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Speaker 1: This is Bloomberg Daybreak here for this Wednesday, the seventeenth

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Speaker 1: of May in London, coming up today.

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Speaker 2: Lacking ambition, the Lord Mayor tells us the UK needs

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Speaker 2: to get off the back.

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Speaker 1: Foot, don't bang on it. Wall Street gets a China

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Speaker 1: reality check, not.

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Speaker 2: Quite dancing on the ceiling. Biden and McCarthy voice course shots,

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Speaker 2: optimism on a debt deal.

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Speaker 1: And paper profit. UBS gets a thirty five billion dollar

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Speaker 1: gain from its credit Sweeze takeover.

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Speaker 3: That's all straight ahead on Bloomberg Daybreak Europe. The Business

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Speaker 3: News You need to start your day in just one

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Speaker 3: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 3: and everywhere you get your podcasts.

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Speaker 1: Good morning, I'm Caroline Hepka.

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Speaker 2: Tom to our top stories this morning. The Lord Mayor

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Speaker 2: of the City of London says Britain is on the

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Speaker 2: back foot post Brexit. Asked if the UK is being

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Speaker 2: ambitious enough, Nicholas Lions had this response.

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Speaker 4: It's not and we need to get on the front foot.

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Speaker 4: We've got massive assets to push. But there is a

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Speaker 4: broader cultural point about the creation of wealth. The creation

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Speaker 4: of wealth in this country has become almost a dirty

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Speaker 4: topic to talk about. We cannot provide the services we

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Speaker 4: want in our national health service, in our care system,

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Speaker 4: in our educational system if we're not driving productive growth

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Speaker 4: in the UK economy that comes from a thriving city

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Speaker 4: and from a more mature approach to the creation of

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Speaker 4: wealth and the creation of jobs. We've got to have

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Speaker 4: that debate. We've got to have that discussion. We've got

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Speaker 4: to talk about the way we remunerate the best executives

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Speaker 4: in this country.

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Speaker 2: Speaking to us on Bloomberg Radio, Alliance called for a

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Speaker 2: fifty billion pound venture capital fund to scale up fintech

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Speaker 2: and entrepreneurship in Britain.

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Speaker 1: Well, the Lord Mayor's comments, we're underline by one of

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Speaker 1: our guests this morning, Zarados Marni from Martin Curry. He

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Speaker 1: told us that investors see Britain as a troubled economy.

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Speaker 5: The UK in itself is quite a challenged economy at

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Speaker 5: the moment, not least because of the uncertainty that the

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Speaker 5: Brexit event has created and also the follow through in

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Speaker 5: terms of how Brexit has been carried. It's got to

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Speaker 5: be set so.

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Speaker 1: So Edos Marni there. Well, those views have been picked

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Speaker 1: up by the likes of City Grand d Yander Pluss.

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Speaker 1: Last week, he told Bloomberg that it's clear that over

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Speaker 1: the last fifteen years the UK has been declining as

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Speaker 1: a financial capital.

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Speaker 2: Now, US banks has spent billions trying to stake a

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Speaker 2: claim on China's sixty trillion dollar financial market, but a

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Speaker 2: Bloomberg investigation has found many and now quietly scaling back

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Speaker 2: their ambitions. Bloomberg opinion column of Hudi Renz says there

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Speaker 2: are big risks for non Chinese banks as long as.

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Speaker 6: The presence Ushenpin continues with this industrial push. Basically, at

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Speaker 6: this point, only domestic banks, especially SOE banks, are there

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Speaker 6: to finance this industrial push because for everyone else there

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Speaker 6: is the danger of infringing upon China's national security risk

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Speaker 6: or whatever they call it.

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Speaker 2: She'd wren has also pointed out that China recently moved

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Speaker 2: to allow foreign firms full ownership of financial services. However,

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Speaker 2: that hasn't stopped raids on consultancies conducting due diligence for

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Speaker 2: global investors.

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Speaker 1: Now to US News, debt ceiling talks are ramping up

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Speaker 1: after a meeting between President Biden and the House Speaker

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Speaker 1: Kevin McCarthy. The latest round of negotiations, though will feature

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Speaker 1: a narrower group of people in the hopes that it

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Speaker 1: yields a deal to averted unprecedented US default. While there's

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Speaker 1: still clear water between the two sides, the present says

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Speaker 1: he's cautiously optimistic.

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Speaker 7: We just finished another good, productive meeting with our congressional

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Speaker 7: leadership about a path forward to make sure that America

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Speaker 7: does not to fall on his debt. There's still work

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Speaker 7: to do, but I made it clear to the Speaker

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Speaker 7: and others that will speak regularly over the next several days,

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Speaker 7: and the staff is going to continue meeting daily to

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Speaker 7: make sure we do not befall.

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Speaker 1: Biden's comments were echoed by McCarthy, who says that a

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Speaker 1: deal is possible within days, although both sides are still

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Speaker 1: far apart. The Treasury says that the United States could

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Speaker 1: default as soon as the first of June if the

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Speaker 1: debt ceiling isn't lifted now.

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Speaker 2: After ten months of consecutive rate rises, divisions are starting

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Speaker 2: to emerge between FED policymakers on when to stop. Chicago

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Speaker 2: FED President Austin Goolsby told Bloomberg's Michael McKee it was

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Speaker 2: the strangest business cycle in history.

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Speaker 8: Inflation is down and continues to make progress. It's not

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Speaker 8: as fast as we wanted it to or we expected

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Speaker 8: it to be, and therein lies the that's the noobe,

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Speaker 8: the of the issue of can you get it down

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Speaker 8: more without starting a recession. Because we have a dual landing,

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Speaker 8: we've got to look at employment and inflation.

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Speaker 2: Golesby's a voting member of the FMC this year, as

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Speaker 2: is New York Fed chief John Williams and Dallas President

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Speaker 2: Lourie Logan. They all say coming data is going to

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Speaker 2: be important as the central Bank tries to assess if

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Speaker 2: it has done enough to tame inflation.

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Speaker 1: Now to Corporate News, UBS says that its emergency takeover

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Speaker 1: of credit Sueeze could boost its bottom line by thirty

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Speaker 1: five billion dollars this quarter, But as well as the

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Speaker 1: massive accounting gain, UBS says that it's projecting billions in

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Speaker 1: potential legal and regulatory costs. The boost profits comes from

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Speaker 1: quote negative goodwill, which many investors consider an accounting quirk.

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Speaker 2: Here in the UK, crypto trading should be regulated like gambling.

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Speaker 2: That's according to the Treasury Select Committee.

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Speaker 9: Bloomberg's Unpots reports, investing in crypto assets like bitcoin should

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Speaker 9: be treated like gambling. That's the view of MPs on

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Speaker 9: the Treasury Select Committee. The cross party group has strongly

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Speaker 9: recommended the changes for retail investors, warning that cryptos are

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Speaker 9: highly volatile and have quote no intrinsic value. The proposal

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Speaker 9: comes after a month's long inquiry and Ron's counter to

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Speaker 9: the government stated plan to regulate digital coins like traditional

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Speaker 9: financial services. Days from HMRC shows around ten percent of

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Speaker 9: UK adults hold or have held crypto assets. The reports

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Speaker 9: also criticized the government for spending public resources on supporting

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Speaker 9: cryptoactivities and singled out a plan now scrapped by the

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Speaker 9: Royal Mint for an NFT in London.

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Speaker 2: I'm you in pots Bloomberg day Break Europe.

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Speaker 1: Okay, those were a few of our top stories this morning.

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Speaker 1: So we're talking a lot about the competition that London

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Speaker 1: faces globally. Our interview with the Lord Mayor of the

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Speaker 1: City of London. It comes really at a moment of

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Speaker 1: a lot of focus on this issue. Berkley's for example,

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Speaker 1: just today we were reporting that they expect to increase

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Speaker 1: their head count in Paris by two thirds. So they've

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Speaker 1: got about three hundred folk in Paris now and they

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Speaker 1: might increase that by two hundreds.

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Speaker 2: But I just think the symbolism of this, this UK

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Speaker 2: Bank Barkley's adding headcount in Paris is just a reminder

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Speaker 2: of the bleed as a result of Brexit on this

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Speaker 2: financial sector. And we had JP Morgan's events last week

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Speaker 2: in Paris where again they just underscored how important that

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Speaker 2: capital is for them as they look to the European

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Speaker 2: market and they're building out and adding headcount in Paris

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Speaker 2: in France as they look to take advantage as those opportunities. Yeah,

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Speaker 2: so this is real, it's happening, and it's a loss

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Speaker 2: for the UK.

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Speaker 1: It is I think it's and I'd argue it's more

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Speaker 1: than just symbolic. On the look the UK though, as

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Speaker 1: Nicholas Lions was saying, is still a major player a

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Speaker 1: you know, in fintech in terms of investment, in the

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Speaker 1: size of the stock market here and so much more so,

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Speaker 1: it's easy to be down on the UK, and yet

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Speaker 1: there is a sense, isn't there. And Lions reflected this

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Speaker 1: that the UK needs to really think bigger in terms

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Speaker 1: of its plan. Speaking of which, let's have a listen

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Speaker 1: to some of the interview with the Lord Mayor of

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Speaker 1: the City of London he's saying that the city's being underestimated.

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Speaker 1: On the other hand, the UK does need to be

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Speaker 1: more ambitious in how it capitalizes on the power of capital.

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Speaker 1: Have a listened to Nicholas Lions, the Lord Mayor of

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Speaker 1: the City of London.

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Speaker 4: There are three things that contribute to this. One is

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Speaker 4: the fact that we've got again it's an advantage, but

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Speaker 4: it's an untapped advantage. We've got four trillion pounds in

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Speaker 4: our pension system, but it's only seven percent invested in

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Speaker 4: unlisted assets like infrastructure, loans, real estate, private equity, private debt.

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Speaker 4: When you look at the most successful pension systems in

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Speaker 4: the world, that's thirty thirty five percent. In some of

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Speaker 4: the cases of the Canadian pension firms, it's fifty percent

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Speaker 4: in those unlisted asset classes. So we've failed so far

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Speaker 4: to deliver the sort of returns that our policyholders need

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Speaker 4: to give to get proper retirement income. Second is, and

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Speaker 4: again it's connected with that, we've had a de equitization

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Speaker 4: over twenty years. This is not a Brexit issue. This

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Speaker 4: is something that's happened over twenty years that resulted from

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Speaker 4: changes to the final salary scheme, pension system so dB

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Speaker 4: pensions are effectively now in runoff and that means that

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Speaker 4: they're very little invested in equities listed or otherwise and

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Speaker 4: invested very heavily and fixed income. And then the third

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Speaker 4: area is we have got again, this is a this

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Speaker 4: is a an asset that we've failed to capitalize. And

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Speaker 4: we've got the most productive, most entrepreneurial country. You know,

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Speaker 4: we're the third largest country in fintech in the world

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Speaker 4: after America and China. We've got more fintech startups and

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Speaker 4: the rest of Europe put together. We've got more fintech

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Speaker 4: unicorns in Japan, Singapore, France, Germany all put together. But

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Speaker 4: we've got to keep these businesses in the UK and

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Speaker 4: we've got to create the ecosystem that encourages them. And

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Speaker 4: that's why what I'm proposing is that we set up

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Speaker 4: a fifty billion pound Future Growth Fund that invests in

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Speaker 4: a later stage VC follow on VC that in the

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Speaker 4: tech fintech, life science and biotech and green and renewable

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Speaker 4: tech areas. That's where the future economy of the UK

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Speaker 4: lies and that's what the financial services industry has to deliver.

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Speaker 4: And they are the best brains in the city right now.

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Speaker 4: Are focusing on delivering this.

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Speaker 1: I think that's a really important point, isn't it. That's

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Speaker 1: a huge hole that a lot of people have identified

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Speaker 1: the kind of scale up cash. It's got to be

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Speaker 1: enough money though, And just going back to the pensions

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Speaker 1: issue though unlisted assets that to me screams risk. Pension

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Speaker 1: funds are not going to be able to do that.

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Speaker 2: Are that?

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Speaker 4: Do you deliver returns?

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Speaker 10: How?

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Speaker 2: What? What is?

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Speaker 4: The financial whole financial services industry is based on risk.

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Speaker 4: That's what we do. We analyze, we measure, we mitigate,

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Speaker 4: or we accept risk. That's how you deliver returns. We

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Speaker 4: have we have been so risk averse as a country

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Speaker 4: that we have prevented people from getting the returns that

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Speaker 4: they need. You can you can overregulate, You can enforce

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Speaker 4: buffer upon buffer on capital ratios on your banks and

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Speaker 4: your insurance companies, and you can stop them doing certain business.

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Speaker 4: You can you can protect customers by giving them no

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Speaker 4: exposure to risk, but that gives them no returns. We

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Speaker 4: haven't got the balance right. That balance has to swing

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Speaker 4: and there is a very good debate now with the

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Speaker 4: regulators about this. And as we look at the Edinburgh

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Speaker 4: reforms that we look at the Financial Services and Markets Bill.

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Speaker 4: These are we're looking at just moving the dial. It's

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Speaker 4: not radical, This is not big bang two point zero,

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Speaker 4: but it is a move in the dial that is

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Speaker 4: very very much needed right now.

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Speaker 1: I think that's really interesting that you talk about lack

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Speaker 1: of ambition. I mean that again is very much in

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Speaker 1: the kind of the zeitgeist. Perhaps at the moment. You know,

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Speaker 1: how ambitious is the UK. Is it ambitious enough being

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Speaker 1: out of the EU?

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Speaker 4: It's not, and we need to get on the front foot.

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Speaker 4: We've got massive assets to push. But there is a

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Speaker 4: broader cultural point about the creation of wealth. The creation

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Speaker 4: of wealth in this country has become almost a dirty

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Speaker 4: topic to talk about. But we cannot provide the services

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Speaker 4: we want in our national health service, in our care system,

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Speaker 4: in our educational ste system if we're not driving productive

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Speaker 4: growth in the UK economy that comes from a thriving

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Speaker 4: city and from a more mature approach to the creation

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Speaker 4: of wealth and the creation of jobs. We've got to

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Speaker 4: have that debate. We've got to have that discussion. We've

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Speaker 4: got to talk about the way we remunerate the best

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Speaker 4: executives in this country. But we've also got to democratize

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Speaker 4: the returns from the growth economy, the future productive capacity

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Speaker 4: of this country by giving people in their pensions exposure

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Speaker 4: to that risk asset class, that venture capital class. And

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Speaker 4: what I'm talking about is a tiny sliver of everybody's pensions,

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Speaker 4: tiny sliver in a fifty billion pound fund that has

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Speaker 4: massive risk diversification in this great asset class.

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Speaker 1: So that was Nicholas Lars, the Lord Mayor of the

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Speaker 1: City of London's talking about the need for more wealth

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Speaker 1: creation in the UK.

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Speaker 2: And the conversation about how we think about wealth creation

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Speaker 2: as well. Let's bring in Bloomberg City Editor Catherine Griffith

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Speaker 2: to break all of this down. Catherine, thanks for joining

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Speaker 2: us in the stud So, the voices, and you know,

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Speaker 2: as Caroline was pointing to early in the show, the

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Speaker 2: voice is really clamoring for a change or addressing some

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Speaker 2: of these issues, is just becoming louder. What is driving

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Speaker 2: do you think this sentiment?

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Speaker 10: So, I think lots of things are driving the sentiment.

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Speaker 10: I think that sort of across the country, people feeling poorer,

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Speaker 10: people having tougher lives, That feeding through into sort of

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Speaker 10: discontent that we see in strikes, and the government knowing

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Speaker 10: it needs to do something about the UK's lack of

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Speaker 10: growth is a huge driver of the sentiment. And at

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Speaker 10: the same time we've got people in the business world,

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Speaker 10: people in the city perhaps in particular, being a little

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Speaker 10: bit bolder about coming out into the public domain and

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Speaker 10: saying that there needs to be more risk taken, challenging

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Speaker 10: certain sort of established things like you know, criticism of

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Speaker 10: the Regulator. A few years ago, they would have kept

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Speaker 10: their head down when we think back to Brexit, the

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Speaker 10: business community kept very quiet despite the fact that it's

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Speaker 10: thought Brexit was an enormous disaster. We're seeing a sort

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Speaker 10: of a willingness to be a little bit more bold

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Speaker 10: and in public again, particularly among the financial community, to

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Speaker 10: articulate the problem and to sort of try and put

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Speaker 10: forward some constructive ideas as solutions.

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Speaker 2: Yeah.

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Speaker 1: I think is a fascinating moment in Britain, isn't it.

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Speaker 1: Is there a lack of ambition by government? I mean

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Speaker 1: we're only just through the Liz Trust moment.

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Speaker 10: Yeah, I think that's absolutely at the crux of it.

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Speaker 10: I think there's a huge I think the ambition is there,

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Speaker 10: but I think there's also a cynicism in government too,

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Speaker 10: which is that they know full well that they're on

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Speaker 10: the back foot on a range of different fronts, and

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Speaker 10: they know that they've got the election in just over

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Speaker 10: a year. They know they've got all these other problems

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Speaker 10: which will probably be top of mind of voters, and

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Speaker 10: so they want to seem to be ambitious on this stuff.

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Speaker 10: But they want to say we're the Party of growth.

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Speaker 10: We've got a Prime Minister and a Chancellor who come

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Speaker 10: from a business background. We've got an incredibly energetic city minister.

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Speaker 10: They all want to say that we're going to do

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Speaker 10: lots of really bold things. Andrew Griffith, the City Minister,

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Speaker 10: yesterday talked about being on a crusade to bring about

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Speaker 10: loads of really big changes. But actually, when it really

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Speaker 10: comes down to it, what will we see in the manifesto?

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Speaker 10: What will we see in the autumn statement. I think

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Speaker 10: that there's a frustration growing, perhaps that the words are

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Speaker 10: not matched by the actions, or at least the plans

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Speaker 10: for actions.

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Speaker 2: Talk to us about how that is related or not

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Speaker 2: to the relationship between between government, the citing government and

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Speaker 2: the civil service. Some within the Tory Party described the

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Speaker 2: civil service very uncharitably as the blob and then the

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Speaker 2: private sector. The interaction between those three parts and how

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Speaker 2: that plays into whether or not progress enough progress is

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Speaker 2: being made, or ever in the deed that there's a

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Speaker 2: block there.

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Speaker 10: Yeah, I think so. Whether the blob thing comes into

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Speaker 10: our part of the debate, I suppose it's around the

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Speaker 10: institutions like the Bank of England and the regulators. And

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Speaker 10: we went on this kind of extraordinary path in this

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Speaker 10: country last year with liz Trust and Quasi quarteng where

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Speaker 10: they sort of launched this big attack on our institutions,

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Speaker 10: particularly the Bank of England, and that led to a

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Speaker 10: sort of a real a huge debate about whether this

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Speaker 10: was the kind of thing that was appropriate in the UK,

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Speaker 10: whether it was democratic, to what extent that actually affected

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Speaker 10: the UK's competitiveness.

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Speaker 1: Yeah, absolutely, Catherine, thank you so much for being with us.

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Speaker 1: Bloomberg City Editor Catherine Griffiths on well, a moment in

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Speaker 1: the UK around ambitions and what the government is doing.

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Speaker 11: This is Bloomberg Daybreak Europe. You're morning brief on the

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