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Speaker 1: Good morning. It's Friday, the twenty second of September here

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Speaker 1: in London. This is the BlueBag Daybreak You Up podcast.

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Speaker 1: I'm Caroline Hepkif.

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Speaker 2: And I'm Stephen Carroll. Coming up today, the Chancellor Jeremy

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Speaker 2: Hunt tells us the West must talk to China over

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Speaker 2: how best to regulate AI.

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Speaker 1: The Bank of England pauses almost two years of rate

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Speaker 1: hikes as recession risks loom.

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Speaker 2: And we take a closer look at Vladimir Zelenski's outburst

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Speaker 2: at the UN and whether or not it's a sign

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Speaker 2: of more serious tensions behind the scenes.

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

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Speaker 2: The Chancellor Jeremy Hunt has told Bloomberg that it's essential

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Speaker 2: for the West to engage with China over how best

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Speaker 2: to regulate artificial intelligence. The comments come after Britain chose

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Speaker 2: to invite officials from Beijing to its Global AI summit

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Speaker 2: later this year. Here's what Jeremy Hunt told our colleagues

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Speaker 2: Unbalance of Power.

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Speaker 3: We'll invite them. They won't come to all the discussions,

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Speaker 3: but you need to have a dialogue with countries like China.

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Speaker 3: They're not going to go away. And then maybe things

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Speaker 3: that we can work together with China on but you know,

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Speaker 3: we have to be very realistic and we have to

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Speaker 3: have those discussions with our eyes open.

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Speaker 2: The stakes for Hunt and the British government are high.

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Speaker 2: According to estimates by Bloomberg Intelligence, the forty billion dollar

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Speaker 2: generative AI market could increase thirty fold over the next

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Speaker 2: ten years. During that interview, the Chancellor also shared his

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Speaker 2: thoughts on the Bank of England's decision not to hike rates,

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Speaker 2: saying that he quote Hope's rate increases are now over well.

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Speaker 1: The Chancellor's comments come after the Bank of England policymakers

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Speaker 1: kept rates unchanged after fourteen back to back increases. The

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Speaker 1: decision is being seen as a signal that the risk

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Speaker 1: of recession is fast replacing inflation as the chief concern.

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Speaker 1: Governor Andrew Bailey says that the latest data on price

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Speaker 1: rises proved to be decisive. With CPI now at six

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Speaker 1: point seven percent, it's a.

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Speaker 4: Point when we've stopped titling because we've had very good

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Speaker 4: news this week on inflation front, very welcome news. We

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Speaker 4: can see the inflation was coming down, but the switch

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Speaker 4: news is good because it's a sign that we've had

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Speaker 4: more than we expected and not something good. But of

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Speaker 4: course the job's not done yet. We can't be complacent

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Speaker 4: about this. Our job is to get inflation back down

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Speaker 4: to the two percent target and to sustain it there.

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Speaker 4: So the job isn't done yet.

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Speaker 1: Andrew Bailey cast the decisive vote in what proved to

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Speaker 1: be a knife edged decision five to four by the

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Speaker 1: Monetary Policy Committee. The Bank of England also kept in

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Speaker 1: place guidance though that more rate rises will be needed

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Speaker 1: if there are signs of persistent price pressures.

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Speaker 2: The yen has weakened after the Bank of Japan kept

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Speaker 2: its monetary policy unchanged. Governor Kazu Awada will speak later

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Speaker 2: today and traders will be looking out for any remarks

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Speaker 2: on the future of the bank's negative interest rates policy.

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Speaker 2: Before the decision, the latest inflation data showed the pace

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Speaker 2: of price rises staying at three point one percent in

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Speaker 2: August instead of slowing as had been forecast. Prime Minister

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Speaker 2: at Female Kashida said that Japan would take necessary action

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Speaker 2: against excessive current and he moves.

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Speaker 1: President Joe Biden vowed continued support for Ukraine as he

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Speaker 1: met with President Volodimi z Alensky at the White House.

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Speaker 5: The entire world has a stake in making sure that

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Speaker 5: no nation, no aggressor, is allowed to take a neighbor's

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Speaker 5: territory by force.

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Speaker 1: Biden's pledge is more controversial than it was last year,

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Speaker 1: with some Republicans calling for a freeze on aid to

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Speaker 1: the war zone. President Zelensky has had a series of

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Speaker 1: public spats with major allies, with Poland threatening to withdraw

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Speaker 1: aid this week. Allies increasingly worry about the outlook for

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Speaker 1: the war beyond the twenty twenty four US presidential election.

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Speaker 2: Russia's decision to ban exports of diesel and gasoline risks

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Speaker 2: disrupting fuel supplies ahead of winter. For Texa, data shows

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Speaker 2: the country shipped more than a million barrels a day

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Speaker 2: of diesel type fuel this year, narrowly making it the

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Speaker 2: world's biggest seaborne exporter. Diesels are used in everything from

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Speaker 2: ships to manufacturing, and how deep the impact will be

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Speaker 2: depends on how long the ban lasts.

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Speaker 1: And Finally, the US Aviation Regulator has warned airlines to

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Speaker 1: check for fake parts in their jet engines. American airlines,

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Speaker 1: United and Southwest Air have all now found unapproved components

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Speaker 1: in their planes. Bloomberg's un Potts has the story.

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Speaker 6: Every piece of a plane needs to come with a

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Speaker 6: birth certificate. London based company AOG Technics stands accused of

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Speaker 6: faking thousands of these documents. The bloomberg scoop has become

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Speaker 6: a worldwide scandal, with American regulators now joining counterparts in

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Speaker 6: Europe and issuing formal warnings about the unapproved parts. Almost

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Speaker 6: one hundred engines have so far been found with uncertified

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Speaker 6: components from AOG. The company has been contacted for comments

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Speaker 6: in London. I'm une pots Bloomberg Radio.

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Speaker 2: Those are your top stories on the markets. The MSCIASA

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Speaker 2: Pacific Index a touch higher this morning, up a tenth

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Speaker 2: of one percent, Durostox fifty features are a quarter of

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Speaker 2: one percent lower, and the ten year Treasury eel holding

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Speaker 2: study at four point four to nine percent.

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Speaker 1: Now, there's a piece on the Bloomberg terminal that I

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Speaker 1: read this morning that was so fascinating. It really subtle,

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Speaker 1: speaking to some of the most privileged and cosmopolitan young

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Speaker 1: people who have a foot both in China and also

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Speaker 1: the West. Why is that interesting Because so many of

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Speaker 1: these young people are now feeling the pull of China,

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Speaker 1: flocking back to China as a place to begin their

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Speaker 1: careers or grow their careers. Have you ever heard of

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Speaker 1: an astronaut household? I haven't, So this is a term

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Speaker 1: that has been coined in California for exactly these sorts

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Speaker 1: of families, particularly Chinese families, where some of the family

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Speaker 1: remain in China Mainland China or Hong Kong, and then

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Speaker 1: the children perhaps are studying, maybe with mothers abroad as well,

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Speaker 1: you know, to go to some of the most prestigious

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Speaker 1: universities in the world. But it's the decisions about what

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Speaker 1: those that young generation and as I say, with a

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Speaker 1: foot in both camps, what they decide to do, you know,

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Speaker 1: that could be the sort of decisive when it comes

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Speaker 1: to brains and talents.

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Speaker 2: Yeah, exactly, and I mean, look, it could reverse a

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Speaker 2: trend that had been very prevalent through the past decades

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Speaker 2: as well, of particularly Chinese students going abroad to study

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Speaker 2: and staying abroad, and the idea that they're seeing better

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Speaker 2: opportunities in China really fascinating trends. That's one of the

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Speaker 2: stories that we're following for you this morning. Let's turn

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Speaker 2: back though to more now on our interview with Jeremy

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Speaker 2: Hunt the UK preparing to host the first Global summat

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Speaker 2: on artificial intelligence in November, as Richie Sinok tries to

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Speaker 2: position Britain as a global leader in efforts to regulate

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Speaker 2: the technology. The government this week confirmed it had invited

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Speaker 2: China to the conference, despite opposition from some Conservative backbenchers.

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Speaker 2: Jeremy Hunt's been discussing this with Bloomberg as one of

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Speaker 2: a host of other issues, including support for Ukraine and

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Speaker 2: the UK's economic outlook. Ann Marie Hordern and Joe Matthew

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Speaker 2: asked Jeremy Hunt about the decision to invite the Chinese

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Speaker 2: to the UK's summus.

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Speaker 3: We'll invite them. They won't come to all the discussions,

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Speaker 3: but you need to have a dialogue with countries like China.

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Speaker 3: They're not going to go away, and there may be

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Speaker 3: things that we can work together with China on, but

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Speaker 3: you know, we have to be very realistic and we

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Speaker 3: have to have those discussions with our eyes open. What

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Speaker 3: we're trying to see is if we can get a

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Speaker 3: global consensus on how to make sure that artificial intelligence

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Speaker 3: remains a massive force for good in the world, which

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Speaker 3: I truly believe it can be. But then if you're

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Speaker 3: going to do that, where you put the guardrails in

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Speaker 3: to stop it going wrong, and the UK is just

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Speaker 3: become the third trillion dollar tech economy globally. We have

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Speaker 3: more unicorns, you know, these billion dollar companies, than anywhere

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Speaker 3: else in Europe. So we are very keen to bring

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Speaker 3: together all our friends and indeed people whose values we

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Speaker 3: don't share, to try and manage this next huge development

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Speaker 3: in humanities tech journey.

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Speaker 5: I used to walk by this roundabout a lot, but

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Speaker 5: right now you're actually dealing with the titans of Silicon

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Speaker 5: Valley in California. Have you convinced any of them to

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Speaker 5: come to the summit in the United Kingdom?

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Speaker 3: I think we're going to get most of them coming

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Speaker 3: right Well, actually he's someone I haven't spoken to, but

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Speaker 3: he'd be very very welcome. But I just say this,

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Speaker 3: you know the you know we are Europe's Silicon Valley.

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Speaker 3: Now since you lived in London and Marie, there's been

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Speaker 3: a huge tech explosion, and you know, we are really

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Speaker 3: proud to be able to make a good contribution to

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Speaker 3: this debate. It's much better that we try and grip

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Speaker 3: this right from the outset. And I think, you know,

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Speaker 3: from the point of view of investment going forward, investors

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Speaker 3: want to see that governments have figured all this stuff out,

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Speaker 3: and then when they do, they're going to start to

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Speaker 3: put in really huge sums of the money. At the moment,

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Speaker 3: we're getting a lot of money going being spent by

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Speaker 3: the really big players, and we've got quite a few startups.

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Speaker 3: But if we're really going to make this huge opportunity

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Speaker 3: it can be, then we need to get some kind

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Speaker 3: of consensus about how to keep it safe.

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Speaker 7: Last question, Chancellor, the UK kept rates on change today,

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Speaker 7: is that the end of what seemed to be an

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Speaker 7: endless cycle of hikes.

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Speaker 3: Well, you know, just like the US, these things are

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Speaker 3: decided independently. I hope it is, but obviously I have

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Speaker 3: to leave it to the experts in the Bank of

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Speaker 3: England to make the final decision. But I think both

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Speaker 3: in the UK and the US, what you can see

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Speaker 3: is that if you take corrective action and if you

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Speaker 3: stay the course, you can get inflation down. And in

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Speaker 3: both our countries it's definitely peaked. But it's just so

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Speaker 3: painful getting inflation out of your system. And I think

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Speaker 3: the lesson here is we've just got to stick at

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Speaker 3: it and then we can get back to the decent

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Speaker 3: growth levels that we all want.

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Speaker 5: When you look at what's going on in Ukraine and

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Speaker 5: the concerns from US legislatures. I want to know from you,

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Speaker 5: as I'm experiencing with some conversations in New York alongside

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Speaker 5: the you in General Assembly, this idea of war fatigue.

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Speaker 5: Are you seeing that in United Kingdom as well?

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Speaker 3: We're not. But what I would say to our friends

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Speaker 3: in America is we are incredibly grateful for the global

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Speaker 3: leadership that the United States has shown when it comes

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Speaker 3: to the Ukrainian conflict. And I don't think there's a choice,

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Speaker 3: you know, either we focus on Ukraine or we focus

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Speaker 3: on China. The truth is that when you have an

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Speaker 3: aggressor who does something completely unacceptable, tries to tear up

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Speaker 3: international borders, if you're weak when that happens, then you

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Speaker 3: are making the likelihood of conflicts in other parts of

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Speaker 3: the world even higher. And so that's why I think

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Speaker 3: the more the international community stands together when it comes

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Speaker 3: to Ukraine, the less likely we'll have problems elsewhere.

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Speaker 2: So was the chance of Jeremy Hans speaking to Bimberg,

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Speaker 2: Samory Hordern and Joe Matthew.

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Speaker 1: Yeah, And if you're curious, the UK's AI summit is

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Speaker 1: meant to be happening on the first and second of

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Speaker 1: November from Bletchley Park, of course, and we'll be bringing

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Speaker 1: you lots of cover of it when it happens. But

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Speaker 1: the chance I was also talking about Ukraine, so let's

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Speaker 1: turn to that story. It has been nineteen months since

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Speaker 1: Russia launched its full scale invasion, and today Bloomberg is

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Speaker 1: reporting on how President Vladimir Zelenski is starting to show

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Speaker 1: the strains from the wall. This is he comes under

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Speaker 1: pressure from the West and leaders on military support his

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Speaker 1: counter offensive, but also corruption in the country. Our senior

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Speaker 1: UK government reporter Alex Wickham joins us now for more. Alex,

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Speaker 1: good morning. What are Bloomberg's sources in Ukraine and also

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Speaker 1: in the West saying about Zelenski's thinking right now?

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Speaker 7: Yeah, we have a story out today based on sources

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Speaker 7: in across Europe and Ukraine, essentially saying that Lensky detects

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Speaker 7: a bit of a shift or he is worried that

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Speaker 7: there is a bit of a shift in the Western

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Speaker 7: position from complete all out support giving endless sceneingly amounts

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Speaker 7: of money and weapons to just a slight bit of

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Speaker 7: concern and a bit of doubt about how long really

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Speaker 7: the war is going to go on. The Western intelligence

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Speaker 7: assessments essentially say this is looking like a very long

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Speaker 7: drawn out war now a war of attrition, and that's

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Speaker 7: what Putin wants. And essentially the question is starting to

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Speaker 7: be asked in some among some Western politians. I think,

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Speaker 7: how long can the West feasibly you keep supporting as

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Speaker 7: it has been, because there are financial considerations, military considerations,

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Speaker 7: but also political considerations in the West with a series

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Speaker 7: of elections coming up, most obviously in the US.

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Speaker 2: Now the White I says that they'll back Ukraine as

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Speaker 2: long as it takes alex. Has there been then a

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Speaker 2: real shift in the West position behind the scenes.

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Speaker 7: It's hard to say that, but certainly that is the

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Speaker 7: fear among I think what people close to Zelenski say,

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Speaker 7: and also some European officials say as well, is that

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Speaker 7: there has been a bit of a shift. And I

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Speaker 7: think the main issue is the US election really, because

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Speaker 7: you know, there's a year in a bit until a

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Speaker 7: potentially different president enters the White House with potentially a

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Speaker 7: very different view on the Ukraine War. Republican politicians increasingly

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Speaker 7: skeptical about the amount of support America is giving, and

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Speaker 7: so you have this situation where while I think, as

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Speaker 7: we just heard from Jeremy Hunt there Western politicians currently

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Speaker 7: would probably quite like to keep supporting Ukraine as long

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Speaker 7: as it takes as they as they keep saying publicly,

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Speaker 7: the reality is they are not necessarily the ones who

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Speaker 7: are in forever in power. So I've heard from one

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Speaker 7: British official that they were sort of saying it would

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Speaker 7: be ideal if the war could end as soon as possible,

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Speaker 7: of or I think probably everybody agrees with that, but

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Speaker 7: also in the in the wider context of elections in

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Speaker 7: the West, would be better if you know, Biden was

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Speaker 7: in charge of the US while those negotiations started than

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Speaker 7: anybody else. Is the sort of sentiment that you're starting

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Speaker 7: to see creep in and that ends up meaning pressure

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Speaker 7: on Zelensky, whether it's on the counter offensive, whether it's

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Speaker 7: on things like corruption in his country, and that's why

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Speaker 7: you see him showing the strain as he has over

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Speaker 7: the last few weeks.

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Speaker 1: Yeah, So is this dependent on a military breakthrough then?

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Speaker 1: Actually in Ukraine? Is that what the West needs to

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Speaker 1: see and what does it mean in terms of negotiation?

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Speaker 1: Is that an idea that is now returning.

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Speaker 7: I think on the military front, you know, Ukraine has

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Speaker 7: made progress over the last few months. It has obviously

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Speaker 7: been slow progress. There hasn't been one obvious moment where

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Speaker 7: they've broken through. As you know, I think some in

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Speaker 7: the West would have liked you see Zelenski the last

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Speaker 7: couple of days, you know, being incredibly grateful to the

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Speaker 7: West and really being you know, over the top with

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Speaker 7: his thanks for particular US support, but other countries as well,

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Speaker 7: like Poland, that he's had an argument with in the

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Speaker 7: last few days as well. And I think what you

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Speaker 7: see there is him. It's a big diplomatic push to say, look,

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Speaker 7: you know, bear with us here. A breakthrough might not

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Speaker 7: come now until twenty twenty four militarily, but keep the

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Speaker 7: weapons coming and the breakthrough will come. And I think

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Speaker 7: that's his argument, certainly to Western leaders as he lobbies

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Speaker 7: for more weapons, is the more weapons you give me,

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Speaker 7: the quicker you give them to me, the quicker we

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Speaker 7: can make a breakthrough. And the slower the slower the processes,

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Speaker 7: the slower the breakthrough is going to be. And then

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Speaker 7: the flip side of it, you have Western politicians trying

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Speaker 7: to explain to voters and you know their respective you

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Speaker 7: know lawmakers. Well, what hasn't a breakthrough come yet? What

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Speaker 7: are we getting for our money? And you know, is

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Speaker 7: this just an endless war? The you know, money after

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Speaker 7: money and weapons after weapons are going into So it

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Speaker 7: is obviously a very difficult situation.

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Speaker 3: You know.

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Speaker 7: I do think Western eaders that you are united, of

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Speaker 7: course in their support for Lensky and Ukraine. It is

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Speaker 7: just that doubt creeping in a little bit.

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