WEBVTT - Bailey Pulled a Blinder 0:00:00.040 --> 0:00:01.800 His chance of the Quasi Quati says the Bank of 0:00:01.800 --> 0:00:05.040 England would be responsible for any market in volatility after 0:00:05.120 --> 0:00:07.960 its bomb buying program ends, and that infusion, I think 0:00:08.000 --> 0:00:10.680 comes between the financial side of the Bank of England 0:00:11.000 --> 0:00:12.880 and the monitary side of the Bank of England, which 0:00:12.920 --> 0:00:15.240 are now trying to do different things. They're trying to 0:00:15.400 --> 0:00:18.239 hold things together as best they can and trying to 0:00:19.000 --> 0:00:22.759 maintain postability and at the same time address financial stability 0:00:22.760 --> 0:00:25.279 issues with his other instrument Monday. But this is going 0:00:25.320 --> 0:00:27.640 to get tense perhaps. Yeah. So you've got both the 0:00:27.640 --> 0:00:32.519 Prime Minister and the Bank of England. There you have 0:00:32.640 --> 0:00:36.479 the sounds of investors, fund managers, analysts, everyone talking on 0:00:36.520 --> 0:00:40.680 Bloomberg over the last month, throughout the remarkable political and 0:00:40.800 --> 0:00:44.479 financial chaos we've all been witnessing. Of course, everyone's been 0:00:44.560 --> 0:00:47.120 questioning throughout all this the credibility of the Bank of England. 0:00:47.159 --> 0:00:49.320 So where are we now, guilt back to where they 0:00:49.360 --> 0:00:53.920 were actually before Quasi Kwarteng's budget. Liz Trust of course 0:00:53.920 --> 0:00:55.920 did not survive as Prime Minister, but still sitting over 0:00:55.920 --> 0:00:57.560 the road from a here a Bloomberg HQ at the 0:00:57.560 --> 0:01:00.640 Bank of England is Governor Bailey. So We're going to 0:01:00.680 --> 0:01:02.960 ask the question this week, did Andrew Bailey in fact 0:01:03.240 --> 0:01:08.199 fuller blinder? I'm David Merritt. This is In the City, 0:01:08.200 --> 0:01:10.959 Bloombergs podcast, connecting you to these stories and the voices 0:01:11.000 --> 0:01:13.280 of the heart of the city of London. You followers 0:01:13.280 --> 0:01:15.800 of France scenes Instagram or no, she's still in New 0:01:15.880 --> 0:01:18.920 York City in her Halloween costume, no less, but here 0:01:18.920 --> 0:01:21.720 with me in the London studio. I'm joined by Bloomberg 0:01:21.720 --> 0:01:25.680 reporter Phil Audrick and Bloomberg Television Economics and Government correspondent 0:01:26.319 --> 0:01:29.839 Lizzie Burton. Welcome Phil and Lizzie back to in the City. 0:01:30.120 --> 0:01:31.600 But before we get going to discuss I just it's 0:01:31.600 --> 0:01:33.120 just been pointed out to me by my producer that 0:01:33.160 --> 0:01:37.560 the phrase pull a blinder is apparently not internationally recognized, 0:01:38.160 --> 0:01:40.720 and she's got an article about a t eight very 0:01:40.720 --> 0:01:43.600 British phrases that will confuse anybody who didn't grow up 0:01:44.200 --> 0:01:45.840 in Britain. So we're gonna have to define what we 0:01:45.880 --> 0:01:48.040 mean pull a blinder. Lizzie, can you have a go 0:01:48.080 --> 0:01:50.080 at defining what we mean by that? Pulled it out 0:01:50.120 --> 0:01:52.920 the hat? It was he was a walking comms crisis 0:01:53.080 --> 0:01:57.160 and now he's shown how shown how it's done. There 0:01:57.160 --> 0:01:59.560 we go. So would you agree with that film that 0:02:00.160 --> 0:02:05.440 Andrew Bailey is now showing the world how it's done. Yeah. 0:02:05.640 --> 0:02:08.640 The handling of the ld I f s was pretty 0:02:08.680 --> 0:02:10.680 pretty impressive by the by the Bank of England. They 0:02:10.800 --> 0:02:13.840 used a market intervention tool that they never used before. 0:02:14.080 --> 0:02:17.200 It worked, It stabilized along into the guilt market. They've 0:02:17.240 --> 0:02:21.120 started quantitative tightening, so they're starting to sell guilts that 0:02:21.160 --> 0:02:24.320 they bought during the sort of easy years of after 0:02:24.360 --> 0:02:27.400 the financial crisis that has never been tried before. Days 0:02:27.480 --> 0:02:30.800 after this near catastrophe and markets they're able to do this. 0:02:31.280 --> 0:02:34.040 So all of that would suggest that the Bank of 0:02:34.040 --> 0:02:37.120 England has has pulled a blinder here. I think that's 0:02:37.360 --> 0:02:39.880 I'm swelling with pride. What do you think, Lizzie de agree? 0:02:39.960 --> 0:02:41.880 I mean, just throwing it back a bit. The reason 0:02:41.919 --> 0:02:45.080 that I think he pulled a blinder was because Andrew 0:02:45.080 --> 0:02:48.880 Bailey said that this emergency intervention to help out pension 0:02:48.919 --> 0:02:51.240 funds was only going to be temporary, and then you 0:02:51.280 --> 0:02:54.519 had the Chancellor at the time, Quasi quarteng saying that 0:02:54.840 --> 0:02:59.200 if the market termoil continued after the deadline, then that 0:02:59.280 --> 0:03:01.520 was a matter for the Bank of England, so a threat. 0:03:02.120 --> 0:03:05.480 And Andrew Bailey was really saying, get your act together, 0:03:05.480 --> 0:03:08.040 pension funds, and then what it really meant was get 0:03:08.080 --> 0:03:12.880 your act together government. They seemed to liquidity improved and 0:03:13.040 --> 0:03:15.880 it made Quasi Quarteng look like he'd lost to Andrew 0:03:15.880 --> 0:03:17.840 Bailey in the end. Yeah, I mean that it all 0:03:17.880 --> 0:03:22.280 happened in Washington during the IMF meetings, and it was 0:03:20.840 --> 0:03:23.840 where it was. It was it was at the event 0:03:23.840 --> 0:03:27.760 where he where Bailey said, we are ending this temporary 0:03:27.840 --> 0:03:31.160 guilt bye program on Friday as planned. We've announced that 0:03:31.200 --> 0:03:32.680 we will be out by the end of this week. 0:03:32.960 --> 0:03:35.040 You've got three days left. Now you've got to get 0:03:35.080 --> 0:03:37.720 this done, which was that was also when Quarting said 0:03:37.720 --> 0:03:41.360 I'm not going exactly and then and then literally the 0:03:41.400 --> 0:03:44.800 next day, Quarteing's pulled back to the UK, sacked on 0:03:44.800 --> 0:03:48.800 the Friday, and and the government then changes its fiscal policy, 0:03:49.040 --> 0:03:51.640 which was what was unsettling markets. You spoke to speaking 0:03:51.680 --> 0:03:56.320 to bankers and investors in Washingtons big ancillary convention called 0:03:56.360 --> 0:03:59.600 the International Institution Cycle Finance Meetings, and they were all 0:03:59.640 --> 0:04:02.520 saying the problem is not not you know, necessarily what 0:04:02.880 --> 0:04:05.320 is happening in markets. The core of the problem was 0:04:05.360 --> 0:04:07.480 the fiscal plan that was the mini budget. They have 0:04:07.600 --> 0:04:09.720 to deal with that, and Bailey did kind of give 0:04:09.760 --> 0:04:13.280 the government a very strict deadline to address this and 0:04:13.320 --> 0:04:16.080 they responded and of course it caused complete mayhem at 0:04:16.080 --> 0:04:18.800 the top of politics. And let's not forget what's so 0:04:18.880 --> 0:04:22.599 embarrassing for quarteng and Trust is that they spent the 0:04:22.600 --> 0:04:25.240 whole summer trashing the Bank of England and saying that 0:04:25.279 --> 0:04:28.080 the BOE didn't do enough to fight inflation, that it's 0:04:28.200 --> 0:04:32.159 mandate needed reviewing. And then they before they you turned 0:04:32.160 --> 0:04:34.920 on the whole budget sack Quarte and Trust went as well. 0:04:34.960 --> 0:04:37.440 They had to go cap in hand to the BOE 0:04:37.560 --> 0:04:40.440 and say it's independence with sacrosanct and basically dropped the 0:04:40.440 --> 0:04:43.200 mandate reviews. It's just exhausting and I think people listening 0:04:43.240 --> 0:04:45.880 to this um will be you know, their heads are 0:04:45.880 --> 0:04:48.479 spinning right like all of ours were tracking this. So 0:04:48.600 --> 0:04:51.160 just diving this back to where we when we all 0:04:51.240 --> 0:04:54.039 are sat down in the summer, the Tory leadership campaign 0:04:54.160 --> 0:04:57.040 was in midflow and as you said, Lizzie, sort of 0:04:57.080 --> 0:05:00.440 a lot of barbs are being thrown around. We discuss, 0:05:00.440 --> 0:05:03.320 didn't we how the bank was under attack by the 0:05:03.360 --> 0:05:07.479 Tory Party. The Bank of England persisted beyond any rational 0:05:07.520 --> 0:05:11.400 interpretation of the data to tell us that inflation was transient. 0:05:11.800 --> 0:05:13.640 I think we need to look at the best practice 0:05:13.680 --> 0:05:16.600 around the world, the countries who have been most successful 0:05:16.640 --> 0:05:20.960 at controlling inflation, for example, the Bank of Japan. I think, 0:05:21.040 --> 0:05:24.200 Liz Trust use the phrase bean counters right about the 0:05:24.240 --> 0:05:27.520 people who are too obsessed with balancing the budget or 0:05:27.560 --> 0:05:31.680 maybe reining in inflation um And you know the bean counters, 0:05:31.800 --> 0:05:34.760 as we've now seen bit back, didn't they big time? 0:05:35.000 --> 0:05:38.520 And there they had now won the argument. But could 0:05:38.520 --> 0:05:39.920 you just sort of spell us out a little bit 0:05:39.920 --> 0:05:42.599 for the listeners to explain how we got here right now? 0:05:43.040 --> 0:05:46.880 You know you mentioned Phil that the banks started tightening 0:05:47.120 --> 0:05:49.240 on the quantity the contract of tightening before anyone else, 0:05:49.240 --> 0:05:50.919 and then it had to do this emergency measure. But 0:05:50.960 --> 0:05:53.080 can we just give everyone a bit of a timeline. 0:05:53.120 --> 0:05:56.719 Liz Trust wins, She announces that mini budget with quasi 0:05:56.800 --> 0:05:59.360 quateng tell us talk us through what happened in the 0:05:59.400 --> 0:06:01.800 next couple of weeks. Well, was the queen died? Of course, 0:06:01.839 --> 0:06:04.360 that was the integratory He had basically ten ten days 0:06:04.400 --> 0:06:07.200 of zero government and then uh and then and then 0:06:07.640 --> 0:06:10.119 literally just within a few days the mini budget was 0:06:10.120 --> 0:06:13.400 was out and um it was. The bizarre thing was 0:06:13.440 --> 0:06:14.960 that a lot of the mini budget had been trailed 0:06:14.960 --> 0:06:17.520 in advance, like thirty five billion of the forty billion 0:06:17.720 --> 0:06:20.080 tax cuts was trailed in advanced. But the tone of 0:06:20.120 --> 0:06:22.440 the the tone of the statement, the fact that the 0:06:22.480 --> 0:06:25.680 Office for Budget Responsibilities, the chief being counters for the 0:06:25.760 --> 0:06:28.840 UK were not were not involved in this. So there 0:06:28.920 --> 0:06:32.880 was no sense of forecast uh, and there was there 0:06:32.920 --> 0:06:36.039 was there was no there was no watchdog who was 0:06:36.080 --> 0:06:42.440 just who act that the head first in quasi quatting 0:06:42.480 --> 0:06:45.719 did on becoming chancellor. So um, there was no one's 0:06:45.760 --> 0:06:48.840 mark their homework. They pushed back and they've lost exactly 0:06:48.880 --> 0:06:52.359 And so Scholar really knew he had deep connections with 0:06:52.400 --> 0:06:54.560 the markets, he had deep knowledge of financial crisis, having 0:06:54.560 --> 0:06:56.679 been there during the two thousand and eight two thousand 0:06:56.680 --> 0:06:58.760 and nine financial crisis. And so they lose all this 0:06:58.880 --> 0:07:03.200 expertise and and they deliberately sideline the people who can 0:07:03.240 --> 0:07:06.400 who can basically mark the government's homework. Um and uh, 0:07:06.839 --> 0:07:09.560 and of course the markets just suddenly here they get 0:07:09.600 --> 0:07:12.400 this the tone from Quarteng was like, we're going to 0:07:12.480 --> 0:07:15.560 be ambitious and we're pushing ahead. He completely ignored what 0:07:15.600 --> 0:07:17.360 was happening in global markets at the time, which was 0:07:17.400 --> 0:07:20.080 generally interest rates were rising, and the higher interest rates 0:07:20.200 --> 0:07:23.640 obviously increasing debt servicing costs, and so the sustainability of 0:07:23.640 --> 0:07:25.960 the public finances. You know, there's going to be questions 0:07:26.000 --> 0:07:28.760 about it. There was apparently thirty billion of headroom. He 0:07:28.840 --> 0:07:31.160 spent the lot then went beyond it, and actually the 0:07:31.200 --> 0:07:33.320 real picture was probably that the thirty billion of headroom 0:07:33.360 --> 0:07:35.320 had shrunk because we were looking at recession and I 0:07:35.360 --> 0:07:38.680 are interesting say at the time, markets will do what 0:07:38.760 --> 0:07:42.520 they and exactly and so there's this kind of turning 0:07:42.560 --> 0:07:45.600 point at them Ani budget where everybody has seen, has 0:07:45.640 --> 0:07:47.800 listened to the words, and suddenly you see it written 0:07:47.840 --> 0:07:51.120 down that they don't care about the you know, these 0:07:51.200 --> 0:07:55.680 these issues, and the market just literally just flips, completely flips, 0:07:55.720 --> 0:07:58.320 and you have you have these immediate that collapse in 0:07:58.360 --> 0:08:02.480 the power to record low like historic low ever and 0:08:02.800 --> 0:08:06.040 and this and this spike in government borrowing costs which 0:08:06.360 --> 0:08:10.480 caused complete catastrophe at this long end of the market, 0:08:10.520 --> 0:08:12.840 which blew up these ld I funds. That was the 0:08:12.920 --> 0:08:14.440 key thing, wasn't it. This is how you mentioned ld 0:08:14.520 --> 0:08:16.320 I just to explain it over means this is this 0:08:16.400 --> 0:08:18.800 is the pension's market, right. The crisis in the pension's 0:08:18.840 --> 0:08:21.800 market was linked to the surge and boring costs the 0:08:21.920 --> 0:08:25.960 long dated UK government debt, And that's what really freaked 0:08:25.960 --> 0:08:28.840 everybody out, wasn't it. Yeah, because they had collateral demands, 0:08:28.960 --> 0:08:31.960 so that when huge collateral demands, so that when prices 0:08:31.960 --> 0:08:35.040 fell and yields rose to raise the necessary cash, they 0:08:35.040 --> 0:08:37.200 had to sell more guilts. It created a doom loop 0:08:37.360 --> 0:08:40.120 and it was all about the pace of this money 0:08:40.120 --> 0:08:42.400 floating out of the door, not really the level. And 0:08:42.440 --> 0:08:43.959 that's what the Bank of England happened. That's when the 0:08:43.960 --> 0:08:47.240 banking woke up, right when the well, I should be fair. 0:08:47.280 --> 0:08:49.360 I'm sure they are awake all throughout right, but that's 0:08:49.400 --> 0:08:53.199 when they had to take really quite serious action. Remember, Phil, 0:08:53.320 --> 0:08:56.280 we were warned about the market reaction. We had Martin Real, 0:08:56.360 --> 0:09:01.679 the former Bow policymaker on Bloomberg TV, not a headline hunter. 0:09:01.880 --> 0:09:08.600 As Phil putt it uncounter. He utimate. He said there 0:09:08.640 --> 0:09:10.000 was going to be a run on the pound. And 0:09:10.040 --> 0:09:14.640 this was the night before And I must say I 0:09:14.679 --> 0:09:18.320 expect the same sort of thing will happen with Fartean's policy, 0:09:18.559 --> 0:09:21.319 that they'll probably be all I wouldn't like to say when. 0:09:21.480 --> 0:09:24.280 They'll probably be a clear run on the pound, and 0:09:24.320 --> 0:09:26.240 then the Bank of England will be forced to put 0:09:26.320 --> 0:09:30.280 up interest rates to stabilize the exchange rate. Much as 0:09:30.600 --> 0:09:33.520 and former Chancellor Philip Hammond came on, he said, the 0:09:33.640 --> 0:09:37.640 market is watching, the markets are looking very very closely 0:09:37.920 --> 0:09:42.560 at political pronouncements and the UK does face some serious headlings. 0:09:44.080 --> 0:09:48.880 He was encountering. They were all right right lining up 0:09:48.960 --> 0:09:52.120 to warn everybody. Well, in the end we all know 0:09:52.200 --> 0:09:54.760 what happened, right, Liz Trust had to first of all 0:09:54.760 --> 0:09:57.640 fire her chancellor and then in the end her entire 0:09:57.880 --> 0:10:00.679 political project was in tatters and she to resign as 0:10:00.679 --> 0:10:06.719 well and became the shortest tenured prime minister in British history. Um, 0:10:06.800 --> 0:10:08.679 at the Bank of England, can you just explain a 0:10:08.720 --> 0:10:11.120 little bit more about what they had been through, because 0:10:11.440 --> 0:10:15.160 of course they were about to start quantitive tightening, and 0:10:15.200 --> 0:10:18.040 that was the plan to start selling again. The vast 0:10:18.080 --> 0:10:21.680 reserves of UK bonds had built up nine billion pounds 0:10:21.720 --> 0:10:24.880 since the financial crisis. The first central bank to go 0:10:24.920 --> 0:10:27.480 ahead and do that, but then they had to suddenly 0:10:27.559 --> 0:10:30.640 reverse Veriot on that didn't they around to to save 0:10:30.760 --> 0:10:34.320 the pension's market. I mean, I remember on Bloomberg Television 0:10:34.320 --> 0:10:36.880 that day we were calling it quantitative confusion because we 0:10:36.880 --> 0:10:38.600 weren't sure which way they were going to turn. Can 0:10:38.600 --> 0:10:40.200 you give us a bit of insight what was going 0:10:40.200 --> 0:10:42.120 on in the bank at that time? Well, I mean, 0:10:42.120 --> 0:10:44.560 so when we talk about barely playing a blind, I 0:10:44.559 --> 0:10:47.320 think I think you should distinguish into two periods. So 0:10:47.320 --> 0:10:49.719 there was the period of the immediate crisis after the 0:10:49.760 --> 0:10:51.880 mini budget, and I think that was dealt with, you know, 0:10:52.320 --> 0:10:56.400 a series of events that were pretty disastrous. They handled 0:10:56.400 --> 0:11:00.240 it very well. Prior to that. They've had years again 0:11:00.280 --> 0:11:02.199 on top of areas of the market where they could 0:11:02.240 --> 0:11:05.320 see potential in stability and also to build proper functioning 0:11:05.360 --> 0:11:09.160 tools to fix markets when they absolutely need to in 0:11:09.200 --> 0:11:11.080 a crisis, and they and I'd say that they can. 0:11:11.200 --> 0:11:14.320 They failed quite considerably at that end, you know, in 0:11:14.400 --> 0:11:16.600 terms of the preparation, in terms of the in terms 0:11:16.640 --> 0:11:20.600 of the oversight. It's the financial Stability Mandate, financial stop 0:11:20.679 --> 0:11:24.920 another financial crisis in COVID there was this dash for cash. 0:11:25.000 --> 0:11:29.600 Bailey has since in recent weeks conceded that that that 0:11:29.679 --> 0:11:31.760 what the bank did then was a two billion pounds 0:11:32.120 --> 0:11:36.080 quantity of easing a bond purchase, which was basically exactly 0:11:36.080 --> 0:11:38.480 the same as what they did after the ld I 0:11:38.679 --> 0:11:41.480 crisis in the last few weeks. So they bought guilts 0:11:41.760 --> 0:11:46.160 off market participants directly, and that was presented as a 0:11:46.160 --> 0:11:48.880 as a quantitative easy mechanism back in the dash for 0:11:48.920 --> 0:11:51.080 cash days in at the start of the pandemic, because 0:11:51.240 --> 0:11:53.520 monetary policy had to be loosened at the same time, 0:11:53.559 --> 0:11:57.240 and so they were loosening monetary policy, so doing normal QUEI, 0:11:57.720 --> 0:11:59.280 but also at the same time it was serving a 0:11:59.320 --> 0:12:01.840 market stability function. Now, they knew at the time that 0:12:01.880 --> 0:12:03.560 there would be there would be a day when interest 0:12:03.640 --> 0:12:06.560 rates were rising when QT was happening, so quie was 0:12:06.600 --> 0:12:09.000 being sold and they would get a market blow up, 0:12:09.200 --> 0:12:10.960 and the only thing that they could do would be 0:12:11.040 --> 0:12:13.800 to buy guilt. So they would effectively restart QUEE on 0:12:13.840 --> 0:12:17.600 a financial stability mechanism rather than a montary policy mechanism. 0:12:17.679 --> 0:12:20.360 And they knew this would cause vast confusion, but they 0:12:20.440 --> 0:12:23.440 didn't get on top of this matter. And and I've 0:12:23.440 --> 0:12:27.560 been told that people senior policy makers in the bank 0:12:27.640 --> 0:12:31.440 were talking in sort of March around that time about 0:12:31.520 --> 0:12:33.679 them needing these two buckets. They needed to have blue 0:12:33.720 --> 0:12:36.760 queue and red QUEI and and blue QUEI would be 0:12:37.240 --> 0:12:39.800 normal monthly policy queie and red QUEI would be this 0:12:39.840 --> 0:12:47.640 financial stability mechanism. But the matrix right, which, so what 0:12:47.640 --> 0:12:49.600 are you gonna do? But they needed to communicate this, 0:12:49.640 --> 0:12:52.400 They needed to tell everybody beforehand. They needed to design 0:12:52.240 --> 0:12:55.079 a tool, and they were talking about this, and there 0:12:55.200 --> 0:12:58.719 was there was no formal disclosure of all of what 0:12:58.800 --> 0:13:00.679 was going on. They didn't have a to Like they 0:13:00.720 --> 0:13:04.560 have other funitial stability tools, like they've changed the borrowing 0:13:05.360 --> 0:13:07.880 requirements for more mortgages to make it harder to worre 0:13:07.920 --> 0:13:10.199 they did a few years ago. They have these particular tools. 0:13:10.200 --> 0:13:12.600 People know about them, and this one just was like, 0:13:13.040 --> 0:13:15.200 you know, the king of all financial stability tools go 0:13:15.240 --> 0:13:20.440 into the markets by guilt rescue everybody indiscriminately put the 0:13:20.480 --> 0:13:23.760 taxpayer at risk fundamentally, although it actually looks like with 0:13:23.800 --> 0:13:25.680 this l d I stuff, they're going to make a fortune. 0:13:26.720 --> 0:13:30.160 And but it hadn't been communicated and they didn't really 0:13:30.200 --> 0:13:32.959 have have it properly set up. So in that respect, 0:13:33.000 --> 0:13:35.319 it was bad, but in the actual crisis they then 0:13:35.400 --> 0:13:37.280 just sort of unleashed everything they knew they were going 0:13:37.320 --> 0:13:38.920 to have to do, and they did it very well 0:13:39.640 --> 0:13:42.080 and the outcome has been to stabilize them. I mean, 0:13:42.120 --> 0:13:45.160 you know, thinking about the outcome right, even chaos behind 0:13:45.200 --> 0:13:47.800 the scenes. But you know, the market is back, as 0:13:47.800 --> 0:13:49.560 I said, guilt yields are back now at the long 0:13:49.640 --> 0:13:51.400 end of the curd, back down to where they were 0:13:51.520 --> 0:13:53.599 before the Mini budget. You know, we've been talking a 0:13:53.640 --> 0:13:56.960 lot about what sort of permanent scarring is there in 0:13:57.080 --> 0:13:59.640 terms of the guilt market, in terms of London's reputation, 0:14:00.320 --> 0:14:02.720 in terms of the Bank of England. But isn't it 0:14:02.960 --> 0:14:04.480 the case now that things are sort of back to 0:14:04.520 --> 0:14:07.360 where they were and its business as usual. Well I 0:14:07.360 --> 0:14:10.040 did an interview with the Trade Secretary kemmy baden Ark 0:14:10.080 --> 0:14:13.520 which suggests to me that we're still a little bit 0:14:13.760 --> 0:14:18.080 perhaps in the trust era, because she was criticizing the 0:14:18.120 --> 0:14:21.600 Office for Budget Responsibility. She said that it's forecasts are 0:14:21.600 --> 0:14:24.760 not always right. Yes, I do dispute the bas forecast 0:14:24.800 --> 0:14:27.280 because what happens with trade depends on the actions that 0:14:28.240 --> 0:14:30.480 I am my colleagues across government to take right now 0:14:30.600 --> 0:14:33.440 the o b R is probably making a forecast based 0:14:33.440 --> 0:14:35.480 on how we used to do things. They don't know 0:14:35.560 --> 0:14:37.960 how we're going to be doing things, so I think 0:14:38.040 --> 0:14:42.680 we wait and see. We were talking about whether the 0:14:42.680 --> 0:14:48.600 o brs forecasts on Brexit mean that the Trade Department 0:14:48.600 --> 0:14:51.880 ought to reconsider the relationship with the EU, and she 0:14:52.000 --> 0:14:54.840 was referring back to her time as a Treasury minister. 0:14:55.280 --> 0:14:58.360 But really what's interesting about questioning the o b R 0:14:58.640 --> 0:15:01.440 at this moment, when we're about to have a budget 0:15:01.480 --> 0:15:05.280 on November the seventeenth again, is that she's kind of 0:15:05.360 --> 0:15:09.560 undermining its credibility by questioning its sums, just as Clarting 0:15:09.720 --> 0:15:13.000 was doing with the BOE. Just as well. Mark Harney, 0:15:13.120 --> 0:15:16.600 the former BOE governor, said that the government was undermining 0:15:16.600 --> 0:15:20.640 the credibility of the UK's economic institutions. Soonac and Jeremy Hunt, 0:15:20.640 --> 0:15:23.080 the new Chancellor, are going to have to rely on 0:15:23.160 --> 0:15:26.960 the o BRES forecasts to get credibility and markets that 0:15:27.000 --> 0:15:31.280 they can balance the books. Are we to think that 0:15:31.680 --> 0:15:33.880 we can believe the o b R sums on growth 0:15:33.880 --> 0:15:35.760 if we can't believe them on Brexit. I was in 0:15:35.800 --> 0:15:38.480 Washington when the day that Liz Trust resigned and there 0:15:38.480 --> 0:15:40.480 was a lot of kind of sympathetic faces around there, 0:15:40.520 --> 0:15:42.200 the people who have been covering the Trump White House 0:15:42.240 --> 0:15:43.920 and the sort of the chaos that we've been seeing 0:15:44.240 --> 0:15:48.160 it totally broken through in America and all around the world, 0:15:48.200 --> 0:15:50.760 and they were saying, are you okay? You know with 0:15:50.800 --> 0:15:52.120 all this gus And there was a bit of a sense, 0:15:52.200 --> 0:15:56.160 wasn't there when Soona was anointed that maybe in for 0:15:56.160 --> 0:15:58.520 a period of calm here, maybe you know, we're back 0:15:58.560 --> 0:16:00.320 to a little bit more of a kind of nor 0:16:00.360 --> 0:16:03.360 Conserva approach and a little bit of the heat taken 0:16:03.360 --> 0:16:05.120 out debate. But what you're saying, is he is that 0:16:05.760 --> 0:16:07.760 you know, it's the same group of MPs, isn't it 0:16:07.840 --> 0:16:11.120 sitting in the Houses of Commons? And maybe sic priorities 0:16:11.120 --> 0:16:14.960 are not that much different to his his maybe his 0:16:15.000 --> 0:16:18.360 two pre assessors, in fact, both both Trust and Boris Johnson. Well, 0:16:18.400 --> 0:16:23.040 everyone's penning their hopes on Richie Sunac. But um, I 0:16:23.080 --> 0:16:26.600 think you have to ask digg dig a little deeper. 0:16:26.720 --> 0:16:29.640 Let's go past his economics. Is he really a brexitter? 0:16:29.800 --> 0:16:34.840 I was wondering, is he just a brexitter? Because yeah, 0:16:34.960 --> 0:16:37.120 well you need to be a brexitor if you wanted 0:16:37.160 --> 0:16:39.480 to rise to the top of the Tory Party, get 0:16:39.520 --> 0:16:43.560 into power and make change in government. But speaking to 0:16:43.600 --> 0:16:47.120 people who say, look, he's an Atlantic sist, he went 0:16:47.160 --> 0:16:50.400 to Stanford, he worked for Goldman. In his heart he 0:16:50.480 --> 0:16:53.800 believes in Brexit. Then think about the Rwanda policy. He's 0:16:53.960 --> 0:16:57.920 reappointed seller Bravernment as Home Secretary and we are to 0:16:58.000 --> 0:17:02.560 understand that he does believe in sending asylum seekers to Rwanda. 0:17:02.680 --> 0:17:07.240 Doesn't go down well with swades of the UK population 0:17:07.640 --> 0:17:11.479 green policy he demoted to climate ministers. He said he 0:17:11.520 --> 0:17:13.880 wasn't going to cop but well we've been on it. 0:17:14.080 --> 0:17:17.359 He said that he will. There we go. But nonetheless, 0:17:17.880 --> 0:17:21.840 I think Alok Sharma is not attending cabinet. Here is 0:17:21.840 --> 0:17:25.639 a question mark over is green credential. I guess we 0:17:25.720 --> 0:17:28.359 know that he is. He is sort of fiscally conservative, 0:17:28.400 --> 0:17:31.240 so that much was clear during the Borough series where 0:17:31.240 --> 0:17:34.159 he had fights with with Boris Johnson about you know, 0:17:34.200 --> 0:17:38.080 paying for stuff. Cakism was not his economic strategy. But 0:17:38.480 --> 0:17:40.160 what we don't really know about him, as you're kind 0:17:40.160 --> 0:17:42.399 of a leading to, is his is his social and 0:17:42.480 --> 0:17:45.200 his cultural vision for the UK. So we we've still 0:17:45.240 --> 0:17:48.080 got to learn who who Rishi is someone described that 0:17:48.160 --> 0:17:51.000 Jill Rutter at the Institute of Government. She said, it's 0:17:51.000 --> 0:17:52.840 not Singapore on Thames that he wants to create. Here 0:17:52.920 --> 0:17:55.400 is California on Thames. It's like, you know, we want 0:17:55.440 --> 0:18:01.000 to bring Silicon venture capital, spirit of entreprene neuralism to Britain. 0:18:01.040 --> 0:18:03.680 That's his that's his kind of vision. Yeah, right, and 0:18:04.080 --> 0:18:06.520 you know in terms of how that spills over to 0:18:06.560 --> 0:18:08.600 the City of London, right, and his relationship with the 0:18:08.640 --> 0:18:11.440 Bank of England as well. What does that mean? I mean, 0:18:11.480 --> 0:18:15.439 I think he's talked about obviously boosting the city and 0:18:15.480 --> 0:18:17.520 I've got the Services Bill, the Financial Services but is 0:18:17.520 --> 0:18:19.240 making its way through. You know. One thing that really 0:18:19.240 --> 0:18:22.159 struck my eye this week was this suggestion, and this 0:18:22.240 --> 0:18:25.320 has been a controversial amendment to that bill, that the 0:18:25.359 --> 0:18:30.560 government can override the city regulators if there's some what 0:18:30.600 --> 0:18:32.760 they would say as emergency reason, but really for any 0:18:32.800 --> 0:18:35.439 reason that they seem deemed necessary. So again to this 0:18:35.480 --> 0:18:39.679 point about attacking the institutions of Britain or the City, 0:18:40.200 --> 0:18:42.680 the financial services, but in front of Parliament at the moment, 0:18:42.720 --> 0:18:45.560 if if the reports are true, is going to chip 0:18:45.600 --> 0:18:48.800 away at the independence of institutions like the f C 0:18:48.960 --> 0:18:52.119 A and presumably the Bank of England as well, and 0:18:52.200 --> 0:18:54.480 that's got to hurt as well in terms of global investors, 0:18:54.520 --> 0:18:57.040 hasn't it. Some words from the Bank thing then said 0:18:57.040 --> 0:18:59.119 that at Mansion House last week that it would undermine 0:18:59.119 --> 0:19:04.719 the credibility if the city internationally, and well, you just 0:19:05.680 --> 0:19:08.359 you need to think about the offering of the city 0:19:09.160 --> 0:19:12.000 under Sounac if you're going to have all these tax 0:19:12.080 --> 0:19:15.720 rises as well, because the UK Finance was warning that 0:19:16.080 --> 0:19:19.080 London might be less competitive than Frankfurt and New York. 0:19:19.800 --> 0:19:22.280 But at the same time he and Jeremy Hunt need 0:19:22.320 --> 0:19:24.560 to balance the books. As they say, there are eyewateringly 0:19:24.600 --> 0:19:27.440 difficult decisions to make. And if you I mean Sam 0:19:27.480 --> 0:19:30.040 whats the head of the Predational Regulation Authority the Thank 0:19:30.080 --> 0:19:33.640 of England, he U if we're going to I mean 0:19:33.960 --> 0:19:36.959 Richie is a pure Brexiteer because he obviously he backed 0:19:37.600 --> 0:19:39.639 he backed in twenty six and he's only just become 0:19:39.680 --> 0:19:42.240 an MP and at that point he was going against 0:19:42.280 --> 0:19:45.120 the government because the government was a remainer government under 0:19:45.119 --> 0:19:48.400 Cameron Um, so you know, he took an ideological position there. 0:19:48.600 --> 0:19:51.720 And now you've got Brexit and what you don't have 0:19:52.000 --> 0:19:54.960 is we have have access to the financial services on 0:19:55.000 --> 0:19:58.880 the in Europe, and so they're not granting us equivalents. 0:19:59.040 --> 0:20:01.359 You can see his thing, King, We we need to 0:20:01.520 --> 0:20:04.399 be Singapore California in terms we need to deregulate, we 0:20:04.440 --> 0:20:06.720 need to take advantage of this. But of course, as 0:20:06.720 --> 0:20:09.280 the regulators point out, you need to have stables, really 0:20:09.280 --> 0:20:12.720 stable financial center. That is a prerequisite of a strong 0:20:13.000 --> 0:20:16.600 a strong city. So there's this balance which he's obviously 0:20:16.640 --> 0:20:19.320 trying to strike, which the regulators think he's planning to 0:20:19.320 --> 0:20:22.320 go too far on, which is a sort of deregulatory 0:20:22.440 --> 0:20:26.199 drive to to boost growth using the city, which was 0:20:26.320 --> 0:20:29.080 kind of what happened in the eighties and the Thatcher 0:20:29.160 --> 0:20:31.920 with the Big Bang. And it's but I mean, you're 0:20:31.920 --> 0:20:33.560 not going to get a new Big Bang when everything 0:20:33.600 --> 0:20:37.680 has already been deregulated. So it's all, yeah, it's a 0:20:37.840 --> 0:20:41.679