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Speaker 1: Good morning. It's Wenesday, the thirteenth of December here in London.

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Speaker 1: This is the BlueBag daybaq At podcast. I'm Caroline Hepki.

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Speaker 2: And I'm Tom McKenzie coming up today. UK GDP shrinks

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Speaker 2: by more than expected as the country's economic headwinds grow.

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Speaker 1: COP twenty eight ends with an agreement to transition away

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Speaker 1: from all fossil fuels for the first time.

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Speaker 2: Plus Netflix and Spill the video platform reveals full details

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Speaker 2: of who watched what for the first time.

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

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Speaker 2: Here in the UK. The economy shrinking more than expected

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Speaker 2: in October as elevated boring costs took their toll. GDP

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Speaker 2: fell by zero point three percent month or month, following

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Speaker 2: again of zero point two percent in September. Bloomberg's senior

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Speaker 2: UK economist Dan Hansen says the figures are the latest

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Speaker 2: indication that the economy is increasingly feeling the effects of

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Speaker 2: fourteen consecutive interest rate hikes.

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Speaker 3: Everything is moving in the right direction if you're thinking

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Speaker 3: about the inflame picture and bringing inflation down.

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Speaker 4: But I think the bad.

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Speaker 3: News story here is that it's going to come potentially

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Speaker 3: at a cost and that's what the data this morning tells.

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Speaker 2: Us Dan Hanson and the team att Bloomberg Economics written

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Speaker 2: the economy is already in a recession that will last

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Speaker 2: through the middle of next year.

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Speaker 1: Meanwhile, on the politics, where Sisunak has survived a vote

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Speaker 1: on his Rwanda deportation bill, a test of his authority,

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Speaker 1: he's survived, at least for now. The policy to send

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Speaker 1: asylum seekers to the African country passed by a majority

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Speaker 1: of forty three, with thirty seven toys abstaining. The Conservative

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Speaker 1: mpe in Duncle Smith back's the deal but now wants changes.

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Speaker 5: There are debates around here about certain clauses where there

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Speaker 5: may be some open possibilities for people to make vexatious

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Speaker 5: continuous vexation claims, so you know, lots. We're looking at

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Speaker 5: whether it's feasible to kind of tighten that bid up.

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Speaker 1: In Douncle Smith is part of a faction on the

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Speaker 1: right of the party who could veto the legislation next

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Speaker 1: but any changes would aggravate Conservative moderates, meaning more into Nissan.

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Speaker 1: Strife is likely for Sunac over his flagship policy.

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Speaker 2: Now the COP twenty eight summit has ended in a

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Speaker 2: deal to transition away from all fossil fuels for the

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Speaker 2: first time. The agreement calls for countries to quickly shift

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Speaker 2: energy systems away from fossil fuels in a just and

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Speaker 2: orderly fashion. While the outcome falls short of the phase

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Speaker 2: out most countries wanted, it does break new ground. No

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Speaker 2: previous cop text has mentioned moving away from oil and gas.

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Speaker 1: Germany's ruling coalition has sealed an agreement on a revised

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Speaker 1: twenty twenty four financial plan after the latest round of

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Speaker 1: talks that stretched into the night. Olaf Schultz three party

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Speaker 1: alliance has been grappling for weeks with the turmoil that

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Speaker 1: was triggered by last month's ruling by the country's top

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Speaker 1: court limiting the use of off budget funds. Bloomberg's Germany correspondent

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Speaker 1: Oliver Brook says that the government may be running out

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Speaker 1: of options to plug their budget hole.

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Speaker 6: We're trying to plug seventeen billion euros, which is a

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Speaker 6: substantial sum of money, and there are only so many

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Speaker 6: ways you can do that in a government budget. Right

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Speaker 6: you can cut spending, you can cut subsidies. This is

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Speaker 6: something that the Greens and Schultz would be sort of against.

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Speaker 6: In Schultz even over the weekends, saying that there will

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Speaker 6: be no dismantling of the German welfare state.

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Speaker 1: Oliver Krook there reporting from Berlin now. The shock judgment

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Speaker 1: by Germany's Constitutional court up ended the decades old practice

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Speaker 1: of using special pots of money, and it also called

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Speaker 1: into question tens of billions of euros in debt financed spending.

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Speaker 2: Argentina meanwhile, has devalued the peso by fifty four percent

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Speaker 2: and announced massive public spending cuts. The moves a part

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Speaker 2: of new President Haaviermille's shock therapy program for the country's economy,

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Speaker 2: which is battling an inflation rate north of one hundred

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Speaker 2: and forty percent. Economy Minister Luis Caputo made the announcement

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Speaker 2: in a Televini to dress.

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Speaker 5: Your fishal exchangery is going to go to eight hundred

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Speaker 5: pistoles so that the productive sectors have the rate incentives

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Speaker 5: to increase their production.

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Speaker 2: The dramatic first steps by Economy Minister Lewis Caborto follows

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Speaker 2: a somber inauguration speech on Sunday, when President Mila warned

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Speaker 2: that Argentinians will have to endure months of pain while

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Speaker 2: he works to pull the country out of its economic crisis.

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Speaker 1: Elon Musk's X, the social network formerly known as Twitter,

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Speaker 1: is expected to miss its own ad revenue goals. According

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Speaker 1: to people familiar with the matter. The platform is on

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Speaker 1: track to earn roughly two point five billion dollars from

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Speaker 1: advertising in twenty twenty three, a big drop from sales

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Speaker 1: of more than a billion dollars per quarter in twenty

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Speaker 1: twenty two. Bloomberg social media reporter kerk Wagner says that

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Speaker 1: Musk's conduct is a key issue for past advertisers.

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Speaker 7: I think the issue here continues to be that, you know,

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Speaker 7: Musk seems to not really be aware that his own

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Speaker 7: behavior is having this dramatic impact, or if he is,

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Speaker 7: he just simply doesn't care. But I think that's really

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Speaker 7: the issue, more than anything, is that he's not really

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Speaker 7: giving advertisers a good enough reason to come back. They're

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Speaker 7: trying to move away from this kind of legacy brand

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Speaker 7: business that Twitter used to have, right, And that's partly

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Speaker 7: because I think it's inconsistent and it's and it's moving

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Speaker 7: because of Elon's behavior.

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Speaker 1: Right.

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Speaker 7: So the more they move away from the Disneys of

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Speaker 7: the World or the Coca Colas from the World, then

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Speaker 7: they get to either small and medium sized businesses subscription

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Speaker 7: revenue data licensing that stuff's just not going to be

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Speaker 7: as impacted by the CEO's behavior.

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Speaker 1: Kurt Wagner there well. He added that X is looking

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Speaker 1: for earning opportunities less likely to be influenced by the

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Speaker 1: actions of its owner. The news also comes as another

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Speaker 1: musk Lad venture. SpaceX announces that it will sell inside

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Speaker 1: A shares at ninety seven dollars each in a tender offer.

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Speaker 1: That's a price increase which boosts the value of the

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Speaker 1: space and satellite company closer to one hundred and eighty

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Speaker 1: billion dollars in indicating strong invested demand.

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Speaker 2: Now Netflix is telling the world how many people watch

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Speaker 2: its shows for the first time. Bloomberg's Charlie Pellett has

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Speaker 2: the story.

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Speaker 4: The company has released global midhear viewer data for every

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Speaker 4: title on its service, the first of what Netflix says

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Speaker 4: will be regular reports. The political thriller The Night Agent

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Speaker 4: was the most watched title globally in the first half

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Speaker 4: of twenty twenty three, generating eight hundred and twelve point

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Speaker 4: one million hours of viewing. That was followed by season

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Speaker 4: two of the family drama Ginny and Georgia and the

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Speaker 4: debut of the Glory of South Korean series Ginny and

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Speaker 4: Georgia delivered the biggest audience if you consider all seasons

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Speaker 4: of a show in New York. Charlie Pellett, Bloomberg Radio.

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Speaker 2: Okay, let's get back to the UK and the economy specifically,

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Speaker 2: the data that came out earlyer this morning showing a

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Speaker 2: contraction of zero point three percent, so a bigger slow

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Speaker 2: down than many had expected. The details then from our

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Speaker 2: senior UK economist Dan Hansen. These of course were the

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Speaker 2: data points that came out for the month of Octorry.

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Speaker 2: But Dan, what's your reading of this data? What does

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Speaker 2: it tell us about where we are with this economy?

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Speaker 3: So I think when it dropped this morning, I was

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Speaker 3: obviously surprised by the weakness. We expected a point one

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Speaker 3: percent drop, which is what the consensus was as well,

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Speaker 3: and it was sort of be all economist expectations in

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Speaker 3: terms of how negative it was. I mean, I think

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Speaker 3: the thing that struck me though, when I opened the

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Speaker 3: release was how broad based the weakness was. The few

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Speaker 3: sectors that did grow noticeably. Health is one sector that

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Speaker 3: you can't really rely on sort of sustain a recovery.

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Speaker 3: And sustain growth. It's a lot to do with what's

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Speaker 3: going on with strikes, It's a lot to do with

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Speaker 3: what's going on getting into the weeds here a little bit,

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Speaker 3: what's going on with the tests and trace and vaccine programs.

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Speaker 3: But I think the broad picture, the broad takeaway is

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Speaker 3: that services, manufacturing and construction all fell and you've got

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Speaker 3: weakness across the board.

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Speaker 1: Okay, how significant is that when we think about recession

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Speaker 1: risks for the UK, whether we're in a recession or not.

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Speaker 3: So Look, I mean, I think we've been having this

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Speaker 3: conversation for a while, haven't we. And I've said on

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Speaker 3: a numerous occasions that I feel that the line between

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Speaker 3: stagnation and contraction is a fine one. It's going to

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Speaker 3: remain a fine one, probably until the second half of

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Speaker 3: next year, when I think there are reasons to think

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Speaker 3: the economy will pick up a little bit. But nonetheless,

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Speaker 3: I think at least for our call, and Tom and

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Speaker 3: I spoke about this earlier, but at least for our

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Speaker 3: call of having some modest contractions in GDP over the

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Speaker 3: next few quarters, this obviously is completely consistent with that.

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Speaker 3: I mean, one thing I just mentioned as well is

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Speaker 3: that the third quarter was it was flat, but if

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Speaker 3: you looked at the details of that, domestic demand fell considerably.

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Speaker 3: We're only saved by this big fall off in imports,

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Speaker 3: saved from a contraction. So I think like Tom's point

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Speaker 3: that we've been stagnating for a while, that's absolutely right.

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Speaker 3: I think there is definitely a risk around the turn

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Speaker 3: of the year that we get a very mile just

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Speaker 3: to emphasize mild fall in GDP okay.

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Speaker 2: The Bank of England, of course meeting with its next

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Speaker 2: decision on Thursday. Most people don't expect any change. Do

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Speaker 2: you think though, as you look into twenty twenty four,

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Speaker 2: it changes your estimates as to when the BOE goes

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Speaker 2: with cuts and just how deep those cuts could be.

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Speaker 3: Yeah, I mean, I mean just on Thursday on that's tomorrow,

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Speaker 3: isn't it? Yes, tomorrow, So we've got you know, you're

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Speaker 3: absolutely right, there's no chance of them moving. I think

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Speaker 3: where what could move the dial is the data today

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Speaker 3: could move the vote potentially to make it a more

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Speaker 3: dubbish split. It's quite possible. Meghan Green joins those who

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Speaker 3: don't want to hike rates anymore, And you only have

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Speaker 3: two going for another hike, But to go to your question, Tom,

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Speaker 3: I think our call is for a first cut in August,

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Speaker 3: and now that balances two things. One is the weak economy,

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Speaker 3: but of course the other side of all of this

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Speaker 3: is sticky inflation that we and we've still got that

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Speaker 3: here in the UK. I don't think that story's gone away.

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Speaker 3: I do think there is a risk though, that the

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Speaker 3: Bank of England is more sensitive to downside news on

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Speaker 3: the economy and it brings the first rate cut forward,

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Speaker 3: and it also cuts more aggressively. Now how much further

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Speaker 3: forward could it be brought I don't think it could

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Speaker 3: be brought forward much more further than May, and I

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Speaker 3: think there are two reasons for that. One is there's

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Speaker 3: going to be quite a bit of hopefully good news

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Speaker 3: on CPI in the April and May reports that will

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Speaker 3: give them give them ba sicly a green flag because

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Speaker 3: of inflation will probably drop to three maybe two and

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Speaker 3: a half if with a fair wind. And also they

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Speaker 3: want to see the March budget and the extent to

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Speaker 3: which Jeremy Hunt loosens the fiscal purse strings.

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Speaker 1: In terms of sequencing and impact today's FED decision day.

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Speaker 1: How much of an effect does that have on the UK,

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Speaker 1: given what is priced in for rate cuts out of America.

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Speaker 3: Yeah, I mean there's always the risk, and I mean

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Speaker 3: this was the case in twenty twenty one, right where

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Speaker 3: you had everyone thought the FED would have to go first,

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Speaker 3: and the bank surprise everyone. Bankingland surprise everyone by first

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Speaker 3: of all not hiking in November twenty twenty one and

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Speaker 3: then hiking in December, and so they went well before

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Speaker 3: the FED. So I don't think there is a reason

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Speaker 3: to think that just because say the FED cuts for

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Speaker 3: the first time in March, which is what our US

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Speaker 3: team thinks, that that puts a lot of pressure on

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Speaker 3: the banking then to bring things for But they'll have

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Speaker 3: a watchful lie on it, of course they will. But

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Speaker 3: I think the justification for all of this is the

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Speaker 3: inflation picture. The US is more advanced in the disinflation process.

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Speaker 3: We know that, and we're not going to get a

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Speaker 3: three percent hand on inflation probably until the spring, maybe summer,

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Speaker 3: so you know, and that's really what the Fed's now

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Speaker 3: now got in its hand. It's had a few of

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Speaker 3: those prints, so it's it's just a slightly more advanced

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Speaker 3: story in the US, and that gives them a little

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Speaker 3: bit of space to go to go earlier.

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Speaker 2: Okay, Senior UK economist Dan Hanson, with the analysis of

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Speaker 2: that growth data for the UK, what it tells us

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Speaker 2: about the trajector of this economy looking into twenty twenty

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Speaker 2: four and indeed the decisions of the Bank of England.

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Speaker 1: Thank you, Dan, cent two COP twenty eight the Climate Summit,

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Speaker 1: shall we they have a great ideal to transition away

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Speaker 1: from fossil fuels this morning. It is the first time

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Speaker 1: that this sort of language has actually been included in

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Speaker 1: nearly three decades of climate talks. And Bloomberg senior climate

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Speaker 1: reporter acshat Ratti has been at the meeting and joins

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Speaker 1: us now, good to have you on the program. Actionat

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Speaker 1: what exactly has been agreed then, Well, as you.

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Speaker 8: Said, there are a number of things that have been

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Speaker 8: agreed that the thing that has made the headlines, rightly so,

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Speaker 8: is that it's the first time transitioning away from fossil

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Speaker 8: fueld as we mentioned at a COP meeting, and that's

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Speaker 8: been agreed on by two hundred countries. Now the science

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Speaker 8: has been clear that its fossil fuel burning that is

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Speaker 8: the cause behind climate change, but countries have resisted to

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Speaker 8: come to a consensus, because, of course there are many

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Speaker 8: fossil fuel producers whose economies would be hood if they

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Speaker 8: move away from fossil flows, and so to come to

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Speaker 8: by the sort of start of the Middle East, where

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Speaker 8: oil and gas production counts for majority of government income.

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Speaker 8: It is a stunning development to have a language agreed

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Speaker 8: by all countries, including Middle Eastern countries, that the world

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Speaker 8: is ready to transition away from fossil fuels, and to

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Speaker 8: do so in this critical decade.

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Speaker 2: Actually talk to us about how significant or robust this

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Speaker 2: commitment actually is.

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Speaker 8: Well. United Nations climate summits put out statements that are

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Speaker 8: quite high level. The only way they become really actionable

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Speaker 8: are when governments take those high level comments and make

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Speaker 8: them policy at home. We saw that after the Paris

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Speaker 8: agreemental sign in twenty fifteen. It took a couple of

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Speaker 8: years before net zero by twenty fifty became a rallying cry,

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Speaker 8: getting all the global economies, at least the major ones,

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Speaker 8: to sign up to that target, and getting companies board

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Speaker 8: rooms interested in understanding how governments now are going to

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Speaker 8: set the sargon and how they should also be setting

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Speaker 8: a target pininzeero by twenty fifty. So what this language

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Speaker 8: around transitioning from fossil fuelds will do, as Jennifer Morgan

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Speaker 8: the German Climate on the White told us, is that

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Speaker 8: it gives a signal to the market that investment and

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Speaker 8: renewables is what is going to be profitable in the

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Speaker 8: long term, and that investment in fossil fuels, at least

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Speaker 8: new ones could lead to stranded assets.

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Speaker 1: That is pretty decisive, isn't it, And pretty pretty fascinating,

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Speaker 1: And yeah, of course the difficulties of getting followed through.

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Speaker 1: Have the people participating in COP twenty eight sort of

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Speaker 1: abandoned the idea of reaching a kind of limited target

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Speaker 1: of one point five percent degree warming a limit to

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Speaker 1: global warming? Are they sort of accepting of the fact

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Speaker 1: that that looks pretty difficult to reach now?

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Speaker 8: Well, as the president of COP, sultanal Jebber, who was

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Speaker 8: also the chief executive officer of above Rabi National Oil Company, said,

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Speaker 8: the not star for this COP was to keep one

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Speaker 8: point fight ce allied. Now does it do it? Maybe

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Speaker 8: because it's definitely not off the table. There are certainly

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Speaker 8: loopholes in the text. There is a role for gas

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Speaker 8: that has been accepted in the text that gas may

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Speaker 8: be used for longer. When it say transitioning away from

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Speaker 8: fossil fuels, it does so only for the energy system,

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Speaker 8: which is about three quarters of the emissions. So oil

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Speaker 8: and gas would be used in fertilizers and plastics. So

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Speaker 8: there is still some concerns, and rightly so from many

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Speaker 8: of the scientists and green groups, but it is also

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Speaker 8: to be recognized that this is historic progress. When it

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Speaker 8: comes to cop meetings, usually you don't get even a

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Speaker 8: mention of the word fossil fields, and now there's a

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Speaker 8: clear signal that the world is ready to end the

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Speaker 8: possil fuel Here