WEBVTT - Daybreak Europe: January 27, 2023

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<v Speaker 1>This is Bloomberg Daybreak here for this Friday, the twenty

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<v Speaker 1>seventh of January in London. Coming up this hour on

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<v Speaker 1>the hunt for growth, the UK's Chancellor was set out

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<v Speaker 1>his economic blueprint at Bloomberg's London headquarters. Goldilocks would be

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<v Speaker 1>proud US GDP slows at a perfect pace for the FED,

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<v Speaker 1>chipping in Japan and the Netherlands to join the US,

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<v Speaker 1>and limiting China's semiconductor ambitions. The BO week gets a

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<v Speaker 1>warning from its ex Rolls Royce burning platform, and Rishie

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<v Speaker 1>SUONAC looks to the student economy. Those are the stories

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<v Speaker 1>we're looking at in today's newspapers. And I'm Leanne Garon's

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<v Speaker 1>plus managing a diversity drive. Bank of America modes m

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<v Speaker 1>d s from underrepresented groups. That's all straight ahead on

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<v Speaker 1>Bloomberg Daybreak Europe on d A B Digital Radio, London,

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<v Speaker 1>Bloomberg eleven three oh New York, Bloomberg Washington d C,

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<v Speaker 1>Bloomberg one oh six one, Boston, Bloomberg nine sixties, San Francis,

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<v Speaker 1>Go cyrus x M Channel one nineteen and around the

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<v Speaker 1>world on Bloomberg Radio dot com and via the Bloomberg

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<v Speaker 1>Business at Good Morning I'm Stephen Carroll and I'm Caroline Hecker.

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<v Speaker 1>Here are the stories that we're following today. In a

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<v Speaker 1>major speech at Bloomberg's European headquarters here in London, the

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<v Speaker 1>Chancellor Jeremy Hunt will lay out his plan for the

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<v Speaker 1>UK economy. Hunt is expected to reject calls for tax

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<v Speaker 1>cuts while arguing the country can use it's bregsit freedoms

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<v Speaker 1>as a catalyst for prosperity. Former Chancellor Philip Hammond says

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<v Speaker 1>the country has a major issue it needs to address.

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<v Speaker 1>It's about productivity. It always was about productivity and it

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<v Speaker 1>always will be. The UK's shockingly low rate of productivity growth,

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<v Speaker 1>which we're beginning to tackle with things like improvements in

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<v Speaker 1>the technical skills agenda, but we've still got a huge

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<v Speaker 1>amount to do and we just can't say it often enough.

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<v Speaker 1>It is about productivity that is the route to sustainable

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<v Speaker 1>higher standards of living. That was the former Chancellor Philip Hamment.

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<v Speaker 1>His comments reflected in the data which show the UK

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<v Speaker 1>is the only G seven economy with GDP below pre

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<v Speaker 1>COVID levels. Will be speaking to Bloomberg Anker and Edwards

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<v Speaker 1>for more about this story in just a moment and now.

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<v Speaker 1>Growth in the US economy beta expectations in the final

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<v Speaker 1>quarter of two GDP expanded at an annualized pace of

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<v Speaker 1>two point nine percent, down from three in the third quarter.

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<v Speaker 1>The data suggests that there's still a path to a

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<v Speaker 1>soft landing for the FED. Reacting to the news, President

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<v Speaker 1>Biden gave this Bolitio assessment. Jobs are the highest in

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<v Speaker 1>American history. Wages are up, and they're growing faster than inflation.

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<v Speaker 1>Over the past six months, inflation has gone down every month,

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<v Speaker 1>and god willing will continue to do that. Despite President

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<v Speaker 1>Biden's optimism, some economists believe that there are warning signs

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<v Speaker 1>in the data. Personal consumption rose by less than economists

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<v Speaker 1>had expected. The two point one percent gain suggests a

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<v Speaker 1>recession continues to be a significant risk for America. Shares

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<v Speaker 1>in the Adanne Groups companies are continuing to fall today,

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<v Speaker 1>with now more than thirty billion dollars wiped off their

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<v Speaker 1>market value after a scathing report from a short seller

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<v Speaker 1>earlier this week. In a call with investors, the Conglamorate

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<v Speaker 1>called Hindenburg's report devoid of facts and bogus. The Adanne

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<v Speaker 1>Group is also understood understood to be exploring legal action

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<v Speaker 1>against the investment research firm Our Asia Equities reporter Abishak

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<v Speaker 1>Vishnoy says market reaction will be key today is the

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<v Speaker 1>real tist because you know the share sale is going

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<v Speaker 1>to open up for retail investors and you know other

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<v Speaker 1>other investors in general. So the response to that and

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<v Speaker 1>how much stocks moved today would establish, you know where

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<v Speaker 1>where the sentiment, whether Heinenberg's report has actually changed the sentiment,

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<v Speaker 1>it marks a U turn in Adani groups again be

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<v Speaker 1>uning rally, or it's just our dent along the way.

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<v Speaker 1>A visionaries assessment comes. As the investor Bill Ackman said

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<v Speaker 1>he found Hindenburg. The Hindenburg does cier on the A.

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<v Speaker 1>Daney Group highly credible and extremely well researched. And now

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<v Speaker 1>sources tell Bloomberg that Japan and the Netherlands are set

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<v Speaker 1>to join the US in limiting China's access to advanced

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<v Speaker 1>semiconductor machinery. Bloomberg's You and Potts has the details. It's

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<v Speaker 1>shaping up to be a powerful alliance to undercut China's

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<v Speaker 1>ambitions to build its own domestic chip industry. Bloomberg has

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<v Speaker 1>learned that Dutch and Japanese officials will conclude talks today

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<v Speaker 1>on setting limits on what can be supplied to Beijing.

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<v Speaker 1>The Netherlands is to expand restrictions on a SML, which

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<v Speaker 1>will prevent it from selling advanced chip making machinery to China,

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<v Speaker 1>and Japan is likely to set similar limits on Nikon.

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<v Speaker 1>The joint effort will expand restrictions the US government unveiled

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<v Speaker 1>in October. China has fall back against the u S

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<v Speaker 1>moves with the complaints to the World Trade Organization in London,

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<v Speaker 1>i'mun pot spin bog day, but europe Intel shares fell

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<v Speaker 1>in late trading after a dire forecast for the first quarter.

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<v Speaker 1>The U S chip maker expects maximum sales of eleven

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<v Speaker 1>point five billion dollars, far short of analysts estimates of

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<v Speaker 1>fourteen billion. CEO pak Elsinger used or urged investors to

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<v Speaker 1>think of the bigger picture. I want to remind everyone

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<v Speaker 1>that we are on a multi year journey. We remain

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<v Speaker 1>focused on the things that are within our control as

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<v Speaker 1>we navigate short term headwinds while executing to our long

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<v Speaker 1>term strategy. Guessing there is now attempting a radical acceleration

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<v Speaker 1>into advanced semiconductor technology. The figures indicate, though the slumber

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<v Speaker 1>demand for personal computers may persist this year. And in

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<v Speaker 1>corporate news this morning, Bank of America has named three

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<v Speaker 1>hundred and sixty new managing directors and more than half

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<v Speaker 1>are from underrepresented groups. It's the third year in a

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<v Speaker 1>row that the bank has awarded the majority of m

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<v Speaker 1>D roles to women all people of color, with Wolfster

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<v Speaker 1>Banks pledging to improve their diversity as senior levels. Competition

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<v Speaker 1>for top talent is heating up across the industry. Those

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<v Speaker 1>our top stories this morning. Of course, we are looking

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<v Speaker 1>ahead to Jeremy Hunt's big speech here at Bloomberg's offices

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<v Speaker 1>in London, so more on that in a moment as well.

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<v Speaker 1>Another name that was visiting us yesterday there was the

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<v Speaker 1>Irish Finance Minister Michael McGrath, who met with Jeremy Hunt yesterday.

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<v Speaker 1>They were talking about the course of the Northern Iron

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<v Speaker 1>Protocol talks and he did say that things had moved

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<v Speaker 1>to a new level in advancement towards a solution there.

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<v Speaker 1>So's some positive signals coming from the Irish side in

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<v Speaker 1>that conversation. Yeah, absolutely, And of course we'll bring you

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<v Speaker 1>the chance of Jeremy hunt speech live here on radio

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<v Speaker 1>later on this morning. Well, the other issue. I think

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<v Speaker 1>that was quite interesting for me. A bit more in

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<v Speaker 1>the weeds, but Esthma the European market watchdog again warning

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<v Speaker 1>London based hedgephons and asset managers to build up their

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<v Speaker 1>presence in the European Union after breggsit. It's not enough

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<v Speaker 1>just to have a few Apparently the big band banks,

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<v Speaker 1>according to our reporting, are really under pressure to move

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<v Speaker 1>senior staff and the decision makers the places like Paris

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<v Speaker 1>and Frankfurt and Ouncer down. Perhaps more flexibility for the

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<v Speaker 1>smaller businesses more to watch their up. Next, the BWI

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<v Speaker 1>gets a warning from its ex Rolls Royce's burning platform

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<v Speaker 1>and soon that it looks to the student economy. Now.

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<v Speaker 1>The paper review on blue birdday Break Europe the news

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<v Speaker 1>you need to know from today's papers to us now

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<v Speaker 1>it's been basically and Garan's to take us through the

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<v Speaker 1>interesting newspaper stories. The Telegraph headline reads the Bank of

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<v Speaker 1>England must slow down interest rate rises. WARN's ex chief

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<v Speaker 1>economists tell us more lean Caroline, good morning to you

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<v Speaker 1>and thank you. Yes, a warning from their ex Andy

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<v Speaker 1>Haldane and here's the Bowees former chief economists says bluntly,

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<v Speaker 1>flickers of life in the economy risk being hindered by

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<v Speaker 1>Rishi Sunac's lack of a medium turned plan for growth.

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<v Speaker 1>The ft says. Haldane is also warning that families were

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<v Speaker 1>content need to be hit by painful price risers and

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<v Speaker 1>also falling real incomes this year. He was actually speaking

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<v Speaker 1>to the BBC on Thursday where he also criticized the

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<v Speaker 1>interest rate risers, saying he would have preferred to have

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<v Speaker 1>seen the Bank of England and other central banks starting

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<v Speaker 1>to raise their rates a little bit sooner. Hal Dane

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<v Speaker 1>does believe this would have helped to nip inflation in

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<v Speaker 1>the bud. The banks expected to raise interest rates for

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<v Speaker 1>the tenth time in a row next week to four percent,

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<v Speaker 1>which hal Dane is really fearing will cause more pain

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<v Speaker 1>for households as mortgage rates will also climb. And we're

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<v Speaker 1>in a cost of living crisis as we know, food

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<v Speaker 1>and lots of other things are extremely expensive. Energy included

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<v Speaker 1>Okay Leanne in the Financial Times. Meanwhile, they have comments

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<v Speaker 1>from Rolls Royce's new chief warning the company is a

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<v Speaker 1>burning platform. Well he didn't hold back, so the new

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<v Speaker 1>CEO of Rolls Royce has given this brutal assess and

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<v Speaker 1>of Britain's flagship engineering group and according to the FT,

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<v Speaker 1>he has told employees it must transform the way it

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<v Speaker 1>operates or it will just not survive. This is almost

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<v Speaker 1>an iconic brand here in the UK and in a

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<v Speaker 1>global address broadcaster staff, parts of which were shared with

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<v Speaker 1>the newspaper, so we're shared with the FT. He said

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<v Speaker 1>investors were losing patients with the iconic British band brand.

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<v Speaker 1>He used the address to launch a transformation program with

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<v Speaker 1>a focus on efficiency and optimism. Now, many people who

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<v Speaker 1>work within Rolls Royce was saying this has been interpreted

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<v Speaker 1>as a signal to staff to expect another round of

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<v Speaker 1>job cuts, in particular among white collar workers as they

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<v Speaker 1>do try to get the company back on track. So

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<v Speaker 1>all not terribly well in sort of industrial Britain. What

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<v Speaker 1>about the Times headline though, when it comes to trying

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<v Speaker 1>to help with this very tight labor market reci sooner

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<v Speaker 1>foreign student plan to show up economy. Yeah, this is

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<v Speaker 1>a really interesting one and it's in the Times. And

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<v Speaker 1>as you say, foreign students would be allowed to work

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<v Speaker 1>longer hours under plans to boost the economy. And this,

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<v Speaker 1>of course, Caroline, as you say, comes in a really

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<v Speaker 1>tight labor market. Where there's loads of vacancies, especially in

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<v Speaker 1>hospitality and retails. So ministers are now looking at ways

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<v Speaker 1>to encourage both British and over see students to take

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<v Speaker 1>more part time jobs really to deal with all the

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<v Speaker 1>shortages we're seeing. Britain's six hundred and eighty thousand overseas

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<v Speaker 1>students currently can only work twenty hours a week during

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<v Speaker 1>term time, but the newspaper says discussions have begun within

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<v Speaker 1>government about either raising that cap to thirty hours or

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<v Speaker 1>removing it entirely. But remember, Richie Sunac is concerned that

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<v Speaker 1>he will struggle to fulfill his pledge that the economy

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<v Speaker 1>will grow this year unless the government can really deal

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<v Speaker 1>with the surge in job vacancies. And it will be

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<v Speaker 1>interesting to see against Suella Brahman's plans really for immigration

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<v Speaker 1>at this time. Yeah, that's such an interesting story in

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<v Speaker 1>the Times today, Leon Garran's thank you very much for

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<v Speaker 1>that review. Afterday's newspapers. Now, the Chancellor Jeremy Hunt will

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<v Speaker 1>speak here at Bloomberg's European headquarters in London later this morning.

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<v Speaker 1>He's expected to reject calls for tax cuts and also

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<v Speaker 1>make the case for how Brexit will drive economic Growth.

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<v Speaker 1>Bloomberg anchor Anna Edwards will be speaking to the chance

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<v Speaker 1>later and she joins us, now, really good to have you, Anna.

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<v Speaker 1>What do we know then about what's going to be

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<v Speaker 1>in this important speed Yeah, good morning, Good morning everybody.

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<v Speaker 1>So he's going to be speaking here at Bloomberg and

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<v Speaker 1>then he's going to be giving an interview to us

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<v Speaker 1>a little bit later on. But what we do know

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<v Speaker 1>then is he is set to rule out tax cuts

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<v Speaker 1>and this is of course, in the build up to

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<v Speaker 1>the budget in March. He's been under a lot of

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<v Speaker 1>political pressure, in particular from his back benches to agree

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<v Speaker 1>to some kinds of tax cuts. Some in the back

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<v Speaker 1>benches of the Tory Party still think that this is

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<v Speaker 1>the way forward, despite the termoil that was created in

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<v Speaker 1>markets by unfunded tax cuts around the mini budget. So

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<v Speaker 1>that's a battle that he is, it seems, still fighting.

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<v Speaker 1>He's also going to talk about some of the positives

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<v Speaker 1>as he sees them for the UK economy and in

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<v Speaker 1>the post Brexit world, in particular drawing on the massive

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<v Speaker 1>amount of money that is available in in for private

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<v Speaker 1>investments in the UK and trying to channel that into

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<v Speaker 1>green projects, and the reason that this was not available

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<v Speaker 1>previously is because of solvency to regulations that meant that

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<v Speaker 1>insurance companies had to keep large amounts of capital tied

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<v Speaker 1>up on their balance sheets. Now post Brexit, we know this,

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<v Speaker 1>this has been talked about for some time. He's able

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<v Speaker 1>to then remove the solvency to regulation, which frees up

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<v Speaker 1>more money for investment, So there'll be some figures around that.

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<v Speaker 1>And he also wants to talk about productivity. This has

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<v Speaker 1>been an issue we've talked about on the program many times.

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<v Speaker 1>It's been something that holds back the UK economy for

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<v Speaker 1>such a long time. Tackling it head on is the

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<v Speaker 1>words he's going to use a little bit later on,

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<v Speaker 1>in particular offering support individual sectors. And we know from

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<v Speaker 1>our own reporting that the semiconductor, the chip sector could

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<v Speaker 1>be in focus there the collapse of that business, British

0:12:59.400 --> 0:13:02.959
<v Speaker 1>roleter course growing into into stark relief, the difficulty that

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<v Speaker 1>perhaps the UK has at the moment in establishing those

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<v Speaker 1>kinds of important strategic tech businesses. So that will be

0:13:09.160 --> 0:13:11.600
<v Speaker 1>a focus. Are the key questions you're hoping to get

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<v Speaker 1>answers to when he speaks. The chance well, a lot

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<v Speaker 1>of our focus given that this is Bloomberg. We will

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<v Speaker 1>be talking about the economy, will be talking about investments,

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<v Speaker 1>investments in the in the UK economy, account corporation tax

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<v Speaker 1>is set to go up by six percentage points in April.

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<v Speaker 1>What that means for business at a time when energy

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<v Speaker 1>bills might still be going up, even though wholesale gas

0:13:31.200 --> 0:13:34.000
<v Speaker 1>prices have been coming down. Will be exploring that and

0:13:34.080 --> 0:13:36.240
<v Speaker 1>whether there is given that he said he's ruling out

0:13:36.280 --> 0:13:38.400
<v Speaker 1>tax carts, are there is there any room to maneuver

0:13:38.480 --> 0:13:40.280
<v Speaker 1>around that at all? Will be will be trying to

0:13:40.360 --> 0:13:41.839
<v Speaker 1>dig into that a little bit. What does all of

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<v Speaker 1>this mean for business. We also live in a fast

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<v Speaker 1>changing geopolitical environment. The news we carried earlier this week

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<v Speaker 1>about the UK government support for the chip sector, and

0:13:50.240 --> 0:13:53.000
<v Speaker 1>the news overnight about Japan and the Netherlands joining in

0:13:53.320 --> 0:13:56.800
<v Speaker 1>a pact to try and keep China away from chip technology.

0:13:57.240 --> 0:13:59.520
<v Speaker 1>All of that's playing out very quickly. And where does

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<v Speaker 1>the UK stand in that the Inflation Reduction Act in

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<v Speaker 1>the in the United States is certainly going to incentivize

0:14:06.240 --> 0:14:08.079
<v Speaker 1>a lot of investment there is that to the detriment

0:14:08.160 --> 0:14:09.599
<v Speaker 1>of the UK. So these are certainly going to be

0:14:09.640 --> 0:14:11.680
<v Speaker 1>some of the conversations will have and perhaps we'll mention

0:14:11.720 --> 0:14:14.920
<v Speaker 1>the name Nadine's are we perhaps that might come okay?

0:14:15.000 --> 0:14:18.839
<v Speaker 1>The have the issue around taxes, um, yeah, and and

0:14:18.920 --> 0:14:21.240
<v Speaker 1>no doubt there will be some quite robust questioning around

0:14:21.320 --> 0:14:24.680
<v Speaker 1>leveling up. Because Bloomberg's own Joe May's is the reporter

0:14:25.200 --> 0:14:27.800
<v Speaker 1>plus team who have done the deep dive into the

0:14:27.880 --> 0:14:30.600
<v Speaker 1>big pledge by government to bring up the rest of

0:14:30.800 --> 0:14:33.720
<v Speaker 1>the UK, bring up the other regions in Britain. It's

0:14:33.800 --> 0:14:36.080
<v Speaker 1>a very very difficult challenge that the government's not doing

0:14:36.120 --> 0:14:37.800
<v Speaker 1>well us right, and there's so there's a lot of

0:14:37.880 --> 0:14:40.360
<v Speaker 1>questions around the budget and how much room for maneuver

0:14:40.480 --> 0:14:43.120
<v Speaker 1>the government really has to do their leveling up spending

0:14:43.240 --> 0:14:46.240
<v Speaker 1>to settle some of the strike activity that we've seen

0:14:46.320 --> 0:14:49.040
<v Speaker 1>taking place, of course, but but in terms of expectations

0:14:49.080 --> 0:14:50.880
<v Speaker 1>around the budget, he's going to rule out tax cuts

0:14:50.920 --> 0:14:52.600
<v Speaker 1>and we do have to remember there's not an election

0:14:52.680 --> 0:14:56.040
<v Speaker 1>until twenty four Eurasia groups saying, of course, giveaways much

0:14:56.040 --> 0:14:59.560
<v Speaker 1>more likely ahead of that than now. This is Bloomberg

0:14:59.640 --> 0:15:02.600
<v Speaker 1>Daybreak Europe, your morning brief on the stories making news

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