Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: Joining us now is Jim O'Neil, former chief economist at
Speaker 2: Gold and Sachs and a former Treasury minister who's advised
Speaker 2: multiple governments on growth initiatives. Jim, welcome back to Bloomberg Radio.
Speaker 2: Thank you so much for your time. Just want to
Speaker 2: quote to you what you said in October. I'm sure
Speaker 2: you'll remember last year you were on BlueBag you said
Speaker 2: that Keir Starmer shouldn't go even if they do really
Speaker 2: badly in the main local elections. This is you speaking
Speaker 2: what new thing would a new leader bring while the
Speaker 2: Labor Party did indeed do badly in those local elections.
Speaker 2: What is your view now? Should Starmer still stay?
Speaker 1: I kind of.
Speaker 3: Still think broadly the same. There's a number of issues
Speaker 3: that affect me, but at the core, And thanks for
Speaker 3: reminding me of what was said, because I actually do
Speaker 3: think pretty similar that the you know, the Tory Party
Speaker 3: effectively been semi destroyed by constantly bringing in new, supposed
Speaker 3: great leaders without going to the British public. And I
Speaker 3: think if the Labor Party start doing that on top
Speaker 3: of what has already unfolded in nearly two years of
Speaker 3: them I think that could be structurally pretty damaging for
Speaker 3: them as well. That the idea that any of these
Speaker 3: candidates that are being mentioned as some kind of you know,
Speaker 3: Margaret Thatcher or Tony Blair type characters to give a
Speaker 3: whole new meaning to the future of the country is
Speaker 3: is not something that I think is going to necessarily
Speaker 3: go down with the public. So for that reason alone,
Speaker 3: I think it would be very foolhardy of the Labor
Speaker 3: Party to do it. Second secondly, you know, link linked
Speaker 3: to the sort of madness that's gone over the country
Speaker 3: ever since the exit vote, whether the whole machine in
Speaker 3: many ways, the intellectual leadership of the country still hasn't
Speaker 3: figured out how to deal with it. This sort of
Speaker 3: impatience that we as the public have got that, you know,
Speaker 3: if it hasn't been miraculous solutions delivered in five minutes,
Speaker 3: we have to have some dramatic change you and give
Speaker 3: it a chance to somebody else. Itself is contradictory with
Speaker 3: what I've said before, because unless we can boost the
Speaker 3: labor force, unless we can boost trade with places that
Speaker 3: really matter, including Europe, then it's not obvious how we're
Speaker 3: going to get out of this sort of vicious circle
Speaker 3: that we're in. That there are a few other things
Speaker 3: that I think they could do to help boost things,
Speaker 3: but you know, those two things.
Speaker 1: Have said quite a core problem.
Speaker 3: Whoever happens to be sitting in number ten, Jim, let.
Speaker 4: Me ask you about one of the candidates who could
Speaker 4: potentially replace kist Armory hasn't got a seat in Parliament
Speaker 4: right now. But I wonder whether you think the bond
Speaker 4: market will ever forgive Andy Burnham's comment that politicians shouldn't
Speaker 4: be in hoc to it.
Speaker 3: Well, it doesn't look like the markets are in too
Speaker 3: great a mood to do that right now, given where
Speaker 3: the guilt markets opened up this morning, although I quickly
Speaker 3: had obviously some of that is also because of the
Speaker 3: rise in US eels and the renewed rising Brent crude prices.
Speaker 1: But if you look at the way the spreads traded
Speaker 1: in the.
Speaker 3: Past month as the renewed speculation about Andy coming back
Speaker 3: has grown, there's the market verdict, and it's not obvious
Speaker 3: to me how Andy can climb back down from that,
Speaker 3: and how markets believe in a in a hurry, And
Speaker 3: I quickly add, given how heavily involved I am in
Speaker 3: the whole Greater Manchester story in Northern Powerhouse. You know,
Speaker 3: I'm in the camp that thinks it would be great
Speaker 3: if Andy stayed where he was, to be honest, because
Speaker 3: the momentum going on in Greater Manchester is fantastic and
Speaker 3: it's not obvious to me also following Thursday, if Andy
Speaker 3: stepped down and there was another election, that we'd get
Speaker 3: anything other than the reform character coming through, like we're
Speaker 3: getting all over the place, and I'm not sure that's
Speaker 3: great for the whole devolution and sort of power of
Speaker 3: what places like great Manster especially have been doing the
Speaker 3: past decade.
Speaker 2: Yeah, and Manchester being the second largest urban economy after London,
Speaker 2: you know, hugely important. I think that's an interesting part.
Speaker 1: Outgrown London by three times in the past.
Speaker 2: Exactly. Yes, this is yeah, absolutely Andy Burnham's line, isn't
Speaker 2: it clearly his his selling point? Look, what about Gordon
Speaker 2: Brown and Harriet Harmon bringing them back? What does that say?
Speaker 2: Does that help or hinder starm if you think that
Speaker 2: he should? I mean, can he really cling on? Realistically?
Speaker 3: I mean, I feel how do I put it carefully?
Speaker 3: I mean I know all these people pretty well, and
Speaker 3: I like a lot of them. Especially Gordon and Andy.
Speaker 3: But I'm not sure bringing Gordon back is great for
Speaker 3: the Chancellor image wise because obviously what Gordon's main strength
Speaker 3: was in the past. And secondly, Gordon represents the old
Speaker 3: school and the old days, and I'm not sure he
Speaker 3: or Harriet really bring around this sort of seeming desire
Speaker 3: for some kind of new approach the last Thursday's implied
Speaker 3: results seem to want and call for. So what the
Speaker 3: Prime Minister's going to do in the next couple of
Speaker 3: hours has come up with some what looks like not
Speaker 3: briefed thing in advance where it's really going to change
Speaker 3: people's belief about how we're going to get greater growth
Speaker 3: and greater belief that the Labor Party is delivering for
Speaker 3: all these confused and contradictory.
Speaker 4: Factions, well, it was reformed that when a lot of
Speaker 4: the seats off Labor at the local elections. Jim, when
Speaker 4: you listen to them, they say they're all about growth.
Speaker 4: Do you believe any of the policy when it comes
Speaker 4: to economics from Nigel Farage, I.
Speaker 1: Don't really believe that. I don't.
Speaker 3: I think if you look at reform proposals, it's just
Speaker 3: it would scare the hell out of the guilt market
Speaker 3: even more, maybe that's partly why the guilt market is
Speaker 3: also struggling, because the markets may be coming to the
Speaker 3: inevitable conclusion that whoever appears, whether it's Kis Starmers staying
Speaker 3: on or somebody else, nothing's going to change and we're
Speaker 3: going to get a reform government. But if you look
Speaker 3: at all the sort of good is that Farage and
Speaker 3: his close colleagues are promising, that implies much bigger budget
Speaker 3: deficits than we have now and the massive constraints of
Speaker 3: the labor force. So how are we going to get
Speaker 3: anything vaguely better than what we have now is pretty
Speaker 3: impossible for me to see at the moment.
Speaker 2: And what about the triple lock. I mean, one of
Speaker 2: the key issues for the budget is the fact that
Speaker 2: it is massive spending on things like pensions, you know,
Speaker 2: the promise to keep pensions state pensions rising. That is
Speaker 2: that is very significant. It's one of the kind of
Speaker 2: main anchors for the for the budget thing weighing the
Speaker 2: budget down. They won't, they haven't, they've they've stuck to it.
Speaker 2: Reform and the Labor Party exactly.
Speaker 3: I mean again, it's part of this sort of madness
Speaker 3: that's taken over the country. I mean, there are three
Speaker 3: or four things that seem very obvious to me that
Speaker 3: some leader at some point is going to be honest
Speaker 3: and bold about and we're going to have a different,
Speaker 3: better outlook, and that includes getting with the triple lock.
Speaker 3: It is completely bonkers. It is very unfair to younger generations,
Speaker 3: and everybody knows in private that it needs to go,
Speaker 3: but nobody's bold enough to say it as a policy. Secondly,
Speaker 3: along with that, we have some crazy inconsistencies going on
Speaker 3: welfare payments, particularly with the so called pip payments, where
Speaker 3: probably from the data outlooks close to a million people
Speaker 3: who are claiming all three of them are earning more
Speaker 3: than you get on the minimum wage, which is completely insane. Also, thirdly,
Speaker 3: despy endless talk about doing something fundamental to the housing market.
Speaker 3: We need to completely shift the incentive structure to make
Speaker 3: sure that it's the value of the land that's taxed,
Speaker 3: not the value of things that go on it, and
Speaker 3: so we can get a much more dynamic housing market
Speaker 3: and much more flexibility of social flexibility. And then lastly
Speaker 3: we've got to be much more candid about the other
Speaker 3: things within government spending, and this notion that we just
Speaker 3: carry on spending more on health whatever goes on forever,
Speaker 3: is equally insane, and especially in this area of AI,
Speaker 3: we need to have a proper policy on trying to
Speaker 3: truly improve using modern technology.
Speaker 1: The health service.
Speaker 3: And if you did all these four things, I think
Speaker 3: you'd see a dramatically different, more positive mood from the
Speaker 3: financial markets. And with it you get a boost in
Speaker 3: financial conditions and probably a much greater lifting business and
Speaker 3: consumer confidence pretty quickly.
Speaker 2: Yeah. And the I pointed this out ahead of the
Speaker 2: last general election and ahead of the local elections that
Speaker 2: actually the manifestos that people were not the politicians not
Speaker 2: telling the truth about this a word for the poor
Speaker 2: British voter. The madness that you say sweeping the UK.
Speaker 2: I want to put the point that Britain hasn't seen
Speaker 2: wages grow. We've got GDP data this week. I'm not
Speaker 2: sure we can even trust the data. GDP has been
Speaker 2: week stagflation stalking the UK. I mean, is it not
Speaker 2: understandable that voters are trying to cast around for an
Speaker 2: actual solution.
Speaker 1: I mean, of course it's not just unique to the UK.
Speaker 3: This is happening in a lot of European countries and
Speaker 3: to some degree obviously is behind the chump strength. International
Speaker 3: liberal capitalism as is on the TIN hasn't effectively worked
Speaker 3: properly for the past thirty years, and so that justifies
Speaker 3: the voter as searching around in the way you described.
Speaker 3: But what is bizarre is that they obviously don't really
Speaker 3: look at what the policies of these radical newcomers suggest,
Speaker 3: because as I said a few minutes ago, certainly from
Speaker 3: what I can see, they're even worse in terms of
Speaker 3: the incompatibility with getting growth and having stable financial markets.
Speaker 1: And they would deliver more or worse of what we've
Speaker 1: got now. Now it might well be that we need
Speaker 1: to see one.
Speaker 3: Of those radical parties actually having proper responsibility and they'd
Speaker 3: last five minutes as well, and then we can finally
Speaker 3: have a bit more honest and clear growth boosting policies
Speaker 3: coming through from something a bit more conventional. But at
Speaker 3: the moment it all seems completely crazy to me, and
Speaker 3: there's no two ways of saying it. That the voters
Speaker 3: appear to want reform, but it's not obvious to me
Speaker 3: why