WEBVTT - Daybreak Weekend: CPI Preview, Reeves Statement, BYD Earnings 0:00:00.280 --> 0:00:07.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.039 --> 0:00:12.400 This is Bloomberg day Break Weekend, our global look at 0:00:12.440 --> 0:00:15.040 the top stories in the coming week from our Daybreak 0:00:15.080 --> 0:00:17.520 anchors all around the world. Straight ahead on the program, 0:00:17.520 --> 0:00:19.439 and look ahead to some key inflation data in the 0:00:19.600 --> 0:00:22.800 US how that may impact FED policy, Plus a look 0:00:22.800 --> 0:00:26.079 at the impact of tariffs on housing. I'm Tom Busby 0:00:26.200 --> 0:00:26.799 in New York. 0:00:27.080 --> 0:00:29.600 I'm Carolyn Hepke here in London, where we're weighing up 0:00:29.640 --> 0:00:32.920 the Chancellor's options ahead of the spring statements. 0:00:33.120 --> 0:00:36.000 I'm Derek Prisner, looking ahead to the earnings from Chinese 0:00:36.080 --> 0:00:38.159 ev Giant byd. 0:00:38.400 --> 0:00:42.400 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.440 --> 0:00:46.160 eleven to three, Yeero, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.640 --> 0:00:50.920 Bloomberg ninety two to nine, Boston, DAB Digital Radio, London, 0:00:51.320 --> 0:00:54.520 Sirius XM one twenty one, and around the world on 0:00:54.600 --> 0:00:57.720 Bloomberg Radio, dot Com and the Bloomberg Business App. 0:01:02.480 --> 0:01:04.280 Good day to you. I'm Tom Busby, and we begin 0:01:04.319 --> 0:01:07.720 today's program with fresh reads on US economic growth that's 0:01:07.720 --> 0:01:10.559 for the final quarter of last year, and the Fed's 0:01:10.640 --> 0:01:14.520 preferred measure of consumer inflation for last month. For more 0:01:14.680 --> 0:01:17.440 on what it all means, we're joined by Stuart Paul 0:01:17.560 --> 0:01:21.520 Us economists with Bloomberg Economics. Well, Stuart, thank you for 0:01:21.600 --> 0:01:24.440 joining us. Did the economy continue to grow in the 0:01:24.440 --> 0:01:26.560 fourth quarter and what's behind that growth? 0:01:26.920 --> 0:01:29.120 Well, we knew that the economy grew in the fourth quarter. 0:01:29.240 --> 0:01:31.600 Our previous estimates that we got from the Bureau of 0:01:31.640 --> 0:01:35.280 Economic Analysis showed two point three percent annualized pace of 0:01:35.319 --> 0:01:39.160 growth in the fourth quarter, mostly supported by consumer spending, 0:01:39.160 --> 0:01:43.679 which was pretty robust, strong, healthy spending through the holidays. 0:01:44.280 --> 0:01:46.360 We're likely to see the same two point three percent 0:01:46.720 --> 0:01:50.840 estimate in the final reading of that fourth quarter GDP number. 0:01:51.720 --> 0:01:54.240 If anything, risk might be skewed a little bit to 0:01:54.320 --> 0:01:58.720 the upside. We do know that there was some adjustments 0:01:58.760 --> 0:02:01.600 that firms were making into imports. We know that some 0:02:01.680 --> 0:02:05.320 foreign countries were trying to get ahead of any sort 0:02:05.320 --> 0:02:09.280 of escalating trade tensions as the Trump administration was gearing 0:02:09.400 --> 0:02:12.360 up to come into office in the first quarter. So, 0:02:12.680 --> 0:02:15.200 if anything, maybe there's a little bit of risk that 0:02:15.320 --> 0:02:18.920 GDP will be revised up just to touch. But we 0:02:19.000 --> 0:02:21.600 do know that there was a healthy, robust pace of 0:02:21.600 --> 0:02:24.120 growth in the fourth quarter. Probably not going to see 0:02:24.160 --> 0:02:26.840 the same degree of growth this year. We know that 0:02:27.000 --> 0:02:30.480 amid policy uncertainty, but I think that we did end 0:02:30.840 --> 0:02:32.880 twenty twenty four in a relatively strong place. 0:02:33.320 --> 0:02:36.920 Well. To your point, consumer spending the big driver of 0:02:36.960 --> 0:02:40.280 all that, and there are indications though in this current 0:02:40.320 --> 0:02:43.520 first quarter, which is about to end, there has been 0:02:43.520 --> 0:02:46.440 a significant pullback though in consumer spending, unlike what we 0:02:46.480 --> 0:02:47.720 saw leading up to the holidays. 0:02:47.800 --> 0:02:50.239 That's right, the first quarter is going to be especially choppy. 0:02:50.600 --> 0:02:55.519 In January sales, we're just dismal. Spending in January decline 0:02:55.639 --> 0:02:58.360 zero point two percent. A big part of that was 0:02:58.360 --> 0:03:00.480 a pullback in autos, and a big part of that 0:03:00.720 --> 0:03:03.280 was that there was a polar vortex in the lower 0:03:03.280 --> 0:03:07.080 forty eight states. When it's snowing in Houston, folks aren't 0:03:07.080 --> 0:03:10.480 going to be wanting to walk around an auto dealer's lot. 0:03:11.000 --> 0:03:15.000 We do expect to see quite a rebound in February. Again, 0:03:15.040 --> 0:03:17.480 a big part of that is a rebound in auto sales. 0:03:17.840 --> 0:03:22.080 We're estimating that February personal spending growth will register zero 0:03:22.120 --> 0:03:24.760 point six percent. That's pretty strong, and that is the 0:03:24.800 --> 0:03:27.800 type of number that's going to justify the Fed's decision 0:03:27.880 --> 0:03:30.440 to hold rate steady when it met just last week. 0:03:31.400 --> 0:03:34.960 But I think that when we decompose what's driving the spending, 0:03:35.360 --> 0:03:39.400 it's not all sunshine and rainbows. After January's polar vortex, 0:03:39.560 --> 0:03:41.960 the February data we're going to be so we think 0:03:41.960 --> 0:03:45.480 we're supported by spending on autos again, just a rebound 0:03:45.840 --> 0:03:49.160 on healthcare because of the rise in the number of 0:03:49.160 --> 0:03:52.960 flu cases, and a little bit of an increase in 0:03:53.080 --> 0:03:57.120 discretionary goods. But we also do know that people pulled 0:03:57.160 --> 0:04:01.120 back on their spending at foods services, in drinking places. 0:04:01.120 --> 0:04:02.880 They were dining out, which is one of the key 0:04:03.000 --> 0:04:05.120 measures of discretionary spending. 0:04:05.320 --> 0:04:08.240 That was the biggest decrease right in bars and restaurant. 0:04:07.920 --> 0:04:09.920 That's right in the retail sales report. So when we 0:04:10.000 --> 0:04:12.520 think about what we should expect from the personal spending 0:04:12.520 --> 0:04:16.000 report coming out this Friday, I think that the headline 0:04:16.080 --> 0:04:18.520 number for spending is going to look pretty solid zero 0:04:18.560 --> 0:04:21.080 point six percent growth, But some of the details, some 0:04:21.120 --> 0:04:23.520 of the composition under the surface is just going to 0:04:23.600 --> 0:04:26.159 illustrate this choppiness in the first quarter. 0:04:26.960 --> 0:04:29.839 Well, let's talk about an even stickier subject related to that, 0:04:29.880 --> 0:04:34.800 and that's inflation. We have the PCE for February that's 0:04:34.800 --> 0:04:36.920 out this week. What are you expecting to see there. 0:04:37.000 --> 0:04:40.240 We're expecting to see a very hot core number, core 0:04:40.279 --> 0:04:43.360 inflation of thirty five basis points during the month. That's 0:04:43.400 --> 0:04:45.840 going to push the year on year measure of core 0:04:45.880 --> 0:04:48.919 inflation up to nearly two point eight percent from a 0:04:49.040 --> 0:04:52.360 touch under two point seven. And what's a little bit 0:04:52.360 --> 0:04:57.400 troubling is that we did see a nice cool CPI measure. 0:04:57.640 --> 0:05:00.159 What could it be that's driving core PC the E 0:05:00.320 --> 0:05:03.640 inflation higher. Well, if you track all the components that 0:05:03.680 --> 0:05:07.360 come from CPI and that come from producer prices the 0:05:07.360 --> 0:05:12.080 PPI and combine those to create the PCE measure, which 0:05:12.120 --> 0:05:15.800 is what the FED is really good at estimating before 0:05:15.800 --> 0:05:19.720 it even meets, we see that the composition of all 0:05:19.720 --> 0:05:22.279 the different spending categories are going to boost the Fed's 0:05:22.320 --> 0:05:27.240 preferred measure. You had hot financial services inflation, you had 0:05:27.240 --> 0:05:32.039 hot food services inflation despite the pullback in spending. You 0:05:32.120 --> 0:05:36.760 had rising healthcare costs, possibly just a continuation of the 0:05:36.800 --> 0:05:40.479 annual resets that typically take place in January. And we 0:05:40.560 --> 0:05:44.479 saw a lot of goods inflation, typically core goods, particularly 0:05:44.600 --> 0:05:49.200 durable goods. Way on headline inflation over the past couple months. 0:05:49.240 --> 0:05:52.640 In February in particular, goods were boosting inflation, which is 0:05:52.640 --> 0:05:56.000 something that's troubling, especially as tarot's start to hit. We 0:05:56.040 --> 0:05:58.919 only saw just the first little wave of tariff's in 0:05:58.960 --> 0:06:03.240 February taking effect. As we get reciprocal tariffs in April 0:06:03.360 --> 0:06:06.719 April second, as we've been told to expect. 0:06:06.720 --> 0:06:09.240 We could expect right now anyway, at least for. 0:06:09.240 --> 0:06:12.080 Now, that's right. As we get those reciprocal tariffs, we 0:06:12.120 --> 0:06:15.720 should expect a little bit more goods inflation. So it 0:06:15.800 --> 0:06:17.360 is the sort of thing that should be troubling for 0:06:17.400 --> 0:06:19.920 the Fed. And again we'll justify that decision to hold 0:06:20.000 --> 0:06:21.719 RAID steady just last week Q. 0:06:21.640 --> 0:06:24.840 Four GDP a third and final reading on GDP. That's 0:06:24.839 --> 0:06:28.520 how this Thursday, February's PCE out on Friday our thanks 0:06:28.560 --> 0:06:32.599 to Stuart Paul, us economists with Bloomberg Economics. Well, we 0:06:32.720 --> 0:06:35.919 turn now to housing, and spring has sprung, the busiest 0:06:35.920 --> 0:06:37.840 time of the year for the US housing market. Bud 0:06:37.880 --> 0:06:42.360 boy has it struggled. Skyrocketing home prices, elevated mortgage rates, 0:06:42.360 --> 0:06:45.359 a dearth of homes on the market despite pent up demand, 0:06:45.480 --> 0:06:50.360 and now a new worry President Trump's tariffs against Canada, Mexico, 0:06:50.480 --> 0:06:53.320 and China, and for more on how those policies could 0:06:53.320 --> 0:06:56.640 impact housing and home building. We welcome Drew reading Bloomberg 0:06:56.640 --> 0:07:01.440 Intelligence US home building analysts. Drew, thank you for being here. 0:07:01.520 --> 0:07:05.760 I tell you, the timing could not be worse for builders, contractors, buyers, 0:07:05.920 --> 0:07:08.200 people that want to replace their back deck or renovate 0:07:08.240 --> 0:07:10.720 their kitchen. I mean, could it be even worse for 0:07:10.760 --> 0:07:11.400 them right now? 0:07:12.240 --> 0:07:15.360 Yeah, you're right. There's a lot of factors conspiring against 0:07:15.400 --> 0:07:18.240 the home building industry. You know, whether it's high home 0:07:18.280 --> 0:07:24.720 prices as you mentioned, elevated rates, declining consumer confidence, potential tariffs, 0:07:25.480 --> 0:07:28.840 immigration policy. So there's a lot of things that builders 0:07:28.880 --> 0:07:31.480 and investors in the space are having to digest right now. 0:07:31.520 --> 0:07:33.040 So definitely a difficult period. 0:07:33.640 --> 0:07:36.400 And these tariffs, these numbers are staggering. Twenty five percent 0:07:36.480 --> 0:07:39.240 on certain imports from Mexico and Canada that went into 0:07:39.280 --> 0:07:42.440 effect early March, and that includes softwood lumber and the 0:07:42.520 --> 0:07:45.600 US gets what like forty percent of its lumber from Canada. 0:07:45.720 --> 0:07:48.720 Also the appliances in Mexico and China that come in 0:07:48.760 --> 0:07:51.800 twenty percent tariffs there drywall out of you know, the 0:07:51.840 --> 0:07:55.840 gypsum and drywall out of Mexico, and we're expecting even 0:07:55.920 --> 0:07:59.400 more tariffs on April second. As of today anyway. 0:08:00.200 --> 0:08:02.040 Right, So for just for a little bit of context, 0:08:02.040 --> 0:08:04.680 the US imports about thirteen billion dollars worth of goods 0:08:04.760 --> 0:08:08.120 used in residential construction. So that's about seven percent of 0:08:08.160 --> 0:08:10.680 all goods used in the industry coming from other countries. 0:08:11.240 --> 0:08:14.800 Within that, you have about forty five percent coming from China, Mexico, 0:08:14.840 --> 0:08:16.680 and Canada, which is you know, have kind of been 0:08:17.280 --> 0:08:19.520 at the forefront of all this tariff talk. China is 0:08:19.520 --> 0:08:22.679 about thirty percent of imports, Mexico about ten in Canada 0:08:22.720 --> 0:08:25.440 almost ten percent. And you're right, it's it's there's products 0:08:25.480 --> 0:08:27.880 you mentioned, it's you know, appliance isn't lighting from China, 0:08:27.920 --> 0:08:31.440 it's drywall from Mexico. And I think you know, the 0:08:31.480 --> 0:08:34.880 real biggie, as you mentioned, is lumber from Canada. That 0:08:34.920 --> 0:08:38.720 accounts for about seventy percent of all US lumber imports, 0:08:38.760 --> 0:08:42.400 and it's about thirty percent of the lumber used in 0:08:42.559 --> 0:08:46.320 US construction. So certainly an important thing to watch. Now, 0:08:46.800 --> 0:08:49.280 keep in mind we're already paying a fourteen and a 0:08:49.320 --> 0:08:53.720 half percent tariff on imports of Canadian lumber, so you know, 0:08:53.720 --> 0:08:55.959 when these go into effect in April will be at 0:08:56.000 --> 0:08:59.480 forty percent, So certainly a real threat to the builders. 0:08:59.120 --> 0:09:02.640 Wow, big builders of Last week, the National Association of 0:09:02.640 --> 0:09:06.600 Home Builders said tariffs on lumber, appliances, steel aluminum piping 0:09:06.640 --> 0:09:09.520 could add as much as ten thousand dollars. That's just 0:09:09.520 --> 0:09:11.800 to the cost of building a home. I mean, what 0:09:11.800 --> 0:09:12.880 does that mean to a buyer? 0:09:13.400 --> 0:09:16.240 Yeah, it's a great question. So typically builders are able 0:09:16.280 --> 0:09:18.679 to pass their costs onto the consumers. 0:09:19.440 --> 0:09:19.640 You know. 0:09:19.880 --> 0:09:22.400 The concern I guess from an investor perspective would be, 0:09:22.880 --> 0:09:25.920 you know, home shoppers have become increasingly sensitive to costs, 0:09:25.920 --> 0:09:28.520 whether it's financing costs or you know, the actual cost 0:09:28.520 --> 0:09:30.480 of a home. So you know, I'm not sure in 0:09:30.480 --> 0:09:33.840 this environment how much they're going to be able to absorb. 0:09:34.880 --> 0:09:36.920 So I think you're going to see builders take some 0:09:37.000 --> 0:09:38.600 of that on the margin side. So I think it's 0:09:38.600 --> 0:09:41.320 going to be a little bit on the builder side 0:09:41.360 --> 0:09:43.600 as well as consumers having to pay a higher price 0:09:43.640 --> 0:09:45.000 for a new product. 0:09:45.280 --> 0:09:47.360 And it's not just the builders. Of course, you want 0:09:47.360 --> 0:09:50.160 to replace your deck or your kitchen cabinets, I mean 0:09:50.200 --> 0:09:51.560 you are going to pay more aren't you. 0:09:53.080 --> 0:09:54.920 Yeah, we're going to see it across the industry. So 0:09:54.960 --> 0:09:57.400 you're going to see it in the repair and remodeling space, 0:09:57.440 --> 0:10:01.319 which is dealing with its own issues with As consumers 0:10:01.360 --> 0:10:04.559 continue to battle with the cumutive impact of inflation over 0:10:04.559 --> 0:10:07.840 the last couple of years, you know, people not wanting 0:10:07.880 --> 0:10:10.199 to go out and make big purchasing decisions. So we're 0:10:10.200 --> 0:10:14.160 seeing pullback indiscretionary categories, and of course, you know, lumbers 0:10:14.200 --> 0:10:17.440 a big component of that. You know, the appliance market 0:10:17.559 --> 0:10:19.920 has also struggled over the last couple of years, so 0:10:20.400 --> 0:10:23.960 you know, on appliances that are imported from China and 0:10:24.000 --> 0:10:26.320 other countries, you're starting going to see higher prices there. 0:10:27.280 --> 0:10:30.920 Now, we did get some encouraging data last week on housing. 0:10:30.960 --> 0:10:34.640 New home construction sharply higher in February. But is that 0:10:34.720 --> 0:10:37.440 more because of the all that wicked winter weather in January? 0:10:37.600 --> 0:10:39.760 I mean, what's behind that push on construction? 0:10:40.840 --> 0:10:42.520 Yeah, I think you're right there. I think a lot 0:10:42.559 --> 0:10:45.080 of is some payback from some of the weather disruption 0:10:45.200 --> 0:10:48.720 we've seen. Within that same report, our preferred measure of 0:10:49.080 --> 0:10:53.160 activity is really building permits. It's a much less volatile indicator, 0:10:53.160 --> 0:10:55.200 and it's a better leading indicator of production, and they 0:10:55.200 --> 0:10:57.720 were actually down eleven percent compared to last year, and 0:10:57.720 --> 0:11:00.520 that jives with the data we saw in builders sentiment. 0:11:01.080 --> 0:11:03.920 You're definitely seeing a more cautious approach to the market. 0:11:03.960 --> 0:11:06.720 What they're doing is matching starts with demand, and with 0:11:06.760 --> 0:11:10.760 the market slowing, you're seeing a corresponding pullback in new production. 0:11:10.880 --> 0:11:13.640 The other important piece is the fact that the industry 0:11:13.760 --> 0:11:16.760 was so aggressive in ramping up speccom production to fill 0:11:16.800 --> 0:11:19.240 the void left by resales that you know, there's a 0:11:19.240 --> 0:11:21.760 lot of inventory out there that's already under construction, so 0:11:21.840 --> 0:11:24.600 there's a lot less incentive for builders to be aggressive 0:11:24.679 --> 0:11:27.560 until they start to work through that inventory. And to 0:11:27.559 --> 0:11:29.080 do that, we think they're going to have to continue 0:11:29.080 --> 0:11:32.839 to lean on incentives, particularly given the increase as you 0:11:32.840 --> 0:11:35.960 allude to before, with the increased competition that we're seeing 0:11:36.000 --> 0:11:38.880 in the resale market in key markets in Florida and Texas. 0:11:39.600 --> 0:11:42.280 Yeah, does that mean maybe there's too many houses out there, 0:11:42.320 --> 0:11:45.480 too many new houses, or maybe not the right kinds 0:11:45.520 --> 0:11:49.120 of houses. People are looking for more affordable houses instead 0:11:49.120 --> 0:11:51.559 of you know, five bedrooms four bats. 0:11:52.400 --> 0:11:54.680 Yeah. I certainly think when you talk about a lack 0:11:54.720 --> 0:11:57.280 of for sale inventory over the last couple of years, 0:11:57.280 --> 0:12:00.720 it's really for more affordably priced products. Now it's an 0:12:00.720 --> 0:12:03.400 area where the builders have been shifting to over the 0:12:03.440 --> 0:12:06.679 last couple of years. They've done that through smaller square 0:12:06.679 --> 0:12:10.480 footage floor plans, are less amenotized home so they realized 0:12:10.520 --> 0:12:13.880 that's where the gap in the market is. But now, 0:12:13.960 --> 0:12:16.240 you know, when you start to pile on additional calls, 0:12:16.240 --> 0:12:18.280 it gets harder and harder for them, you know, to 0:12:18.360 --> 0:12:21.680 make that product work. But by and large, if you 0:12:21.720 --> 0:12:24.160 look at the inventory picture, I mean, over the last 0:12:24.240 --> 0:12:27.040 couple of years, the lack of resale supply has really 0:12:27.080 --> 0:12:29.880 been what's driven demand into the new home market. It's 0:12:29.880 --> 0:12:31.240 been certainly been a key factor. 0:12:31.679 --> 0:12:34.120 Well, we get more housing data out this week, new 0:12:34.160 --> 0:12:37.400 home sales for February coming out on Tuesday. Our thanks 0:12:37.400 --> 0:12:41.280 to Drew Redding Bloomberg Intelligence US home building analysts. Coming 0:12:41.360 --> 0:12:43.320 up on Bloomberg day Break weekend to look ahead to 0:12:43.400 --> 0:12:48.480 UK Chancellor Rachel reeves hotly anticipated spring statement. I'm Tom 0:12:48.480 --> 0:13:02.600 Busby and this is Bloomberg. This is Bloomberg Day Break weekend, 0:13:02.600 --> 0:13:04.880 our global look ahead at the top stories for investors 0:13:04.880 --> 0:13:07.360 in the coming week. I'm Tom Busby in New York. 0:13:07.960 --> 0:13:10.360 Up later, our program will look ahead to earnings from 0:13:10.440 --> 0:13:15.240 Chinese ev maker byd But first UK Chancellor Rachel Reeves 0:13:15.320 --> 0:13:19.559 presenting her hotly anticipated spring statement this week. She faces 0:13:19.600 --> 0:13:24.319 contentious a contentious environment, including recently slash growth figures and 0:13:24.440 --> 0:13:27.760 expensive promises on defense. Now there's also a question of 0:13:27.800 --> 0:13:30.720 silencing critics, some of whom may be from within her 0:13:30.760 --> 0:13:33.160 own party. For more, let's go to London and bring 0:13:33.160 --> 0:13:36.079 in Bloomberg Daybreak Europe anchor Caroline hepgar. 0:13:36.240 --> 0:13:39.320 Tom On Wednesday, the twenty sixth of March, the Chancellor 0:13:39.360 --> 0:13:42.440 is expected to announce billions of pounds of spending cuts 0:13:42.760 --> 0:13:46.320 to ensure that she meets her key fiscal rule, which 0:13:46.360 --> 0:13:49.520 requires day to day government spending to be covered by 0:13:49.640 --> 0:13:53.360 tax receipts. Her task is not an easy one. Rachel 0:13:53.400 --> 0:13:57.880 Reeves left herself an historically slim nine point nine billion 0:13:58.000 --> 0:14:02.040 pound margin against that time target at her budget in October, 0:14:02.320 --> 0:14:05.600 a buffer that has since been eroded by higher government 0:14:05.640 --> 0:14:10.320 borrowing costs and lower growth forecasts. Net debt for Britain 0:14:10.400 --> 0:14:14.400 stood at ninety five point three percent of GDP in January. 0:14:14.480 --> 0:14:17.440 That is close to levels last scene in the early 0:14:17.559 --> 0:14:21.360 nineteen sixties. The deficit in the first ten months of 0:14:21.400 --> 0:14:25.160 the year was one hundred and eighteen billion pounds, and 0:14:25.240 --> 0:14:28.040 that is nearly thirteen billion more than the Office for 0:14:28.080 --> 0:14:33.520 Budget Responsibility forecasts only in October. But Reeves is standing strong. 0:14:33.840 --> 0:14:36.720 She told Bloomberg that she is committed to bringing down 0:14:36.840 --> 0:14:39.560 government borrowing despite the obstacles. 0:14:39.880 --> 0:14:44.840 We've already made some substantial changes on regulation. Last week 0:14:44.880 --> 0:14:47.640 the Prime Minister announced that we're going to be getting 0:14:47.720 --> 0:14:51.000 rid of NHS England, the biggest quango in the world. 0:14:51.360 --> 0:14:55.320 We announced last week getting rid of the Payment Systems 0:14:55.400 --> 0:15:00.560 Regulator and just today the merger of the Community Interest 0:15:00.600 --> 0:15:04.400 Companies Regulator into Company's House. So you can see that 0:15:04.440 --> 0:15:08.479 this government are determined to make it easier for businesses 0:15:08.560 --> 0:15:11.680 to do business in the UK, to get building and 0:15:11.760 --> 0:15:17.360 to get on with things. Over Burdensome regulation, overlapping regulation 0:15:17.560 --> 0:15:20.360 has held back Britain for too long and we're determined 0:15:20.400 --> 0:15:21.160 to turn that around. 0:15:21.280 --> 0:15:23.760 Well, what's the metric for success here, how soon and 0:15:23.800 --> 0:15:25.840 how much do you expect this to boost GDP? 0:15:26.200 --> 0:15:29.400 Well, we've made a commitment to reduce the regulatory burden, 0:15:29.480 --> 0:15:33.000 the administrative burden by twenty five percent during the course 0:15:33.040 --> 0:15:36.240 of this parliament. That's across all regulators, whether it is 0:15:36.280 --> 0:15:40.760 in the environment or financial services, right across the economy, 0:15:41.080 --> 0:15:43.920 and that is to meet our ambition to grow the economy, 0:15:44.000 --> 0:15:46.840 to make working people better off, and to make our 0:15:46.920 --> 0:15:51.440 country and our economy more competitive. So next week the 0:15:51.480 --> 0:15:54.960 new growth forecast will be published by the Office of 0:15:55.000 --> 0:15:58.680 Budget Responsibility. But this is just one of a range 0:15:58.680 --> 0:16:01.560 of measures, along with the Planning an Infrastructure Bill that 0:16:01.640 --> 0:16:04.680 was published last week, the Pensions Bill which is coming 0:16:04.760 --> 0:16:08.680 soon to turn around the lackluster growth performance that has 0:16:08.800 --> 0:16:10.600 affected the UK for far too long. 0:16:10.720 --> 0:16:14.040 Well, the OCD published its forecast today has cut its 0:16:14.080 --> 0:16:16.960 growth forecast for this year and next. Do you accept 0:16:17.040 --> 0:16:19.800 responsibility for that or is it all the fault of 0:16:19.840 --> 0:16:21.640 Donald Trump and the Conservatives. 0:16:22.240 --> 0:16:25.200 Well, if you look at what the OECD have done today, 0:16:25.480 --> 0:16:31.200 they have downgraded most major economies growth forecasts. The UK 0:16:31.400 --> 0:16:34.640 is not immune from those global headwinds. But if you 0:16:34.680 --> 0:16:37.000 look at the forecast for next year for the UK, 0:16:37.400 --> 0:16:40.840 with forecast to be the second fastest growing economy in 0:16:40.880 --> 0:16:43.600 the G seven, that is up from the third fast 0:16:43.680 --> 0:16:46.440 is the last time they published their forecasts. But if 0:16:46.440 --> 0:16:49.880 you're asking am I happy with those numbers, of course not. 0:16:50.440 --> 0:16:53.480 I want to see the UK economy create more jobs, 0:16:53.560 --> 0:16:57.040 create more prosperity, to lift the living standards of working people, 0:16:57.240 --> 0:17:02.240 and that's what this regulatory drive is all about, unlocking growth, 0:17:02.400 --> 0:17:04.479 making it easier to do business in Britain. 0:17:04.600 --> 0:17:07.280 What I'm asking is, do you accept any responsibility for 0:17:07.280 --> 0:17:10.640 the downgrade? Is it anything to do with your gloomy 0:17:10.640 --> 0:17:13.280 messaging or your tax risers in the October budget. 0:17:13.840 --> 0:17:18.679 Well, of course there are costs from any measures on tax, 0:17:18.720 --> 0:17:22.000 but there are also costs of irresponsibility. And if in 0:17:22.040 --> 0:17:24.760 the budget last year I hadn't have dealt with a 0:17:24.800 --> 0:17:27.840 twenty two billion pound black hole that I'd inherited from 0:17:27.880 --> 0:17:31.159 the Conservatives, if I hadn't put our public finances on 0:17:31.240 --> 0:17:33.879 a firm footing, then we wouldn't have been able to 0:17:34.119 --> 0:17:37.080 increase defense spending in the way that we did just 0:17:37.160 --> 0:17:40.240 a couple of weeks ago, and we wouldn't be able 0:17:40.280 --> 0:17:44.240 to weather the global economic headwinds. So we made the 0:17:44.320 --> 0:17:48.280 right decisions in that budget to return stability to the economy. 0:17:48.440 --> 0:17:50.560 And since the general election, of course, there's been three 0:17:50.600 --> 0:17:54.639 cuts in interest rates, only possible because we've returned stability 0:17:54.680 --> 0:17:55.400 to the economy. 0:17:55.440 --> 0:17:58.119 But do you regret not giving yourself more breathing space 0:17:58.200 --> 0:18:01.080 against your fiscal rules at the time of the October prodject. 0:18:01.320 --> 0:18:04.800 Well, in October we set the fiscal rules for this 0:18:04.880 --> 0:18:07.320 Parliament that we would balance day to day spending with 0:18:07.400 --> 0:18:09.879 tax receipts and we would get decked down as a 0:18:09.920 --> 0:18:13.280 share of GDP. But significantly we changed the way that 0:18:13.400 --> 0:18:16.480 we measured investments. So for the first time ever we 0:18:16.560 --> 0:18:19.399 count the benefits of investment, not just the costs. And 0:18:19.480 --> 0:18:22.320 because of that we were able to invest in an additional 0:18:22.280 --> 0:18:25.120 one hundred billion pounds during the course of this parliament 0:18:25.359 --> 0:18:30.440 in capital projects, transport, digital energy and of course a 0:18:30.600 --> 0:18:33.240 housing that's pro business, that's pro growth and it's pro 0:18:33.280 --> 0:18:33.960 working people. 0:18:34.720 --> 0:18:38.200 That was Chancellor Rachel Reeves speaking two Bluebags Lizzie Burden 0:18:38.280 --> 0:18:41.040 ahead of her big day in the Commons. This is 0:18:41.080 --> 0:18:43.760 an event the government, though, has tried to play down, 0:18:44.160 --> 0:18:47.800 even as Work and Pension Secretary Liz Kendall announced the 0:18:47.880 --> 0:18:50.879 plan to save five billion pounds a year by twenty 0:18:51.000 --> 0:18:54.919 thirty with cuts to welfare benefits. So what will we 0:18:55.000 --> 0:18:58.560 learn from the Chancellor's spring statement? Can Rachel Reeves keep 0:18:58.640 --> 0:19:03.000 markets on side and also fend off her political opponents. 0:19:03.320 --> 0:19:06.320 I ask putting bogs UK government reporter Joe mays, how 0:19:06.359 --> 0:19:10.360 difficult the backdrop is for Reeves given the UK economy 0:19:10.440 --> 0:19:14.879 shrank in January and Britain has many long standing and 0:19:14.960 --> 0:19:16.920 now some new expenses. 0:19:17.440 --> 0:19:21.520 Yes, the backdob is a stagnating economy. It's barely grown 0:19:21.600 --> 0:19:25.680 since Labor took power last year. And indeed the budget 0:19:25.720 --> 0:19:28.040 that rich Reeves had in October is seen to have 0:19:28.280 --> 0:19:30.960 not made things much better. Indeed, the increase in the 0:19:31.040 --> 0:19:34.119 Nation Insurance payroll tax has led to a decrease in 0:19:34.200 --> 0:19:37.160 business confidence. It's been a hit to hiring as well. 0:19:37.359 --> 0:19:39.840 And rich Reeves has tried to get growth going with 0:19:39.920 --> 0:19:43.960 these initiatives announced such as Heather expansion, developing the Oxford 0:19:43.960 --> 0:19:45.920 Cambridge art but these will take time. So in the 0:19:45.960 --> 0:19:48.040 immediate term there's that there have been headwinds to growth 0:19:48.359 --> 0:19:51.199 and so yeah, the backdrop is difficult for her, and 0:19:51.240 --> 0:19:54.760 it's within that very tight space of low growth that 0:19:54.800 --> 0:19:58.199 she's having to manage these public finances. And now, as 0:19:58.200 --> 0:20:00.280 we'll talk about, she has to find spending cuts, make 0:20:00.320 --> 0:20:02.320 sure she keeps hitting her main fiscal rule and that 0:20:02.359 --> 0:20:04.520 will be a big political difficulty for her. 0:20:05.000 --> 0:20:08.560 Yeah, spending cuts rather than tax increases. Where do we 0:20:08.560 --> 0:20:10.000 think the cuts are going to come from? 0:20:10.359 --> 0:20:13.280 Well, what we expect Richarl Reeves to announce on March 0:20:13.320 --> 0:20:17.359 twenty sixth is a reduction in the overall spending envelope, 0:20:17.400 --> 0:20:19.399 so the overall amount the government's going to spend on 0:20:19.440 --> 0:20:22.240 public services through the end of the parliament. It's currently 0:20:22.280 --> 0:20:24.000 it's set to grow at one point three percent on 0:20:24.040 --> 0:20:26.800 average until twenty thirty and economists thinks she could hit 0:20:26.840 --> 0:20:29.560 it down to one one percent, but she won't crucially 0:20:29.560 --> 0:20:31.720 have to spell out where those cuts will fall. That's 0:20:31.760 --> 0:20:34.680 something that will be revealed at the Spending Review in June, 0:20:34.720 --> 0:20:37.560 which is where each government department is allocated its budget. 0:20:37.840 --> 0:20:40.159 So yeah, that can be that'll come later. But we 0:20:40.200 --> 0:20:43.000 do know that welfare is already earmarked for five billion 0:20:43.040 --> 0:20:45.200 pounds in savings. Governments already announced that. Well off, the 0:20:45.200 --> 0:20:46.800 waiting scene has a where the rest of the cuts 0:20:46.840 --> 0:20:47.040 do for? 0:20:47.800 --> 0:20:50.119 Okay, will we get more details on that then? Do 0:20:50.160 --> 0:20:53.600 you think potentially on Wednesday, given the pressure that Rachel 0:20:53.640 --> 0:20:57.760 Reeves will be under, how much does Reeves need to 0:20:57.800 --> 0:21:00.879 gain in terms of savings in order also to keep 0:21:00.960 --> 0:21:04.600 to her pledge of sticking to her fiscal rules. 0:21:04.960 --> 0:21:07.440 So we think that she might announce up to ten 0:21:07.560 --> 0:21:11.480 billion pounds of production in public spending in addition to 0:21:11.480 --> 0:21:14.200 the welfare savings that have been announced, and that would 0:21:14.359 --> 0:21:17.720 help her get back to a fiscal buffer of about 0:21:17.760 --> 0:21:20.440 ten to fifteen billion pounds against her fiscal rule. Because 0:21:20.440 --> 0:21:22.720 that's another question here, you know, what headroom does she 0:21:22.840 --> 0:21:25.879 build back against that rule. I mean, we saw that 0:21:25.920 --> 0:21:29.359 headroom eroded in recent months because of the weaker growth 0:21:29.359 --> 0:21:32.200 forecasts because of higher borrowing costs. I think Rachel reads 0:21:32.240 --> 0:21:35.879 it alive to the problems that can happen when you 0:21:35.920 --> 0:21:39.119