1 00:00:00,160 --> 00:00:02,040 Speaker 1: It's that time of year again. We've a new champion 2 00:00:02,040 --> 00:00:04,760 Speaker 1: for financial services and the square mile. Alister King is 3 00:00:04,800 --> 00:00:07,920 Speaker 1: the six hundred and ninety sixth Lord Mayor of London. 4 00:00:08,080 --> 00:00:10,080 Speaker 1: He's an aw set manager and former corporate lawyer and 5 00:00:10,080 --> 00:00:13,200 Speaker 1: says his aim this year is to reopen London's capital markets. 6 00:00:13,200 --> 00:00:15,240 Speaker 1: And Alster King is with us in the Bloomberg Radio studio. 7 00:00:15,320 --> 00:00:18,040 Speaker 1: Good morning, great to see you with us now. Rachel 8 00:00:18,040 --> 00:00:20,520 Speaker 1: Reeves hasn't speaking to Bloomberg ahead of her Mansion House 9 00:00:20,960 --> 00:00:24,680 Speaker 1: speech tonight. She says that the UK will consolidate pension 10 00:00:24,720 --> 00:00:28,160 Speaker 1: funds but won't force them to invest in UK assets. 11 00:00:28,320 --> 00:00:29,280 Speaker 1: Is this going to work? 12 00:00:31,000 --> 00:00:33,199 Speaker 2: Rachel Reeves is absolutely right that there needs to be 13 00:00:33,360 --> 00:00:36,600 Speaker 2: real effort and energy put into a reforming of the 14 00:00:36,600 --> 00:00:39,560 Speaker 2: pension system. We have had a too long a period 15 00:00:39,600 --> 00:00:43,720 Speaker 2: where pension funds have been unreformed and I think that 16 00:00:43,720 --> 00:00:46,879 Speaker 2: that's led to a an imbalanced system that we have. 17 00:00:47,400 --> 00:00:50,000 Speaker 2: It's also wasteful in the sense of we've had a 18 00:00:50,040 --> 00:00:54,240 Speaker 2: big pool, the second largest pool of a pension pool 19 00:00:54,280 --> 00:00:57,800 Speaker 2: in the world, yet we're not allowed to use those 20 00:00:57,840 --> 00:00:59,920 Speaker 2: moneys to invest in some of the recesses that we 21 00:01:00,120 --> 00:01:03,200 Speaker 2: have to invest into British innovation, and I think that 22 00:01:03,240 --> 00:01:05,240 Speaker 2: there does need to be substantial change. 23 00:01:05,400 --> 00:01:09,120 Speaker 3: Okay, is this going to be enough? The comparison is 24 00:01:09,120 --> 00:01:12,880 Speaker 3: being made, for example, to the Australian pension fund, I 25 00:01:12,920 --> 00:01:15,920 Speaker 3: wonder whether that's a little bit misleading, the Aussie fund 26 00:01:16,040 --> 00:01:19,720 Speaker 3: being something like forty years old and absolutely vast and 27 00:01:19,800 --> 00:01:24,600 Speaker 3: deeply invested in Australian champions. I mean, surely the UK 28 00:01:24,800 --> 00:01:26,400 Speaker 3: version cannot be compared to that. 29 00:01:27,120 --> 00:01:31,000 Speaker 2: No, but I think that there is a great opportunity 30 00:01:31,040 --> 00:01:34,400 Speaker 2: for us is the fact that in the Australian system 31 00:01:34,400 --> 00:01:38,040 Speaker 2: there are around fourteen of the superannuation funds. The number 32 00:01:38,080 --> 00:01:39,920 Speaker 2: of pension funds we have here in the United Kingdom 33 00:01:39,959 --> 00:01:43,760 Speaker 2: is around twenty one thousand. I mean, imagine the extraordinary 34 00:01:43,840 --> 00:01:47,280 Speaker 2: duplication of fees and effort in having twenty one thousand 35 00:01:47,280 --> 00:01:50,320 Speaker 2: different pension pots. I think the case for consolidation is there. 36 00:01:51,480 --> 00:01:55,280 Speaker 1: The idea though, of a consolidation boosting and having an 37 00:01:55,320 --> 00:01:59,000 Speaker 1: effect on the UK is something. It's not a new idea, 38 00:01:59,200 --> 00:02:02,320 Speaker 1: it's something that's been mentioned by previous chancellors as well, 39 00:02:02,520 --> 00:02:05,480 Speaker 1: but we haven't seen much progress on it. How quickly 40 00:02:05,520 --> 00:02:08,280 Speaker 1: can we expect to see results or to see if 41 00:02:08,280 --> 00:02:09,240 Speaker 1: it's working at all. 42 00:02:10,320 --> 00:02:14,720 Speaker 2: I think that there is certainly a willingness to among 43 00:02:14,760 --> 00:02:17,440 Speaker 2: the around the city of that there is a need 44 00:02:17,480 --> 00:02:21,600 Speaker 2: to use some of these funds to invest into British innovation. 45 00:02:22,600 --> 00:02:26,120 Speaker 2: I think the you have this element that if you're 46 00:02:26,160 --> 00:02:29,200 Speaker 2: all investing into one particular class of asset in the 47 00:02:29,240 --> 00:02:34,080 Speaker 2: pension's case, largely fixed income affect, that becomes a riskier 48 00:02:34,120 --> 00:02:36,320 Speaker 2: asset if everyone's in it, and so therefore I do 49 00:02:36,720 --> 00:02:39,919 Speaker 2: sense that there is a need for diversification and also 50 00:02:39,960 --> 00:02:43,000 Speaker 2: there's a need to use some of that vitality in 51 00:02:43,080 --> 00:02:44,480 Speaker 2: order to invest into risk assets. 52 00:02:44,639 --> 00:02:47,680 Speaker 1: Are you against the idea of mandating funds to invest 53 00:02:47,720 --> 00:02:48,799 Speaker 1: in the UK assets? 54 00:02:49,360 --> 00:02:51,679 Speaker 2: I mean, I think it would need to have a 55 00:02:51,720 --> 00:02:55,239 Speaker 2: substantial change in the law in the sense that pension 56 00:02:55,280 --> 00:02:57,880 Speaker 2: fund trustees do have fillocy duties to try and find 57 00:02:57,880 --> 00:03:01,320 Speaker 2: the best returns, and so therefore if they are if 58 00:03:01,320 --> 00:03:03,560 Speaker 2: you do want to mandate, then there has to be 59 00:03:03,639 --> 00:03:06,280 Speaker 2: it has to be a legal element. But I think 60 00:03:06,320 --> 00:03:09,760 Speaker 2: that certainly, I think the mood music out there within 61 00:03:09,919 --> 00:03:12,600 Speaker 2: the financial community is that there is a much more 62 00:03:12,639 --> 00:03:16,040 Speaker 2: willingness to invest into UK assets now, and it may 63 00:03:16,080 --> 00:03:20,880 Speaker 2: be that certainly I would say incentives to go ahead 64 00:03:20,880 --> 00:03:23,800 Speaker 2: and invest into UK assets rather than mandation. Maybe a 65 00:03:23,800 --> 00:03:24,240 Speaker 2: way forward. 66 00:03:24,360 --> 00:03:25,280 Speaker 1: What would does look like? 67 00:03:25,680 --> 00:03:27,120 Speaker 2: Well, I mean I think that we could look at 68 00:03:29,280 --> 00:03:31,679 Speaker 2: I'm something I would be talking about later on in 69 00:03:32,200 --> 00:03:36,000 Speaker 2: the match and house banquet today, and that is this 70 00:03:36,080 --> 00:03:39,880 Speaker 2: idea of the of you know, cash ices for instance. 71 00:03:39,920 --> 00:03:42,400 Speaker 2: You know, we're getting all sorts of possibilities in the 72 00:03:42,440 --> 00:03:46,080 Speaker 2: relation to tax breaks. You know, why are we incentivizing 73 00:03:46,080 --> 00:03:50,160 Speaker 2: people to invest into into cash, a largely non productive asset. 74 00:03:50,800 --> 00:03:55,760 Speaker 2: Why don't we give higher tax incentives to invest into 75 00:03:56,360 --> 00:03:59,800 Speaker 2: into UK public companies? You know, that might be something 76 00:03:59,800 --> 00:04:02,400 Speaker 2: that I'll be rating with the Chancellor today. 77 00:04:02,560 --> 00:04:05,040 Speaker 3: Yeah, okay, that's interesting. But I mean, if I may, 78 00:04:05,160 --> 00:04:08,480 Speaker 3: those potentially are really quite small tweaks versus the twenty 79 00:04:08,520 --> 00:04:11,560 Speaker 3: to thirty year decline in investing in UK assets that 80 00:04:11,600 --> 00:04:13,600 Speaker 3: we have seen. The S and P five hundred has 81 00:04:13,600 --> 00:04:16,280 Speaker 3: tripled in value in the past decade, the fifty one 82 00:04:16,320 --> 00:04:18,599 Speaker 3: hundred has been flat. Shouldn't we just give up on 83 00:04:18,680 --> 00:04:21,840 Speaker 3: the idea of boosting the London market except that it 84 00:04:21,920 --> 00:04:25,400 Speaker 3: is in decline and actually focus on other businesses where 85 00:04:25,560 --> 00:04:27,120 Speaker 3: the London has real strength. 86 00:04:27,720 --> 00:04:29,560 Speaker 2: No, I don't agree. I think that there is a 87 00:04:29,600 --> 00:04:33,680 Speaker 2: case for the London Stock Exchange and quoted assets here 88 00:04:33,720 --> 00:04:37,200 Speaker 2: in London. If we are serious about being a global 89 00:04:37,240 --> 00:04:40,120 Speaker 2: financial center, which we are, then we have to have 90 00:04:40,200 --> 00:04:43,760 Speaker 2: a really functioning, all powerful stock exchange. And just to 91 00:04:44,040 --> 00:04:47,080 Speaker 2: your earlier point, in relation to that cash actual point, 92 00:04:47,720 --> 00:04:50,480 Speaker 2: it's not really tinkering around the edges. The market capitalization 93 00:04:50,520 --> 00:04:54,400 Speaker 2: of the London market is around two trillion pounds. The 94 00:04:54,440 --> 00:04:57,240 Speaker 2: amount of money in cash isces is two hundred and 95 00:04:57,240 --> 00:05:00,920 Speaker 2: fifty billion, so over ten percent of the market capitalization. 96 00:05:01,040 --> 00:05:03,880 Speaker 2: There is a decent amount of money to go in 97 00:05:03,880 --> 00:05:05,600 Speaker 2: there that potentially could be utilized. 98 00:05:05,960 --> 00:05:09,240 Speaker 1: How much harder is this mission to revive the capital 99 00:05:09,320 --> 00:05:12,200 Speaker 1: markets in London now that Donald Trump is in power 100 00:05:12,200 --> 00:05:14,599 Speaker 1: in the United States and the ensuing market reaction you 101 00:05:14,600 --> 00:05:16,520 Speaker 1: know the dollar or two year high. 102 00:05:16,560 --> 00:05:20,640 Speaker 2: Well, the city did pretty well under the last Trump administration. 103 00:05:20,800 --> 00:05:24,479 Speaker 2: I think that there was and so I don't think 104 00:05:24,560 --> 00:05:27,920 Speaker 2: it's not a zero sum game either fatally, it's more 105 00:05:29,240 --> 00:05:33,640 Speaker 2: I mean, I sent it provides different challenges and different opportunities. 106 00:05:33,880 --> 00:05:35,479 Speaker 2: And there are of course some parts of the world 107 00:05:35,520 --> 00:05:39,200 Speaker 2: that don't want to be listing. For instance, in New York, 108 00:05:39,240 --> 00:05:41,840 Speaker 2: they wanted list perhaps elsewhere. So I do sense that 109 00:05:41,880 --> 00:05:43,960 Speaker 2: there are opportunities for us, and we're big enough to 110 00:05:44,000 --> 00:05:45,640 Speaker 2: take advantage of those opportunities. 111 00:05:45,760 --> 00:05:48,200 Speaker 3: Do you see any signs of companies based here in 112 00:05:48,200 --> 00:05:50,400 Speaker 3: the UK working here in the UK on showing or 113 00:05:50,480 --> 00:05:52,279 Speaker 3: reshowing into the US now. 114 00:05:53,400 --> 00:05:56,720 Speaker 2: I haven't experienced much of that in the course of 115 00:05:56,800 --> 00:05:59,159 Speaker 2: last week. People have not been mentioning that to me. 116 00:05:59,600 --> 00:06:02,000 Speaker 2: In really too that certainly in relation to the areas 117 00:06:02,000 --> 00:06:05,400 Speaker 2: that I work in. It's something that potentially could come 118 00:06:05,520 --> 00:06:07,159 Speaker 2: till later on, and I think it's up to us 119 00:06:07,640 --> 00:06:09,840 Speaker 2: to try and make sure that the city remains very vital, 120 00:06:10,200 --> 00:06:14,479 Speaker 2: properly regulated and a great opportunity for investment. 121 00:06:14,760 --> 00:06:17,400 Speaker 3: Does the UK avoid tariffs by dint of I mean 122 00:06:17,440 --> 00:06:19,400 Speaker 3: you've talked about, you know, perhaps the UK doing a 123 00:06:19,440 --> 00:06:22,440 Speaker 3: little better under Trump or the last time around. I 124 00:06:22,440 --> 00:06:25,719 Speaker 3: mean he's a slight angler file perhaps also thanks the 125 00:06:25,720 --> 00:06:28,240 Speaker 3: fact that we've got a services driven economy. Does the 126 00:06:28,320 --> 00:06:30,680 Speaker 3: UK avoid tariffs or the big hit that we expect 127 00:06:30,680 --> 00:06:31,159 Speaker 3: for Europe. 128 00:06:31,400 --> 00:06:34,480 Speaker 2: I don't think that will avoid them. Let's see what 129 00:06:34,839 --> 00:06:38,040 Speaker 2: is in the detail of the legislation rather than we're 130 00:06:38,080 --> 00:06:40,880 Speaker 2: dealing on rumor at the moment. But I do sense 131 00:06:40,920 --> 00:06:44,560 Speaker 2: that the British economy is well set up giving its 132 00:06:44,560 --> 00:06:48,800 Speaker 2: services bias to avoid the full front of tariffs. 133 00:06:49,080 --> 00:06:52,799 Speaker 1: You're welcoming Rachel Reeves to Mansion House later for this speech. 134 00:06:53,000 --> 00:06:54,240 Speaker 1: I think it's fair to say that a lot of 135 00:06:54,240 --> 00:06:56,719 Speaker 1: the decisions in the budget haven't gone down terribly well 136 00:06:56,760 --> 00:07:00,000 Speaker 1: with businesses, things like the rise in employers national insurance contributions. 137 00:07:00,240 --> 00:07:03,279 Speaker 1: What's the financial services community saying about these things? 138 00:07:03,760 --> 00:07:07,200 Speaker 2: I mean, I think that there is I've heard the criticism, 139 00:07:07,680 --> 00:07:11,120 Speaker 2: it is out there. I think there is, which is interesting. 140 00:07:11,160 --> 00:07:15,640 Speaker 2: I think on the other side, though, there is something 141 00:07:15,640 --> 00:07:17,480 Speaker 2: that's been lacking perhaps for some time, and that is 142 00:07:17,520 --> 00:07:21,520 Speaker 2: there is some stability, and I think that the stability 143 00:07:21,600 --> 00:07:25,840 Speaker 2: that can give rise to people starting to make long 144 00:07:25,960 --> 00:07:29,440 Speaker 2: term capital budgeting decisions. And so therefore, though perhaps some 145 00:07:29,440 --> 00:07:33,120 Speaker 2: of the fiscal landscape has changed, there is the possibility 146 00:07:33,160 --> 00:07:36,440 Speaker 2: that for the next five years they know pretty much 147 00:07:36,520 --> 00:07:38,760 Speaker 2: what's going to happen, and so therefore they can then 148 00:07:38,800 --> 00:07:43,000 Speaker 2: take that into consideration when they're working out that expansion. Also, 149 00:07:43,040 --> 00:07:45,880 Speaker 2: I would say that I don't see a fall off 150 00:07:46,280 --> 00:07:49,200 Speaker 2: certainly in the financial professional services people that I have 151 00:07:49,280 --> 00:07:54,080 Speaker 2: spoken to in their investment plans in job creation. No, 152 00:07:54,360 --> 00:07:57,280 Speaker 2: I don't think it will in these sectors. I think 153 00:07:57,280 --> 00:08:00,200 Speaker 2: it's different in other sectors out there, Hospitality, you know, 154 00:08:00,520 --> 00:08:03,360 Speaker 2: there may be some problems. But I think financial professional services, 155 00:08:03,360 --> 00:08:07,880 Speaker 2: which is in my Baileywick, I think that the impression 156 00:08:07,880 --> 00:08:10,120 Speaker 2: there is that it's still a still a positive place. 157 00:08:10,400 --> 00:08:13,960 Speaker 3: Okay. Having said that, perhaps that may not be so 158 00:08:14,040 --> 00:08:16,440 Speaker 3: surprising when you think that Rachel Reaves and the Labor 159 00:08:16,480 --> 00:08:18,480 Speaker 3: Goulment do seem to be listening to the city in 160 00:08:18,480 --> 00:08:22,400 Speaker 3: the sense that she's talking about consolidation but no mandate, 161 00:08:22,960 --> 00:08:27,440 Speaker 3: which was kind of the big overhang and the big worry. Now, though, 162 00:08:27,600 --> 00:08:29,560 Speaker 3: is she going to come to Mansion House and actually 163 00:08:30,720 --> 00:08:33,200 Speaker 3: ask the City of London, press the City of London 164 00:08:33,240 --> 00:08:36,079 Speaker 3: to deliver on economic growth because that is her pitch, 165 00:08:36,120 --> 00:08:38,320 Speaker 3: isn't it, Private businesses deliver growth. 166 00:08:39,880 --> 00:08:42,320 Speaker 2: I'm sure she will do exactly that this evening, and 167 00:08:42,360 --> 00:08:43,880 Speaker 2: she will be asking the city to do that. And 168 00:08:43,880 --> 00:08:46,040 Speaker 2: also I think she's right to ask it because effectually, 169 00:08:46,840 --> 00:08:50,240 Speaker 2: I sense the city and the financial professional services sector 170 00:08:50,559 --> 00:08:54,200 Speaker 2: in general, that's where the labor government are going to 171 00:08:54,200 --> 00:08:56,960 Speaker 2: get their growth in the short term. Effectually, because the 172 00:08:56,960 --> 00:09:00,280 Speaker 2: building's already built, that the people are already trained. The 173 00:09:00,400 --> 00:09:03,559 Speaker 2: missing element is confidence. In my view, I think there's 174 00:09:03,600 --> 00:09:07,000 Speaker 2: obviously some things to do in relation to regulatory reform, 175 00:09:07,000 --> 00:09:09,040 Speaker 2: and I'll be talking with the Chancellor about that today. 176 00:09:09,360 --> 00:09:12,760 Speaker 3: So is this a pro business a pro financial services government? 177 00:09:13,400 --> 00:09:16,160 Speaker 2: Well? I think that the thing that I my job 178 00:09:16,200 --> 00:09:19,080 Speaker 2: as Lord Mayor will be to try and boost confidence 179 00:09:19,120 --> 00:09:21,120 Speaker 2: within the sector in order to get people to take 180 00:09:21,240 --> 00:09:24,280 Speaker 2: investment decisions in order to provide some of that growth. 181 00:09:25,360 --> 00:09:29,359 Speaker 1: Has the city completely moved on now from its challenges 182 00:09:29,400 --> 00:09:33,200 Speaker 1: over Braxast? Has there We know that there's discussions aren't 183 00:09:33,240 --> 00:09:35,840 Speaker 1: going about perhaps improving ties, but there are some looming 184 00:09:35,920 --> 00:09:39,400 Speaker 1: dadlines as well in issues like clearing that could pose 185 00:09:39,440 --> 00:09:40,280 Speaker 1: further challenges. 186 00:09:40,840 --> 00:09:44,720 Speaker 2: I would say yes. Brexit has scarcely featured in some 187 00:09:44,760 --> 00:09:46,360 Speaker 2: of the questions that I've had over the course of 188 00:09:46,400 --> 00:09:50,520 Speaker 2: the last a few days. I've been in office since Friday, 189 00:09:51,160 --> 00:09:54,320 Speaker 2: and it hasn't come up. I think also the further 190 00:09:54,360 --> 00:09:57,360 Speaker 2: away you get from London as you go around the world, 191 00:09:57,600 --> 00:09:59,640 Speaker 2: the less again sort of where Brexit comes up as 192 00:09:59,640 --> 00:10:02,960 Speaker 2: a matter. I think that the course is set and 193 00:10:03,000 --> 00:10:05,800 Speaker 2: so therefore I think that's there are other things to 194 00:10:05,840 --> 00:10:06,600 Speaker 2: be concerned about. 195 00:10:07,360 --> 00:10:11,080 Speaker 3: A final thought though, in particular the non doms issue. 196 00:10:11,360 --> 00:10:13,400 Speaker 3: We spent a lot of time thinking about that and 197 00:10:13,520 --> 00:10:16,600 Speaker 3: tracking the number of people who were leaving the UK. 198 00:10:17,000 --> 00:10:19,760 Speaker 3: Do you think that there will be more of those 199 00:10:19,840 --> 00:10:22,160 Speaker 3: because of the tax changes from Rachel Leaves. 200 00:10:23,960 --> 00:10:28,320 Speaker 2: What I've seen is that that people who have left, 201 00:10:28,360 --> 00:10:32,120 Speaker 2: and we are aware of them, some leaving, largely their 202 00:10:32,160 --> 00:10:35,199 Speaker 2: businesses are remain remaining here in the United Kingdom, so 203 00:10:35,240 --> 00:10:38,560 Speaker 2: that I have not heard of businesses leaving because of 204 00:10:39,480 --> 00:10:43,280 Speaker 2: somebody's tax affairs. And plus also I think there is 205 00:10:43,640 --> 00:10:46,080 Speaker 2: a great desire along many of them to return at 206 00:10:46,080 --> 00:10:49,040 Speaker 2: some stage. But I think that where we've got an 207 00:10:49,080 --> 00:10:51,920 Speaker 2: opportunity is the fact that forty percent of people who 208 00:10:52,000 --> 00:10:54,600 Speaker 2: work in the city of financial preacial services in the 209 00:10:54,600 --> 00:10:57,679 Speaker 2: city are born abroad. Of it, we have to make 210 00:10:57,720 --> 00:11:00,440 Speaker 2: sure we've got a really competitive fiscal land escape for 211 00:11:00,520 --> 00:11:03,600 Speaker 2: them to stay here, to scale here and invest here 212 00:11:03,640 --> 00:11:04,240 Speaker 2: and visas. 213 00:11:04,360 --> 00:11:05,280 Speaker 1: Is that an issue. 214 00:11:05,679 --> 00:11:07,760 Speaker 2: I think it's certainly something that we need to be 215 00:11:07,800 --> 00:11:10,360 Speaker 2: working with the Chancellor and others in government to make 216 00:11:10,400 --> 00:11:13,160 Speaker 2: sure that we're right. But I think that that's less 217 00:11:13,160 --> 00:11:15,760 Speaker 2: of an issue now than perhaps was eighteen months ago. 218 00:11:16,760 --> 00:11:19,000 Speaker 3: Alistair, thank you so much. For your time this morning, 219 00:11:19,080 --> 00:11:22,440 Speaker 3: for taking all of our many questions. Alistair King is 220 00:11:22,559 --> 00:11:25,600 Speaker 3: the Lord Mayor of London six hundred and ninety six. 221 00:11:25,600 --> 00:11:26,920 Speaker 3: I hope that you're going to become a friend of 222 00:11:26,960 --> 00:11:30,160 Speaker 3: the program as your predecessors have been. Michael Minelli, that 223 00:11:30,200 --> 00:11:33,120 Speaker 3: you're taking over from. Hope we'll see you again very soon.