WEBVTT - Rachel Reeves Talks US-UK Trade Agreement, Budget Day Goals

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>Rachel Reeves, the UK Chancellor of the ex Checker Chancellor, welcome.

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<v Speaker 2>It's great to have you with us today Bloomberg TV

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<v Speaker 2>and Radio. Just to start with this. You're in New

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<v Speaker 2>York and Toronto for that matter, to help drum up

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<v Speaker 2>investment in the UK. A lot of folks are looking

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<v Speaker 2>at these images of riots over the past couple of days,

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<v Speaker 2>and I wonder your thoughts as investors try to consider

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<v Speaker 2>the impact of these riots as they consider the UK

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<v Speaker 2>as a destination for investment.

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<v Speaker 1>Those responsible for the disorder that we've seen these last

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<v Speaker 1>couple of days in the United Kingdom, they don't represent

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<v Speaker 1>the vast, vast majority of people. They are a tiny minority,

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<v Speaker 1>and as our Prime Minister, Keir Starmer says, they will

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<v Speaker 1>be met with the full force of the law and

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<v Speaker 1>they will feel the consequences of their actions. But it's

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<v Speaker 1>been great for me as Chancellor to be here in

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<v Speaker 1>New York today with US investors to send the message

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<v Speaker 1>lad and clear that Britain is back in business and

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<v Speaker 1>we are open to business under this new government led

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<v Speaker 1>by Keir Starmer. We won the election just over a

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<v Speaker 1>month ago with a mandate to grow the economy. Number

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<v Speaker 1>one mission of this new government is to bring economic

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<v Speaker 1>growth and jobs and productivity to all parts of the

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<v Speaker 1>United Kingdom, and that's a message that I've been really

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<v Speaker 1>pleased to share with investors here in New York today.

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<v Speaker 3>Well, Chancellor, of course, trade has a big impact on

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<v Speaker 3>the economy, and we have an election of our own

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<v Speaker 3>here in the US coming up just a few months

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<v Speaker 3>from now. When it comes to a potential US UK

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<v Speaker 3>trade agreement, do you think that's more likely to happen

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<v Speaker 3>under a future Harris or second Trump administration.

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<v Speaker 1>Well, it's up to the people of the United States

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<v Speaker 1>to choose who they want as their president. But the

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<v Speaker 1>UK government, whether that's Labor or a conservative government in

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<v Speaker 1>the UK, has always worked with whoever's the White House

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<v Speaker 1>and whoever is in Congress, and that will continue to happen.

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<v Speaker 1>The US doesn't have a greater friend than Great Britain.

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<v Speaker 1>We are the closest of friends and allies, and already

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<v Speaker 1>Britain's largest trading partner is the United States, of course,

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<v Speaker 1>who want to build on that and make it easier

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<v Speaker 1>for Great British businesses to export to the United States

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<v Speaker 1>and to make it easier for great American businesses to

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<v Speaker 1>export to the United Kingdom, so we want to strengthen

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<v Speaker 1>and deepen those trade ties. Trade is good for countries,

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<v Speaker 1>and especially when it's between countries that share each other's

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<v Speaker 1>values in the way that the UK and the US do.

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<v Speaker 2>Well as long as Joe Biden is the president. There's

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<v Speaker 2>a debate underway, and I suspect that will continue if

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<v Speaker 2>Kamala Harris becomes the next president about what to do

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<v Speaker 2>with the Trump era tax cuts from twenty seventeen. There's

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<v Speaker 2>an effort by Republicans to extend them or make them permanent.

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<v Speaker 2>Democrats here say we can't afford it because of the

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<v Speaker 2>impact that we're we have on our debt and deficit.

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<v Speaker 2>President Biden goes further to say the super rich need

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<v Speaker 2>to pay their fair share when it comes to taxes.

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<v Speaker 2>Is that something you agree with?

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<v Speaker 1>I think people should pay their fair share of tax

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<v Speaker 1>and one of the challenges we have in the UK

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<v Speaker 1>is a gap between what should be collected by His

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<v Speaker 1>Majesty's revenue and customs and what is actually collected. But

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<v Speaker 1>we made a commitment in our manifesto that we'll be

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<v Speaker 1>sticking to, which is that we don't want to increase

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<v Speaker 1>taxes on working people, and we will be keeping income tax,

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<v Speaker 1>National insurance and value added tax at the rates they

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<v Speaker 1>are for the duration of this parliament. I would like

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<v Speaker 1>taxes on working people to be lower, but I believe

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<v Speaker 1>that you can't make promises without being able to say

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<v Speaker 1>where the money is going to come from. But the

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<v Speaker 1>tax burden in the UK has got too high. The

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<v Speaker 1>tax burden in the UK is a seventy year high.

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<v Speaker 1>I want to bring that tax burden high down because

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<v Speaker 1>I want to make Britain the best place to start

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<v Speaker 1>and grow a business and I want working people to

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<v Speaker 1>keep more of their own money in their pockets. And

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<v Speaker 1>that's what people will have with this new labor government.

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<v Speaker 1>And it's why it's so important that we grow the

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<v Speaker 1>economy because the last few years in the UK, there's

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<v Speaker 1>been lots of debate about what level of taxation and

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<v Speaker 1>what level of spending, but it's missed the bigger picture. Yeah,

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<v Speaker 1>and the bigger picture is growing the economy. And that's

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<v Speaker 1>why I'm here in New York today and tomorrow and

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<v Speaker 1>then in Toronto later in the week to drum the

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<v Speaker 1>bang the drum for Britain and to say loud and

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<v Speaker 1>clear that Britain with this new government, is open for business.

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<v Speaker 3>Well, as you mentioned income taxes there Channel story, I wonder,

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<v Speaker 3>given the revenue it potentially could generate, if you're tempted

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<v Speaker 3>to bring capital gains taxes in line with the income tax,

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<v Speaker 3>is that something you're considering.

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<v Speaker 1>We've got a budget on the thirtieth of October and

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<v Speaker 1>we'll set out our policy then. But it's always important

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<v Speaker 1>when you're deciding tax policy to strike the right balance.

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<v Speaker 1>Of course, you need to bring in the revenue to

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<v Speaker 1>fund vital public services, but we've also got to grow

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<v Speaker 1>the economy, and I want do anything that makes it

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<v Speaker 1>harder to achieve that economic growth and prosperity, because in

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<v Speaker 1>the end, the only way we're going to lift living

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<v Speaker 1>standards for working people and have the money that we

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<v Speaker 1>need to invest in our public services, whether that is

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<v Speaker 1>our health service or our schools, or indeed our police

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<v Speaker 1>and our armed forces, is by growing the economy. And

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<v Speaker 1>so I am determined to ensure that when we set

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<v Speaker 1>all of our policy, including tax policy, that we're not

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<v Speaker 1>doing anything that will deter the investment and growth that

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<v Speaker 1>we need to see in the UK economy. But we'll

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<v Speaker 1>make decisions around tax and around spending at the budget

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<v Speaker 1>and the spending review later this year.

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<v Speaker 2>As you consider those decisions, you've said that private equity

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<v Speaker 2>firms that co invest on deals might receive more favorable

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<v Speaker 2>tax treatment. What would those favorable rates look like.

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<v Speaker 1>Well, we've just announced a consultation at the end of

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<v Speaker 1>July into the treatment of carried interest to make sure

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<v Speaker 1>that the system works fair. Of course, if you put

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<v Speaker 1>in your own capital, if you've got capital at risk,

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<v Speaker 1>I think it is right that you benefit from a

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<v Speaker 1>more generous form of tax relief. But if it's not

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<v Speaker 1>your capital at risk, then that's not right that you

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<v Speaker 1>receive those tax breaks. So that's why we've launched this consultation,

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<v Speaker 1>and we will in the budget later this year on

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<v Speaker 1>the thirtieth of October, bringing forward the changes that we

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<v Speaker 1>need to see to our tax system around the carried

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<v Speaker 1>interest for private equity.

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<v Speaker 3>Well, and of course private equity I would imagine is inclusive.

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<v Speaker 3>In some of the meetings that you're having while you're

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<v Speaker 3>here in the US, we understand you've been meeting with

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<v Speaker 3>the likes of Steve Schwartzman or Gene Fraser. What have

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<v Speaker 3>you heard from them, Have they made any commitments in

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<v Speaker 3>regard to the UK Investment Summit, for example, or are

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<v Speaker 3>think looking for certain things from your government.

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<v Speaker 1>It's been great to meet some of the private equity

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<v Speaker 1>and venture capital firms here today in New York, and

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<v Speaker 1>I'll be doing more of that tomorrow. There's so much

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<v Speaker 1>money that we think we can unlock for the UK

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<v Speaker 1>economy and ensure then that British firms, startup firms, scale

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<v Speaker 1>up firms, can grow and access that long term patient

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<v Speaker 1>capital that private equity and venture can often bring to

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<v Speaker 1>the table. And what I've been hearing loud and clear

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<v Speaker 1>from the private equity bosses that I've had a chance

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<v Speaker 1>to meet with today is that they welcome the change

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<v Speaker 1>of approach that they've seen from this new labor government,

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<v Speaker 1>where a relentless focus on growing the economy, the reform

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<v Speaker 1>to the planning system, reforms to our pension system to

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<v Speaker 1>unlock the long term patient capital, the creation of a

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<v Speaker 1>National Wealth Fund to leverage in private sector investment, as

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<v Speaker 1>well as building and resetting our relations with our nearest

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<v Speaker 1>neighbors and trading partners in the European Union, which is

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<v Speaker 1>really important for US businesses when they're deciding where in

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<v Speaker 1>Europe to locate and headquarters. So it's been really useful

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<v Speaker 1>having the frank exchange of views with private equity and

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<v Speaker 1>venture capital today. And as you say, we're going to

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<v Speaker 1>be hosting an international investment summit in the UK on

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<v Speaker 1>the fourteenth of October, and I hope that many of

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<v Speaker 1>the businesses that I've had a chance to meet with

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<v Speaker 1>here in the States will be over in London for

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<v Speaker 1>that investment summit in October.

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<v Speaker 3>All right, Chancellor, thank you so much for spending some

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<v Speaker 3>time with us this evening here at Bloomberg. That's Rachel Brieves,

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<v Speaker 3>UK Chancellor of the Exchequer. We appreciate it.