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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the bloom Big Day, Bacurate podcast. Good morning,

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Speaker 2: It's Wednesday, the second of July. I'm Caroline Hepkit in London.

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Speaker 3: And I'm Stephen carollin Brussels. Coming up today, kir Starmer's

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Speaker 3: welfare cuts climbed down leaves the UK government with a

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Speaker 3: five billion pound budget black hole.

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Speaker 2: President Trump's three point three trillion dollar tax and spending

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Speaker 2: bill faces Republican resistance as it heads back to the House.

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Speaker 3: Plus, a health warning shares an Astroszeneca rise after a

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Speaker 3: report the CEO wants to move the pharma giants listing

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Speaker 3: to the United States.

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Speaker 4: Let's start with the roundup of our top stories.

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Speaker 3: The British Prime Minister abandoned his flagship welfare overhaul ninety

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Speaker 3: minutes before a key vote and a blow to his authority.

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Speaker 3: Faced with a rebellion of his own MPs, ker Starmer

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Speaker 3: reversed controversial changes to disability benefits, erasing five billion pounds

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Speaker 3: in planned savings his work in Pension Secretary Liz Kendall

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Speaker 3: was asked after the U turn if the party still

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Speaker 3: had faith in its leader.

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Speaker 2: I think people are one hundred percent behind a prime.

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Speaker 4: Minister who secured the first labor government in fourteen years.

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Speaker 2: There are definitely lessons to learn from this process. I

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Speaker 2: certainly will do that, and I'm sure my colleagues will too.

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Speaker 3: Kendall Starmer and Chancellor Rachel Reeves are seen as the

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Speaker 3: lightning rods for their party's anger. The gotting of the

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Speaker 3: bill leaves the government's hunting for billions in new revenue,

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Speaker 3: making tax rises in the autumn even more likely.

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Speaker 2: President Trump's three point three trillion dollar tax cut and

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Speaker 2: spending bill is facing resistance from some House Republicans after

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Speaker 2: it passed the Senate yesterday. Moderate and ultra conservatives are

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Speaker 2: pushing for changes to the bill, citing concerns over Medicaid cuts,

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Speaker 2: spending reductions, and the scale of the tax bill. House

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Speaker 2: lawmakers are set to vote on the bill later today.

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Speaker 2: How Speaker Mike Johnson can only afford to lose three

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Speaker 2: Republican votes for the bill to pass, and he seems

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Speaker 2: all too aware of the uphill battle.

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Speaker 5: We have members across the conference who have concerns about

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Speaker 5: various provisions of the bills, but a lot of people

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Speaker 5: didn't get what they wanted. They didn't get I didn't

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Speaker 5: think some savings went as far as they should have gone,

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Speaker 5: or that maybe some of the cuts went too far.

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Speaker 5: I mean, it depends upon who you ask. They have

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Speaker 5: different opinions. But that's the beauty of a large de

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Speaker 5: liberty body, lots of different priorities and opinions and districts represented.

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Speaker 2: How speaking, Mike Johnson went on to say that he'll

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Speaker 2: do everything possible to get the package passed by Thursday,

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Speaker 2: President Trump's self impost deadline ahead of the July fourth

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Speaker 2: holiday weekend.

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Speaker 3: Well, President Trump says Israel has agreed to the terms

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Speaker 3: of a sixty day ceasefire in Gaza, which will now

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Speaker 3: be presented to Hamas. In the social media post, he

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Speaker 3: said Israel had agreed to the necessary conditions for a

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Speaker 3: truce and the Katarro in Egypt will deliver the final proposal.

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Speaker 3: Trump also warren Hamas that things will only get worse

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Speaker 3: if they don't accept the ceasefire it breaks. Dan Williams

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Speaker 3: says there's no sign that the militant group's position has changed.

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Speaker 6: It would appear its conditions remain firm. Those conditions are

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Speaker 6: for full is really withdrawal or actually, more precisely and

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Speaker 6: it's really declaration that this war is over with a

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Speaker 6: full withdrawal of troops and tanks from the Gardza strip effects.

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Speaker 6: We humas once a guarantee that once it delivers all

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Speaker 6: the hostages it still holds some fifty people, then it

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Speaker 6: will be effectively provided immunity from an Israeli offensive design

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Speaker 6: from the outset to topple it from power and to

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Speaker 6: disarm it.

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Speaker 3: That's bimb breaks Dan Williams. Donald Trump announced the development

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Speaker 3: ahead of hosting Israel's Prime Minister Benda Maneattan Yaho at

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Speaker 3: the White House next week.

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Speaker 2: The United States is halting the transfer of artillery rounds

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Speaker 2: and air defenses to Ukraine. It's a move that deprives

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Speaker 2: the country of much needed weapons as it endures more

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Speaker 2: intensive missile and their own attacks from Russia. The White

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Speaker 2: House says the decision came after a review of US

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Speaker 2: munition's stockpiles amid concerns they had fallen too low. The

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Speaker 2: Pentagon says that it continues to provide President Trump with

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Speaker 2: quote robust options to continue military aid to Ukraine.

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Speaker 3: It's being reported that AstraZeneca's CEO Pascal Sario wants to

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Speaker 3: move the drug maker's stock listing to the United States.

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Speaker 3: Bloombergs Christopher Pitt has more on what could prove to

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Speaker 3: be a major setback for the London Stock Exchange and

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Speaker 3: the UK's efforts to build up its life science as industry.

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Speaker 7: According to reporting from The Times, Sorrio is frustrated with

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Speaker 7: the UK's regulatory regime for drugs and is concerned that

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Speaker 7: the country's life sciences sector is falling behind the US

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Speaker 7: and China. Citing people familiar with the matter, the paper

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Speaker 7: says the pharma CEO is also discussing relocating the firm's

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Speaker 7: corporate listing to the USENK Britain's largest publicly traded company,

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Speaker 7: with a market value of about one hundred and sixty pounds.

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Speaker 7: Losing it would mark another sign of the UK's declining

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Speaker 7: status as a magnet for global capital. A spokesperson for

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Speaker 7: the company said we do not comment on speculation. As

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Speaker 7: AstraZeneca's share price rose following the report in London, Chris

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Speaker 7: Pitt Bloomberg Radio.

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Speaker 2: Bank of England Governor Andrew Bailey says that high interest

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Speaker 2: rates aren't working as well because of Britain's low debt levels.

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Speaker 2: Bank of England is taking a cautious approach to lowering

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Speaker 2: UK interest rates as it tries to squeeze out stubborn

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Speaker 2: price pressures in Britain. Bailey told a panel in Centro

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Speaker 2: that he has been surprised.

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Speaker 8: The level of household and corporate debt in the economy

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Speaker 8: is actually lower than we would have expected it to

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Speaker 8: be based on past experience. So again that feeds through

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Speaker 8: into just how restrictive policy is of an interest rate.

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Speaker 8: It's somewhat less restricted, probably than it would have been historically.

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Speaker 2: The Central Bank governor added that the unexpected low debt

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Speaker 2: levels are one of the reasons that he doesn't try

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Speaker 2: to forecast when the economy has reached a neutral point.

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Speaker 2: Trade has now put the odds of another interest rate

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Speaker 2: cut at the Monetary Policy Committee's next meeting in August

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Speaker 2: at over eighty percent, keeping the Bank of England on

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Speaker 2: a once a quarter pace for interest rate reductions.

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Speaker 3: Santander has agreed to buy TSB from Sabadell for two

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Speaker 3: point sixty five billion pounds in an all cash transaction.

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Speaker 3: The deal will make Santander the UK's third largest lender

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Speaker 3: by personal current account balances and the fourth largest by

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Speaker 3: mortgage value. The combined bank will have close to twenty

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Speaker 3: eight million customers, and Santander says it will lead to

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Speaker 3: cost savings of at least four hundred million pounds.

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Speaker 2: And those are some of our top stories for you

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Speaker 2: this morning. In terms of the markets, so Asian stocks

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Speaker 2: are slightly flat at the moment. MCI Asia Pacific Index

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Speaker 2: is flat at least President Trump saying that he'll stick

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Speaker 2: to the July ninth deadline for imposing high levees and

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Speaker 2: again criticizing Japan. So it's Japan stocks that are weighing

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Speaker 2: NICKK two to five, down two tens to one percent.

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Speaker 2: The costs also lower eight tenths of one percent. In

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Speaker 2: the FX markets, the Euros had this huge winning streak,

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Speaker 2: the best in twenty years now at fourteen percent versus

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Speaker 2: the dollar. Year to date, we've seen a new high

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Speaker 2: for twenty twenty five yesterday of one eighteen twenty nine.

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Speaker 2: At the moment we trade at one seventeen ninety four

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Speaker 2: and the Blue Big Dollar Spot Index this morning is

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Speaker 2: down again. So that's a look at the markets from

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Speaker 2: the currency perspective. Just in terms of the stock futures

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Speaker 2: actually surging, for US stock's fifty futures up by six

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Speaker 2: tenths of one percent.

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Speaker 4: Stephen Well.

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Speaker 3: In a moment, we'll bring you more on the UK

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Speaker 3: Prime minister's climb down over his welfare refums, plus the

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Speaker 3: latest wrangling over Donald Trump's tax bell in the US.

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Speaker 3: But the story that caught her either mo about what

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Speaker 3: I'm going to call one of the most controversial corners

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Speaker 3: of the Internet, of course, talking about the book reviews

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Speaker 3: website Goodreads.

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Speaker 9: It's owned by Amazon.

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Speaker 3: If you don't know what I'm talking about, you've clearly

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Speaker 3: never gotten into an argument about somebody who's dissed your

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Speaker 3: favorite book online. Jason Bailey has been writing about this

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Speaker 3: for Bloomberg Opinion, and he talks about the importance of

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Speaker 3: the platform, first of all, how it can drive sales,

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Speaker 3: how it can be something that can be a huge

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Speaker 3: word of mouth boost to authors, but also, as with

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Speaker 3: many review websites, it has its problems in you know,

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Speaker 3: in fighting within their communities as well, but also what

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Speaker 3: he describes as Amazon's unwillingness to take responsibility for the

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Speaker 3: reach of the site and from instituting common sense guardrails.

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Speaker 9: Take for example, review bombing.

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Speaker 3: This is a practice where a work gets bombarded with

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Speaker 3: bad reviews, often because of a perceived ideological issue with

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Speaker 3: the other or other anything to do with the book itself,

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Speaker 3: but then creates problems obviously, because you know, books essentially

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Speaker 3: are being getting bad reviews for nothing to do with

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Speaker 3: the book at all.

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Speaker 2: No, and look, we've seen this so many times before.

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Speaker 2: Why is this such an issue? I mean, we've seen

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Speaker 2: it when it comes to restaurants, we've seen it. You know,

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Speaker 2: for any tourist destination that you might go to. Films

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Speaker 2: and movies, there are loads of these aggregator sites, and

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Speaker 2: kind of keeping control of the reviews and making sure

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Speaker 2: that they're actually fair to the people who are producing

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Speaker 2: the project is really really important. So it's kind of

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Speaker 2: odd that this has not happened also in the publishing world.

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Speaker 2: So yeah, I think it's really interesting that Jason makes

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Speaker 2: this point, and he says that one solution may be

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Speaker 2: the use of verification, although it's quite tricky because he says,

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Speaker 2: at least you'd be able to verify that the user

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Speaker 2: has actually bought that book, but then you'd be funneling

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Speaker 2: people towards only Amazon and buying their books maybe, so

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Speaker 2: perhaps that would be unfair.

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Speaker 4: Anyway, So I thought it was a really good writer.

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Speaker 3: The Internet needs a policeman for good Reads is essentially

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Speaker 3: what we've learned. But it's a great piece from Jason

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Speaker 3: Bailey fined at Libert dot calm slash Opinion.

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Speaker 4: Now, let's talk about what happened last night.

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Speaker 2: The British Prime Minister Kirs Starmer abandoned key parts of

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Speaker 2: his flagship welfare reforms in order to avoid a defeat

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Speaker 2: in Parliament, but at what cost to his authority and

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Speaker 2: the nation's finances. Joining us now as our UK Politics

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Speaker 2: report to James Walcott, Good morning, James. Take us through

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Speaker 2: actually what happened yesterday.

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Speaker 10: I think the way to think about it is Carolyn

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Speaker 10: on a piece of legislation the Labor leader has called

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Speaker 10: a moral imperative that his government has said is key

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Speaker 10: to resolving the two point eight million people out of

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Speaker 10: work in the UK. And just last week, where he

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Speaker 10: referred to rebels on this issue as a distraction and

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Speaker 10: quote noises off, he has had to, in a humiliating

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Speaker 10: climb down, strip his own flagship reform of any measures

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Speaker 10: that would say that any money, and that comes after

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Speaker 10: crunch talks were held last week and a U turn

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Speaker 10: was held. Then it's a second rarely seen double U

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Speaker 10: turn further taking money out of the policy and sting

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Speaker 10: in the tail. These cuts were already budgeted into the

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Speaker 10: government's spending plans for this past summer, and so now

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Speaker 10: that leads the government facing roughly five billion pounds as

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Speaker 10: a fiscal black hole, something that they have attacked previous

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Speaker 10: governments for doing, and how weakened.

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Speaker 9: James is the Prime minister by all of this.

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Speaker 10: Well, objectively, Stephen, he still has the largest majority since

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Speaker 10: two thousand and one and he's not going anywhere for

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Speaker 10: the next four years at the very least Labor Government isn't.

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Speaker 10: But I think you can look at it in two

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Speaker 10: ways in which yes, they really set him back as

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Speaker 10: a leader. One is the Labor Party mood MPs are

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Speaker 10: furious at how this has been handled. They are furious

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Speaker 10: at Starma himself, They are furious at Number ten operation.

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Speaker 10: There is I think growing anger around what they see

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Speaker 10: as kind of the fiscal way decisions were done. A

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Speaker 10: lot of the debate, yes that in Parliament was talk

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Speaker 10: about how the welfare reforms were not done for the

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Speaker 10: sake of getting people back into work, MPs argued, but

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Speaker 10: instead sort of to balance the books and the MP's

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Speaker 10: fell that was morally objectionable. That's what level of the

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Speaker 10: anger in response to this. But the other way is fiscally,

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Speaker 10: this now shows that this is a government that really

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Speaker 10: struggles to make cuts to the savings bills. Is that

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Speaker 10: you look at winter fuel which are utail recently on,

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Speaker 10: you look at this U turn any kind of government

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Speaker 10: spending reductions is clearly quite a difficult ask of this

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Speaker 10: Labor government. That then puts them on the road to

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Speaker 10: taxes in the autumn budget.

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Speaker 2: And yeah, of course all of this was well flagged

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Speaker 2: at the last general election that there were going to

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Speaker 2: be very many difficult decisions to be made. Where do

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Speaker 2: you think this leaves the Chancellor?

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Speaker 10: I think politically in a lot of trouble. It was

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Speaker 10: fascinating that so many MP's pointed to the Chancellor as

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Speaker 10: a key problem in how this government was being run,

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Speaker 10: more for kind of the fiscal situation than for Labour's

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Speaker 10: political aims, but also fiscally in equally a lot of

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Speaker 10: trouble in that she has ruled out debt rule changes.

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Speaker 10: These spending commitments were supposed to be the way the

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Speaker 10: government wild spend money. They are now effectively junked, and

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Speaker 10: that leaves her with one road, which is taxes she

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Speaker 10: has ruled out in the past. Taxes on working people,

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Speaker 10: taxes on business seem remarkably restrictive given that's what she

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Speaker 10: did last year. Something we'll have to give here, and

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Speaker 10: the question is quite exactly what Okay?

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Speaker 9: James Wilcock, a UK politics supporter.

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Speaker 4: Thank you now.

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Speaker 2: Meanwhile, in the US, of course, President Trump's Tags and

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Speaker 2: spending bill passed the House with JD Vance's tie breaking vote,

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Speaker 2: but it is being challenged in the House by moderate

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Speaker 2: and ultraconservative Republican lawmakers, so different sides of the Republican Party.

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Speaker 2: Joining us now to discuss is Bimberg's news desk editor

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Speaker 2: Jill Desis.

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Speaker 4: Good morning, Jill.

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Speaker 2: I think firstly we should start by what's actually in

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Speaker 2: this enormous Senate bill, which really does comprise President Trump's

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Speaker 2: entire domestic legislative agenda.

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Speaker 1: Yes, good morning, Caroline, it really is. I mean, you know,

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Speaker 1: he describes it as the big, beautiful bill. This thing

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Speaker 1: sure does seem like it has pretty much everything in it.

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Speaker 1: So what we're looking at with the Senate version is,

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Speaker 1: first of all, they've altered that earlier House approved version,

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Speaker 1: it's now going to make deeper cuts to safety net

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Speaker 1: programs such as Medicaid health insurance for poor and disabled.

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Speaker 1: The Senate bill also speeds up the elimination of clean

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Speaker 1: energy tax breaks. You are seeing some benefits for businesses

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Speaker 1: from some changes from the Senate version that makes permanent

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Speaker 1: a series of breaks that had only been offered temporarily.

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Speaker 1: So that's a pretty big component of this. And then

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Speaker 1: there's also a more generous tax break for companies based

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Speaker 1: in high tax states. And along with this, you're also

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Speaker 1: seeing the extension of some tax cuts for businesses and

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Speaker 1: people initially passed in twenty seventeen when Trump was first

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Speaker 1: in office that was due to expire this year, so

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Speaker 1: that's going to be extended according to this new version

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Speaker 1: of the bill, adding in some temporary new breaks for

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Speaker 1: tipped in overtime workers, the elderly car buyers who take

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Speaker 1: out loans. There's also a bunch of funding, hundreds of

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Speaker 1: billions of dollars worth of funding and defense spending. And

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Speaker 1: then also for the Trump's immigration crack down, which has

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Speaker 1: really been a signature of Trump point two point zero,

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Speaker 1: his you know, his second term in office. So yes,

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Speaker 1: I mean really kind of encompassing everything here in the

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Speaker 1: Senate version of this bill.

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Speaker 3: So what about going back to the House, then, what

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Speaker 3: sorts of objections could be coming from Republicans there as

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Speaker 3: this version goes back to them.

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Speaker 1: Yes, So, Steven, I think, as Carolyn hinted just a

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Speaker 1: couple of minutes ago, you're probably going to see some

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Speaker 1: objections that run the gamut, everything from ultra conservatives who

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Speaker 1: you know, are worried that in some ways this bill

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Speaker 1: doesn't go far enough, as well as more moderates that

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Speaker 1: are also worried that some of the changes are too much.

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Speaker 1: So some of the holdouts that you're seeing from the

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Speaker 1: GOP in the House or that you know, the few

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Speaker 1: really more on that moderate side, they're they're kind of

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Speaker 1: troubled by the scale of the decaid cuts in particular.

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Speaker 1: And then again on that ultra conservative side, you're seeing

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Speaker 1: some that you know say that they really were kind

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Speaker 1: of strong armed into passing the initial version of this

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Speaker 1: bill when it first you know, went through the House,

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Speaker 1: and they really want to see some deeper spending cuts.

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Speaker 1: So what we're hearing right now from Republican leadership in

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Speaker 1: the House is that they're fairly confident or that they're

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Speaker 1: very confident that the bill is going to pass when

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Speaker 1: it comes back to the House. But again, I do

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Speaker 1: feel like in some ways we're back to where we

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Speaker 1: were when the House was originally debating this, where you've

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Speaker 1: got people on either end of the spectrum that really

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Speaker 1: kind of want would ultimately come down to competing interests

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Speaker 1: to make their way into the bill, And so it

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Speaker 1: really may come down to a case of, you know,

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Speaker 1: how do you manage to get enough people over the

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Speaker 1: line where you can actually get this through? Because remember

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Speaker 1: that first version of the House bill when it originally

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Speaker 1: passed back in May, it was a one vote margin.

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Speaker 2: Yeah, in terms of what this means them for the

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Speaker 2: US fiscal position, I mean, and just a moment, I

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Speaker 2: do want to all this this comparison. You know, this bill,

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Speaker 2: for example, has cuts to medicaid of one trillion dollars

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Speaker 2: over ten years here in the UK, you know, you're

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Speaker 2: talking about five billion pounds. I mean, the scale of

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Speaker 2: this bill is just staggering. But what does that therefore

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Speaker 2: mean for the US fiscal position and how it's being

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Speaker 2: responded to and reacting to this in the markets?

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Speaker 1: Yes, thanks for pulling out that number Caroline again, really

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Speaker 1: does just emphasize how really, I mean, just enormous the

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Speaker 1: impact of this is. You know, we're looking at some

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Speaker 1: the Bloomberg Economics is looking at you know, some calculations.

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Speaker 1: They're expecting the US debt to GDP ratio to near

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Speaker 1: one hundred and twenty six percent by twenty thirty four.

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Speaker 1: Looking at you know, some of this, you know, how

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Speaker 1: exactly this bill would impact here. I mean, that really

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Speaker 1: does call in to question the sustainability of US fiscal policy.

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Speaker 1: I do think what's really important to remember, particularly as

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Speaker 1: you're looking for you know, market reaction. I think we'll

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Speaker 1: have to see how this bill ultimately unfolds in the House.

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Speaker 1: I know that, you know, ultimately treasury markets or certainly

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Speaker 1: I think a bit wary of this. There's some doubt

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Speaker 1: about whether that rally is ultimately going to continue depending

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Speaker 1: on the fate of this bill. But to me, you know,

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Speaker 1: the big question is, all right, so you've, you know,

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Speaker 1: assuming this bill actually passes, and you do see you know,

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Speaker 1: the the debt and in the US affected that way,

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Speaker 1: one potential way to offset this is ultimately was supposed

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Speaker 1: to come down to tariffs, right, and there's still a

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Speaker 1: lot of uncertainty over what Donald Trump's trade policy looks

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Speaker 1: like going forward. We've got that deadline coming up, you know,

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Speaker 1: on the ninth. Is that ultimately going to you know,

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Speaker 1: are we going to see you know, more sustainable like

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Speaker 1: tarift policy to actually up offset some of the impact

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Speaker 1: from this bill. We're hearing right now from Republican leadership

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Speaker 1: in the House is that they're fairly confident or that

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Speaker 1: they're very confident that the bill is going to pass

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Speaker 1: when it comes back to the House. But again, I

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Speaker 1: do feel like in some ways we're back to where

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Speaker 1: we were when the House was originally debating this, where

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Speaker 1: you've got people on either end of the spectrum that

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Speaker 1: really kind of want would ultimately come down to competing

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Speaker 1: interests to make their way into the bill, and so

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Speaker 1: it really may come down to a case of, you know,

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Speaker 1: how do you manage to get enough people over the

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Speaker 1: line where you can actually get this through because remember

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Speaker 1: that first version of the House bill when it originally

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Speaker 1: passed back in May, it was a one vote margin.

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Speaker 2: Yeah, in terms of what this means then for the

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Speaker 2: US fiscal position, I mean, and just a moment ago, Jill,

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Speaker 2: I do want to drawle this this comparison. You know,

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Speaker 2: this bill, for example, has cuts to medicaid of one

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Speaker 2: trillion dollars over ten years here in the UK. You know,

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Speaker 2: you're talking about five billion pounds. I mean, the scale

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Speaker 2: of this bill is just staggering. But what does that

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Speaker 2: therefore mean for the US fiscal position and how it's

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Speaker 2: being responded to and reacting to this in the markets.

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Speaker 1: Yes, thanks for pulling out that number, Caroline. Again, really

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Speaker 1: does just emphasize how really, I mean, just enormous the

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Speaker 1: impact of this is. You know, we're looking at some

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Speaker 1: the Bloomberg Economics is looking at you know, some calculations.

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Speaker 1: They're expecting the US debt to GDP ratio to near

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Speaker 1: one hundred and twenty six percent by twenty thirty four.

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Speaker 1: Looking at you know, some of this, you know, how

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Speaker 1: exactly this bill would impact here. I mean that really

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Speaker 1: does call into question the sustainability of US fiscal policy.

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Speaker 1: I do think what's really important to remember, particularly as

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Speaker 1: you're looking for you know, market reaction. I think we'll

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Speaker 1: have to see how this bill ultimately unfolds in the House.

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Speaker 1: I know that, you know, ultimately treasury markets or certainly

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Speaker 1: I think a bit wary of this. There's some doubt

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Speaker 1: about whether that rally is ultimately going to continue depending

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Speaker 1: on the fate of this bill. But to me, you know,

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Speaker 1: the big question is, all right, so you've you know,

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Speaker 1: assuming this bill actually passes, and you do see you know,

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Speaker 1: the the debt and in the US affected that way,

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Speaker 1: one potential way to offset this is ultimately was supposed

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Speaker 1: to come down to tariffs, right, and there's still a

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Speaker 1: lot of uncertainty over what Donald Trump's trade policy he

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Speaker 1: looks like going forward. We've got that deadline coming up,

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Speaker 1: you know, on the ninth. Is there ultimately going to

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Speaker 1: you know, are we going to see you know, more

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Speaker 1: sustainable like terror policy the actually offset some of the

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Speaker 1: impact from this bill.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 3: stories making news from London to Wall Street and beyond.

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Speaker 9: I'm Caroline Hepka and I'm Stephen Carroll.

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Speaker 3: Join us again tomorrow morning for all the news you

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Speaker 3: need to start your day right here on Bloomberg Daybreak

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Speaker 3: Europe