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Speaker 1: Good morning. It's Wednesday, the twelfth of July in London.

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Speaker 1: This is the Blueberg Daybak podcast that I'm Caroline Hepcare and.

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Speaker 2: I'm Lizzie Burden. Coming up today. A new report suggests

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Speaker 2: the UK's inflation crisis could last until next May, as

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Speaker 2: the Prime Minister rules out tax cuts.

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Speaker 1: And NATO agreed plans for expansion and more arms for

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Speaker 1: Ukraine after a hugely consequential meeting for the Alliance.

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Speaker 2: Plus, we hear more about the high end home buyers

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Speaker 2: becoming increasingly nervous about London's prime property market. Let's start

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Speaker 2: with the roundup of our top stories. The average UK

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Speaker 2: household will be two three hundred pounds worse off by

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Speaker 2: the time inflation eases in May next year. That's according

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Speaker 2: to a report by Grant Thornton and Retail Economics, who

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Speaker 2: say the financial squeeze will wipe sixty five billion pounds

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Speaker 2: off household spending power. The Prime Minister, Rishi Sunak, insists

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Speaker 2: that getting inflation down remains his top priority.

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Speaker 3: UKA is not.

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Speaker 4: Alone in experiencing a rise in interest rates very similar

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Speaker 4: in America or Australia, Canada and New Zealand. For example,

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Speaker 4: the crucial thing that we have to do is bring

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Speaker 4: inflation down. That's how we're going to ease the verden

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Speaker 4: on families. That's how we're going to stop the increase

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Speaker 4: in interest rates. And that's why my first priority is

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Speaker 4: to harm inflation.

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Speaker 1: Now.

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Speaker 4: Of course that is proving to be more persistent than

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Speaker 4: people thought.

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Speaker 2: Speaking to reporters at the NATO summit in Lithuania, Sunak

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Speaker 2: also said that the fight against price rises trump's the

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Speaker 2: need for tax cuts. The comments echo those of his

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Speaker 2: chancellor Jeremy Hunt over the weekend. However, this stands risks

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Speaker 2: alienating members of his own party, who are unhappy that

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Speaker 2: a conservative government has taken the tax burden to a

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Speaker 2: seventy year high.

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Speaker 1: Now, NATO has moved forward with plans to enlarge its

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Speaker 1: defense alliance. During a meeting in the Lithuanian capital Vilnius,

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Speaker 1: the group firmed up the prospects for Ukraine's future membership

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Speaker 1: and secured a breakthrough deal with Sweden that will complete

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Speaker 1: its expand northwards. Speaking of Bloomberg's mirror today at the gathering,

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Speaker 1: the UK Foreign Secretary James cleverly made clear that he

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Speaker 1: feels its Moscow's actions that have forced NATO to move.

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Speaker 5: My message to Russia is remove your troops now. Russia

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Speaker 5: is the aggressor. Russia sent its troops into Ukraine. Russian

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Speaker 5: missiles are targeting civilian infrastructure, civilian centers. Russia has been

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Speaker 5: the one that has escalated throughout this.

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Speaker 1: And we'll be getting more on that story with Bloomberg's

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Speaker 1: mir to day. Who is on the ground at the

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Speaker 1: NATO meeting in Vilnius.

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Speaker 2: US inflation out to US inflation data out today is

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Speaker 2: likely to be pivotal for Fed officials. The consensus estimate

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Speaker 2: sees headline inflation falling sharply from four to three point

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Speaker 2: one percent. Bloomberg Economics expects headline and core CPI to

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Speaker 2: be subdued. JP Morgan's analysts think there's a good chance

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Speaker 2: it comes in cooler than expected, though, while their trading

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Speaker 2: desk put an eighty percent chance the print comes in

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Speaker 2: below or in line with the forecasts. A cool print

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Speaker 2: could allow the FOMC to pause the hiking cycle after

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Speaker 2: its July meeting.

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Speaker 1: Now, the US Federal Trade Commission is understood to be

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Speaker 1: plotting its next move after a judge ruled against the

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Speaker 1: agency in its case to block the Microsoft's Activision deal.

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Speaker 1: Bloomberg's Doug Krisner has the details.

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Speaker 6: We're told the FTC is leaning toward filing an appeal

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Speaker 6: as soon as today. A federal judge found the FTC

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Speaker 6: did not prove the deal would harm competition for gaming,

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Speaker 6: but Robert Landy of the University of Baltimore Law School

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Speaker 6: said the law only requires the agency to show a

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Speaker 6: deal may substantially lesson competition, not that it will or

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Speaker 6: is likely too. The judge extended in order, blocking Microsoft

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Speaker 6: from closing the deal until midnight Pacific time on Friday.

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Speaker 6: The FTC would need to seek an emergency stay to extend.

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Speaker 6: The question is whether the appeals court would rule before

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Speaker 6: the deal's deadline on July eighteenth.

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Speaker 3: In New York.

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Speaker 6: I'm Dead Prisoner Bloomberg Daybreak.

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Speaker 1: Europe from the US comes as the UK Competition of

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Speaker 1: Markets Authority says that it's prepared to evaluate proposals from

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Speaker 1: Microsoft after vetoing the deal in May. The CMA says

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Speaker 1: that it has now agreed to stay in the company's

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Speaker 1: appeal before the Competition Appeal Tribunal.

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Speaker 2: Meanwhile, Microsoft says a China backed hacking group intent on

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Speaker 2: conducting espionage breached a series of email accounts linked to

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Speaker 2: government agencies in Western Europe. In a blog post, Microsoft

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Speaker 2: said the group that it identified as Storm zero five

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Speaker 2: five eight was able to remain undetected for a month

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Speaker 2: after gaining access to email data from around twenty five

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Speaker 2: organizations in mid May. The software company says it only

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Speaker 2: discovered the breach following an investigation in mid June after

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Speaker 2: being alerted by customer reports about abnormal mail activity.

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Speaker 1: Now, documents detailing how the biggest merger in golf history

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Speaker 1: came together has attracted the scrutiny of US lawmakers. The

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Speaker 1: US Senate has released documents from officials that show how

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Speaker 1: Live agreed to stop competing against the PGA in exchange

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Speaker 1: for a say in governments, governance and a share in

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Speaker 1: future media rites. US Senator Richard Blumenthal, the panel's chairman,

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Speaker 1: says that transparency is vital.

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Speaker 7: Americans very simply deserved to know what this agreement means

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Speaker 7: for the future of God, as well as for the

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Speaker 7: future of the Saudi Arabian government's investment in sports and

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Speaker 7: other autocratic regimes that may choose to do the same.

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Speaker 1: Meanwhile, the deal the PGA made with Live Golf and

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Speaker 1: the Saudi Sovereign Wealth Fund includes a broad non disparagement

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Speaker 1: clause that Bloomenthal argues could prevent criticism of Saudi Arabia.

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Speaker 2: And finally, London's property market slump is starting to weigh

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Speaker 2: on even the richest buyers. James Wilcock has more.

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Speaker 8: Rather than sell a house for less, many owners are

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Speaker 8: opting not to sell at all. Property researcher Lonrez says

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Speaker 8: transactions are down twenty percent compared to this time last year,

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Speaker 8: with homes worth more than five billion pounds being worst hit.

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Speaker 8: It's not just volume. Deals are taking long as to

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Speaker 8: happen and I'm more likely to fall through. Foreign buyers

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Speaker 8: are also holding back as they look ahead to a

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Speaker 8: general election and potential rule changes by any new government

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Speaker 8: in London. James Wilcock, Bloomberg Daybreak, Europe.

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Speaker 1: Right, those were a few of today's top stories for you. Then,

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Speaker 1: just in terms of the inflation picture, I think it's

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Speaker 1: really important to focus on the USCPI number. The inflation

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Speaker 1: report expected to show clear deceleration. I mean just remember,

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Speaker 1: you know a year ago we were at nine percent

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Speaker 1: more than nine percent US inflation, and now that could

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Speaker 1: well come in to sort of three four percent, depending

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Speaker 1: on which forecast you're looking at. It doesn't look as

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Speaker 1: if it's going to derail the FED when it comes

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Speaker 1: to the next rate height, but it could have significant

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Speaker 1: impact after that.

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Speaker 2: Exactly. It's all abit certain that the Fed's going to

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Speaker 2: hike by a quarter point this month. The question really

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Speaker 2: is will it be the final one? This print really

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Speaker 2: could be pivotal for shaping in expectations in the coming months.

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Speaker 2: Last week it was all about the jobs data. This

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Speaker 2: really is the grand finale. But also with inflation dominating

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Speaker 2: the headlines here in the UK, still that really interesting

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Speaker 2: Grant Thornton report about how long the crisis is going

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Speaker 2: to continue here in the UK and having an impact

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Speaker 2: on the Prime Minister's political ambitions. We know that tax

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Speaker 2: cuts are what his MPs want. Doesn't look like that's

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Speaker 2: going to be something that we see this year.

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Speaker 1: No, absolutely. But the other key issue for Ashisunak is

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Speaker 1: how much public sector pay will be dolled out by

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Speaker 1: government and we are expecting the decision in the coming

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Speaker 1: days about you know, how much that is going to

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Speaker 1: be for people like teachers and nurses and so on.

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Speaker 1: After all the strike action that we've seen in the UK.

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Speaker 1: On a slightly lighter note, Barbenheimer, have you butchered tickets

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Speaker 1: for the weekend?

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Speaker 2: We both look great. I haven't booked my tickets, but

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Speaker 2: I'd found it had difficult to choose between the two.

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Speaker 2: So indeed, Barbenheimer, it's going to have to be. I

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Speaker 2: think I'll have to do them back to back. Not

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Speaker 2: sure which order though yet.

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Speaker 1: Yeah. Absolutely for the uninitiated, of course, it's whether you're

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Speaker 1: going to go and watch the Barbie movie and the

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Speaker 1: Oppenheimer movie. And this is not my line, but I

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Speaker 1: think it's a great line. One film about a bomb

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Speaker 1: another film about a bombshell is quite a contrast. But

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Speaker 1: apparently it's going to be a hit. Maybe at least

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Speaker 1: that's what the makers of the movies would like you

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Speaker 1: to believe.

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Speaker 2: Anyway, My pink hat off to Sarah Rappaport, the author

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Speaker 2: of that fantastic line. But let's get back to geopolitics,

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Speaker 2: because NATO is expanding northwards with a breakthrough deal for

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Speaker 2: Sweden to join, but the timetable for Ukraine's membership looks

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Speaker 2: more uncertain. NATO members pledged to invite Ukraine to join

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Speaker 2: the bloc when allies agree and conditions are met. Well,

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Speaker 2: to unpack what that exactly means joining us now to

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Speaker 2: discuss is boom mood. Europe correspondent Maria TODAYO she's at

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Speaker 2: the NATO summer in Vilnius, Mario, thanks for being with us.

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Speaker 2: Ukraine President and Vladimir Zelenski's called the failure to set

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Speaker 2: a NATO time table absurd, but the country's got extra

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Speaker 2: support from the G seven. What's the thinking now about

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Speaker 2: support for Ukraine.

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Speaker 3: Look, if they communicate that, it is tricky to define

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Speaker 3: what it means, because in some ways it is vague

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Speaker 3: when you allude it to this. This idea of yes,

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Speaker 3: Ukraine and will join and the invitation will be extended

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Speaker 3: to the country when allies agree and the conditions are

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Speaker 3: met obviously implies there's a double conditionality in here, and

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Speaker 3: that's a problem for Ukrainians. Are they happy with the communicating, No,

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Speaker 3: they're not. They think it came on the weaker side.

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Speaker 3: They expected something that would read well, less of a

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Speaker 3: future hypothetical but really more in the immediate pature and

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Speaker 3: kind of set up a more defined timeframe. Are they

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Speaker 3: happy with the language. Obviously, they say that the expectations

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Speaker 3: were just so high for Ukraine that this was simply

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Speaker 3: not enough to satisfy what the country says is fighting

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Speaker 3: for companies to fight for in this war. I think

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Speaker 3: when I told yesterday to a very very senior or

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Speaker 3: pan official, he basically told me, look the communicate. It

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Speaker 3: took a blurry diplomacy, it was hours and the main thing,

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Speaker 3: but this was the best balancing act that would get

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Speaker 3: damped to in terms of yes, damp to the Ukraine,

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Speaker 3: but also factor some of the concerns about more immediate

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Speaker 3: language that had been manifested in the publicly by the partner,

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Speaker 3: the United States, but not just that an idea, something

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Speaker 3: that looked like an immediate invitation could be potentially a

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Speaker 3: form of escalation. I think there's also a question here

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Speaker 3: was there a mismass in the expectations. Is that fundamentally

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Speaker 3: the issue overall Ukraine? Obviously it's like sex says, this

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Speaker 3: is on the weaker side. But what I was told

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Speaker 3: from is a diplomatic ultimately that as far as they

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Speaker 3: could go if they wanted consensus.

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Speaker 1: Yeah, okay, how united you think? Then NATO comes out

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Speaker 1: of these two days of ME sayings versus Russian aggression.

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Speaker 1: Big question for Europe. You know the level of US

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Speaker 1: support present Biden being there.

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Speaker 3: But I think we're going to find out today the

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Speaker 3: day continuous presence of Landscain will be here to abut

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Speaker 3: you will inaugurate what is a new format that is

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Speaker 3: called the Major Ukraine Council. This is something that the

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Speaker 3: Secretary General has said, Look, it has real value behind

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Speaker 3: it because there is a political platform. It has a

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Speaker 3: political dimension to this. We're also expecting potentially another package

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Speaker 3: that will be agreed by Major in terms of this

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Speaker 3: medium term support. And then there's obviously the question about

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Speaker 3: the security guarantees not assurances. Again we go back to

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Speaker 3: the language here which matters so much. Ukraine says they

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Speaker 3: want to talk about guarantees that that is stronger in

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Speaker 3: the sense of stronger signal than an assurance. So a

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Speaker 3: lot of this will play into the final day and

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Speaker 3: of course that sure whether or not need or needs

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Speaker 3: business when they see where united and which stay is

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Speaker 3: down with Ukraine for the long Hauld.

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Speaker 2: Okay, Bliem mod Europe correspondent Maria TODAYO thanks for being

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Speaker 2: with us. Up next, Jeremy Hunt orders cuts to fund

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Speaker 2: public sector pay rises.

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Speaker 6: Now the paper.

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Speaker 3: Review on blue Bird Daybreak Europe.

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Speaker 8: The news you need to know from today's papers.

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Speaker 1: So mostly and Gains joins us for more on the

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Speaker 1: fund pages the Financial Times. Jeremy Hunt orders ministers to

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Speaker 1: find two billion pounds of savings for public sector pay rises.

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Speaker 1: Good morning, Leonne. This is the big issue then for

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Speaker 1: the Chancellor for public sector workers.

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Speaker 9: Yes, absolutely, Caroline, not just for the Chancellor but also

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Speaker 9: for the Prime Minister, and they're going to be meeting

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Speaker 9: about this apparently tomorrow, according to the FT, So let's

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Speaker 9: get into the details. The Chancellor's actually asking ministers to

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Speaker 9: find billions of pounds of savings to fund public sector

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Speaker 9: pay rises this year, and this will basically be to

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Speaker 9: plug a funding gap that is missing. Independent pay review

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Speaker 9: bodies are recommending public sector awards of around six percent

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Speaker 9: for two thousand and twenty three and twenty four, so

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Speaker 9: they want the pay for public sector to go up

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Speaker 9: to that amount, and that's well above the three point

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Speaker 9: five percent caroline that the government's been proposing. And we've

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Speaker 9: seen this wave of strikes across the country due to

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Speaker 9: public sector pay and Hans made it clear that he

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Speaker 9: will not borrow more money to fund these pay rises.

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Speaker 9: For police officers teachers, nurses and other public sector workers.

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Speaker 9: And according to the Financial Times, apparently white All is

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Speaker 9: now in a complete flurry to find savings, including reviewing

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Speaker 9: which programs.

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Speaker 1: Essentially return to austerity, which is really quite remarkable. As

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Speaker 1: well as not knowing whether well the government will will

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Speaker 1: hand over you know that the amount of money that

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Speaker 1: is being recommended by these independent paybodies which the government's

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Speaker 1: sort of been talking about for months being the arbiters.

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Speaker 2: There is a good bit of news for the government

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Speaker 2: in the jobs data yesterday there were only i say,

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Speaker 2: only one hundred and twenty eight thousand working days lost

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Speaker 2: to strikes in May, which was actually the lowest number

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Speaker 2: of days lost since July twenty twenty two.

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Speaker 9: But the problem is why I get what you're saying,

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Speaker 9: but why Jeremy Hunter is saying six percents are very

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Speaker 9: high when we look at this is because high wages

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Speaker 9: mean high inflation and they are trying to get hold

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Speaker 9: of this and they are raising rates, which is making

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Speaker 9: it hard for people who have mortgages. The cost of

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Speaker 9: living crisis. And yesterday, even though there was some positive data, Lizzie,

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Speaker 9: it was still high and that means that that could

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Speaker 9: really point to a Bank of England raising interest rates

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Speaker 9: in August to counter this.

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Speaker 2: Or so the Chancellor would argue. Let's move on to

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Speaker 2: another front page. The Guardian says that financial firms must

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Speaker 2: boost protect actions against AI scums. This is that something

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Speaker 2: the UK regulator is going to warn me on.

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Speaker 9: Yeah, you're absolutely right. So Nikol A'rathi, the head of

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Speaker 9: the Financial Conduct Authority, is basically going to be giving

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Speaker 9: this big speech in London today and he's going to

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Speaker 9: be warning bosses in the finance sector of their accountability

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Speaker 9: for decisions taking by AI at their firms. I think

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Speaker 9: this is a pretty interesting way to look at things.

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Speaker 9: He will also say that there are risks of cyber frauds,

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Speaker 9: cyber attacks and identity fraud really increasing in a scale

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Speaker 9: and sophistication that we haven't seen before. And this is

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Speaker 9: because AI technology is moving so rapidly, it's becoming so

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Speaker 9: widespread and businesses We've heard this time and time again,

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Speaker 9: Caroline haven't, we are scrambling to work out how to

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Speaker 9: use the rapidly advancing technologies such as open AI to

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Speaker 9: improve productivity. Today's speak each by Nikhil Rathi will outline

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Speaker 9: the benefits of how the financial sector can really improve

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Speaker 9: models due to technology, but the increasing risks that it

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Speaker 9: does come with us. So you know, Rishi Sunak hoping

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Speaker 9: to make the UK the center for regulation of AI,

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Speaker 9: but I think this is going to be a critical

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Speaker 9: speech for all the companies out there.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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Speaker 1: I'm Caroline Hipka.

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Speaker 2: And I'm Lizzie Burden. Join us again tomorrow morning for

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Speaker 2: all the news you need to start your day right

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Speaker 2: here on Bloomberg Daybreak Europe