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

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Speaker 2: This is the Bloomberg Daybreak You podcast, available every morning

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Speaker 2: on Apple, Spotify or wherever you listen. It's Tuesday, the

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Speaker 2: fifth of March in London. I'm Caroline Hepka and.

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Speaker 3: I'm Stephen Carroll coming up today.

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Speaker 4: The reality is stronger than the sort of naysayers would say.

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Speaker 4: Life's about how you do versus expectations, isn't it?

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Speaker 2: Often?

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Speaker 4: And then hopefully twenty four will be a year where

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Speaker 4: things get better.

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Speaker 2: Is there a more bullish case for Britain's economy. Wpp's

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Speaker 2: CEO Mark Reid is one of the business leaders who

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Speaker 2: told us he's more optimistic. We have a special report

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Speaker 2: ahead of the Chancellor's budget.

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Speaker 3: Plus growth on paper. China sets its GDP expansion target

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Speaker 3: at around five percent as foreign businesses worry about a

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Speaker 3: lack of transparency.

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

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Speaker 3: Some of Britain's top business leaders say confidence is returning

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Speaker 3: to the UK after years of disruption. A two month

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Speaker 3: investigation by Bloomberg Radio found London's business elite increasingly upbeat

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Speaker 3: about the future of the economy. Lloyd's of London CEO

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Speaker 3: John Neil told us the city is on the right path.

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Speaker 5: We've seen a wealth of delisting on the foot seat.

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Speaker 5: We've seen real challenges around investment and funding in the UK.

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Speaker 5: We need to get that back on track.

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Speaker 4: You know.

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Speaker 5: Part of the livelihood of wellbeing of UKPLC is as

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Speaker 5: a global financial services center. I think we're starting to

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Speaker 5: get that right, but I wouldn't say that journeys yet complete.

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Speaker 3: Neil and other executives who's spoken to see the UK

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Speaker 3: as a relative safe haven ahead of this year's election.

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Speaker 3: Official figure suggests the UK remains the second highest destination

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Speaker 3: globally for greenfield foreign investment after the United States.

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Speaker 2: China has set its growth target for this year at

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Speaker 2: around five percent, matching last year's figure despite a higher

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Speaker 2: base of comparison. The move raises expectations for leaders to

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Speaker 2: unleash more stimulus to bolster the Chinese economy. In his

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Speaker 2: first work report to the National People's Congress, Premier Li

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Speaker 2: Chang acknowledged the challenges facing the world's second largest economy.

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Speaker 6: The action environment is more complex, severe and uncertain, and

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Speaker 6: that the gross at home is not solid enough, and

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Speaker 6: the expectation is low and a small and the medium

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Speaker 6: sized enterprise. Of this difficulties in your operation, and we

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Speaker 6: have seen the pressures from overall job creation and employment problems.

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Speaker 2: The Chinese premier, speaking through a translator. He also announced

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Speaker 2: plans to issue one trillion one that is, about one

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Speaker 2: hundred and thirty nine billion US dollars of Ultralong's special

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Speaker 2: government bonds in order to support what Beijing is calling

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Speaker 2: key national strategies.

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Speaker 3: AMD is at a US government roadblock after trying to

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Speaker 3: sell an AI chip tailored for China. Blomberg has learned

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Speaker 3: the chip maker st America's approval a hand for a

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Speaker 3: semiconductor tailored to US export restrictions, but was rejected. The

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Speaker 3: US has been working to limit Chinese access to cutting

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Speaker 3: out semiconductors out of fear that Beijing will gain a

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Speaker 3: military edge.

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Speaker 2: The dramatic rally in US tech stocks has left JP

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Speaker 2: Morgan and Goldman Sachs with opposing views, as the banks

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Speaker 2: attribute the market conditions to different drivers. To JP Morgan's

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Speaker 2: chief MARKETSTRASHUS Marco Kolonovitch, the advances in US equities and

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Speaker 2: bitcoin surge above sixty thousand dollars signal that there is

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Speaker 2: froth in the market. Goldman sacks, as David Costen has

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Speaker 2: argued that big text valuations are supported by fundamentals, warranting

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Speaker 2: the risk on mood. The major gains in the technology

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Speaker 2: giants have driven the S and P five hundred index

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Speaker 2: to new highs, with the SMP setting fifteen closing records

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Speaker 2: in twenty twenty four, so far fueling the debate between

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Speaker 2: bulls and bears.

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Speaker 3: A group of banks spearheaded by Morgan Stanley, has held

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Speaker 3: refinancing talks with Elon Musk over debt linked to his

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Speaker 3: takeover of the social media platform x. The talks centered

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Speaker 3: on twelve and a half billion dollars of debt, which

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Speaker 3: supported Mosques move to take the company private in twenty

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Speaker 3: twenty two. Sources of told Bloomberg they discussed options to

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Speaker 3: reduce the cost of the debt and make it less

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Speaker 3: risky for banks to hold. The Seven Landers have repeatedly

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Speaker 3: renewed an agreement not to offload their holdings until the

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Speaker 3: social media platform is on a firmer financial footing.

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Speaker 2: The US Supreme Court has ruled that Donald Trump can

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Speaker 2: appear on presidential ballots. The decision comes after nationwide efforts

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Speaker 2: to ban him, citing a constitutional provision preventing insurrectionists from

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Speaker 2: holding office. The Colorado Supreme Court's earlier decree against Trump's

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Speaker 2: right to run for a second presidential term was overturned unanimously.

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Speaker 2: The former president said the result was a milestone.

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Speaker 7: I think it's a very big day for America.

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Speaker 2: I think it's a very big day for liberty, and

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Speaker 2: I think it's just a great day for this country,

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Speaker 2: Donald Trump speaking them. His Republican opponent Nent Nicki Haley

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Speaker 2: also praised the move.

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Speaker 8: I'll defeat Donald Trump fair and square, but I want him.

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Speaker 9: On that ballot.

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Speaker 2: Nicky Haley is trailing Donald Trump by sixty four points

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Speaker 2: in national polls ahead of today's Super Tuesday primary votes

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Speaker 2: in fifteen US states.

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Speaker 3: Now we're just a day away from the budget here

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Speaker 3: in the UK, a moment when the public finances and

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Speaker 3: economic outlook for Britain or a subject of national conversation.

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Speaker 3: Business and consumer confidence are key to the UK's success.

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Speaker 3: So after a rocky few years, are things improving? Carlyn?

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Speaker 3: You've been taking the temperature with foot see one hundred

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Speaker 3: CEOs and chairs ahead of tomorrow's announcements from the Chancellor

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Speaker 3: and asking them if there's a more positive case to

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Speaker 3: be made for Britain.

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Speaker 2: Yeah. The thought around this was that last year was

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Speaker 2: such a difficult year for Britain and I did a

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Speaker 2: long print and radio piece in April called Britain a drift,

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Speaker 2: you know, whether the economy was a drift and sort

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Speaker 2: of uninvestible in Britain. Microsoft Brad Smith, if you remember,

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Speaker 2: he said that the EU was a better place to

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Speaker 2: do business at the time. That really stung. And then

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Speaker 2: there were other criticisms from Dyson and Astrazenica and many

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Speaker 2: quite loud, plus the arm vote to list in the

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Speaker 2: US not in London that really rattled a lot of people.

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Speaker 2: I think. Ten months later, though, the data and the

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Speaker 2: mood does seem to have changed quite significantly. Economists and

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Speaker 2: business leaders have moved on and so for example, wpp's

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Speaker 2: Mark Reed telling me that he's more hopeful about twenty

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Speaker 2: twenty four being a year where things are going to

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Speaker 2: go get better as they go along, unlike twenty twenty three.

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Speaker 2: Simon Carter, the CEO of British Land, saying that he's

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Speaker 2: cautiously optimistic. Berenberg and Deutsche Bank economists pointing to the

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Speaker 2: resilience of the UK, the silver linings of the UK

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Speaker 2: and a host of other CEOs really sounding a lot

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Speaker 2: more confident, welcoming some of the government initiatives looking ahead

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Speaker 2: to the election year that's going to be so important.

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Speaker 2: So yes, as you say, went out and did a

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Speaker 2: number of big interviews with Fritzy one hundred CEOs and

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Speaker 2: chairs over the last few weeks major UK businesses. Here

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Speaker 2: is the result.

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Speaker 1: Have a listen.

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Speaker 2: In the UK. You learn to love the weather, and

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Speaker 2: you have to, but when the economy has been as

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Speaker 2: clouded over as it has been recently, you start to

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Speaker 2: long for any glimmer of sunshine. Last year, it was

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Speaker 2: a drizzly day when I spoke to the Marks and

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Speaker 2: Spencer chairman Archie Norman at the company's head office in Paddington.

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Speaker 2: The drizzle rather matched his mood at the time. He

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Speaker 2: was deeply concerned about post Brexit Britain. Since then we

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Speaker 2: know the UK has gone into at session. So with

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Speaker 2: that in mind and the rain of course still coming down,

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Speaker 2: I asked if his forecast is just as downbeat.

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Speaker 9: When you're running a business like m Ands, our philosophy

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Speaker 9: is we row our own boat. No and the Caesar

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Speaker 9: choppy or the Caesar calm, but our job is to

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Speaker 9: make the boat go faster. Actually, our success is more

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Speaker 9: to do with how successful we are and reshaping m

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Speaker 9: ands than what happens in the market. And you know,

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Speaker 9: we've had a decent run, but at long, long way

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Speaker 9: further ago.

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Speaker 2: While Norman puts the success of Mars and Spencer down

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Speaker 2: to the way that it's run, he does see light

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Speaker 2: on the horizon for the consumer and that will help

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Speaker 2: his business and many others.

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Speaker 9: Very importantly, wages are now rising faster than inflation, faster

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Speaker 9: than prices, so people are genuinely better off on average.

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Speaker 2: From the iconic British retailer to one of the country's

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Speaker 2: large just pension providers, Legal and General Investment Management manages

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Speaker 2: pensions for five million people. Michelle Scrimshaw is the CEO.

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Speaker 1: It's easier to focus on the challenges when you're looking

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Speaker 1: outside the window of our UK headquarters and it's raining

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Speaker 1: down and it's a great day here in London. Actually,

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Speaker 1: the UK has been an amazing home for legal in

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Speaker 1: general for over one hundred and eighty years.

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Speaker 2: But what of this year or next year will the

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Speaker 2: UK see significant improvements in growth and wealth?

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Speaker 1: So if you think about where the world is today,

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Speaker 1: there is a lot of uncertainty. There is geopolitical uncertainty,

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Speaker 1: there is in certainty around interest rates. We're no different

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Speaker 1: in the UK. We're part of that big ecosystem. But

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Speaker 1: if I think about where things could go better, for sure,

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Speaker 1: we're still in a post COVID environment. We're still in

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Speaker 1: a post energy crisis environment that isn't going away, it

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Speaker 1: is working through. So as things work through, there is

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Speaker 1: certainly an opportunity for interest rates to come down, Yes,

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Speaker 1: when a technical recession, but as rates come down and

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Speaker 1: that frees up more capital and it actually has an

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Speaker 1: impact on individuals and where they are because I don't

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Speaker 1: forget this is there's a cost of living challenge here

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Speaker 1: at an individual level, not just an economic challenge for

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Speaker 1: the country. I do think there is opportunity l.

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Speaker 2: Jim's Michelle Scrimjaw seeing opportunities. So is it the start

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Speaker 2: of a more bullish British economy To know that? You

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Speaker 2: also have to get at the heart of what drives

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Speaker 2: economic sentiment For a large slice of the UK, the

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Speaker 2: property market.

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Speaker 5: If monetory is do you call my tail, Yeah, that

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Speaker 5: would almost certainly become a problem.

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Speaker 6: Property prices fell in July at their faster space since

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Speaker 6: a global financial crisis.

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Speaker 1: For the third month in a row, the housing market

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Speaker 1: is on track to see the lowest level of home

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Speaker 1: sales since twenty twelve.

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Speaker 2: But although house prices declined last year, they avoided predictions

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Speaker 2: of a collapse, and well office rents in the US

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Speaker 2: fell in the UK, that was not the case British

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Speaker 2: Land too. Simon Carter told me he's now hopeful for us.

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Speaker 7: What really matters is unemployment. If people have money in

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Speaker 7: their pocket, they spend at our retail assets. I think

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Speaker 7: it's encouraging that we might see real wage growth. That

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Speaker 7: helps because we haven't seen a lot of that. And similarly,

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Speaker 7: when we're leasing office space, what matters is we do

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Speaker 7: top end office space and its headquarter space where businesses

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Speaker 7: are using it to attract and retain talent, and of

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Speaker 7: course they want to attract and retain talent when unemployment

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Speaker 7: is low. So I think if we can see a

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Speaker 7: situation where unemployment remains relatively low, the economy grows a

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Speaker 7: little bit and we see a bit of real wage growth,

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Speaker 7: the momentum that we've seen over the last couple of

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Speaker 7: years can continue, because that's been the odd thing in

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Speaker 7: the property market, that the investment market because of higher

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Speaker 7: interest rates, has struggled, but actually occupationally it's been very

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Speaker 7: good and people have taken space.

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Speaker 2: So momentum in the right direction. But what about some

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Speaker 2: acceleration to get that You need to tap into the

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Speaker 2: buzzword on every CEO's lips.

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Speaker 9: AI is going to be important.

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Speaker 5: We believe, we're excited about it.

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Speaker 7: We're addressing some of the most profound social challenges with

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Speaker 7: AI in ways that are transformative.

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Speaker 4: AI is going to change the nature of jobs.

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Speaker 8: We believe that AI is the most profound opportunity in

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Speaker 8: our lifetime.

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Speaker 3: You heard executives mention the word AI about fifty times.

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Speaker 2: Advertising Giant wpp's CEO, Mark Read is focused on the

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Speaker 2: benefits this once in a generation technology could deliver for Britain.

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Speaker 4: I think it's a massive opportunity for us. I mean,

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Speaker 4: at one level, you could say, well, the large language models,

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Speaker 4: they're all being created in America. But actually what you

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Speaker 4: can do with AI is get access to these models

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Speaker 4: extremely cheaply. You know, we're not investing billions of dollars

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Speaker 4: at WPP andi, we can't afford it, but we are

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Speaker 4: using the models created by open AI and Microsoft and

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Speaker 4: Google and others to power our work. And so it's

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Speaker 4: really about applications of technology, as you say, because we're

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Speaker 4: a service based economy, it could make our service structure

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Speaker 4: much much more productive, much much more efficient, and I

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Speaker 4: just think we have to lean into it and embrace it.

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Speaker 2: WPP is planning to spend about two hundred and fifty

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Speaker 2: million pounds a year on AI technology. Microsoft is investing

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Speaker 2: two and a half billion pounds in UK AI data

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Speaker 2: centers over three years, and the government says that it

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Speaker 2: wants Britain to be focused on reaping the rewards from

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Speaker 2: the AI gold rush. Here's the Deputy Prime Minister Oliver

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Speaker 2: Dowden speaking to Bloomberg at last year's AI summits, if

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Speaker 2: you think.

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Speaker 8: About how financial services and the City of London have

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Speaker 8: so enriched the United Kingdom over the past generation or two,

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Speaker 8: I'm convinced that AI can do the same thing for

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Speaker 8: the UK over generations to come.

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Speaker 2: So the government is persuaded of the benefits of artificial intelligence,

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Speaker 2: but John Neil, the CEO of Lloyd's of London, says

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Speaker 2: better performance also needs political stability.

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Speaker 5: I think we all need the confidence of the two

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Speaker 5: term government, well, whatever that government is, because I think

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Speaker 5: the issues that we're grapping with, you know, and the

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Speaker 5: need for confidence and the lack of the confidence that

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Speaker 5: whether it's the public or whether it's business, we just

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Speaker 5: need the sense that there is a plan and that

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Speaker 5: plan is going to have to stretch beyond one term

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Speaker 5: of government. So I would say we need change, and

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Speaker 5: I'm not saying that has to be a labor government

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Speaker 5: versus a conservative government. We do need to change. We

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Speaker 5: cannot carry on the way we are.

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Speaker 2: And he's concerned that even with the attempts by the

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Speaker 2: big political parties to woo the city, too much is

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Speaker 2: still being taken for granted.

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Speaker 5: Our advantage in insurance is the only marketplace for insurance

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Speaker 5: in the world is here. There isn't another one, and

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Speaker 5: I think we are standing up and representing the best

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Speaker 5: of that or doing our best to illustrate how that

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Speaker 5: value can be. We're growing, We're profitable. We need to

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Speaker 5: be profitable if we're going to innovate and reinvest in

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Speaker 5: what the future looks like. I don't think the same

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Speaker 5: is quite true everywhere in financial services, we've seen a

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Speaker 5: wealth of delisting. We've seen real challenges around investment and

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Speaker 5: funding in the UK. We need to get that back

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Speaker 5: on track. You know, part of the livelihood and wellbeing

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Speaker 5: of UKPLC is as a global financial services center.

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Speaker 2: There's a lot of ground to make up. Even with

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Speaker 2: the Chancellor Jeremy Hunt's Mansion House reforms, the Footy one

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Speaker 2: hundred has lagged global markets since two thousand and eight.

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Speaker 2: Investors pulled a record twenty nine billion dollars from UK

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Speaker 2: equity funds last year, and Europe's too. He announced recently

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Speaker 2: it will delist from London. Those numbers are not lost

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Speaker 2: on other CEOs we spoke to. Here's wpp's mark read again.

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Speaker 4: I've learned the CEO never really to comment on our

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Speaker 4: share price, but I mean, you can but look at

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Speaker 4: your evaluation relative to your peers in other markets and think,

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Speaker 4: you know, there aren't some possible attractions to being in

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Speaker 4: the US, though I think the complexities of it make

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Speaker 4: it very difficult really in reality for most companies. And

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Speaker 4: what we really need to do is get UK pension

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Speaker 4: funds investing back in the UK market because you know, ultimately,

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Speaker 4: you know, we have a sizable stock market and if

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Speaker 4: it's not being supported by pension funds, you know, why

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Speaker 4: would international pension funds support us?

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Speaker 2: So the UK economy is still under a cloud and

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Speaker 2: no one expects rapid growth tomorrow, but there is hope

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Speaker 2: that it could stop being rained on and at last

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Speaker 2: enjoy some sunshine.

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Speaker 3: Okay, well, fittingly, Caroline, this morning there's no rain outside.

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Speaker 3: The sun is just about rising outside in the city

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Speaker 3: of London. So much to unpack and the worst lots

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Speaker 3: of really key voices from very diverse industries across the

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Speaker 3: UK economy. Put this in perspective for us. How much

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Speaker 3: is confidence improving? What's driving this?

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Speaker 2: So I think it's first and foremost inflation coming down.

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Speaker 2: That was a big issue last year. Also the possibility

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Speaker 2: of interest rate cuts. All of those CEOs were talking

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Speaker 2: about those as two main drivers. Plus wages going up

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Speaker 2: and they have gone up for six months now, so

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Speaker 2: that's massively important. Bloomberg Economics thinks that the economy in

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Speaker 2: the UK could grow by one percent this year, but

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Speaker 2: one point nine percent of consumers feel more confident and

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Speaker 2: spend their savings. That would be a big difference. So

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Speaker 2: you heard from the Marks and Spencer chair Archie Norman.

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Speaker 2: They're saying people are genuinely better off on average, so

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Speaker 2: that sort of gets past the technical recession that we

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Speaker 2: sought the end of last year. Maybe that's the worst

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Speaker 2: of it. More, long term business investment is up six

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Speaker 2: point one percent year on year in twenty twenty three,

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Speaker 2: and artificial intelligence is already being adopted across businesses like

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Speaker 2: MNS but also like WPP. That could really improve one

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Speaker 2: of the main long term week spots, and that is

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Speaker 2: UK productivity. So Mark read saying it's already seeing twenty

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Speaker 2: to twenty five percent improvements in productivity for some of

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Speaker 2: their people. And I also spoke to Matt Clifford, who

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Speaker 2: created the Prime Minister's Artificial Intelligence Safety Summit last year,

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Speaker 2: and I mean you don't get more bullish than him.

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Speaker 3: Yeah, I mean this is also an election year and

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Speaker 3: this is part of the conversation that you were having

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Speaker 3: with these business leaders too. Are they warm about Krestar

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Speaker 3: Labor Party course leading in the polls?

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Speaker 2: Yes, I can't say that they're not what they want though,

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Speaker 2: is consentus on growth something that a lot of them

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Speaker 2: do see. They want long term policy making. I was

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Speaker 2: surprised about how often this idea of having a two

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Speaker 2: term government came up for business leaders, Archie Norman saying

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Speaker 2: you have to have a ten year consistent approach. Everyone

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Speaker 2: recognizes this problem of how you rekindle growth. Now also

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Speaker 2: the fact that they are really too centrist in Keir

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Speaker 2: Starmer and Rishie Sunak vying for power and that is

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Speaker 2: quite reassuring. Lloyd's of London's CEO John Neil said that

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Speaker 2: you need the confidence as you just heard there of

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Speaker 2: a two term government and then you do see things

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Speaker 2: like British Land joining the Labor led Building Back Britain Commission,

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Speaker 2: for example. But I think legal and general investment managements.

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Speaker 2: Michelle Scrimgel kind of put it quite neatly, so less

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Speaker 2: apout politics. It is more about in her words, stability,

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Speaker 2: clarity and consistency. So there still is a long way

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Speaker 2: to go for Britain.

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Speaker 3: But is there a gap too between investors and these

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Speaker 3: business leaders.

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Speaker 2: Perhaps quite sobering because along with this deep dive reporting

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Speaker 2: that I did with my colleague in print, Philip Orderick,

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Speaker 2: we also put out one of our regular M live

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Speaker 2: surveys of investors on the Bloomberg terminal and we asked

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Speaker 2: them this question, do you think that living standards in

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Speaker 2: the UK in five years time? Are going to go up,

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Speaker 2: go down, or stay the same. Out of four hundred

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Speaker 2: and six three investors that we surveyed, forty eight percent

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Speaker 2: said that they expected living standards in the UK to

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Speaker 2: decline versus G seven piers over five years thirty five

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Speaker 2: percent no change. Only seventeen percent of the British living

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Speaker 2: standards would improve. That is, you know, pretty sobering stuff. Surely,

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Speaker 2: that is something that the UK has to improve, got

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Speaker 2: improve confidence inward investment in so many other points, you know,

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Speaker 2: to make the kind of slightly brighter economic picture a

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Speaker 2: much more decisive reality.

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Speaker 3: Okay, well, this is part of our special featuring of

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Speaker 3: this reporting on the bullish case for Britain. You can

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Speaker 3: read more on the Bloomberg terminal and on the Bloomberg website.

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Speaker 3: With peace by our colleague Philip Aldrich. This is Bloomberg

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Speaker 3: Daybreak Europe, your morning brief on the stories making news

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Speaker 3: from London to Wall Street and beyond.

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Speaker 2: Look for us on your podcast feed every morning on Apple,

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Speaker 2: Spotify and anywhere where else you get your podcasts.

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Speaker 3: You can also listen live each morning on London Dab Radio,

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Speaker 3: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 2: Our flagship New York station is also available on your

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Speaker 2: Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.

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Speaker 2: I'm Caroline Hepka and.

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Speaker 3: I'm Stephen Carol. Join us again tomorrow morning for all

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Speaker 3: the news you need to start your day right here

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Speaker 3: on Bloomberg day Break Europe