WEBVTT - Rachel Reeves and Jonathan Reynolds Talk UK Fiscal Decisions, Year Ahead 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:07.680 --> 0:00:10.560 Bloomberg's editor in chief John Mickelthwaite is in conversation with 0:00:10.600 --> 0:00:12.400 the UK Chancellor Rachel Reeves. 0:00:12.640 --> 0:00:15.480 Let's take a listen. Three bits of news maybe to 0:00:15.520 --> 0:00:18.159 deal with. First, and the biggest and most obvious is 0:00:18.200 --> 0:00:23.319 Donald Trump's inauguration. He's already kicked off with tariffs on 0:00:24.200 --> 0:00:27.560 Canada and Mexico. Now he's talking about China. Now. Britain 0:00:27.600 --> 0:00:31.360 is an unusually open economy. I think we will argue 0:00:31.360 --> 0:00:34.080 about the numbers downstairs, but by some counts, and if 0:00:34.159 --> 0:00:37.040 sixty percent of trade equipment to sixty percent of GDP, 0:00:37.760 --> 0:00:40.440 I suppose. My question is, you know how vulnerable are 0:00:40.479 --> 0:00:43.080 we to this, especially given the fact that we've already 0:00:43.600 --> 0:00:49.520 come out of the European Union. One of you your 0:00:49.560 --> 0:00:51.680 trade Good morning everyone, it's a yeah. 0:00:51.680 --> 0:00:55.880 I mean going around Davos, seeing making eye contact with 0:00:55.920 --> 0:00:58.360 all your trade ministerial counterparts, you can. 0:00:58.280 --> 0:01:01.360 Imagine what is on our mind, right and no conversation, 0:01:01.440 --> 0:01:04.080 but I think it was a few things on this. 0:01:04.120 --> 0:01:05.440 First of all, yes, the UK is a. 0:01:05.560 --> 0:01:10.160 Very globally orientated, trade intensive economy. That is a good thing. 0:01:10.680 --> 0:01:12.480 That openness to the rest of the world will be 0:01:12.600 --> 0:01:16.200 championed by this government and actually there are opportunities to 0:01:16.240 --> 0:01:18.760 expand on that. I think at a unique selling point 0:01:18.959 --> 0:01:21.680 in terms of our relationship with the Gulf and the 0:01:21.760 --> 0:01:26.479 trade deal, negotiating our aspirations with India, the EU reset, 0:01:26.880 --> 0:01:29.120 hopefully maybe some things with the US that come out 0:01:29.319 --> 0:01:32.960 of this, the China engagement that you have kicked off, Chancellors. 0:01:33.040 --> 0:01:35.560 So you know, yes, there's a vulnerability, that there's a 0:01:35.560 --> 0:01:38.200 strength that comes from that openness to the world as well. 0:01:38.240 --> 0:01:39.679 So let's recognize that. 0:01:40.280 --> 0:01:44.280 The second thing is, look, we understand there is a genuine, 0:01:45.520 --> 0:01:49.160 you know, analysis in the US that feels that the 0:01:49.600 --> 0:01:52.200 very big trade deficits in goods that the US has 0:01:52.280 --> 0:01:55.400 bok with the EU and with China, you know, the 0:01:55.440 --> 0:01:57.640 sense of unfairness that that is the proof point of 0:01:57.840 --> 0:01:59.680 we understand that we might disagree, but we know we'll 0:01:59.720 --> 0:02:02.080 engage with that. Now you're right to say we are 0:02:02.400 --> 0:02:06.240 an incredibly globally orientated economy, but also we obviously don't 0:02:06.280 --> 0:02:07.680 have that trade. 0:02:07.840 --> 0:02:10.200 US does not have that trade deficit on manufactured goods 0:02:10.520 --> 0:02:11.040 with the UK. 0:02:11.440 --> 0:02:13.400 Musing we have said this to the Cabinet last week, 0:02:13.720 --> 0:02:15.959 but the UK and the us actually believe we have 0:02:16.000 --> 0:02:18.880 a surplus rate to other own goods because of asymmetric 0:02:19.080 --> 0:02:22.359 statistical quirk. So there's the basis for a conversation there 0:02:22.560 --> 0:02:26.680 as to the future. But you know it will be 0:02:27.840 --> 0:02:31.560 a truppy time to be a trade minister, there's no 0:02:31.600 --> 0:02:34.760 doubt about that. But our job is to navigate through that. 0:02:34.800 --> 0:02:36.640 You don't get to pick the world as you want 0:02:36.680 --> 0:02:38.200 it to be. You get the world as it is. 0:02:38.320 --> 0:02:41.280 And I do believe you know, the unique pitch from 0:02:41.280 --> 0:02:43.919 the United Kingdom can be first of all, a return 0:02:43.960 --> 0:02:47.320 to political stability, which we appreciate after their Brexit referendum 0:02:47.520 --> 0:02:50.040 has been challenging in the UK, but that's also relative 0:02:50.040 --> 0:02:51.560 to some other European countries as well. 0:02:51.880 --> 0:02:53.000 That pitch to openness. 0:02:53.000 --> 0:02:54.560 And then I know something you'll want to get into, 0:02:54.560 --> 0:02:57.440 which is the willingness of this new government to use 0:02:57.480 --> 0:03:00.240 its mandate to use the opportunity we have to fundamentally 0:03:00.240 --> 0:03:02.160 improve the business and investor environment in the UK. 0:03:02.400 --> 0:03:04.160 So can I come on to that straight away because 0:03:04.200 --> 0:03:08.760 another piece of news is overnight you got rid of 0:03:08.880 --> 0:03:12.799 the Chairman of the Competition of Markets Authority, and people 0:03:12.919 --> 0:03:17.040 conceive that as being a pro growth, pro deregulation because 0:03:17.600 --> 0:03:20.120 one of the things about Trump is yes business people 0:03:20.800 --> 0:03:23.240 people at Davos are scared of his trade wars, but 0:03:23.280 --> 0:03:27.080 they do like the pro growth deregulatory side of Trump. 0:03:27.680 --> 0:03:29.520 Is this a sign of more things to come in 0:03:29.600 --> 0:03:30.399 terms of regulation? 0:03:30.760 --> 0:03:34.440 Growth is the number one mission of this new labor government. 0:03:34.520 --> 0:03:35.800 Six months in. 0:03:36.560 --> 0:03:40.200 We are building the foundations to deliver that strong growth 0:03:40.240 --> 0:03:42.480 that has eluded the UK for far too long, more 0:03:42.520 --> 0:03:46.640 than a decade of very slow, sluggish economic growth, and 0:03:46.680 --> 0:03:49.840 we want our regulators to be part of that growth mission. 0:03:50.160 --> 0:03:50.360 Now. 0:03:50.440 --> 0:03:53.400 Of course, the regulators are independent and the chair of 0:03:53.400 --> 0:03:58.440 the CMA decided to step down, but he recognized that 0:03:58.720 --> 0:04:01.760 this government have got different strategic approach when it comes 0:04:01.800 --> 0:04:05.840 to regulation, and he recognized that there was time for 0:04:05.920 --> 0:04:08.880 him to move on and make way for somebody who 0:04:08.960 --> 0:04:13.040 does share the mission and the strategic direction that this. 0:04:13.040 --> 0:04:14.120 Government are taking. 0:04:14.240 --> 0:04:18.719 So we wrote myself, Johnny the Prime Minister, to all 0:04:18.760 --> 0:04:21.840 of the regulators, as more than one hundred regulators in 0:04:21.880 --> 0:04:24.239 the UK were written to all of them and said, 0:04:24.800 --> 0:04:29.600 what can you do to reorientate your organization to regulate 0:04:29.720 --> 0:04:31.560 not just for risk And of course regulating for risk 0:04:31.640 --> 0:04:34.279 is important, but regulating for growth. I've done it with 0:04:34.320 --> 0:04:37.440 the financial services regulators. We've now done it with all 0:04:37.520 --> 0:04:40.120 of the regulators. I've got to say the responsors we've 0:04:40.120 --> 0:04:42.760 had a lot of them have been incredibly positive about 0:04:42.800 --> 0:04:43.720 things that they can do. 0:04:44.200 --> 0:04:46.440 Would you want financial services? You just mentioned that. Would 0:04:46.440 --> 0:04:50.240 you ever consider ring fencing? You know we are unusual 0:04:50.640 --> 0:04:54.360 in Britain in since we've ring fence banks, we've said, look, 0:04:54.720 --> 0:04:57.760 you have to put your retail bank separate. In an 0:04:57.800 --> 0:04:59.800 era where Trump and other people are pushing out with 0:05:00.120 --> 0:05:03.360 regulation lots of fronts, is that an area you would also? Look? 0:05:03.440 --> 0:05:04.960 You just mentioned financial services. 0:05:05.000 --> 0:05:08.440 We'll always keep an open mind about things. Already, since 0:05:09.320 --> 0:05:15.640 the election of President Trump, the pra Prudential Regulator has 0:05:15.760 --> 0:05:20.160 pushed back the implementation for Barzil three. So that was 0:05:20.200 --> 0:05:22.400 going to be January twenty twenty six. We've pushed that 0:05:22.560 --> 0:05:25.359 back for a year. We're ahead of the European Union 0:05:25.360 --> 0:05:29.560 in recognizing that the world has changed, so we've put 0:05:29.600 --> 0:05:32.960 back that day. I think that shows that our regulators 0:05:33.160 --> 0:05:37.160 are willing to be pragmatic, recognize the importance of attracting 0:05:37.200 --> 0:05:40.279 investment into the UK and not being out of kilter 0:05:40.839 --> 0:05:44.000 with our major trading partners and our major competitors. 0:05:44.040 --> 0:05:45.479 So I think you've already seen that. 0:05:45.520 --> 0:05:49.800 We saw the letter from the Financial Conduct Authority to 0:05:50.320 --> 0:05:53.839 the Government just last week about what they might be 0:05:53.920 --> 0:05:57.480 able to do to drive investment driving growth in the 0:05:57.600 --> 0:06:01.440 UK with a number of practical propose That's what this 0:06:01.520 --> 0:06:04.800 government wants to implement, practical things to make it easier 0:06:05.040 --> 0:06:08.160 more in Britain, make it easier to get things done 0:06:08.520 --> 0:06:10.640 in Britain, because that's how we drive growth. 0:06:10.800 --> 0:06:12.440 Is another that's a very good example of that. Which 0:06:12.520 --> 0:06:14.919 is my third piece of news which people are talking about, 0:06:15.040 --> 0:06:17.479 is the idea that next week, there's been the leak 0:06:17.480 --> 0:06:20.039 ahead of it, that you would say go ahead with 0:06:20.120 --> 0:06:22.960 the third runway, he throw go ahead with the expansion 0:06:23.000 --> 0:06:27.080 of gap, maybe the bridge over the Thames as well. 0:06:27.440 --> 0:06:29.200 You know, that would be a sign you're prepared to 0:06:29.240 --> 0:06:31.320 take tough decisions that help growth. 0:06:31.680 --> 0:06:35.800 We've already taken a number of big decisions on City Airport, 0:06:35.880 --> 0:06:40.960 on Stansted Airport, on a number of planning decisions that 0:06:41.040 --> 0:06:43.239 this government have called in that we're on the desks 0:06:43.279 --> 0:06:47.640 of ministers in the previous on housing, on data centers 0:06:47.760 --> 0:06:51.080 in the creative industries, not going to sort of comment 0:06:51.120 --> 0:06:53.600 on speculation about what I may or may not say 0:06:53.720 --> 0:06:56.239 next week. But Johnny started with a sort of pitch 0:06:56.279 --> 0:06:59.880 that Britain is an open, trading, vibrant economy. 0:06:59.880 --> 0:07:01.039 We want to remain as such. 0:07:02.240 --> 0:07:04.520 Use your example of taking tough decisions. If you push 0:07:04.520 --> 0:07:07.080 you ahead with you throw that might cause problems with Sikon, 0:07:07.240 --> 0:07:11.080 might cause problems with your colleague Ed Milliman, Like. 0:07:11.160 --> 0:07:14.200 This is the problem with the last government. There was 0:07:14.280 --> 0:07:16.920 always somebody that said, oh, yes, of course we want 0:07:16.960 --> 0:07:19.120 to grow the economy, but we don't like that investment, 0:07:19.200 --> 0:07:21.560 or we don't like that wind farm, we don't like 0:07:21.640 --> 0:07:24.200 those pylons, we don't like that airport, we don't want 0:07:24.200 --> 0:07:26.920 that housing near us. The answer can't always be no, 0:07:27.560 --> 0:07:30.080 and that's been the problem in Britain for a long time, 0:07:30.440 --> 0:07:32.880 that when there was a choice between something that would 0:07:32.880 --> 0:07:37.280 grow the economy and sort of anything else, anything else 0:07:37.320 --> 0:07:40.520 always one. Now, of course there are other things that matter, 0:07:40.640 --> 0:07:42.720 but when we say that growth is the number one 0:07:42.840 --> 0:07:46.200 mission of this government, we mean it, and that means 0:07:46.200 --> 0:07:49.760 that trumps other things, and so we're making pro growth 0:07:49.800 --> 0:07:51.240 decisions in the national interest. 0:07:51.520 --> 0:07:55.720 I feel like John Well, I genuinely feel there is 0:07:56.440 --> 0:08:00.000 in the UK and perceptions of the UK at the minute. 0:08:00.480 --> 0:08:03.640 People haven't quite recognized how resolved this group of people 0:08:03.680 --> 0:08:05.960 in the new cabinet in the UK are to make 0:08:06.000 --> 0:08:08.880 these decisions to make a difference, right, And I know 0:08:08.960 --> 0:08:11.080 that the proof points of that are not what we 0:08:11.200 --> 0:08:13.400 say or what strategies we published, but the kind of 0:08:13.760 --> 0:08:16.680 decisions that we seek to make. When Rachel says gross 0:08:16.680 --> 0:08:19.920 the number one mission, you know, that's about attracting product 0:08:19.920 --> 0:08:20.600 capital to the UK. 0:08:20.600 --> 0:08:22.720 That's why I've getting things done more quickly. There are 0:08:22.760 --> 0:08:24.440 things we know the UK needs. I mean, look, we 0:08:24.480 --> 0:08:25.280 could all tell. 0:08:25.680 --> 0:08:28.320 Stories of UK infrastructure that you know, there's a famous 0:08:28.320 --> 0:08:30.880 example of the M six tool was sort of initiated 0:08:30.960 --> 0:08:33.839 under the Kalahan government, delivered by the Blair Labor government. 0:08:33.880 --> 0:08:33.959 You know. 0:08:34.000 --> 0:08:36.360 I mean it's we've got to do things quicker and better, 0:08:37.120 --> 0:08:39.640 and I think people don't yet quite appreciate. 0:08:39.240 --> 0:08:41.200 How resolved we are to do that. Isn't isn't that 0:08:41.400 --> 0:08:43.760 I mean to come to the point, Isn't that? Isn't 0:08:43.800 --> 0:08:47.600 that to do with in some ways the budget? I mean, 0:08:47.600 --> 0:08:49.600 if you talk to people here, they will come up 0:08:49.600 --> 0:08:52.319 with a variety of complaints. They'll talk about fiscal headroom, 0:08:52.320 --> 0:08:55.720 which work we'll come back to. But their basic point 0:08:55.800 --> 0:08:58.839 with the budget was they thought that came across as 0:08:58.880 --> 0:09:02.040 something that was not in favor of wealth creation. You know, 0:09:02.080 --> 0:09:04.560 at the heart of it, it had big pay rises 0:09:04.600 --> 0:09:07.920 for public sector workers, paid for big taxes on business. 0:09:08.720 --> 0:09:11.160 And that is the main thing when you wander around 0:09:11.240 --> 0:09:13.440 the halls of Davos, you've just come back for New 0:09:13.520 --> 0:09:16.040 York that you seem to have started on the foot 0:09:16.200 --> 0:09:19.280 of being people who are not pro business. So it's 0:09:19.320 --> 0:09:22.360 not just to do with these past decisions, stupid Conservatives. 0:09:22.640 --> 0:09:24.480 It's to do with that particular thing with the budget, 0:09:24.520 --> 0:09:27.679 and do you wish you'd done things differently that When I. 0:09:27.679 --> 0:09:31.640 Became chancellor there was this twenty two billion pound gap 0:09:31.760 --> 0:09:35.239 between what the previous government were bringing in in revenues 0:09:35.320 --> 0:09:38.439 this year and what they were spending. 0:09:38.679 --> 0:09:40.200 It wasn't some years in the future. 0:09:40.320 --> 0:09:43.800 It was an in year gap that hadn't been disclosed 0:09:43.840 --> 0:09:47.599 to the independent forecasters, hadn't been disclosed to Parliament. You 0:09:47.760 --> 0:09:50.240 had an idea of it because if you looked at 0:09:50.240 --> 0:09:54.319 the monthly borrowing numbers every month it was coming in 0:09:54.360 --> 0:09:59.040 a billion or two above what the Independent Forecaster had 0:09:59.040 --> 0:10:02.719 suggested the government would be borrowing on a monthly basis, 0:10:02.800 --> 0:10:06.280 but until we were elected, we did not know the 0:10:06.320 --> 0:10:10.160 scale of that inheritance. Now, I said during the election 0:10:10.320 --> 0:10:12.439 campaign that I would never play fast and loose with 0:10:12.520 --> 0:10:15.800 the public finances. Liz trusted that the previous government did 0:10:15.800 --> 0:10:19.439 that and it caused untold damage in terms of borrowing 0:10:19.520 --> 0:10:21.920 costs and confidence in the UK. 0:10:22.160 --> 0:10:22.880 So I had to. 0:10:22.840 --> 0:10:26.200 Get a grip of the public finances, and that did 0:10:26.280 --> 0:10:30.440 mean difficult decisions actually on welfare, on spending, and on 0:10:30.640 --> 0:10:35.080 taxation to get the public finances in under control. And 0:10:35.120 --> 0:10:39.200 I strongly believe, and I think businesses instinctively know this too, 0:10:39.720 --> 0:10:43.520 that stability is the prerequisite for economic growth. You can't 0:10:43.559 --> 0:10:46.480 grow an economy unless you have that stability. So we've 0:10:46.520 --> 0:10:50.160 now wiped the slate clean under the economic and fiscal 0:10:50.200 --> 0:10:53.679 mismanagement of the previous government. It did require difficult decisions 0:10:53.760 --> 0:10:57.640 and not immune to the challenges posed by the increases 0:10:57.679 --> 0:11:01.160 in tax But let's look at the alternative. The alternative 0:11:01.360 --> 0:11:04.040 was that I did half measures and then everyone would 0:11:04.080 --> 0:11:06.760 know that I'd have to come back for more next year. 0:11:07.080 --> 0:11:09.240 Or I swept things under the carpet and pretend those 0:11:09.280 --> 0:11:13.000 problems didn't exist, but they would reassert themselves at some stage. 0:11:13.120 --> 0:11:16.360 What businesses can know is that our public finances are 0:11:16.400 --> 0:11:18.360 now in order. We're never going to have to come 0:11:18.400 --> 0:11:21.480 back again and do a budget like that, so we 0:11:21.559 --> 0:11:23.040 have the stability. 0:11:22.600 --> 0:11:24.400 Upon which we can now build as a government. 0:11:25.280 --> 0:11:27.120 There's a limit, though, how much you can blame back 0:11:27.160 --> 0:11:29.280 on the Tories. I don't think anyone here regrets the 0:11:29.360 --> 0:11:32.560 Tories going that you look at the numbers. The British 0:11:32.600 --> 0:11:35.480 Chambers of Commerce said that British business confidence is its 0:11:35.559 --> 0:11:38.800 lowest EBB since liz Trust's mini budget. Two thirds are 0:11:38.800 --> 0:11:41.680 worried about tax, half say they have to raise prices, 0:11:41.679 --> 0:11:45.400 firms already cutting back on investment, employment, that British economy 0:11:45.440 --> 0:11:48.520 is actually smaller now than when the Tory's left. 0:11:48.520 --> 0:11:50.240 You've given the bad news. Let me tell you two 0:11:50.280 --> 0:11:54.160 pieces of good news. PwC survey that came out on 0:11:54.280 --> 0:11:58.280 Monday whilst you were here in Davos showed that we 0:11:58.320 --> 0:12:01.680 are second to the UK as the place to invest. 0:12:01.360 --> 0:12:02.400 For global seers. 0:12:02.520 --> 0:12:05.200 That is the first time in twenty US to the US. 0:12:05.320 --> 0:12:08.280 It's the first time in twenty eight years that Britain 0:12:08.280 --> 0:12:09.880 has been in that position. 0:12:09.920 --> 0:12:12.640 That is good news and there's a vote of confidence 0:12:12.640 --> 0:12:13.200 in the UK. 0:12:13.600 --> 0:12:17.400 The IMF forecast that came out last Friday revised up 0:12:17.520 --> 0:12:20.240 growth for the UK this year and puts us top 0:12:20.280 --> 0:12:23.680 of the pack of the major European economies. So we 0:12:23.720 --> 0:12:28.960 can trade surveys and data. But you know, I'm here 0:12:29.000 --> 0:12:31.160 to sell Britain, to talk about the strengths and what 0:12:31.200 --> 0:12:34.200 we are doing. We're reforming the planning system, we're reforming 0:12:34.200 --> 0:12:38.719 our regulatory system, reforming pensions and also this year we're 0:12:38.720 --> 0:12:41.880 going to be publishing an immigration white paper. And although 0:12:41.920 --> 0:12:44.959 we know that we need to bring immigration down, particularly 0:12:45.000 --> 0:12:49.040 illegal immigration into the UK, we are going to look 0:12:49.080 --> 0:12:53.880 again at route for the highest skilled people visas, particularly 0:12:53.920 --> 0:12:55.720 in areas like AI. 0:12:55.640 --> 0:12:56.720 And life sciences. 0:12:56.800 --> 0:13:00.360 Because Britain is open for business, we are open for talent. 0:13:00.480 --> 0:13:01.160 We've got some of. 0:13:01.080 --> 0:13:03.920 The best universities, some of the best entrepreneurs in the world, 0:13:04.040 --> 0:13:06.920 but we also want to bring in global talent into Britain. 0:13:08.200 --> 0:13:10.280 There's no complacency by any of use. 0:13:10.400 --> 0:13:12.880 I would say the challenge of our inhuritance has made 0:13:12.960 --> 0:13:14.920 us even more resolved to do those things that. 0:13:14.920 --> 0:13:17.720 Rachel has described, because we wanted to do them. We 0:13:17.720 --> 0:13:18.600 thought they were essential. 0:13:18.920 --> 0:13:21.160 I think that that case is even more compelling as 0:13:21.160 --> 0:13:22.880 a result of what we have in Hurt. 0:13:22.920 --> 0:13:24.280 And it comes back to this, people. 0:13:24.040 --> 0:13:27.000 Should not doubt how resolved we are to make a difference. 0:13:27.040 --> 0:13:29.280 It's not just about the economic performance and what it 0:13:29.280 --> 0:13:30.199 means for our constituents. 0:13:30.240 --> 0:13:32.440 Of course that's important. It's also about to be honest 0:13:32.480 --> 0:13:32.600 with the. 0:13:32.640 --> 0:13:35.280 Legitimacy of the political system, showing people that you know, 0:13:35.320 --> 0:13:37.520 government can make a difference to their lives, avoiding some 0:13:37.559 --> 0:13:40.560 of the populist pressures which are evident and discussed quite widely. 0:13:40.960 --> 0:13:43.160 An event like this, we know what's at. 0:13:43.120 --> 0:13:45.080 Stake, and that's why we're going to deliver to you 0:13:45.120 --> 0:13:47.600 on this issue as you here again and again from 0:13:47.600 --> 0:13:50.440 people here, this issue of wealth creation. I just thought, 0:13:50.480 --> 0:13:52.320 as I said, I just saw Tony Blair walking on 0:13:52.360 --> 0:13:56.960 the street. He was famously relaxed about wealth creators getting wealthier. 0:13:57.720 --> 0:14:00.920 Listening to people here, they'll say taxes. We've got taxes 0:14:00.920 --> 0:14:03.520 on business, taxes on wealth, taxes on school fees. You've 0:14:03.520 --> 0:14:06.480 got small businesses spending all their time now worrying about 0:14:06.520 --> 0:14:10.360 inheritance tax. Non doms complain and say you're Rachel Leaves, 0:14:10.400 --> 0:14:14.840 not Rachel reeves because they were heading abroad. The record 0:14:14.880 --> 0:14:18.600 of left of center governments that are unpopular with business 0:14:18.679 --> 0:14:20.680 or start on the wrong terms with business, it's not 0:14:20.760 --> 0:14:23.720 a good one. You think of francois Land in France, 0:14:25.240 --> 0:14:28.160 there is a problem there. And beyond sort of announcing 0:14:28.440 --> 0:14:30.000 some things around the edge, what are you going to 0:14:30.040 --> 0:14:32.280 do to change that idea that is out there at 0:14:32.320 --> 0:14:34.880 the moment that you're not in favor of wealth creation. 0:14:35.080 --> 0:14:39.560 Maybe you can correct that. Now you relaxed about wealth. 0:14:39.280 --> 0:14:43.880 Creation, absolutely and we want that. I just said, the 0:14:44.280 --> 0:14:47.040 best talent, the best people to come to Britain, create 0:14:47.160 --> 0:14:51.800 jobs in Britain, to grow our economy. We had an 0:14:51.800 --> 0:14:57.560 international investment summit two months into the Labor government sixty 0:14:57.640 --> 0:15:01.680 three billion pounds of inward investment into the UK, primarily 0:15:01.880 --> 0:15:07.360 in AI and in clean energy. That is incredibly exciting 0:15:07.400 --> 0:15:11.040 and shows the strength that we have as an economy. 0:15:11.600 --> 0:15:15.280 I'm not going to apologize for the budget because although 0:15:15.280 --> 0:15:16.800 I hear criticism, what I don't hear. 0:15:16.800 --> 0:15:18.280 Is any real alternatives. 0:15:18.680 --> 0:15:21.080 If you're a CEO or a CFO and you're coming 0:15:21.120 --> 0:15:25.320 into a new business and you've got these massive problems 0:15:25.600 --> 0:15:28.240 with your finances, you have to stabilize them, and that 0:15:28.280 --> 0:15:31.880 requires difficult decisions. But if you don't make those decisions, 0:15:32.160 --> 0:15:34.920 you're going to be plagued by them for years to come. 0:15:35.240 --> 0:15:37.720 So we have now wipe the slate clean. Businesses can 0:15:37.760 --> 0:15:41.760 be confident that my instinct is to have a lower taxes, 0:15:42.600 --> 0:15:45.880 less regulation, make it easier for businesses to do business. 0:15:46.200 --> 0:15:50.120 But unless you can have that economic and fiscal stability, 0:15:50.840 --> 0:15:54.640 then to be honest, I think that you're not going 0:15:54.680 --> 0:15:57.280 to have any serious plan for economic growth. 0:15:57.440 --> 0:15:59.040 We saw that under the previous government. 0:15:59.080 --> 0:16:01.440 We've seen that government around the world that get into 0:16:01.440 --> 0:16:02.640 financial difficulty. 0:16:03.320 --> 0:16:05.160 We have avoided that through. 0:16:05.000 --> 0:16:09.600 The difficult decisions that we've made. But on every other area, 0:16:09.760 --> 0:16:13.400 I think businesses will say on regulation, on planning, on pensions, 0:16:13.400 --> 0:16:17.840 on capitol markets reform, that we are doing the things 0:16:17.880 --> 0:16:19.520 that are needed to unlock economic growth. 0:16:19.640 --> 0:16:22.240 And come back to the issues of other things you 0:16:22.240 --> 0:16:25.200 could do in a second with with Johnny, but first 0:16:25.240 --> 0:16:29.280 with you this particular issue of stability, and the issue 0:16:29.360 --> 0:16:31.560 is you know about fiscal headroom. You know you left 0:16:31.600 --> 0:16:35.320 yourself a very small kind of buffer. I looked at 0:16:35.600 --> 0:16:38.720 zero point three percent of GDP, or to put it 0:16:38.720 --> 0:16:41.200 in another way, it's that's nine point nine billion dollars 0:16:41.480 --> 0:16:44.800 nine point nine billion pounds against total public spending a 0:16:44.880 --> 0:16:48.240 more than one point three trillion, so very little margin. Verio. 0:16:48.320 --> 0:16:51.520 You've seen all those moves in the bond markets, which 0:16:51.560 --> 0:16:54.640 you'll point out have been corrected. But each time that happens, 0:16:54.840 --> 0:16:58.280 it kind of pushes through the buffer. You know, are 0:16:58.320 --> 0:17:00.040 you at some point going to have to make a 0:17:00.080 --> 0:17:02.080 bigger a bigger buffer at some time? 0:17:02.680 --> 0:17:07.040 I see the two fiscal rules that this government will meet. 0:17:07.040 --> 0:17:08.960 The first is that we will pay for day to 0:17:09.040 --> 0:17:12.800 day spending through tax receipts previous government didn't achieve that 0:17:12.880 --> 0:17:16.480 in fourteen years, and that we would bring down as 0:17:16.480 --> 0:17:21.280 a share of GDP. We meet those rules two years early. 0:17:21.440 --> 0:17:23.439 We meet those both of those in year three of 0:17:23.480 --> 0:17:26.240 the forecast at the moment, and in the final year 0:17:26.280 --> 0:17:29.679 of the forecast as a nine point bill pound amount 0:17:29.720 --> 0:17:32.200 of headroom. That is more headroom than we inherited from 0:17:32.200 --> 0:17:36.040 the previous government. We actually put more money into increasing. 0:17:36.720 --> 0:17:38.800 This was a famously small amount as well. 0:17:39.000 --> 0:17:44.240 Yeah, it's so it's tight, and those fiscal rules are 0:17:44.359 --> 0:17:48.200 important to us because they are the sort of bedrock 0:17:48.320 --> 0:17:51.679 and foundation of that stability that I've spoken about, so 0:17:51.720 --> 0:17:54.520 we will we will continue to make decisions to ensure 0:17:54.560 --> 0:17:56.439 that we meet those fiscals. I just say another thing 0:17:56.480 --> 0:17:59.120 about the fiscal rules and why we chose to pay 0:17:59.160 --> 0:18:00.560 for day to days sending. 0:18:00.359 --> 0:18:01.280 Through tax receeats. 0:18:01.440 --> 0:18:03.760 That is so important for this government to get a 0:18:03.760 --> 0:18:07.160 grip of day to day spending because that allows us 0:18:07.200 --> 0:18:12.320 to free up money to invest in capital infrastructure projects, 0:18:12.359 --> 0:18:19.400 whether that is energy or transport, or in tech compute 0:18:19.720 --> 0:18:23.520 capability for example. And we're only able to unlock one 0:18:23.600 --> 0:18:26.719 hundred billion pounds during the course of this parliament. 0:18:26.359 --> 0:18:27.760 For those capital projects. 0:18:27.800 --> 0:18:31.560 Additional one hundred billion because this government are getting a 0:18:31.560 --> 0:18:34.240 group of day to day spending. And some of you 0:18:34.280 --> 0:18:37.600 would have heard our Chief Secretary to the Treasury, Darren Jones, 0:18:37.920 --> 0:18:41.840 and our Science and Innovation Secretary Peter Kyle yesterday speak 0:18:41.880 --> 0:18:44.760 about the possibilities that. 0:18:44.800 --> 0:18:47.080 Tech have to transform our public. 0:18:46.760 --> 0:18:50.000 Services to get better value for the money that we 0:18:50.119 --> 0:18:53.840 put into them by using tech better the creation of 0:18:54.000 --> 0:18:57.480 a government a digital app that will have our driving 0:18:57.560 --> 0:19:01.160 licenses on and other things by the end of this year, 0:19:01.800 --> 0:19:04.879 using tech to cut out some of the costs in 0:19:04.920 --> 0:19:08.159 the back office functions of government. The more costs we 0:19:08.200 --> 0:19:10.560 can take out. The less we have to do on 0:19:10.600 --> 0:19:14.600 the tax side, the better services we will deliver for citizens, 0:19:14.640 --> 0:19:16.479 and the more we can free up to invest in 0:19:16.480 --> 0:19:20.680 that capital the projects that can help transform our economy. 0:19:21.040 --> 0:19:22.880 Sounds as if you're going down the same route as 0:19:22.920 --> 0:19:26.879 Elon Musk with his Department of Government Efficiency. 0:19:28.040 --> 0:19:31.400 Well, look, we want to route out waste in governments. 0:19:31.440 --> 0:19:40.400 Then to I think maybe the fiscal headroom you've got 0:19:40.400 --> 0:19:43.679 the Officer Budget Responsibility is forecast updates at the end 0:19:43.720 --> 0:19:46.400 of March March twenty sixth, and that says my question 0:19:46.440 --> 0:19:47.720 is can you leave it that long? 0:19:48.000 --> 0:19:51.399 If you're riding a bicycle and you hit the curb twice, 0:19:51.800 --> 0:19:54.400 you tend to move a bit closer to the center 0:19:54.440 --> 0:19:56.760 of the road. If you've you've already had two incidents 0:19:56.800 --> 0:20:01.240 where those the sheer rise in borrowing costs, which occasionally happens, 0:20:01.320 --> 0:20:03.960 could have wiped out that buffer. Isn't that something you're 0:20:03.960 --> 0:20:05.560 going to have to deal with eventually? 0:20:06.280 --> 0:20:11.480 Well, there's been no undoubtedly global movements in financial markets 0:20:12.200 --> 0:20:16.800 this year, mainly driven by the US, but of course 0:20:17.080 --> 0:20:21.520 the UK gets caught in those headwinds. The Officer Budget 0:20:21.560 --> 0:20:26.280 Responsibility are just starting their forecast process, and that don't 0:20:26.280 --> 0:20:29.560 take into account just one week's moves. In financial markets, 0:20:29.600 --> 0:20:33.240 they look at a period of time. But I don't 0:20:33.240 --> 0:20:35.080 think we should get ahead of ourselves. There's a couple 0:20:35.080 --> 0:20:38.080 of months before that OBR forecast is published. 0:20:38.280 --> 0:20:39.760