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Liz Truss' Tax Fiasco Shows How UK Guardrails Have Fallen Away · Stephanomics

• 0:00
  Speaker 1: I do certainly think we're living through a period of
• 0:07
  Speaker 1: elevated risk and that earthquakes don't come all of a sudden.
• 0:17
  Speaker 1: There are tremors in the same way that people became
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  Speaker 1: anxious in August of two thousand and seven. This is
• 0:28
  Speaker 1: a moment when there should be increased anxiety. Hello and
• 0:42
  Speaker 1: welcome back to Stephanomics, the podcast that brings you a
• 0:45
  Speaker 1: global economy entering choppy waters. Interest rates are going up,
• 0:50
  Speaker 1: inflation is not yet really coming down. Households and countries
• 0:53
  Speaker 1: that import most of their energy are facing a tough winter,
• 0:57
  Speaker 1: and financial markets they're all over the place, though mainly down.
• 1:02
  Speaker 1: Isn't this all, as Larry Summers suggested? There possibly a
• 1:06
  Speaker 1: warm up exercise for another global financial crisis, or merely
• 1:10
  Speaker 1: turbulence on the way to that much hope for soft landing.
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  Speaker 1: Who the hell knows, but whatever is going on, we
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  Speaker 1: do know the UK has been right in the crosshairs,
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  Speaker 1: with a new Conservative Prime Minister, Liz Trust, facing wild
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  Speaker 1: swings in the value of the pound in the past
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  Speaker 1: two weeks, and I'm watering increases in borrowing costs that
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  Speaker 1: will ripple through the UK economy and society for months
• 1:32
  Speaker 1: to come. Just to give you a sense of it,
• 1:34
  Speaker 1: if you remortgage your home this summer in the UK,
• 1:37
  Speaker 1: you might have got alone with an interest rate of
• 1:39
  Speaker 1: around two point three percent that would be fixed for
• 1:42
  Speaker 1: five years. The rate on the average five year fixed
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  Speaker 1: today is closer to six and quite a lot of
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  Speaker 1: that rise has come just since the government unveiled its
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  Speaker 1: plan to borrow more to pay for tax cuts for
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  Speaker 1: businesses and high earners under the banner of spurring growth.
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  Speaker 1: So we're going to take a closer look at the
• 2:04
  Speaker 1: UK in this first episode of the series and ask
• 2:07
  Speaker 1: a question whether the dramas that have afflicted Liz Truss
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  Speaker 1: are a cautionary tale or more a sneak preview of
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  Speaker 1: what might lie in store for others. JP Morgan's chief
• 2:19
  Speaker 1: European economist, Malcolm Barr thinks investors were reacting not so
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  Speaker 1: much to one bad plan, but a long term systematic
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  Speaker 1: weakening in Britain's key institutions. I'll talk to him about
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  Speaker 1: that in a few minutes later on. We'll also have
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  Speaker 1: a report from Liverpool, where cost of living woes for
• 2:39
  Speaker 1: doc workers are getting in the way of any hopes
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  Speaker 1: that post Brexit that city could once again play a
• 2:45
  Speaker 1: major role in global trade. But first, a quick taste
• 2:50
  Speaker 1: of what it's been like to be in Birmingham this
• 2:52
  Speaker 1: week for the Conservative Party's annual conference. Was supposed to
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  Speaker 1: be a coming out party for the new prime minister,
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  Speaker 1: where she about her radical vision for growth and generally
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  Speaker 1: reveled in getting the top job. But at least one
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  Speaker 1: part of that radical plan had already been junked in
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  Speaker 1: the face of overwhelming opposition before the delegates even arrived
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  Speaker 1: in Birmingham, and many of her own MPs, amid the
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  Speaker 1: market turmoil, opted not to come at all. Alas Bloomberg,
• 3:22
  Speaker 1: UK Government reporter Kitty Donaldson was not so fortunate. She
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  Speaker 1: was there for every minute. You could call this Conservative
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  Speaker 1: conference a Roana coaster for Liz Truss, but that implies
• 3:42
  Speaker 1: had been high points. Most of the time. It felt
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  Speaker 1: like she was plunging into free full I spent this
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  Speaker 1: week talking to Tory MP's cabinet ministers and activists and
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  Speaker 1: it's not been pretty. They were a cross anyway because
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  Speaker 1: the Prime Minister hadn't united the party after a leadership win.
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  Speaker 1: One MP said she's been behaving like she won a
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  Speaker 1: landslide at a general election. Other MP's were also hopping
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  Speaker 1: mad about last week's market turmoil and the damage abolishing
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  Speaker 1: the top rate of income tax did to the party's reputation.
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  Speaker 1: That's because Labor can now present the Tories is out
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  Speaker 1: of touch and favoring the wealthy. In the end, the
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  Speaker 1: U turn was the worst of both worlds. Trust. According
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  Speaker 1: to some MPs, it's now weak and the damage is
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  Speaker 1: done at the parties and the fringes around the conference.
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  Speaker 1: Even the Cabinet were angry and spelled out the implications
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  Speaker 1: of Liz Truss's policy reverse ferret. They said to me,
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  Speaker 1: she's now so damaged she'll only be able to get
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  Speaker 1: very little of her agenda through Parliament. That includes stuff
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  Speaker 1: such as planning reform. Meanwhile, two very big beasts, former
• 4:51
  Speaker 1: Cabinet ministers, Michael Gove and Grant Shaps, we're going around
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  Speaker 1: having secret squirrel conversations and separately drumming rebellion. Liz Trust
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  Speaker 1: was also in submarine mode, disappearing from public view while
• 5:06
  Speaker 1: her aids limited the damage. I actually had a drink
• 5:10
  Speaker 1: with Liz Trust on Monday night and she was quite chipper,
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  Speaker 1: making jokes but also being clear she had a vision
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  Speaker 1: of economic success that needs to be judged in the
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  Speaker 1: longer term. The trouble for Trust, she's now isolated. Some
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  Speaker 1: of her MP's even talked about a cult at the
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  Speaker 1: center of the party, and it's largely a cult of two.
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  Speaker 1: That's Liz Trust herself and her chancellor Quasi quoteng h.
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  Speaker 1: In her speech on Wednesday, which actually went much better
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  Speaker 1: than many suspected it would, Liz Trust talked about an
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  Speaker 1: antique growth coalition and we need an economically sound and
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  Speaker 1: secure United Kingdom and that will mean challenging those who
• 6:00
  Speaker 1: tried to stop growth. I will not allow the anti
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  Speaker 1: growth coalition to hold us back. Now that may sound
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  Speaker 1: like a band that should be in one of the
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  Speaker 1: second stages at Glastonbury, but what it actually means is
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  Speaker 1: anyone who disagrees with Trust and Quarteng's very specific brand
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  Speaker 1: of tourism, almost like Trust hasn't learned a single lesson
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  Speaker 1: from this week. In order to get voters on side,
• 6:31
  Speaker 1: never mind conservative MPs, political parties need to offer a
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  Speaker 1: positive vision and not set themselves up with even more
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  Speaker 1: enemies becoming. Weeks for his Trust are going to be
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  Speaker 1: fractious at the very best. So Malcolm bart is head
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  Speaker 1: of European Economics for JP Morgan here in London, and
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  Speaker 1: as I said at the start of the program, he
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  Speaker 1: wrote a rather eye catching piece just as all hell
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  Speaker 1: was breaking loose in the financial markets for the UK
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  Speaker 1: the other day entitled the Fiscal Event, Brexit and silly Walks. Malcolm,
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  Speaker 1: thanks very much for joining us. Not in that piece,
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  Speaker 1: you basically say that the financial markets were not only
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  Speaker 1: doubtful about this government's promises, but they were sort of
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  Speaker 1: structurally doubtful about the state of in UK institutions now
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  Speaker 1: and you know that was that's rooted in policy shifts
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  Speaker 1: going back many years. So just talk us through it,
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  Speaker 1: because of course usually a lot of the sort of
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  Speaker 1: research that comes out of places like JP Morgan is
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  Speaker 1: quite short term, and you were making a very very
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  Speaker 1: long term and a rather damning argument. Well, thanks, Stephanie.
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  Speaker 1: I mean that the basic idea which I've been trying
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  Speaker 1: to investigating that piece is really that there have been
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  Speaker 1: a set of changes going on for a while which
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  Speaker 1: have been tending to create more space ease for policymakers
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  Speaker 1: to steer off the straight and narrow. Some of the
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  Speaker 1: guardrails have been being removed over time, and I don't
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  Speaker 1: think this is a new process. I think it goes
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  Speaker 1: back beyond Brexit. But Brexit certainly made the process more intense,
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  Speaker 1: and there's a result. I think that you have to
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  Speaker 1: have that little bit of history in mind when you
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  Speaker 1: ask yourself the question, well, hang on, the trust administration
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  Speaker 1: has said we are going to deal with medium term sustainability,
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  Speaker 1: but why why were markets not prepared to take them
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  Speaker 1: on trust? And I think that that is really because,
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  Speaker 1: as I say, over time, I think a lot of
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  Speaker 1: things have been changing which really have made an accident
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  Speaker 1: like this a lot more likely to happen. I mean,
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  Speaker 1: it's funny because it's the kind of analysis that one
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  Speaker 1: would usually hear of an emerging market economy when people
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  Speaker 1: talk about weaknesses and institutions or even the basic rule
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  Speaker 1: of law. I mean, you list it's quite deaf data.
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  Speaker 1: You listed the things that were considered to be, as
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  Speaker 1: you say, the sort of guard rails that helped us
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  Speaker 1: sort of push policy choices towards the orthodoxy even when
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  Speaker 1: you had unorthodox politicians. Independent central bank, independent monitoring of
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  Speaker 1: the fiscal choices are technically proficient, and independent civil service
• 9:22
  Speaker 1: functioning parliamentary oversight, a respected judiciary. When you think of Brexit,
• 9:30
  Speaker 1: the sort of mayhem in politics of post Brexit years
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  Speaker 1: under Boris Johnson and others, more or less all of
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  Speaker 1: those things have been undermined to some extent. I think
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  Speaker 1: that's right. And it can sound like you're making a
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  Speaker 1: very sort of party political point sometimes when you're discussing this,
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  Speaker 1: and I really actually think this is a point which
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  Speaker 1: isn't about whether you're from the left or from the right,
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  Speaker 1: or whether you're firmly in the middle. I think it's
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  Speaker 1: really just about understanding how policy is it. So, I
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  Speaker 1: mean I was I was asking myself that the question,
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  Speaker 1: what is it that's different about what's what's been happening
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  Speaker 1: in the last week or two weeks compared to some
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  Speaker 1: of the sort of iconic UK debarkles that we all
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  Speaker 1: think about in the past. You know, the I m
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  Speaker 1: F loan, the exit from the e r M, the
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  Speaker 1: financial crisis. You know, what, is this just another one
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  Speaker 1: of those or is it different? And I would argue
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  Speaker 1: it is a bit different. And the reason it's a
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  Speaker 1: bit different is I think if you go back to
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  Speaker 1: the seventy six I m F, if you look at
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  Speaker 1: the e r M exit and even that was Sorry,
• 10:35
  Speaker 1: just for those who don't remember the finer points of
• 10:37
  Speaker 1: exchange rate policy in Europe, that was when we joined
• 10:40
  Speaker 1: the exchange rate system in Europe that came before the
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  Speaker 1: euro and then had to spectaclic spectacular exit it because
• 10:47
  Speaker 1: the markets decided we just couldn't sustain the rate we
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  Speaker 1: were at. That's right if you've been covering the UK,
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  Speaker 1: these these events are rather tattooed on the back of
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  Speaker 1: your eyeballs as the kind of big events where we
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  Speaker 1: really messed up. But I think there is a difference
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  Speaker 1: between them and now, and I think that the difference
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  Speaker 1: is that those failings were worth the failings of institutions
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  Speaker 1: that were actually trying to do what was quite orthodox
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  Speaker 1: or of their time. You know, if you look at
• 11:16
  Speaker 1: what the Labor government was doing in seventy six, it
• 11:19
  Speaker 1: might look a little bit odd now, but by the
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  Speaker 1: standards of the time, they were doing things that were
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  Speaker 1: very much seen in other administrations around Europe. You look
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  Speaker 1: at the e r M, you know, there was a
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  Speaker 1: sense in which the UK was like a lot of
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  Speaker 1: other countries, just trying to figure out what policy regime
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  Speaker 1: you needed to have in place when you moved away
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  Speaker 1: from monetarism, you know, so, I think again kind of
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  Speaker 1: orthodox the financial crisis very much the UK was doing
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  Speaker 1: what other countries were doing. I think what's different this
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  Speaker 1: time around is that, really what we're seeing is that
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  Speaker 1: the changes that have been going on for a while
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  Speaker 1: all have given politicians room for an experimentalism that really
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  Speaker 1: we wouldn't we we didn't see through any of those episodes.
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  Speaker 1: It's difficult in my mind to imagine a similar set
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  Speaker 1: of errors having been made by any incoming administration over
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  Speaker 1: really the last fifteen to twenty years, in the sense
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  Speaker 1: of being able to present policy in a way that
• 12:30
  Speaker 1: was so roundly condemned in both the political space and
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  Speaker 1: by the market reaction. More fundamentally, I think the UK
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  Speaker 1: is in a state where, looking over the coming years,
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  Speaker 1: I think that we are at more risk of events
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  Speaker 1: like this occurring unless we begin to repair some of
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  Speaker 1: the institutional changes that you mentioned before, improving parliamentary oversight
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  Speaker 1: to some extent, making it have a little bit more teeth,
• 13:00
  Speaker 1: making sure that politicians are actually respecting and listening to
• 13:05
  Speaker 1: independent voices like the Civil Service and the Office for
• 13:09
  Speaker 1: Budget Responsibility. Everything you say, Malcolm, could be quite reassuring
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  Speaker 1: to people listening in the rest of the world, because
• 13:16
  Speaker 1: it sounds like the market ructions and the really startling
• 13:23
  Speaker 1: spike in borrowing costs and they're feeling for a while
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  Speaker 1: anyway that things were sort of out of control. Is
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  Speaker 1: a UK problem, it's it's it's something that's that's result
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  Speaker 1: of UK policy mistakes. The government would make the argument,
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  Speaker 1: and some others would make the argument that no, the
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  Speaker 1: UK has perhaps got a few things wrong, or it
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  Speaker 1: has been the first country to face a more challenging world,
• 13:50
  Speaker 1: but it won't be the last because the financial markets
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  Speaker 1: not wanting to borrow at such cheap rates to governments anymore,
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  Speaker 1: and inflation being a difficult problem to fix without hurting
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  Speaker 1: your economy. Well, those two challenges are going to face
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  Speaker 1: every government in the next few months and maybe years.
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  Speaker 1: I think there are some lessons to be taken from this.
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  Speaker 1: We have a very very big energy shock which the
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  Speaker 1: global economy is trying to digest, and an energy shock
• 14:22
  Speaker 1: basically means that those who are energy consumers are going
• 14:25
  Speaker 1: to be worse off and the benefits again to the
• 14:28
  Speaker 1: energy producers. And that is as central bankers are very
• 14:32
  Speaker 1: fond of telling us that is a unavoidable real adjustment,
• 14:36
  Speaker 1: and that is out there. I think what the UK
• 14:39
  Speaker 1: experience does tell you is that when you try to
• 14:43
  Speaker 1: address that, you must make sure that whatever you're doing
• 14:49
  Speaker 1: has some clear political consensus that can be sustained behind it.
• 14:55
  Speaker 1: In an environment where you have an inner energy shock,
• 14:58
  Speaker 1: reducing taxation for those at the top end of the
• 15:01
  Speaker 1: income distribution is not just questionable economics, but it's extremely
• 15:07
  Speaker 1: bad politics in the sense of maintaining some kind of
• 15:13
  Speaker 1: coherent support for the policies you're putting in place. So
• 15:18
  Speaker 1: I think I think it's absolutely fair to say that
• 15:20
  Speaker 1: there is a common component. But if you look at
• 15:24
  Speaker 1: markets around Western Europe, there has been nothing of the
• 15:29
  Speaker 1: same sort of sequence of events as we've seen from
• 15:33
  Speaker 1: in the UK over the last couple of weeks, and
• 15:35
  Speaker 1: so I do think that there is a component of this,
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  Speaker 1: which is some some chickens which the UK you know,
• 15:41
  Speaker 1: has been incubating, coming home to roost. There is one
• 15:45
  Speaker 1: fundamental feature of that of that crazy week for the UK,
• 15:50
  Speaker 1: which is likely to have some residents in other parts
• 15:54
  Speaker 1: of the world, and that's the big rise in long
• 15:56
  Speaker 1: term interest rates. The borrowing cast attached to these io
• 15:59
  Speaker 1: use that governments have, the bombs have, but also interest
• 16:02
  Speaker 1: rates attached to mortgages. Larry Summers has talked about feeling
• 16:06
  Speaker 1: a little bit like two thousand and seven that you're
• 16:09
  Speaker 1: starting to get many sort of explosions and problems in
• 16:12
  Speaker 1: certain areas can Aias in the coal mine of this
• 16:16
  Speaker 1: much broader issue of the world having to adjust to
• 16:21
  Speaker 1: much higher interest rates potentially for several years if central
• 16:25
  Speaker 1: banks can't get inflation under control. Well, I think lingering
• 16:29
  Speaker 1: in the background of all of this is a very
• 16:32
  Speaker 1: fundamental question, which is is the inflation process stable. If
• 16:38
  Speaker 1: we were having this conversation probably three years ago, we
• 16:44
  Speaker 1: would have been reflecting on how difficult advanced economies had
• 16:49
  Speaker 1: found it to make sure inflation was not too low.
• 16:55
  Speaker 1: Wind forward a few years and here we are not
• 16:58
  Speaker 1: just looking the issue of an increase in inflation, but
• 17:03
  Speaker 1: really are quite profound said of questions around whether central
• 17:08
  Speaker 1: banks really are still in control of the inflation process.
• 17:12
  Speaker 1: And so I think I think we need to recognize
• 17:14
  Speaker 1: that that was all part of the backdrop against which
• 17:18
  Speaker 1: the you know, the markets responded in the way that
• 17:22
  Speaker 1: they did, um you know, to to the mini budget
• 17:26
  Speaker 1: in the UK, and these are uniquely challenging times, and
• 17:31
  Speaker 1: you're absolutely right to say some of the adjustments in
• 17:33
  Speaker 1: markets that we've been seeing have been brutal as that
• 17:37
  Speaker 1: has been been occurring. Now, I'll admit here that there
• 17:41
  Speaker 1: is a bit of me that says, as much as
• 17:44
  Speaker 1: one has to be careful what you wish for, if
• 17:47
  Speaker 1: you had said prior to the pandemic, you can have
• 17:52
  Speaker 1: a choice of an unemployment problem or an inflation problem
• 17:55
  Speaker 1: on the other side of this, which one you think
• 17:58
  Speaker 1: we'd be We'd rather have a which are we better
• 18:01
  Speaker 1: placed to be able to deal with. I think most economists,
• 18:05
  Speaker 1: this one included, would have said I'd rather have the
• 18:07
  Speaker 1: inflation problem, thank you, because I think that that we
• 18:11
  Speaker 1: may have both in Well, yes, you're absolutely right to
• 18:15
  Speaker 1: some extent. You might not get to choose you You're
• 18:17
  Speaker 1: just getting to choose the balance of both, right, But
• 18:20
  Speaker 1: I think if you if at the moment, I think
• 18:22
  Speaker 1: it's fair to say, yes, policy may have been too
• 18:26
  Speaker 1: easy for too long. Yes, it may be the case
• 18:30
  Speaker 1: that what was originally thought of as an energy shock
• 18:32
  Speaker 1: was actually something more fundamental than that. But I personally
• 18:37
  Speaker 1: think that over time we have a policy making framework
• 18:41
  Speaker 1: that can response to that we can do without the
• 18:43
  Speaker 1: sorts of messiness that we got in the UK mini
• 18:46
  Speaker 1: budget along the way. I would be less confident about
• 18:49
  Speaker 1: making that statement if we were coming out of the
• 18:52
  Speaker 1: pandemic and economies were extremely weak and we were worrying
• 18:57
  Speaker 1: about getting growth back up again and trying to get
• 19:00
  Speaker 1: unemployment down, because there I would be wondering exactly what
• 19:05
  Speaker 1: we could do to make that happen. So, yes, it's
• 19:08
  Speaker 1: a problem. Yes it's not just the UK issue, but
• 19:13
  Speaker 1: there is a bit of a sense in my mind
• 19:15
  Speaker 1: at least, that this is probably the problem we'd have
• 19:18
  Speaker 1: chosen to have faced given the sequence of events that
• 19:21
  Speaker 1: we've seen over the last few years. Well, you've taken
• 19:24
  Speaker 1: us to a to a welcome, rather positive endpoint, So
• 19:28
  Speaker 1: I definitely I don't think we should we should go
• 19:30
  Speaker 1: too far further down the road. But those who are
• 19:33
  Speaker 1: listening carefully at the beginning may have a nagging question
• 19:36
  Speaker 1: in their mind as to what the reference to silly
• 19:39
  Speaker 1: walks referred to in the title of your Peace, So
• 19:43
  Speaker 1: maybe you should explain it. So for those who those
• 19:48
  Speaker 1: of your listeners who've heard of Monty Python, there is
• 19:52
  Speaker 1: many people, but well, Monty Python a sort of very
• 19:56
  Speaker 1: archetypal seventh c. Slash eighties British common the and one
• 20:01
  Speaker 1: of their most iconic creations was the Ministry for Silly Walks,
• 20:05
  Speaker 1: wherein the individuals would make their way from A to
• 20:07
  Speaker 1: b in all sorts of entertaining ways. That John Clees
• 20:12
  Speaker 1: was the archetypal demonstrator of that, and I've always thought
• 20:16
  Speaker 1: that there was something uniquely British about that, in the
• 20:19
  Speaker 1: sense that you would still get from A to B,
• 20:22
  Speaker 1: but there would be some amount of entertainment to be
• 20:25
  Speaker 1: had in the quirkiness of the of the roots and
• 20:28
  Speaker 1: the manner of the motion, and so you know, I
• 20:31
  Speaker 1: think that there was there was always a sense of
• 20:33
  Speaker 1: looking at the UK that there was all sorts of
• 20:38
  Speaker 1: quirkiness and idiosyncrasy to our politics, to our legal system.
• 20:43
  Speaker 1: But international investors always thought, look, this is all very
• 20:47
  Speaker 1: interesting and colorful, but the destiny that the route from
• 20:51
  Speaker 1: A to B is ultimately a route from where you
• 20:54
  Speaker 1: are to a centerport destination. And I think that, you know,
• 20:58
  Speaker 1: what I was trying to get get at in in
• 21:00
  Speaker 1: the Silly Walks reference was a little bit that international
• 21:03
  Speaker 1: investors are just beginning to wonder whether we're silly as
• 21:06
  Speaker 1: opposed to whether this is just an entertaining walk. And
• 21:11
  Speaker 1: of course the idea of going from A to B
• 21:13
  Speaker 1: feels particularly challenging today because it happens to be the
• 21:16
  Speaker 1: day of a rail strike in the UK. But let's
• 21:19
  Speaker 1: say we do eventually get their Malcolm bar thank you
• 21:21
  Speaker 1: very much, my pleasure. With inflation at nearly ten percent
• 21:32
  Speaker 1: and many key workers being offered pay increases that are
• 21:35
  Speaker 1: a fraction of that, the cost of living is a
• 21:37
  Speaker 1: massive issue for households and for businesses across Britain. It's
• 21:41
  Speaker 1: also getting in the way of the government's grand vision
• 21:43
  Speaker 1: of the country's economic future. Freed from the European Union,
• 21:47
  Speaker 1: our supply chains are Brendan Murray found all of those
• 21:50
  Speaker 1: tensions and more on a recent trip across the Mercy.
• 21:57
  Speaker 1: I've been there knocking round thee of her pity For yes,
• 22:01
  Speaker 1: I'm on the London stage. It's hide a boat song,
• 22:04
  Speaker 1: Get two people on alf on Lowden, dischargeon you know
• 22:08
  Speaker 1: on the just waited the next bolt, and then usually
• 22:14
  Speaker 1: each hour. When Liverpool residents claim that their seaside town
• 22:18
  Speaker 1: in northern England is where the modern world began, they're
• 22:21
  Speaker 1: not exaggerating global trade crossed its wharfs in the late
• 22:25
  Speaker 1: nineteenth century. This was the launchpad for the British Empire,
• 22:28
  Speaker 1: the home of the shipping line that operated the Titanic,
• 22:31
  Speaker 1: and the birthplace of the most popular UK export, the Beatles.
• 22:35
  Speaker 1: One constant here has been the docks, seven miles of
• 22:38
  Speaker 1: them along the Mersey River towards the Irish Sea. But
• 22:42
  Speaker 1: Liverpool's port is in the midst of the worst labor
• 22:44
  Speaker 1: unrest in a quarter century, a fight over the future
• 22:47
  Speaker 1: of good jobs for generations of families like Ferry Dock
• 22:51
  Speaker 1: hand Brian Thompson's So in these thirty five years, what
• 22:55
  Speaker 1: have you seen changed for the better for worse here
• 23:00
  Speaker 1: the border Liverpool. Well, when the starts of the it
• 23:03
  Speaker 1: was like a big bus station. Every bus comes to
• 23:05
  Speaker 1: the pier head, every bush at the pier head on
• 23:08
  Speaker 1: the front of it. Now there's no bus station here,
• 23:12
  Speaker 1: you know, that's all gone. What do put on the
• 23:14
  Speaker 1: bus stations about? What you really do you build the
• 23:17
  Speaker 1: city in thest fifteen years you know this buildings down
• 23:21
  Speaker 1: the next to them as you've found each building that's
• 23:23
  Speaker 1: a new building. You've got the Museum of Liverpool just
• 23:26
  Speaker 1: strolling on the ice hands side, so it's it's a
• 23:29
  Speaker 1: nice welcome the city sucome to, you know. At the
• 23:32
  Speaker 1: moment though, the dispute on the city's northern docks involved
• 23:35
  Speaker 1: some six d dock workers who have been on strike
• 23:37
  Speaker 1: for the past few weeks. The doctors here have had
• 23:40
  Speaker 1: a long history of ups and downs with their bosses.
• 23:43
  Speaker 1: Here's Katie fox Hotus, a lecturer and employment relations at
• 23:46
  Speaker 1: Sheffield University Management School. Liverpool historically was always one of
• 23:52
  Speaker 1: the sort of most militant groups of doctor trade union
• 23:56
  Speaker 1: this in the UK are really sort of well known story,
• 24:00
  Speaker 1: very politically inclined and strongly organized. All of that began
• 24:07
  Speaker 1: to change with the ending of the National Dock Labor
• 24:10
  Speaker 1: Scheme in the late nineteen eighties and that laid the
• 24:15
  Speaker 1: groundwork for this twenty eight month long strike in the
• 24:20
  Speaker 1: mid nineteen nineties known as the Doctors Strike from as
• 24:25
  Speaker 1: fox Hotas explains, basically, the entire workforce was fired twenty
• 24:29
  Speaker 1: five years ago and new workers were hired through non
• 24:32
  Speaker 1: union agencies and it was quite a bad employment situations,
• 24:36
  Speaker 1: he said. But something happened over the past decade that
• 24:39
  Speaker 1: turned the tide back in favor of the unions in Liverpool.
• 24:42
  Speaker 1: We've really seen over the past decade really this sort
• 24:45
  Speaker 1: of renaissance of union organizing on the docks in Liverpool,
• 24:50
  Speaker 1: and it's been a slow, arduous process of really building
• 24:55
  Speaker 1: the union up from nothing to the fighting force it
• 24:59
  Speaker 1: is today that has a most a percent union density. Yeah,
• 25:10
  Speaker 1: you can see all that history today hanging on the
• 25:12
  Speaker 1: walls of a Liverpool pub called the Casa, which was
• 25:15
  Speaker 1: founded by one of the workmen who was fired back in.
• 25:19
  Speaker 1: Jackie Richardson manages the place. It's a community center where
• 25:23
  Speaker 1: union members gathered for meetings and to get financial help
• 25:26
  Speaker 1: in these tough economic times. It's a nonprofit organization. It's
• 25:30
  Speaker 1: a social justice center and like a community hop. It's
• 25:33
  Speaker 1: known as like a trades union bar. So the majodity
• 25:35
  Speaker 1: of the trades unions meet here. It's a strike day
• 25:38
  Speaker 1: goes from here and and a lot of the you know,
• 25:41
  Speaker 1: the unions of the Philly Phillies to he is about
• 25:43
  Speaker 1: the regular meetings each from everyone and then people are
• 25:46
  Speaker 1: struggling so much. You know, if someone goes in, it's
• 25:49
  Speaker 1: you know, through these doors sort of face all for help.
• 25:53
  Speaker 1: If we can't help them, will try and point them inside.
• 25:55
  Speaker 1: Erection of someone, or they'll try and find someone that
• 25:57
  Speaker 1: can't help them. What Richards hears from the Dockers is
• 26:01
  Speaker 1: that they're trying to prevent their livelihoods from going in reverse.
• 26:04
  Speaker 1: Their employer, peel Ports, says it's offering a fair pay
• 26:07
  Speaker 1: rise of more than eight percent and that the strikers
• 26:10
  Speaker 1: are threatening the local economy. That's the challenge across Britain
• 26:14
  Speaker 1: for the new UK Prime Minister, Liz Trusts, whose government
• 26:17
  Speaker 1: is charged with reviving the UK economy in a way
• 26:20
  Speaker 1: that doesn't unsettle financial markets, hurt the middle class or
• 26:23
  Speaker 1: alienate her political base. Around Liverpool, public sympathy has tilted
• 26:28
  Speaker 1: toward the Dockers. Here's Brian Thompson again. I think you
• 26:32
  Speaker 1: know that the incestrates and the inflation, people's money delusion
• 26:36
  Speaker 1: the gold backwards. So do you want to just stay
• 26:39
  Speaker 1: level the I don't think they They want to be
• 26:40
  Speaker 1: geedy and they don't want any excellent money. It's just
• 26:43
  Speaker 1: like to keep level of inflation, which he'll I think
• 26:46
  Speaker 1: they've got advice for that. You know. With its connections
• 26:49
  Speaker 1: to trade routes west to the Americas, Liverpool is well
• 26:52
  Speaker 1: positioned to capitalize on Brexit, which was supposed to untether
• 26:55
  Speaker 1: Britain from the European Union so we can thrive under
• 26:58
  Speaker 1: new trade deals in the global econom to me, but
• 27:01
  Speaker 1: Brexit's promise so far has mainly meant more paperwork for
• 27:04
  Speaker 1: local businesses rather than newfound prosperity. Here's Elena and Theso
• 27:08
  Speaker 1: of the Liverpool Chamber of Commerce explaining how the city
• 27:11
  Speaker 1: leverages its rich maritime history with the need to modernize
• 27:15
  Speaker 1: after Brexit. I think it is a little bit of
• 27:18
  Speaker 1: a mix of both because obviously you have to move
• 27:20
  Speaker 1: on with technology tally say sum paperless trade frictions trade
• 27:26
  Speaker 1: and I think we have a really good cluster of
• 27:28
  Speaker 1: logistic capabilities in the region. Quite a few phone members
• 27:32
  Speaker 1: are well prepared to cope with the changes post Brexit,
• 27:35
  Speaker 1: postco with everybody is prepared to accept the mole atility
• 27:39
  Speaker 1: for the trade supply chains for example, and I think
• 27:45
  Speaker 1: Liverpool has to continue to play this vital role in
• 27:47
  Speaker 1: the north of the UK to be seen as as
• 27:51
  Speaker 1: a really good platform for trade links with all the
• 27:55
  Speaker 1: overseas global networks that you have. For the doctors, they
• 27:58
  Speaker 1: just want a fair piece of Liverpool's future and the
• 28:01
  Speaker 1: signs of progress are rising among the scrap yards and
• 28:04
  Speaker 1: vacant lots along the waterfront. What are you doing here?
• 28:07
  Speaker 1: So you tell me? As we walked through the museum
• 28:10
  Speaker 1: here why On a recent weekday morning, tourists and school
• 28:14
  Speaker 1: kids waited outside the Maritime Museum and bustled in and
• 28:17
  Speaker 1: out of the shops in the redeveloped Albert Docks, a
• 28:19
  Speaker 1: crown jewel of the Industrial Age when it opened in
• 28:22
  Speaker 1: the mid nineteenth century. A five million pounds stadium is
• 28:25
  Speaker 1: being built near the banks of the River Mercy to
• 28:28
  Speaker 1: be the new home of Everton, Liverpool's second most famous
• 28:31
  Speaker 1: team in English Premier League. You got a hell of
• 28:34
  Speaker 1: a lot of statist COMMENTI in Liverpool. You know they
• 28:36
  Speaker 1: want to take a ferry across the Mercy. Did Yes,
• 28:38
  Speaker 1: it's it's one of the book list things you'd you'd
• 28:40
  Speaker 1: be surprised, you know already people have just been actual
• 28:43
  Speaker 1: before goes on in Liverpool. I'm Brendan Murray for Bloomberg News,
• 28:57
  Speaker 1: Torn in every Soul, fairy Cross, the Mersey has this land.
• 29:25
  Speaker 1: Well that's it for this rather British episode of Stephanomics.
• 29:28
  Speaker 1: I'm escaping to Washington next week. In the meantime, do
• 29:32
  Speaker 1: please rate the show if you like it, and check
• 29:34
  Speaker 1: out the Bloomberg News website for more economic news and
• 29:37
  Speaker 1: views on the global economy. You should also follow at
• 29:40
  Speaker 1: economics on Twitter. This episode is produced by Summer Saddi
• 29:44
  Speaker 1: and Magnus Hendrickson, with special thanks to Kitty Donaldson, James Woolcock,
• 29:49
  Speaker 1: Malcolm Barr, and Brendan Murray. Mike Sasso is the executive
• 29:53
  Speaker 1: producer of Stephanomics, the