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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybreak Here podcast, available every morning on Apple, Spotify, wherever

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Speaker 1: you listen. It's Monday, the twenty third of December. Here

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Speaker 1: in London. I'm Caroline Hepkitt. Coming up today. The UK

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Speaker 1: economy unexpectedly flat lines as Starmer's growth ambitions appear to

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Speaker 1: be in need of resuscitation. Honda and Nissa looked to

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Speaker 1: finalize a merger agreement and picking Fight's pre presidency. Panama's

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Speaker 1: leader rejects Donald Trump's threat to reimpose US control over

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Speaker 1: the Panama Canal. Let's start with a round up of

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Speaker 1: our top stories. The UK economy failed to grow in

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Speaker 1: the third quarter, according to revised estimates that suggest that

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Speaker 1: the slowdown since the Labour Party took office has been

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Speaker 1: sharper than previously thought. GDP was unchanged in three months

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Speaker 1: to September, according to data from the Office for National Statistics.

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Speaker 1: That is a downgrade from their previous estimate of zero

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Speaker 1: point one percent growth. Economists had expected no revision. The

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Speaker 1: figures delivered a further blow to Prime Minister Keir Starmer,

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Speaker 1: who came to power promising to boost jobs and living standards. Instead,

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Speaker 1: the economy has weakened dramatically after outpacing all of its

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Speaker 1: group of seven peers in the first half of twenty

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Speaker 1: twenty four. The grim economic data comes as UK businesses

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Speaker 1: say that they expect their activity will fall noticeably in

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Speaker 1: the months ahead. Primberg's two Adebayo has more a steep decline.

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Speaker 2: That's what awaits the country's private section activity in twenty

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Speaker 2: twenty five, says the Confederation of British Industry. According to

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Speaker 2: the group's latest Growth Indicator survey, all three major sectors

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Speaker 2: are expecting volumes to fall in the first quarter, with

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Speaker 2: manufacturers expectations at their weaker since May twenty twenty. Businesses

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Speaker 2: say they plan to respond by cutting headcount sharply. Hiring

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Speaker 2: tensions are at their weakest in over four years. The

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Speaker 2: bleak outlook from UK employer shows the scale of the

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Speaker 2: challenge facing Rachel Reeves as she seeks to turn around

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Speaker 2: economic sentiment. It comes after the Chancellor's tax raising October

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Speaker 2: budget was widely criticized by the business community for jeopardizing

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Speaker 2: growth in London. To You are added Bio Bloomberg Radio.

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Speaker 1: Now, Honda and Nissan are in talks to finalize a

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Speaker 1: merger agreement as soon as June, with plans to create

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Speaker 1: a holding company. The merged company would be led by

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Speaker 1: a president chosen by Honda, with the aim of completing

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Speaker 1: the merger in twenty twenty six. The merger is seen

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Speaker 1: as a response to the challenges faced by both companies,

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Speaker 1: particularly Nissan, which is struggling with declining sales and profits.

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Speaker 1: President elect Donald Trump's trade threats and diplomatic efforts are

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Speaker 1: causing turmoil globally, and the latest example, Trump is claiming

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Speaker 1: the Panama Canal is charging the US exorbitant prices and

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Speaker 1: rates of passage, and he's demanding lower fees or else

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Speaker 1: his Trump, speaking earlier in Phoenix, Arizona, the.

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Speaker 3: Fees being charged by Panama ridiculous, highly unfair, especially knowing

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Speaker 3: the extraordinary generosity that has been bestowed to Panama. I say,

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Speaker 3: very foolishly by the United States. This complete ripoff of

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Speaker 3: our country will immediately stop.

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Speaker 1: Trump's diplomatic hardball less than a month before his inauguration,

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Speaker 1: represents a new front in his attempt to ratchet up

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Speaker 1: pressure on trading partners. In a video statement, Panama's President

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Speaker 1: Jose Raoul Melino rebuffed Donald Trump's threat.

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Speaker 4: Every square meter of the Panama Canal and its surroundings

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Speaker 4: belongs to Panama and will.

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Speaker 5: Continue to be.

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Speaker 1: The sovereignty and the independence of our country are non negotiable,

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Speaker 1: Panama's president speaking there Vra translator, writing on truth Social

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Speaker 1: Trump hit back, saying, quote, We'll see about that. Meanwhile,

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Speaker 1: Presidents elect Trump has also been fighting claims he has

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Speaker 1: ceded the presidency to billionaire advisor Elon Musk. Is what

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Speaker 1: he told that event in Phoenix. No, he's not taking

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Speaker 1: the presidency.

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Speaker 5: I like having smart people. You know, they're on a

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Speaker 5: new kick.

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Speaker 3: Russia, Rashia, Russia, Ukraine, Ukraine, Ukraine, all the different hoaxes,

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Speaker 3: and the new one is President Trump proceeded the presidency Musk.

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Speaker 1: No, that's that happening. Trump's decision to address Musk's power

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Speaker 1: is testimony to the influence of the world's richest man.

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Speaker 1: Trump appointed the Tesla CEO to head a cost cutting

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Speaker 1: and deregulation effort, while the two men came together to

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Speaker 1: try to block a deal to temporarily fund the US government.

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Speaker 1: After failing to get enough votes for an alternative, a

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Speaker 1: slim down version of the original bill was passed preventing

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Speaker 1: a government shutdown in the US before Christmas. A judge

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Speaker 1: has ordered a pre trialed attention for the man suspected

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Speaker 1: of driving a car into a German Christmas market in

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Speaker 1: the city of Magdeburg two days ago. The suspect, a

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Speaker 1: fifty year old doctor of Saudi Arabian origin, was taken

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Speaker 1: into custody on Friday evening. Christian Pagel is the interior

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Speaker 1: minister for the German states where the man originally lived.

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Speaker 1: He says that he had been previously flagged to German authorities.

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Speaker 4: The suspect threatened to do something that would attract international attention.

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Speaker 4: He referred in this context the attack in Boston the

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Speaker 4: Boston Marathon in twenty thirteen. Subsequently, a warrant was issued

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Speaker 4: to search the flat of the suspect. No evidence of

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Speaker 4: any kind was found that would indicate actual preparations to

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Speaker 4: commit such an act.

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Speaker 1: Christian Pegel, the Interior minister for the German state of

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Speaker 1: Mecklenburg Western Pomerania, speaking for our translator. There, a nine

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Speaker 1: year old child and four women were killed in the incident,

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Speaker 1: which left more than two hundred people injured. And those

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Speaker 1: are our top stories for you this more. In a moment,

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Speaker 1: we're going to be discussing the war of words between

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Speaker 1: President Donald Trump and Panama's Present over the Panama Canal.

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Speaker 1: But first I want to get to the UK GDP data.

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Speaker 1: The figures flat lined in the third quarter, according to

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Speaker 1: the new figures that were released this morning from the ONS.

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Speaker 1: It is another blow. It seems that the chance of

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Speaker 1: Rachel Reeves joining me now to discuss is Binomberg's Markets

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Speaker 1: today reported Dave Goodman, Really to discuss the latest GDP numbers.

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Speaker 1: Is it worse than what we had been expecting on.

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Speaker 6: A headline basis, It's certainly worse. Previously it was estimated

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Speaker 6: that the UK company had grown zero point one percent

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Speaker 6: in the third quarter.

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Speaker 5: I mean, that's not great, but it's growth.

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Speaker 6: Now that the revisions have come in and they're shown

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Speaker 6: that there was no growth at all, that the ecmpany

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Speaker 6: basically flat lined, going further back. Growth the second quarter

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Speaker 6: was also dengraded very slightly from point five to point four.

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Speaker 6: So overall that the picture of the economy is not good.

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Speaker 6: And I think you can think of this a couple

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Speaker 6: of ways. Obviously, it's an embarrassment for Reeves and the

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Speaker 6: Labor Party come in in their first quarter of growth

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Speaker 6: be see essentially nothing at all, and especially when the

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Speaker 6: government came in and made so much about them being

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Speaker 6: a growth kind of related mission. I think the other

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Speaker 6: way though, is like it was their first quarter in power,

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Speaker 6: argue with there's not that much you can do. Historically,

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Speaker 6: if you look at the data, the economy tends to overform,

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Speaker 6: we go into an election and then we'll slightly dip

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Speaker 6: after that.

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Speaker 5: And also like the general trend of the UK economy, this.

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Speaker 6: Is what it is, right, it's very low growth, maybe

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Speaker 6: a little bit of growth. We had the kind of

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Speaker 6: that data got a bit messier because we had the

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Speaker 6: very mild recession at the end of twin twenty three

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Speaker 6: and then that led to a strong rebound at the

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Speaker 6: start of twenty twenty four. So some of these comparisons

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Speaker 6: about going from the strongest in the G seven to

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Speaker 6: one of the weakest, they're all a timing. Growth is

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Speaker 6: always a timing call, right, So you're looking at the

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Speaker 6: reason we did so well in the first half of

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Speaker 6: this year was because the second half of last year

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Speaker 6: wasn't great.

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Speaker 5: So you get these weird like variations eode flows. Yeah,

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Speaker 5: the overall.

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Speaker 6: Picture of the UK colonies, and then we've talked about

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Speaker 6: in this studio for years. I think that there's no

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Speaker 6: that it is really stuck in this low growth trap

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Speaker 6: and I think that's what successive governments have tried to

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Speaker 6: find ways to get out of.

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Speaker 5: But that's not going to happen the straightaway.

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Speaker 6: But it does kind of show that any government coming

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Speaker 6: in with a kind of growth agenda is always in

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Speaker 6: the struggle. And we kind of talked about that a

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Speaker 6: bit even in the realm of the election, that this

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Speaker 6: is a very lofty goal to set.

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Speaker 1: Yeah, although you are, you are perhaps rightly giving the

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Speaker 1: government the benefit of the doubt. On the other hand,

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Speaker 1: there was a big slump in business and consumer confidence,

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Speaker 1: you know that some people blamed on the language that

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Speaker 1: the government was using. And now this new survey showing

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Speaker 1: that businesses say that activity is expected to fall in

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Speaker 1: twenty twenty five. So again quite gloomy.

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Speaker 5: Yeah, very much.

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Speaker 6: I think this is I think the third quart I

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Speaker 6: was talking about about the third quarter, So the fourth

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Speaker 6: quarter obviously included the budget of tax risers, so that

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Speaker 6: that's the stuff that labor really have to own. I

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Speaker 6: think I think the third quarter a bit less than

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Speaker 6: but the fourth quarter. Obviously, the budget was at the

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Speaker 6: end of October. We had the run up to budget

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Speaker 6: where we saw consumer confidence falling off. Now we're seeing

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Speaker 6: business confidence and kind of general sentiment from business.

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Speaker 5: Being very negative.

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Speaker 6: So I think that from this point onwards, this is

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Speaker 6: something that is going to be a problem. I think

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Speaker 6: on the survey data and what we're seeing from people

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Speaker 6: like the CBI this morning is very interesting that they

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Speaker 6: are so downbeat, because if you think that in the

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Speaker 6: summer business was really welcoming labor. They were saying, oh,

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Speaker 6: this is great, like we've got stability, we've got little

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Speaker 6: disability after years of chaos, and that picture has changed

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Speaker 6: very quickly, basically on the back of one tax I

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Speaker 6: think from what you can see, so's it's a decision

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Speaker 6: that I'm not sure whether Reeves would take back.

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Speaker 5: I'mually didn't have very many options.

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Speaker 6: There are not very much you could do in order

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Speaker 6: to kind of reset the perfect finances. But it's obviously

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Speaker 6: something that's caused a great degree of concern within the

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Speaker 6: economy and within businesses.

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Speaker 1: And you're talking about the nationalist national or in the place.

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Speaker 6: Yeah, I mean, there are other ways to raise money,

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Speaker 6: but they all would have involved clearly breaking the manifesto pledge,

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Speaker 6: so she'd kind of backed itself into a corner during

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Speaker 6: the election, and now this is the kind of follow

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Speaker 6: through from that.

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Speaker 1: How far is it to talk or think about stagflation

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Speaker 1: for the UK?

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Speaker 6: I mean, I think it's if you look at the data,

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Speaker 6: it's pretty fair right now. We had no growth in

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Speaker 6: the third course, so in the latest monthly figures for

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Speaker 6: October showed actually a slight dan grade in negative negative

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Speaker 6: growth and inflation is ticking back up again.

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Speaker 5: I mean, so classically that is that is where we are.

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Speaker 6: I mean again, it's where we've been for a long

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Speaker 6: time there, Like we in the the tail end of

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Speaker 6: last year we had actually a technical recession and we

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Speaker 6: had again inflation was still fairly high at that point,

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Speaker 6: so we've been stuck in that trap for a long time.

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Speaker 5: I think what's.

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Speaker 6: Different now is that we've kind of we had all

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Speaker 6: this optimism about inflation, about ray cuts, about growth, and

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Speaker 6: in the in the last six months they've all taken

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Speaker 6: a hit in some ways. I think the one thing

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Speaker 6: to watch now is whether these this kind of the

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Speaker 6: quite slow, low, disappointing growth picture starts to feed.

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Speaker 5: Into what the Bank of England thinks.

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Speaker 6: We saw that a bit come through last week in

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Speaker 6: the meeting on Thursday with the people who were talking

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Speaker 6: about wanting to cut rates. The three members of the

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Speaker 6: NPC the bank held rates, of course, but three people

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Speaker 6: vote for immediate cat.

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Speaker 5: They were all talking about weakening demand. They kind of

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Speaker 5: stopped looking.

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Speaker 6: They were a bit less concerned about the inflation picture,

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Speaker 6: because that's a very much a predicted thing where things

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Speaker 6: like a hinji prices have an obvious impact. But if

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Speaker 6: you start if it is clear that the UK economy

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Speaker 6: is really struggling, that might mean that the bank has

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Speaker 6: to do more next year, which conversely then gives growth

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Speaker 6: a bit of a beast. It's always it's a very

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Speaker 6: weird dynamic you have going on where you can kind of.

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Speaker 1: That, well, it's very uncertain, isn't it. For twenty twenty five,

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Speaker 1: it's perhaps going to be very uncertain for the Bank

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Speaker 1: of England, as perhaps it is also with the ECB

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Speaker 1: and the Fed. So maybe next is also going to

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Speaker 1: have a lot of surprises for us.

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Speaker 6: Yeah, and if you think where we were last year

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Speaker 6: this time last year, we were thinking they're going to

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Speaker 6: be six. Catch in the biuie we got two? Yes,

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Speaker 6: now there's barely two. Could we get six? Is it

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Speaker 6: that kind of thing where does everything over corrects in December?

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Speaker 1: That would certainly make it very interesting for US and

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Speaker 1: for markets. Dave, thank you so much for being with

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Speaker 1: me this morning, Bloomberg's Markets Today Reporter David Goodman, thank

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Speaker 1: you for your time. Well, Panama's president has rejected Donald

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Speaker 1: Trump's threat to reimpose US control over the Panama Canal.

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Speaker 1: It's our other big story this morning. Let's bringing Bloomberg

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Speaker 1: editor Jill Desis for more on this. Jill, good morning.

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Speaker 1: Trump app is concerned about China's involvement in managing some

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Speaker 1: trade through the canal. What has Panama's president been saying?

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Speaker 1: The real world impact of this feud? What could it be?

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Speaker 7: Yes, So there's a few things that play here I

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Speaker 7: think are kind of important as we explore the nuances.

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Speaker 7: So essentially, the first part of Trump's complaints boils down

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Speaker 7: to you. He says that the fees associated traveling through

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Speaker 7: the Panama Canal, the US is the largest customer really here,

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Speaker 7: he says they're too exorbitant. That's something that Panama's president ultimately,

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Speaker 7: you know, said that the shipping tolls weren't inflated, So

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Speaker 7: he's certainly pushing back on that aspect. And then yes,

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Speaker 7: the second one is more of this geopolitical aspects here.

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Speaker 7: So Trump essentially claiming that countries like China are as

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Speaker 7: certain greater and greater influence and ultimately controlled over the

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Speaker 7: Panama Canal, and that's what's ultimately leading to his threat.

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Speaker 7: So what the Panamanian president is saying is that that's

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Speaker 7: not how this is. That you know, he said, quote

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Speaker 7: every square meter of the Panama Canal and its adjacent

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Speaker 7: zones is part of Panama and it would continue to

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Speaker 7: be so certainly refuting on that point. But I mean,

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Speaker 7: if you kind of try to connect the dots here

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Speaker 7: in terms of what Trump is complaining about, you know,

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Speaker 7: there are certain levels of influence within along the canal. Well,

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Speaker 7: China doesn't control the canal. There is a Chinese company,

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Speaker 7: it's a subsidiary of a Hong Kong based company that

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Speaker 7: actually has two of the five ports adjacent to the canal.

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Speaker 7: Perhaps that's something that Trump is you know, taking issue

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Speaker 7: with here in terms of real world implications here, Usk Caroline,

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Speaker 7: I mean, what we've already seen over the course of

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Speaker 7: the last several weeks. Trump isn't even president again yet,

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Speaker 7: but you know, he's really kind of shaken up a

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Speaker 7: lot of the global order, has you know, sort of

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Speaker 7: lashed out against so variety of nations you know about terroriffs,

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Speaker 7: sir sanctions or you know what have you here, and

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Speaker 7: it has seemed to cause quite a bit of consternation.

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Speaker 7: We're seeing an involding political crisis in Canada, for example,

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Speaker 7: on the back of some terror city threatened there. So

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Speaker 7: it does seem like, you know, Trump is very poised

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Speaker 7: to sort of shake things up ahead of him returning

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Speaker 7: to the White House in January.

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