WEBVTT - Exclusive: Is Britain Adrift? Plus: UBS finalizes Credit Suisse Takeover 0:00:02.560 --> 0:00:05.440 This is Bloomberg Daybreak Europe for this Monday, the twelfth 0:00:05.440 --> 0:00:06.560 of June in London. 0:00:06.640 --> 0:00:09.000 Coming up today, Britain adrift. 0:00:09.119 --> 0:00:12.480 The evidence grows that the UK has gone from charting 0:00:12.520 --> 0:00:14.960 its own course to going off course. 0:00:15.160 --> 0:00:16.560 We have a special report. 0:00:16.720 --> 0:00:19.400 A warning from the Chairman of M and S, Archie Norman, 0:00:19.480 --> 0:00:23.640 tells us Sunak's government desperately needs to rebuild the business ties. 0:00:23.920 --> 0:00:25.560 Boris Johnson swept away. 0:00:26.040 --> 0:00:29.400 One hundred and sixty seven years of independence comes to 0:00:29.440 --> 0:00:34.640 an end. UBS finalizes its takeover of troubled rival Credit Sweee. 0:00:34.520 --> 0:00:38.559 Plus political dramas worthy of Shakespeare. Boris Johnson quits Parliament 0:00:38.640 --> 0:00:41.880 and the former Scottish First Minister, Nicholas Sturgeon is arrested. 0:00:43.760 --> 0:00:47.600 That's all straight ahead on Bloomberg Daybreak Europe. The business 0:00:47.640 --> 0:00:49.800 news you need to start your day in just one 0:00:49.920 --> 0:00:54.400 fifteen minute podcast on Apple, Spotify, the Bloomberg Business App 0:00:54.520 --> 0:00:56.680 and everywhere you get your podcasts. 0:01:00.560 --> 0:01:02.160 Good morning, I'm Stephen Carroll and. 0:01:02.120 --> 0:01:05.319 I'm Caroline Hetger. Here are the stories that we're following today. 0:01:05.760 --> 0:01:09.119 Some of the world's biggest companies are highlighting the deteriorating 0:01:09.200 --> 0:01:13.039 investment climate in the UK. An investigation by us here 0:01:13.080 --> 0:01:16.160 on Daybreak Europe and the Bloomberg Newsroom has found that 0:01:16.200 --> 0:01:19.280 business leaders believe the government has failed to meet the 0:01:19.360 --> 0:01:23.600 twin challenges of Brexit and the foreign subsidies arms race. 0:01:23.920 --> 0:01:26.920 Here's what the chairman of Marx and Spencer, Archie Norman, 0:01:27.000 --> 0:01:27.520 told us. 0:01:28.680 --> 0:01:31.479 Other countries are saying, No, we need laboratory as systems. 0:01:31.560 --> 0:01:33.560 No we need more coders, No we we need more 0:01:33.600 --> 0:01:37.000 data suntists. We seem to be agnostic. We don't know 0:01:37.000 --> 0:01:39.560 what we need and that's not good enough. The footprint 0:01:39.560 --> 0:01:42.440 of government is too big in the economy to say 0:01:42.600 --> 0:01:44.040 we're just hands off. 0:01:44.800 --> 0:01:46.920 And we'll be bringing you more of our interview with 0:01:47.120 --> 0:01:49.600 Archie Norman, as well as a host of other conversations 0:01:49.600 --> 0:01:52.240 with leading business voices later in the show. 0:01:52.560 --> 0:01:54.960 The criticism from the business community comes on the same 0:01:55.040 --> 0:01:58.000 day that the Bank of England policymaker Katherine Mann has 0:01:58.000 --> 0:02:00.320 called on the government to move economic policy to a 0:02:00.360 --> 0:02:04.000 more sustainable footing. In an essay for the Resolution Foundation, 0:02:04.040 --> 0:02:07.240 the rate setter says fiscal and monetary policymakers need to 0:02:07.280 --> 0:02:11.239 transition from a crisis policy phase to a longer term agenda. 0:02:11.720 --> 0:02:13.600 Catherine Mann's word, they are a warning to both Prime 0:02:13.600 --> 0:02:16.480 Minister Rishi Sunak and the opposition Labour leader kir Starmer 0:02:16.680 --> 0:02:19.280 as each begins to set out their agenda and spending 0:02:19.320 --> 0:02:22.440 plans for a general election expected next year. 0:02:22.919 --> 0:02:25.800 The growing chorus of voices calling for a new approach 0:02:25.919 --> 0:02:28.920 by government come just as the Prime Minister faces a 0:02:28.960 --> 0:02:33.120 major political challenge from his predecessor. On Friday, Boris Johnson 0:02:33.120 --> 0:02:35.800 resigned as an MP, with two of his allies also 0:02:35.880 --> 0:02:39.359 stepping down from Parliament in a row over COVID nineteen 0:02:39.480 --> 0:02:43.920 rule breaches. The resignations trigger three by elections that could 0:02:44.000 --> 0:02:48.040 highlight softening support for the Conservative Party, but Johnson's former 0:02:48.080 --> 0:02:52.680 communications director, Ghetto Harry claims that that wasn't what drove 0:02:52.760 --> 0:02:55.799 the former Prime Minister's decision to stand down. 0:02:56.440 --> 0:02:59.320 I don't think this is part of an elaborate plot 0:02:59.440 --> 0:03:02.960 to sort of destabilize and topple Rishie Sunac. I think 0:03:03.240 --> 0:03:05.280 there is an opportunity for him now to go off 0:03:05.440 --> 0:03:07.000 and seize new opportunities. 0:03:07.960 --> 0:03:11.680 Despite itet Harry's assertion, the by elections complicates Sunac's hopes 0:03:11.720 --> 0:03:14.840 of further narrowing the gap in support with Labor. Recent 0:03:14.880 --> 0:03:17.720 opinion polls have put the opposition party up by as 0:03:17.800 --> 0:03:20.880 much as fourteen points against the Tories in Scotland. 0:03:20.960 --> 0:03:24.080 Former First Minister Nicolas Sturgeon says she knows beyond doubt 0:03:24.200 --> 0:03:27.079 that she's innocent of any wrongdoing. That's after she was 0:03:27.160 --> 0:03:30.440 arrested as part of an investigation into the SMP's finances. 0:03:30.760 --> 0:03:34.160 Sturgeon was questioned by police before being released without charge. 0:03:34.400 --> 0:03:37.360 Professor of Politics at the University of Strathclyde, John Curtis 0:03:37.360 --> 0:03:41.280 says it's fire from the SMP's only electoral issue. 0:03:41.520 --> 0:03:44.280 I think in truth we've probably been anticipating that at 0:03:44.320 --> 0:03:46.840 some point the police would also want to talk to 0:03:46.920 --> 0:03:49.520 Nicholas Sturgion. Any conclusion we can draw from this so 0:03:49.600 --> 0:03:52.640 far as the investigations concern is that the police have 0:03:52.680 --> 0:03:55.120 everently decided it is still worth continuing. 0:03:56.000 --> 0:03:59.400 Strathclyde Professor of Politics, John Curtis, speaking there. The SMP 0:03:59.480 --> 0:04:01.400 is set to hold a special conference later this month 0:04:01.480 --> 0:04:04.040 to consult party members on the way forward for its 0:04:04.040 --> 0:04:05.080 independence campaign. 0:04:05.680 --> 0:04:09.880 Now away from politics, Crispin ODI's main hedge fund will 0:04:09.880 --> 0:04:12.720 now be run by his co manager, Freddie Neve. The 0:04:12.760 --> 0:04:16.159 move follows a decision by Ode Asset Management to remove 0:04:16.200 --> 0:04:20.239 its founder, who is facing fresh assault allegations. Crispin Odi 0:04:20.400 --> 0:04:23.520 denies those allegations and declined to comment on the decision. 0:04:23.760 --> 0:04:26.400 The Financial Times also reports that the Hedge Fund is 0:04:26.480 --> 0:04:30.760 discussing restrictions on investor withdrawals from its EU funds as 0:04:30.839 --> 0:04:33.480 part of emergency measures to contain the fallout. 0:04:34.000 --> 0:04:37.039 UBS says it's completed its takeover of Credit Suisse. The 0:04:37.080 --> 0:04:39.400 bank made the announcement in an open letter published in 0:04:39.440 --> 0:04:43.040 the Swiss Enzz newspaper. It comes as The Financial Times 0:04:43.040 --> 0:04:46.320 of reports that the UBS will impose restrictions on bankers 0:04:46.320 --> 0:04:49.080 from Credit Suisse, including a ban on new clients from 0:04:49.120 --> 0:04:51.880 high risk countries. The paper says a list of almost 0:04:51.880 --> 0:04:54.559 two dozen red lines will apply to Credit sweet staff 0:04:54.640 --> 0:04:55.280 under the merger. 0:04:55.920 --> 0:04:59.880 And finally, Ukraine's President Vladimi Zelenski confirmed yesterday that the 0:05:00.200 --> 0:05:08.040 long expected Ukrainian counter offensive has begun. 0:05:08.360 --> 0:05:11.760 Counter Offensive and defensive actions are taking place in Ukraine. 0:05:12.080 --> 0:05:15.039 On which stage I won't say in detail, and we 0:05:15.200 --> 0:05:17.880 for sure will feel all of it. I wouldn't trust 0:05:17.880 --> 0:05:20.760 those or other telegram channels and especially putin. 0:05:21.920 --> 0:05:25.200 Hey's comments come as Ukrainian forces say that they have 0:05:25.320 --> 0:05:28.560 retaken three villages in the southeast of the country. The 0:05:28.640 --> 0:05:32.960 gains couldn't be independently verified, and Russia's defense ministry called 0:05:33.000 --> 0:05:34.719 the situation fluid. 0:05:34.920 --> 0:05:36.760 Okay, so those are our top stories on the program 0:05:36.800 --> 0:05:39.599 this morning, Karlin, so much more on this theme of 0:05:39.920 --> 0:05:42.560 is Britain adrift? But first I just wanted to mark 0:05:42.640 --> 0:05:46.719 this news that we're having in regards to UBS's takeover 0:05:46.760 --> 0:05:50.039 of Credit Sweee. The milestone moment has arrived. UBS has 0:05:50.080 --> 0:05:53.800 taken over its former rival. This ends the lenders one 0:05:53.880 --> 0:05:59.119 hundred and sixty seven year independent existence. This of course 0:05:59.200 --> 0:06:03.640 capping two months of uncertainty for employees. After this Swiss 0:06:03.680 --> 0:06:08.640 government brokered takeover nine billion Swiss francs guarantee against potential 0:06:08.640 --> 0:06:11.960 losses on credit swiez asses. It's been a massive story 0:06:12.040 --> 0:06:15.120 in the financial sector and today we're turning another page 0:06:15.160 --> 0:06:15.359 in it. 0:06:15.600 --> 0:06:20.440 Yeah. Absolutely, this is the expectation. We had that note 0:06:20.520 --> 0:06:23.960 to employees from the Credit Suisse a CEO on Friday 0:06:23.960 --> 0:06:26.240 that was expected to happen. So now the details are 0:06:26.240 --> 0:06:32.120 actually out this Monday that UBS Credit Suisse takeover is complete. 0:06:32.279 --> 0:06:35.440 Now yet more political uncertainty in the UK, and a 0:06:35.440 --> 0:06:38.640 growing number of business leaders are left wondering if Britain 0:06:38.839 --> 0:06:42.359 is a drift. The challenges the economic challenges for the 0:06:42.440 --> 0:06:45.240 UK are clear, the damaging consequences of the pandemic, the 0:06:45.279 --> 0:06:48.039 war in Ukraine and Brexit, but the UK is also 0:06:48.120 --> 0:06:50.520 at a crossroads in need of what business leaders see 0:06:50.560 --> 0:06:56.120 as a long term, ambitious planned from government that is deliverable. Caroline, 0:06:56.160 --> 0:06:58.719 this is something that you've been looking into in some detail. 0:06:58.920 --> 0:07:01.680 Yeah, absolutely, I think there was a moment in the 0:07:01.720 --> 0:07:05.840 newsroom where we were thinking about this. Bloomberg is doing 0:07:05.839 --> 0:07:08.240 a deep dive into the state of the British economy. 0:07:08.240 --> 0:07:12.160 The past couple of months have seen this criticism from 0:07:12.400 --> 0:07:19.000 a host of business leaders wondering concern that the business 0:07:19.400 --> 0:07:22.200 and the policies that the government is pursuing and trying 0:07:22.200 --> 0:07:24.360 to execute perhaps are not the right ones. Think James 0:07:24.440 --> 0:07:28.920 Dyson think of the criticism from Stilantis Revolute, Microsoft's Brad Smith, 0:07:29.160 --> 0:07:32.080 Rigie sou NAC's Five Pledges, which are largely economic, and 0:07:32.120 --> 0:07:37.200 the Chancellor's Edinburgh reforms simply have not quelled the chorus. Indeed, 0:07:37.240 --> 0:07:40.920 the government only looks increasingly bogged down now and precarious. 0:07:41.200 --> 0:07:43.520 So I've been speaking to business leaders about this. Archie 0:07:43.560 --> 0:07:46.040 Norman the chairman of Marks and Spencers since twenty seventeen. 0:07:46.080 --> 0:07:49.720 A lifelong Conservative. We know former MP himself, former CEO 0:07:49.840 --> 0:07:54.040 of ASDA. I met him at mns's headquarters in Paddington 0:07:54.120 --> 0:07:56.760 and I spoke to him at length about this issue. 0:07:56.880 --> 0:08:00.800 Where is the British economy right now? Is the UK adrift? 0:08:00.840 --> 0:08:01.640 This is what he said. 0:08:02.480 --> 0:08:05.640 I think there's a huge appetite for a new agenda, 0:08:05.920 --> 0:08:08.440 for a sense of where are we trying to compete 0:08:08.440 --> 0:08:12.120 in the world? What is our strategy post for exit 0:08:12.720 --> 0:08:15.520 is no good just saying we left and we're going 0:08:15.560 --> 0:08:17.760 to have some trade agreements. Is how are we now 0:08:17.800 --> 0:08:21.200 going to compete in the world. We've created this dislocation, 0:08:21.720 --> 0:08:25.040 We created friction fal trade. No rightly or wrongly, that's 0:08:25.080 --> 0:08:28.800 what people voted to do. Now we need a plan 0:08:28.920 --> 0:08:31.040 for how we compete and that used to be called 0:08:31.080 --> 0:08:35.760 industrial strategy. Now this government, for whatever reason, has an 0:08:35.800 --> 0:08:38.439 aversion to the expression industrial trait. It's what everybody else 0:08:38.480 --> 0:08:41.400 calls it, so they can't bring themselves to say it. 0:08:42.000 --> 0:08:45.040 But I don't care whether it's a growth strategy or competitiveness. 0:08:45.080 --> 0:08:47.480 It's got to be a profound point of view as 0:08:47.520 --> 0:08:51.000 to how Britain's going to compete. 0:08:50.000 --> 0:08:53.320 So a profound point of view Archie Norman speaking to 0:08:53.360 --> 0:08:56.120 me there, he also made a lot of other interesting 0:08:56.160 --> 0:08:58.800 points on skills. The government is agnostic, it doesn't know 0:08:58.880 --> 0:09:02.320 what it wants in terms of people's skills acquisition. That's 0:09:02.360 --> 0:09:04.720 not good enough, he says. For the economy of the future. 0:09:05.040 --> 0:09:08.559 He was scathing about recent policy blunders on a price 0:09:08.640 --> 0:09:12.200 cap on essential foods. He called that hair brained. His 0:09:12.440 --> 0:09:15.120 advice to Sunak if you want to be re elected, 0:09:15.160 --> 0:09:18.760 you've got to be the future, not the past. We've 0:09:18.800 --> 0:09:20.920 lost the plot. When it comes to getting firms to 0:09:21.080 --> 0:09:25.160 list and headquarter themselves in London, that is a long 0:09:25.160 --> 0:09:25.959 list for government. 0:09:26.080 --> 0:09:29.040 Yeah, it certainly is British business. More broadly, though, Carolyn, 0:09:29.080 --> 0:09:33.040 there's this battle ongoing for who represents and who works 0:09:33.080 --> 0:09:35.240 with the government on addressing these concerns. 0:09:35.280 --> 0:09:39.079 Well, that's it. It's about the relationship with business and 0:09:39.480 --> 0:09:41.959 the interplay with business and government. The British Chambers of 0:09:41.960 --> 0:09:44.640 Commers is trying to supersede the CBI as the biggest 0:09:44.760 --> 0:09:48.120 business lobby. Martha Lane Fox, who is herself perhaps Brittain's 0:09:48.120 --> 0:09:52.280 most successful techre entrepreneur, is the president of the BCC. 0:09:52.520 --> 0:09:55.040 She's been traveling across the UK and again I spoke 0:09:55.040 --> 0:09:57.920 to her at length and she says that there needs 0:09:57.960 --> 0:10:02.360 to be policy across a breadth of sectors, a particular 0:10:02.400 --> 0:10:06.040 focus on increasing trade, on getting the sales of UK 0:10:06.200 --> 0:10:10.839 businesses abroad up. This is how she described the moment domestically. 0:10:11.480 --> 0:10:15.400 There's also a sort of holding a collective breath, waiting 0:10:15.440 --> 0:10:17.360 to see what happens over the next eighteen months with 0:10:17.440 --> 0:10:20.160 political situation, not just here in the UK, but in 0:10:20.200 --> 0:10:22.959 the US and more broadly, I guess across Europe, and 0:10:23.000 --> 0:10:25.800 that's a confidence piece to a large degree. So I 0:10:25.800 --> 0:10:28.040 think you have to be careful not to talk ourselves 0:10:28.080 --> 0:10:30.160 into a position where we're saying that the UK is 0:10:30.679 --> 0:10:33.120 all at cduse your words, you know, adrift. That's a 0:10:33.200 --> 0:10:35.040 propriate language in some ways, but in other ways it 0:10:35.080 --> 0:10:37.760 really isn't. I think the UK has a huge amount 0:10:37.880 --> 0:10:41.439 to offer. We have a lot of extraordinary businesses and 0:10:41.559 --> 0:10:44.160 amazing talent pool. We have to be careful, I think, 0:10:44.200 --> 0:10:46.640 not to talk ourselves into a dark spot, because that's 0:10:46.640 --> 0:10:49.080 not the UK that I think I recognize and that 0:10:49.120 --> 0:10:50.200 I think we will want to build. 0:10:51.320 --> 0:10:54.480 So, you know, business leaders and entrepreneurs like Martha lane 0:10:54.520 --> 0:10:57.480 Fox are not pessimists, that they're always looking on the 0:10:57.480 --> 0:11:02.240 bright side, emphasizing the advantages that the UK has, especially universities, 0:11:02.440 --> 0:11:06.880 innovation entrepreneurs. But lane Fox does also talk about there 0:11:06.920 --> 0:11:10.280 being a people crisis in the UK. People's crisis, the 0:11:10.360 --> 0:11:14.640 difficulty of finding staff and retaining them. She talks about 0:11:14.760 --> 0:11:18.600 needing a businesses needing to feel most importantly that they 0:11:18.640 --> 0:11:21.960 can look ahead with certainty and there's not going to 0:11:22.000 --> 0:11:25.880 be this constant rotation and chaos. Those are her words. 0:11:26.400 --> 0:11:29.559 So this is reflected in the Big Take, the Deep 0:11:29.640 --> 0:11:31.880 Dive imprint that we've got. It's on the front page 0:11:31.880 --> 0:11:34.800 of the Bloomberg dot co dot UK websites, also on 0:11:34.840 --> 0:11:38.079 the terminal this morning talking to a lot of businesses 0:11:38.120 --> 0:11:41.360 about what they think about investibility within Britain. 0:11:41.400 --> 0:11:43.800 And what we're hearing from the people that you've been 0:11:43.840 --> 0:11:46.840 speaking to is that this is a pivotal moment for 0:11:46.920 --> 0:11:49.480 the UK and one that needs policy solutions. 0:11:49.640 --> 0:11:49.880 Yeah. 0:11:49.880 --> 0:11:52.520 And Xavier Julie was also in London, so I had 0:11:52.559 --> 0:11:54.959 a long conversation with him. He was the CEO of 0:11:55.000 --> 0:11:58.480 the London Sock Exchange between two thousand and nine twenty seventeen, 0:11:58.520 --> 0:12:03.600 he's now nonexecu UIR and Ashore Capital, another well known company. 0:12:04.120 --> 0:12:07.480 Very frustrated that there isn't a more serious conversation in 0:12:07.480 --> 0:12:11.520 the UK but also in Europe about how we fund businesses, 0:12:11.559 --> 0:12:14.560 how we get them to grow. Very critical of the 0:12:14.559 --> 0:12:16.960 fact that in the UK, in Europe we use debt, 0:12:17.040 --> 0:12:20.200 we use bank lending, and in the US it's obviously 0:12:20.200 --> 0:12:24.040 done far more through equity. He talks about today we're 0:12:24.080 --> 0:12:27.160 at a point of needing radical reform. 0:12:27.320 --> 0:12:28.720 Here's his arguments. 0:12:29.360 --> 0:12:31.800 If you have equity markets there are one tenth the 0:12:31.840 --> 0:12:36.480 size of US. The cost of raising equity here, particularly 0:12:36.520 --> 0:12:39.920 for a high growth industry, cost is much higher here. 0:12:39.960 --> 0:12:44.560 So the best, fastest growing, biggest value creators moved to 0:12:44.600 --> 0:12:46.640 the United States, and then we end up with that 0:12:46.720 --> 0:12:51.439 productivity deficit. Over time, you end up with a low growth, 0:12:52.120 --> 0:12:56.440 low productivity, debt focus funding environment, and the best of 0:12:56.480 --> 0:12:59.960 what you've invested in your universities, your entrepreneurs and others. 0:13:00.400 --> 0:13:03.880 Migrates the US are leveraging that. But in the US 0:13:04.240 --> 0:13:08.000 business runs, business investors make the choices as to who 0:13:08.360 --> 0:13:10.959 are going to be the winners on the technology side. 0:13:11.200 --> 0:13:14.400 In the UK and Europe. It is still today government 0:13:14.800 --> 0:13:17.680 you know, these talks of sovereign funds and all sorts 0:13:17.720 --> 0:13:22.240 of initiatives government driven. Eliminate the regulation that prevents the 0:13:22.240 --> 0:13:25.720 long term holders of capital insurance companies and pension funds 0:13:26.080 --> 0:13:29.800 from investing inequities and let investors make the choices. You'll 0:13:29.840 --> 0:13:32.520 see what happens. We could grow our equity to be 0:13:32.559 --> 0:13:35.680 on part of the United States. With these changes, we 0:13:35.720 --> 0:13:38.800 could grow the liquidity of our equity markets in the 0:13:38.920 --> 0:13:40.120 UK by tenfold. 0:13:41.640 --> 0:13:45.240 So that was a Zevier rule speaking to me about 0:13:45.280 --> 0:13:48.480 the kind of the difficulties that the UK and Europe 0:13:48.559 --> 0:13:51.120 has in terms of how we fund high grade businesses. 0:13:51.160 --> 0:13:53.320 I mean, he says very said, to be very clearly, 0:13:53.520 --> 0:13:57.440 you can't scale up the industries of the future, particularly tech, 0:13:57.520 --> 0:14:01.480 without far deeper equity markets. And he was very concerned 0:14:02.120 --> 0:14:05.760 that there wasn't a lot of responsiveness to that idea. 0:14:06.559 --> 0:14:10.560 Carolyn, from these conversations, what are you taking away is 0:14:10.600 --> 0:14:11.400 Britain adrift? 0:14:12.000 --> 0:14:17.400 Well, the economic issues for the UK have again been 0:14:17.480 --> 0:14:21.840 superseded by these internal party politics of the Conservative Party. 0:14:21.960 --> 0:14:25.320 So on the one hand, we understand the depths of 0:14:25.400 --> 0:14:29.000 the economic issues in the UK. On the other hand, 0:14:29.120 --> 0:14:32.160 the more positive and optimistic outlook might be this is 0:14:32.200 --> 0:14:36.440 a moment right for big ideas, well thought out long 0:14:36.560 --> 0:14:42.720 term industrial strategy, accountability. It's what Archie Norman was sort 0:14:42.720 --> 0:14:45.400 of saying. The footprint of government is too big in 0:14:45.440 --> 0:14:48.200 the economy to say we're just hands off. We've got 0:14:48.240 --> 0:14:50.560 to get on with it in post Brexit Britain and 0:14:50.640 --> 0:14:53.680 actually deliver for the growth economy of the future. 0:14:54.000 --> 0:14:57.080 Okay, Carolyn, so much more coming from your conversations throughout 0:14:57.080 --> 0:14:59.320 the program this morning. You can find that Big Take 0:14:59.360 --> 0:15:01.880 report the Bloomberg website and I Big Take it for 0:15:02.000 --> 0:15:04.320 using the terminal, or you'll see plenty more. Two on 0:15:04.360 --> 0:15:07.640 social media, Caroline, you can find our c hepger on 0:15:07.720 --> 0:15:10.720 Twitter as well, or of course by looking up Bloomberg Radio. 0:15:11.040 --> 0:15:14.280 But of course this has bigger implications than just in 0:15:14.320 --> 0:15:15.000 the business world. 0:15:15.000 --> 0:15:15.160 Two. 0:15:15.200 --> 0:15:18.280 Growing the economy one of Ritchie Sinac's five key priorities. 0:15:18.440 --> 0:15:21.200 Does the Prime Minister, though risk being distracted by more 0:15:21.240 --> 0:15:23.960 Tory infighting follow the resignation of Boris Johnson and two 0:15:23.960 --> 0:15:26.600 of his key allies. Well, our UK correspondent Lizzie Burden 0:15:26.640 --> 0:15:29.640 is with us for more on this. Lizzie let's start 0:15:29.680 --> 0:15:32.560 on I suppose what is the government's current plan in 0:15:32.600 --> 0:15:34.760 this area, What is the government's plan for growth? 0:15:34.800 --> 0:15:37.200 Well, the government would argue that it's number one priorities 0:15:37.240 --> 0:15:39.640 having inflation by the end of the year. That would 0:15:39.720 --> 0:15:43.080 create stability as a platform for growth. And you've just 0:15:43.120 --> 0:15:45.600 seen SUNAC in the US to shore up ties there 0:15:46.120 --> 0:15:49.920 specifically to boost growth. For example, it's pumping a billion 0:15:49.960 --> 0:15:54.360 pounds into the semiconductor industry. But that pales in comparison 0:15:54.440 --> 0:15:57.320 to what the US are doing through the Inflation Reduction 0:15:57.360 --> 0:16:00.440 Act and what the EU's doing in response, and it 0:16:00.560 --> 0:16:03.840 leaves the UK heavily reliant on its allies to fill 0:16:03.840 --> 0:16:05.880 in the gaps in the rest of the supply chain. 0:16:06.160 --> 0:16:09.800 You heard there in Caroline's brilliant reporting. Business leaders are 0:16:09.880 --> 0:16:13.000 queuing up to put forward the notion that Britain's closed 0:16:13.000 --> 0:16:16.320 for business, that the government isn't doing enough to compensate 0:16:16.640 --> 0:16:19.320 for the economic damage of Brexit. You had as well 0:16:19.400 --> 0:16:23.640 last week almost one thousand tech companies, including Alphabet and Apple, 0:16:24.160 --> 0:16:27.320 warning that the UK's falling behind in sectors like AI, 0:16:27.720 --> 0:16:31.640 like semiconductors. So on the UK Politics podcast this week, 0:16:31.680 --> 0:16:33.800 we're going to be speaking to Oliver Dowd and the 0:16:33.800 --> 0:16:36.880 Deputy Prime Minister at Founders Forum in front of a 0:16:36.960 --> 0:16:41.600 room of tech bosses and founders about this very question. 0:16:41.840 --> 0:16:44.640 Is Britain adrift? What is the plan for growth? 0:16:44.680 --> 0:16:47.880 So do tune into that on Friday's episode on Bloomberg 0:16:47.960 --> 0:16:49.120 Radio at twelve pm. 0:16:49.160 --> 0:16:51.840 Okay, great stuff. The reporting also comes though, as the 0:16:51.840 --> 0:16:55.560 Bank of England's Catherine Mann has called for long term 0:16:55.640 --> 0:16:57.480 strategy for the economy. 0:16:57.520 --> 0:16:58.440 What's she been saying? 0:16:58.560 --> 0:17:01.080 Well, she's the hawk of them and a try policy committee, 0:17:01.120 --> 0:17:03.960 as you know, And this essay for the Resolution Foundation 0:17:04.320 --> 0:17:06.320 really argues that the focus of the government needs to 0:17:06.359 --> 0:17:09.760 be on the long term, especially on sustainability, rather than 0:17:10.560 --> 0:17:13.680 on fire fighting because of course we've had the successive 0:17:13.720 --> 0:17:16.840 shocks of Brexit, the pandemic Ukraine. But I have to 0:17:16.840 --> 0:17:20.760 say frankly, even for Labor which has promised a more 0:17:20.840 --> 0:17:24.520 activist state in response to Bidenomics, secure Anomics. 0:17:24.200 --> 0:17:26.320 Is what the Shadow Chancellor Rachel Reeves calls it. 0:17:26.400 --> 0:17:30.000 That's centered around investing twenty eight billion pounds a year 0:17:30.080 --> 0:17:33.280 on the green energy transition. Labour's had to scale that 0:17:33.480 --> 0:17:36.439 plan back and now the plan is to ramp up 0:17:36.480 --> 0:17:39.399 spending rather than hit that twenty eight billion pound target 0:17:39.440 --> 0:17:42.400 in the first year of a labor government. Labour says 0:17:42.440 --> 0:17:45.800 it's because of persistent inflation, meaning higher rates since that 0:17:45.880 --> 0:17:48.920 plan was announced, and it's necessary, they say, to cut 0:17:49.000 --> 0:17:52.800 back a bit to maintain fiscal responsibility. So you've got 0:17:52.840 --> 0:17:56.360 both parties battling it out to be the party of Business, 0:17:56.400 --> 0:17:59.240 to be ambitious on growth within a very. 0:17:59.000 --> 0:18:01.720 Politically and fiscally constrained environment. 0:18:02.760 --> 0:18:05.800 Okay, Lizzie, this is all happening at a time when, 0:18:05.920 --> 0:18:08.600 of course we've been also watching what's been happening inside 0:18:08.640 --> 0:18:12.560 the Conservative Party. What's the risk that these events surrounding 0:18:12.640 --> 0:18:14.600 Boris Johnson and the resignation of two of his allies 0:18:14.640 --> 0:18:16.840 as well, will take away from the government's focus of 0:18:17.240 --> 0:18:17.840 the economy. 0:18:18.000 --> 0:18:19.720 Yes, so much happened over the weekend, didn't it. 0:18:19.760 --> 0:18:19.920 Well. 0:18:19.920 --> 0:18:23.800 The announcement of Boris Johnson's resignation and the timing of 0:18:23.800 --> 0:18:28.200 that announcement does look designed to inflict the maximum damage 0:18:28.440 --> 0:18:31.920 on the Prime Minister. Of course, Johnson blames Sunac for 0:18:31.960 --> 0:18:36.879 his downfall, and Johnson even said he's exiting politics for now, 0:18:37.160 --> 0:18:40.040 so hinting again that he hopes for a comeback as 0:18:40.080 --> 0:18:42.399 his allies have been. It reminds me of when he 0:18:42.440 --> 0:18:45.919 said Asta la visa baby when he left as Prime Minister, 0:18:46.040 --> 0:18:49.560 suggesting that like the terminator, he's going to be back. 0:18:50.000 --> 0:18:53.160 And of course the comparison to Donald Trump is well done. 0:18:53.400 --> 0:18:56.560 You know, Johnson resigned even on the same day that 0:18:56.600 --> 0:18:59.959 Trump was indicted on federal charges. But the key difference 0:19:00.160 --> 0:19:05.080 says Johnson's isolated within the party, but scandal only seems 0:19:05.119 --> 0:19:06.320 to boost Donald Trump. 0:19:06.200 --> 0:19:07.359 Among the Republicans. 0:19:07.600 --> 0:19:11.280 The bigger picture, as you point out, is whether or 0:19:11.320 --> 0:19:14.919 not Johnson's comeback is realistic. It's a distraction from the 0:19:15.000 --> 0:19:18.640 diligent government that sunac's trying to present. It's also an 0:19:18.640 --> 0:19:22.520 immediate challenge for SUNAC in the sense that Johnson's resignation, 0:19:22.840 --> 0:19:25.960 along with those of his two allies, Nigel Adams and 0:19:26.080 --> 0:19:29.200 Noddine Doris, triggers by elections. That is going to be 0:19:29.240 --> 0:19:32.879 embarrassing if SUNAC loses. The opposition Labor parties already calling 0:19:32.920 --> 0:19:35.479 for a general election. Some polls show that they'd win 0:19:35.520 --> 0:19:38.520 a landslide if there were an election. And over the 0:19:38.520 --> 0:19:41.720 weekend you also saw Nikola Sturgeon, the former First Minister 0:19:41.760 --> 0:19:43.119 of Scotland, arrested. 0:19:43.160 --> 0:19:45.640 She was released after several hours. 0:19:45.960 --> 0:19:49.320 But it adds to this sense that her party's imploding 0:19:49.680 --> 0:19:52.600 that would benefit labor, and so Sunak's going to be 0:19:52.600 --> 0:19:54.840 watching very closely what happens north of the border. 0:19:56.320 --> 0:19:59.040 This is Bloomberg Daybreak Europe, your morning brief on the 0:19:59.119 --> 0:20:02.160 stories making you from London to Wall Street and beyond. 0:20:02.440 --> 0:20:06.400 Look for us on your podcast feed every morning on Apple, Spotify, 0:20:06.520 --> 0:20:08.399 and anywhere else you get your podcasts. 0:20:08.520 --> 0:20:11.520 You can also listen live each morning on London Dab Radio, 0:20:11.560 --> 0:20:14.280 the Bloomberg Business app, and Bloomberg dot Com. 0:20:14.320 --> 0:20:17.080 Our flagship New York station is also available on your 0:20:17.119 --> 0:20:21.840 Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 0:20:22.040 --> 0:20:23.360 I'm Caroline Hepka and. 0:20:23.280 --> 0:20:25.960 I'm Stephen Carroll. Join us again tomorrow morning for all 0:20:26.000 --> 0:20:28.400 the news you need to start your day right here 0:20:28.440 --> 0:20:33.960 on Bloomberg day Break Europe.