible, totally unrealistic. And what

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Speaker 8: Donald Trump achieved yesterday is to get all of the

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Speaker 8: NATO members to sign on to spending five percent of

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Speaker 8: their GDP on defense going forward. That is a massive

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Speaker 8: win for the President of the United States. I think

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Speaker 8: that it's fair to say that, you know, this would

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Speaker 8: not have happened without the presence of Donald Trump in

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Speaker 8: the Oval office. There's you know, there's been a lot

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Speaker 8: of complaints through the years that the Europeans have not

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Speaker 8: been pulling their weight on defense, and this is something

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Speaker 8: that he can, i think justly go around and say

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Speaker 8: has been a massive win for the President of the

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Speaker 8: United States. That being said, he did also highlight the

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Speaker 8: fact that Spain was reticent to sign on to that figure.

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Speaker 8: He then threatened, you know, more trade action against the Spanish,

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Speaker 8: which is really going to be one of the focuses

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Speaker 8: for EU leaders today because we go from the last crisis,

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Speaker 8: which was Article five and NATO going forward into the

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Speaker 8: trade negotiations with the United States as that deadline looms, just.

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Speaker 2: Linking together, that's question of that I'm sure to come

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Speaker 2: up and the EU leader summit today as well. Around Spain.

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Speaker 2: Donald Trump critical of Spain for holding out on increasing

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Speaker 2: defense spending, saying tougher trade terms could be imposed in

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Speaker 2: the country as a result. What does that mean in

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Speaker 2: the context of the ongoing talks between the EU and

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Speaker 2: the US on trade.

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Speaker 8: Yeah, I think right now it'll be treated a little

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Speaker 8: bit like noise. I mean, as you know, Steven, you know,

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Speaker 8: the competence of trade is something that has been delegated

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Speaker 8: from individual member states to the European Union. You know,

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Speaker 8: there's a sort of kind of Article five on trade

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Speaker 8: for the European Union. Attack on one as an attack

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Speaker 8: on all. So it's you know, it's not generally how

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Speaker 8: it happens. But I think that what is going to

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Speaker 8: be concerning for European leaders now is from all the

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Speaker 8: reporting we have done is there has not been a

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Speaker 8: huge amount of progress between the US and the EU

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Speaker 8: as they sort of limp towards that deadline of July

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Speaker 8: the ninth, and remember Donald Trump ratcheted up the pressure

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Speaker 8: on that. Now as of July the ninth, if there

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Speaker 8: is no deal, there will be fifty percent tariffs between

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Speaker 8: the United States and the EU. And so there's different

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Speaker 8: sort of ways in which different member states are suggesting

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Speaker 8: a approaching this or are those who are saying, listen,

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Speaker 8: we need to be very sort of hard with the

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Speaker 8: United States, even if they impose a baseline tariff of

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Speaker 8: ten percent, which is remember what the UK was still

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Speaker 8: stuck with, the EU should retaliate. Other members state say

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Speaker 8: this will only infuriate the president and this is going

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Speaker 8: to create a even more escalating trade war. And then

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Speaker 8: actually a fast deal, if imperfect, is better than no

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Speaker 8: deal at all. So I think that is going to

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Speaker 8: be one of the main focuses for the leaders that

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Speaker 8: assembled here in Brussels, is to sort of look at

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Speaker 8: the way that they are where they're willing to compromise.

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Speaker 8: Of course, there are also other issues, the fact that

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Speaker 8: basically the United States is apparently demanding, according to some

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Speaker 8: of the people we're speaking to, sort of unilateral terms

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Speaker 8: and really unbalanced practices within this trade deal.

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Speaker 2: Okay, Oliver Krook in Brussels, thank you very much for that. Well,

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Speaker 2: let's go to Caroline this morning, who is at the

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Speaker 2: City UK's annual conference. The group represents UK based financial

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Speaker 2: services and it's a moment to hear from the industry

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Speaker 2: about what they want when it comes to UK competitiveness

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Speaker 2: and growth.

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Speaker 1: Caroline, good morning. How supportive is the government then of

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Speaker 1: financial services? What's the mood for this.

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Speaker 3: Conference, well, this is the financial industry gathering in the

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Speaker 3: heart of Westminster, so it's really a marriage of finance,

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Speaker 3: business and politics and we're into this labor government.

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Speaker 1: Of course.

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Speaker 3: Remember last year we were also here. There was a

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Speaker 3: lot of engagement with the government in waiting as it

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Speaker 3: was lots of optimism about a fresh start. Financial services

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Speaker 3: is one of the growth areas that the government has

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Speaker 3: earmarked in the recent Industrial Strategy, but there are others too.

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Speaker 3: Eight in all Kids Sarma's government said on Wednesday that

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Speaker 3: they're going to try to expand this recognition of professional

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Speaker 3: certifications abroad, so that could help things like accounting, a

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Speaker 3: law and other occupations and boost services exports from the UK,

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Speaker 3: but there is still a huge hill to climb. Speaking

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Speaker 3: to Mars Sellick, who's the CEO of the City UK,

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Speaker 3: he says he just wants action faster on regulation, on planning,

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Speaker 3: on attracting talent to the UK and it needs to

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Speaker 3: be delivered, he says, in a much more effective way.

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Speaker 3: So this feels to me like we might be getting

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Speaker 3: close to a scorecard from the financial industry on this government.

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Speaker 3: Have a listened to what Miles Seleik told me.

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Speaker 9: We cannot be complacent on this. We have no god

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Speaker 9: given right to be a successful all of the world's

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Speaker 9: two most successful international financial centers and I do worry

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Speaker 9: about complacency. We cannot afford to be complacent.

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Speaker 3: So that was Miles Seleik, the CEO of the City UK,

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Speaker 3: speaking to me ahead of this event today. The government

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Speaker 3: Stephen does have some huge issues sluggish economic growth. In

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Speaker 3: the last quarter. The UK did do a trade deal

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Speaker 3: with the US, but it still faces this ten percent

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Speaker 3: tariff and experts of the US have obviously gone down.

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Speaker 3: Additional taxes on business that the British Chambers of Commerce

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Speaker 3: said only today must not be repeated. A very difficult

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Speaker 3: fiscal position with much higher borrowing costs for this government

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Speaker 3: than let's say, on the continent. So there are really

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Speaker 3: huge headwinds and the government seems to be casting around

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Speaker 3: to lots of different industries to try to drive economic growth,

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Speaker 3: but it has to do more to deliver.

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Speaker 2: What about Carolyn questions of deregulation as well, very much

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Speaker 2: to the forefront of the debate happening in the financial

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Speaker 2: services industry.

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Speaker 3: Yeah, we've tracked lots of reviews and consultations from the

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Speaker 3: PRA from the FCA, the regulators here in the UK

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Speaker 3: on remuneration for banks and building society bosses on consumer

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Speaker 3: protections and financial address on politically exposed people. Perhaps lots

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Speaker 3: of issues, esg ratings, agencies, so many issues. But the

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Speaker 3: question is what does that amount to in total? What

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Speaker 3: is the actual drive on deregulation now? And it also

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Speaker 3: does feel like the government maybe is helping business with

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Speaker 3: one hand but then taking away with another. I mean,

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Speaker 3: the ending of the non dom tax benefit overhangs everything.

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Speaker 3: It's prompted something of a wealth exodus. We've seen also

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Speaker 3: swift delistings from the London Sock Exchange in the past year,

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Speaker 3: an area you know where again the government tried regulatory changes,

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Speaker 3: but have they really made a difference, And perhaps they

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Speaker 3: take a long time to take effect. So the question

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Speaker 3: is whether it's also too late to reverse that exodus

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Speaker 3: from the London stock Exchange or not. So deregulation is

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Speaker 3: happening bit by bit, what does it amount to, what

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Speaker 3: is it delivering? I think that's some questions really for

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Speaker 3: the panel that I'm going to be speaking on later.

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Speaker 2: Yeah, indeed, and that's one of the key conversations that

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Speaker 2: we're watching and we'll bring it to our listeners on

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Speaker 2: Bloomberg Radio later as well. This Caroline, all ahead of

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Speaker 2: the Chancellor's Mansion House speech in a couple of weeks time.

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Speaker 1: What should we be expecting. What are we expecting to

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Speaker 1: hear from the industry around that.

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Speaker 3: Look, the Chancellor's under pressure, not just because of her

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Speaker 3: own MPs, but also because of the bond markets. Her

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Speaker 3: headroom is incredibly narrow and it is under constant scrutiny.

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Speaker 3: The Bank of England Governor Andrew Bailey recently warned about this,

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Speaker 3: So there will be lots to look at in the

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Speaker 3: Mansion House speech. Look, the City UK want more details

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Speaker 3: on how the financial services sector can deliver economic growth.

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Speaker 3: They want the actual sort of framework. Will there also

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Speaker 3: be maybe changes to visas, maybe an investment visa or

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Speaker 3: changes to isers that's also been floated. The bottom line

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Speaker 3: is will financial services make a difference to productivity and

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Speaker 3: economic growth? How is the government going to do that

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Speaker 3: when their fiscal room to kind of pick winners and

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Speaker 3: losers in the economy is very very limited. And when

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Speaker 3: you step away from that, why is it so important?

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Speaker 3: It's that Resolution Foundation report that we mentioned just earlier

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Speaker 3: household incomes are expected to stagnate this decade. And remember

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Speaker 3: you have Reform UK riding high in the polls. The

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Speaker 3: Labor government's polar rating has sunk rapidly, much more rapidly

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Speaker 3: than past governments have, and Reform UK has been swift

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Speaker 3: to offer things like a flat tax for wealthy people

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Speaker 3: wanting to move into the UK. All are flat tax

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Speaker 3: for people up to twenty pounds in income. So they're there,

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Speaker 3: you know, on the sidelines making their offers. As the

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Speaker 3: Labor governments it has to come up with their own answers.

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Speaker 3: So yeah, lots of expectation for the Mansion House speech

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Speaker 3: on the fifteenth of July two.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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

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Speaker 3: Look for us on your podcast feed every morning on Apple,

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Speaker 3: Spotify and anywhere else you get your podcasts.

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Speaker 2: You can also listen live each morning on London Dab Radio,

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Speaker 2: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 3: Our flagship New York station is also available on your

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Speaker 3: 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.

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

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Speaker 2: need to start your day right here on Bloomberg day Break.

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Speaker 1: Europe