Latest / Trumponomics / Exclusive: Rachel Reeves on Iran Shock, US Trade and Inflation Risks

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Exclusive: Rachel Reeves on Iran Shock, US Trade and Inflation Risks · Trumponomics

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
• 0:08
  Speaker 2: Hello Trump Andomics listeners. We're working hard on an episode
• 0:12
  Speaker 2: with opinion columnist and energy bureau Javier Blass and Bloomberg
• 0:16
  Speaker 2: Economics Ziad Daude assessing the economic impact of the war
• 0:20
  Speaker 2: in Iran, and that's going to be out in feeds
• 0:23
  Speaker 2: at the regular time tomorrow Wednesday. But earlier today I
• 0:26
  Speaker 2: sat down for an exclusive conversation with the UK's Chancellor
• 0:30
  Speaker 2: of the Exchequer, Rachel Reeves. We had an opportunity to
• 0:34
  Speaker 2: discuss her expectations for the UK's economy over the coming years,
• 0:39
  Speaker 2: how she sees the escalating war in the Middle East
• 0:41
  Speaker 2: affecting it. We also mentioned her take on the Supreme
• 0:45
  Speaker 2: Court ruling on Trump tariffs, the status of the UK
• 0:48
  Speaker 2: US trade deal, and I asked her whether she thought
• 0:51
  Speaker 2: people moving to Dubai to avoid UK taxes might now
• 0:55
  Speaker 2: be starting to rethink. Here's that conversation, Chancellor, Thank you
• 1:08
  Speaker 2: so much for doing this. You've come over to Bloomberg
• 1:11
  Speaker 2: headquarters straight from the Treasury on a busy.
• 1:14
  Speaker 1: Day, Okay, straight from the Chamber.
• 1:16
  Speaker 2: From the Chamber of course, Yes, you wanted to talk
• 1:19
  Speaker 2: about your thoughts about the state of the UK economy
• 1:22
  Speaker 2: and the growth plan going forward. But obviously, given everything
• 1:26
  Speaker 2: that's happening today in markets in the Middle East, I
• 1:30
  Speaker 2: want to start with just asking you a few questions
• 1:32
  Speaker 2: about that. I mean, you mentioned in your speech in
• 1:34
  Speaker 2: the Commons that you were planning to talk tomorrow to
• 1:38
  Speaker 2: northse oil producers. What are you hoping to get out
• 1:41
  Speaker 2: of that conversation.
• 1:42
  Speaker 1: So I said in the Chamber that some of the
• 1:45
  Speaker 1: most affected industries I wanted to spend some time with
• 1:50
  Speaker 1: and been in touch with over the last few days.
• 1:52
  Speaker 1: And obviously developments in oil and gas markets are absolutely
• 1:57
  Speaker 1: crucial for every family, in every business in Britain. Now
• 2:02
  Speaker 1: oil and gas production in the North Sea Council less
• 2:05
  Speaker 1: than one percent of global supply of oil and gas,
• 2:08
  Speaker 1: but it's still very important. It's important for jobs in
• 2:11
  Speaker 1: the UK, it's important for investment, and it's important for
• 2:15
  Speaker 1: every family in Britain. So I'm going to be a
• 2:17
  Speaker 1: meeting with them tomorrow to talk about their production plans
• 2:22
  Speaker 1: and also to talk about how they see the situation evolving.
• 2:26
  Speaker 1: Because every oil and gas company pretty much that operates
• 2:29
  Speaker 1: in the North Sea will also operate in other parts
• 2:31
  Speaker 1: of the world, whether that is SHELL or BP or
• 2:34
  Speaker 1: equinor or others, and so getting their insights into how
• 2:41
  Speaker 1: oil and gas prices might evolve based on a number
• 2:45
  Speaker 1: of different scenarios over the coming days and weeks will
• 2:48
  Speaker 1: be very useful for me and for the government.
• 2:51
  Speaker 2: We can give you our scenarios as well, but our
• 2:53
  Speaker 2: economists are looking at this as you suggest, there's nothing
• 2:56
  Speaker 2: that our north to oil producers could do to affect
• 2:59
  Speaker 2: a globe or price hike. It is already up significantly.
• 3:03
  Speaker 2: If it's sustained for any period, it seems like it
• 3:06
  Speaker 2: would be much harder to get the headline inflation rate
• 3:10
  Speaker 2: in the UK back to two percent as you were,
• 3:13
  Speaker 2: as you were hoping it would be. You did a
• 3:14
  Speaker 2: lot of things in the budget to encourage shall we
• 3:17
  Speaker 2: say inflation to go back to two percent even by April.
• 3:20
  Speaker 2: Has Donald Trump's wore an iran taken that away from you?
• 3:23
  Speaker 1: Well, the first thing I would say is that the
• 3:25
  Speaker 1: action that I took in the budget will still happen.
• 3:29
  Speaker 1: So the freezing prescription charges, the freezing rail fares, and
• 3:33
  Speaker 1: also the one hundred and fifty pounds off of energy
• 3:36
  Speaker 1: bills that I announced in the budget will take effect
• 3:40
  Speaker 1: next month and so people paying families paying their gas
• 3:43
  Speaker 1: and electricity bills do not need to worry about the
• 3:47
  Speaker 1: next three months. That price cap is set and they
• 3:51
  Speaker 1: will get the benefit of those policies I announced in
• 3:55
  Speaker 1: the in the budget. But of course, you know, we
• 3:58
  Speaker 1: have to see how things evolved in terms of where
• 4:01
  Speaker 1: oil and gas prices go going forward. But what the
• 4:04
  Speaker 1: Office's Budget Responsibility confirmed today and what the Bank of
• 4:07
  Speaker 1: England said when they published their most recent outlook for
• 4:11
  Speaker 1: inflation in February, was that the measures that we have
• 4:16
  Speaker 1: taken as the government are helping bring inflation back down
• 4:19
  Speaker 1: to target much sooner than they anticipated. I think in
• 4:22
  Speaker 1: the OBR numbers today inflation is likely to meet target
• 4:26
  Speaker 1: at six months earlier than they previously envisaged. Now, of
• 4:31
  Speaker 1: course that doesn't take into accounter developments over the last
• 4:34
  Speaker 1: few days. But also we are only just into what
• 4:38
  Speaker 1: is happening in the Middle East. We saw each other
• 4:41
  Speaker 1: last week, Stephanie, and we were not talking about the
• 4:43
  Speaker 1: Middle East or Iran. There was lots of other things
• 4:46
  Speaker 1: to talk about in the economy, but this only really
• 4:50
  Speaker 1: kicked off on Friday. So of course we're monitor developments
• 4:54
  Speaker 1: very very closely and do everything in our power to
• 4:57
  Speaker 1: protect businesses and and families in the UK, and we
• 5:02
  Speaker 1: are better placed to do that than we were just
• 5:06
  Speaker 1: a few months and years ago because of the choices
• 5:09
  Speaker 1: we've taken as a government. So what I was able
• 5:11
  Speaker 1: to set out today in the OBR forecast is that
• 5:14
  Speaker 1: both interest rates and inflation have been falling faster than expected.
• 5:19
  Speaker 1: Government borrowing and debt have been revised down since the
• 5:24
  Speaker 1: budget last year G seven borrowing is not coming down
• 5:30
  Speaker 1: at the same rate that it is in the UK.
• 5:32
  Speaker 1: Our public sect to net borrowing, forecast to be just
• 5:34
  Speaker 1: four point three percent this year, is the lowest in
• 5:37
  Speaker 1: six years and the first time in twenty two years
• 5:40
  Speaker 1: that are borrowing has been lower than the G seven average.
• 5:44
  Speaker 1: So welcome developments which put us in a stronger position
• 5:48
  Speaker 1: to be able to withstand the shocks, including the shock
• 5:51
  Speaker 1: that we are likely to be responding to in the
• 5:53
  Speaker 1: weeks and months ahead, than we would have been without
• 5:56
  Speaker 1: the action that we've taken as a government to secure
• 5:58
  Speaker 1: and stabilize the public FIINDNSS.
• 6:00
  Speaker 2: But it is vulnerable. I mean even that fall in
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  Speaker 2: borrowing is driven in large part actually by lower than
• 6:06
  Speaker 2: expected spending, which is actually in turn lower spending on
• 6:10
  Speaker 2: guilt interest, which is a result of lower inflation. So
• 6:13
  Speaker 2: that lower path for inflation that we were counting on
• 6:16
  Speaker 2: even markets were assuming for this year, that was also
• 6:19
  Speaker 2: going to potentially pave the way for another rate cut.
• 6:22
  Speaker 2: You mentioned in your speech how proud you were that
• 6:25
  Speaker 2: you've been part of the government at the Bank of
• 6:28
  Speaker 2: England had been able to have six rate cuts since
• 6:31
  Speaker 2: ry King was going on.
• 6:33
  Speaker 1: There's three things that are going on to put our
• 6:35
  Speaker 1: public finances in a better position. First of all, tax
• 6:39
  Speaker 1: revenues have come in stronger than anticipated, and we saw
• 6:42
  Speaker 1: that particularly in the January. January borrowing numbers, it was
• 6:46
  Speaker 1: the biggest surplus on record.
• 6:48
  Speaker 2: But yet to day, isn't it still lower than the
• 6:50
  Speaker 2: forecast than the oba's forecast, so that that month was
• 6:54
  Speaker 2: very good.
• 6:54
  Speaker 1: But borrowing has come in lower. This revenue, the borrowing
• 6:59
  Speaker 1: has come in lower than forecast. And spending. We set
• 7:03
  Speaker 1: out the spending review last summer, many people said, well
• 7:06
  Speaker 1: we wouldn't really able to live within those budgets. Well,
• 7:10
  Speaker 1: this year we have not used all of the surplus
• 7:12
  Speaker 1: that is put aside for genuine emergencies and instead we're
• 7:15
  Speaker 1: able to roll that surplus forward, so spending is under control, whereas,
• 7:19
  Speaker 1: of course when I became Chancellor, the reserve for the
• 7:23
  Speaker 1: year that we were in and we were only three
• 7:25
  Speaker 1: months into it had been spent four times over, so
• 7:28
  Speaker 1: we haven't used a full reserve for this year. And
• 7:31
  Speaker 1: also borrowing costs have come down. The OBR today forecast
• 7:35
  Speaker 1: that borrowing costs next year will be four billion pounds
• 7:38
  Speaker 1: lower than that even they thought in the budget last year.
• 7:41
  Speaker 1: So tax review coming in a bit stronger, spending coming
• 7:45
  Speaker 1: in as planned and in fact not even using the
• 7:47
  Speaker 1: full reserve, and also boring costs coming down because of
• 7:51
  Speaker 1: that additional stability we've brought to the economy have all
• 7:55
  Speaker 1: contributed to the better forecast or the public finances that
• 7:58
  Speaker 1: I was able to set out today.
• 8:00
  Speaker 2: But that good news, A lot of that was related
• 8:02
  Speaker 2: to the fallen guilt yields, a lot of some of
• 8:05
  Speaker 2: that has been reversed even just today in the concerns
• 8:08
  Speaker 2: in the markets and expectations of lower interest rates from
• 8:11
  Speaker 2: the Bank of England, which traders in the market this
• 8:14
  Speaker 2: week have decided again to certainly not happen in March
• 8:18
  Speaker 2: now and where as they were expecting and maybe not
• 8:20
  Speaker 2: happen in the next few months.
• 8:22
  Speaker 1: I won't comment on market movements over a day or two.
• 8:26
  Speaker 1: I think it is too early to know what the
• 8:30
  Speaker 1: market impact is. Obviously, the immediate concern for the government
• 8:34
  Speaker 1: is trying to get the three hundred thousand British citizens
• 8:37
  Speaker 1: who are in the Middle East back home if they
• 8:40
  Speaker 1: want to come back to the UK. Think around one
• 8:43
  Speaker 1: hundred thousand have always already registered for the scheme to
• 8:48
  Speaker 1: say that you are there, and that is very welcome,
• 8:53
  Speaker 1: and that's our mediate goal, as well as protecting our
• 8:57
  Speaker 1: personnel and our assets in the region. But of course
• 9:01
  Speaker 1: the economic consequences of any extended military action, especially in
• 9:06
  Speaker 1: the Middle East, which is so crucial for trade and
• 9:10
  Speaker 1: for oil and gas, would have an impact on the
• 9:13
  Speaker 1: UK economy, but it is too early to judge exactly
• 9:16
  Speaker 1: what that will be and therefore what response would be needed.
• 9:18
  Speaker 2: I mean, I'll focus on the economy today. I'm not
• 9:20
  Speaker 2: going to go into the government stance in relation to
• 9:24
  Speaker 2: the support or not for what the president's doing. But
• 9:26
  Speaker 2: judging from Donald Trump's posts in the last and interviews
• 9:30
  Speaker 2: in the last twenty four hours, he does seem to
• 9:32
  Speaker 2: be not very happy with the Prime Minister as a
• 9:35
  Speaker 2: result of the last few days, do you worry that
• 9:38
  Speaker 2: that will make it harder to finalize, finally finalize the
• 9:42
  Speaker 2: trade situation, the trade deal with the US, which was
• 9:45
  Speaker 2: put into quite a lot of uncertainty by that Supreme
• 9:47
  Speaker 2: Court judgment a few weeks ago.
• 9:50
  Speaker 1: When it comes to decisions around using British armed forces
• 9:57
  Speaker 1: to take part in a conflict around the world, it
• 10:01
  Speaker 1: is very important that we judge those on whether it
• 10:06
  Speaker 1: is legal and whether it is the right thing to do.
• 10:11
  Speaker 1: You can't make a decision about whether to get British
• 10:14
  Speaker 1: armed forces involved in a conflict because it may or
• 10:16
  Speaker 1: may not make it more likely to get a trade deal.
• 10:19
  Speaker 1: And we judged that there was not a legal basis
• 10:23
  Speaker 1: for offensive action on Iran, but of course once Iran
• 10:28
  Speaker 1: responded particularly.
• 10:31
  Speaker 2: Sorry, not a legal basis for the UK or but
• 10:33
  Speaker 2: presumably not for the US either.
• 10:35
  Speaker 1: We can only make judgments for ourselves and that was
• 10:39
  Speaker 1: the judgment that we came to based on our legal advice,
• 10:43
  Speaker 1: and it's up to other countries to explain what action
• 10:46
  Speaker 1: they've taken and on what basis. But once Iran responded
• 10:50
  Speaker 1: in the way that they did, including with missiles being
• 10:55
  Speaker 1: launched into our allies who were not involved in the
• 10:58
  Speaker 1: offensive action and the risks to our military basis in Cyprus.
• 11:04
  Speaker 1: Of course it was right that we became involved in
• 11:08
  Speaker 1: defensive action and we were involved in that from Saturday,
• 11:11
  Speaker 1: and of course on Sunday we go permission for US
• 11:15
  Speaker 1: jets to use British assets from which to launch those
• 11:19
  Speaker 1: defensive actions, and that's a decision that we've taken as
• 11:23
  Speaker 1: a government. On trade, I'm proud of what we've done
• 11:26
  Speaker 1: as a government. We've secured a trade deal with India,
• 11:30
  Speaker 1: I think probably the best trade deal that any country
• 11:32
  Speaker 1: in the world has secured with India, and we hope
• 11:34
  Speaker 1: to be able to bring that into effect in the
• 11:36
  Speaker 1: next couple of months. But in addition, improving our trade
• 11:40
  Speaker 1: relations with our nearest neighbors and trading partners in the
• 11:43
  Speaker 1: European Union. And I'm going to say more about our
• 11:46
  Speaker 1: relations with the European Union in a speech I'm going
• 11:49
  Speaker 1: to give in a couple of weeks time, because I
• 11:50
  Speaker 1: think that that is one of the big bets that
• 11:52
  Speaker 1: we can take as a country to change our trajectory
• 11:56
  Speaker 1: for productivity and growth. We've already rejoining the Erasmus Scheme
• 12:01
  Speaker 1: to allow young people to be able to study in
• 12:04
  Speaker 1: European Union countries and for young people in those countries
• 12:07
  Speaker 1: to be able to study in the UK. But we
• 12:09
  Speaker 1: also want to deliver an energy and electricity trading deal,
• 12:14
  Speaker 1: we want a food and farming agreement and SPS agreement,
• 12:18
  Speaker 1: and also we want to bring in a youth ability
• 12:22
  Speaker 1: schemes so that young people in Britain can go and
• 12:25
  Speaker 1: take advantage of opportunities in Europe and vice versa, young
• 12:29
  Speaker 1: people in the European Union can come and work in
• 12:31
  Speaker 1: the UK. I know that some countries around the world
• 12:34
  Speaker 1: are looking to pull up the drawbridge, but Britain benefits
• 12:37
  Speaker 1: from being an open trading economy, open to trade, open
• 12:41
  Speaker 1: to investment and also open to talent.
• 12:43
  Speaker 2: But for trade, it's enormously important just to have some
• 12:46
  Speaker 2: kind of certainty about what the trade rules are. I mean,
• 12:49
  Speaker 2: are you able to say to UK exporters to the
• 12:52
  Speaker 2: US that you know currently what the trade rules are
• 12:56
  Speaker 2: for going into the US because it's not clear to US.
• 13:00
  Speaker 1: Or did a trade deal with the US last year
• 13:02
  Speaker 1: on the export of goods. Since then, we've gone further
• 13:05
  Speaker 1: and secured a deal around pharmaceuticals, which is obviously crucial
• 13:09
  Speaker 1: for the UK given the importance of our pharmaceuticals.
• 13:12
  Speaker 2: As ferns, and those things are not affected by the
• 13:15
  Speaker 2: Supreme Court ruling as far as your.
• 13:17
  Speaker 1: Concern, obviously we are in constant negotiation and dialogue with
• 13:21
  Speaker 1: the US administration, but there's absolutely no reason why the
• 13:24
  Speaker 1: trade deal that we secured last year can't be maintained.
• 13:28
  Speaker 1: And of course there are other areas as well where
• 13:30
  Speaker 1: we want to go further with our trade links with
• 13:32
  Speaker 1: the US, whether that is on the future of capital markets,
• 13:35
  Speaker 1: where we want to deepen and strengthen the capital market
• 13:40
  Speaker 1: links between our economy, making it easier for British companies
• 13:44
  Speaker 1: to raise finance in the US and US businesses to
• 13:47
  Speaker 1: raise finance in London, as well as doing more in
• 13:50
  Speaker 1: terms of mutual recognition of standards so that if you
• 13:54
  Speaker 1: have a license for a product in the US, you
• 13:56
  Speaker 1: can bring it to the UK and again vice versa,
• 13:59
  Speaker 1: to help British businesses in financial services and elsewhere to
• 14:02
  Speaker 1: be able to launch product products in the US, which
• 14:05
  Speaker 1: is obviously hugely beneficial for UK firms. So there are
• 14:09
  Speaker 1: other areas as well where we want to deepen those
• 14:11
  Speaker 1: relations with the US, but our nearest neighbors and trading partners,
• 14:16
  Speaker 1: our countries in the EU, and the benefits from rebuilding
• 14:20
  Speaker 1: trust between US and the European Union, and crucially those
• 14:25
  Speaker 1: trade links in goods and our hope in services in
• 14:28
  Speaker 1: due course is what will have the biggest impact on
• 14:32
  Speaker 1: British businesses and jobs and living standards.
• 14:47
  Speaker 2: Let's talk about that sort of broader approach to growth.
• 14:50
  Speaker 2: I know you're going to talk about also in a
• 14:52
  Speaker 2: speech in a couple of weeks, you promise that today's
• 14:55
  Speaker 2: spring statements being forecast would be a non event so
• 14:59
  Speaker 2: I think I can who you succeeded in making it
• 15:01
  Speaker 2: not very eventful. We haven't had all this kind of
• 15:04
  Speaker 2: speculation that we had leading up to the budget, so
• 15:06
  Speaker 2: we haven't had that uncertainty. As you've mentioned, the economic
• 15:08
  Speaker 2: news leading up to this, at least till this week
• 15:11
  Speaker 2: was fairly positive. The political environment is, if anything, has
• 15:15
  Speaker 2: deteriorated for the government, and we had a poll today
• 15:18
  Speaker 2: that showed labor even potentially behind the Greens. As well
• 15:21
  Speaker 2: as reform, I guess I mean your economic mission, which
• 15:26
  Speaker 2: was central to this government. A large chunk of voters
• 15:30
  Speaker 2: you look at the polling, are disappointed feel that the
• 15:33
  Speaker 2: government should have done better. Do you think that you
• 15:35
  Speaker 2: could have done better?
• 15:37
  Speaker 1: People voted for change at the general election a year
• 15:39
  Speaker 1: and a half ago, and I'm deeply aware of my
• 15:42
  Speaker 1: responsibility and helping to deliver that change. Now since I
• 15:45
  Speaker 1: became Chancellor, wages have increased faster than inflation every single month,
• 15:51
  Speaker 1: and the six cuts in interest rates means that if
• 15:53
  Speaker 1: you're taking out a mortgage, a typical mortgage, you'll be
• 15:58
  Speaker 1: saving around one three hundred pounds a year than if
• 16:01
  Speaker 1: you'd have taken that mortgage out the day before I
• 16:03
  Speaker 1: became Chancellor of the Exchequer. But the years leading up
• 16:07
  Speaker 1: to that had been really tough for people. The last
• 16:10
  Speaker 1: parliament was the first parliament ever where people were poorer
• 16:14
  Speaker 1: on average at the end of it than they were
• 16:15
  Speaker 1: at the start, and it takes time to unwind that legacy.
• 16:20
  Speaker 1: We've made progress, but is there more to do? Absolutely
• 16:23
  Speaker 1: there is, which is why I'm so focused on bringing
• 16:26
  Speaker 1: down inflation and interest rates and returning that stability to
• 16:30
  Speaker 1: the economy. But the other thing that makes people's lives
• 16:33
  Speaker 1: better is having public services that function properly. Being able
• 16:37
  Speaker 1: to get a hospital appointment or a doctor's appointment when
• 16:40
  Speaker 1: you need it. Ensuring your kid gets into the school
• 16:43
  Speaker 1: they want to go to and has good qualified teachers,
• 16:48
  Speaker 1: buses and trains that run frequently and are affordable, all
• 16:52
  Speaker 1: of those things that we're starting to make a difference,
• 16:56
  Speaker 1: but there is more to do. I think that the
• 16:59
  Speaker 1: next election, what people are going to ask is and
• 17:01
  Speaker 1: me and my family better off? And I'm determined that
• 17:04
  Speaker 1: the answer to that question is yes, by ensuring that
• 17:06
  Speaker 1: people have more money in their pockets to spend on
• 17:09
  Speaker 1: the things that they want to spend it on, not
• 17:11
  Speaker 1: just the essentials the mortgage, the bills, the weekly food shop,
• 17:15
  Speaker 1: but more money to spend on the things that they
• 17:17
  Speaker 1: actually want to do that give them pleasure in their lives.
• 17:21
  Speaker 1: And are undetermined that people have more of that. But
• 17:25
  Speaker 1: the first thing you need to do to achieve that
• 17:27
  Speaker 1: is to bring stability back to the economy. And what
• 17:30
  Speaker 1: the OBR forecasts showed today is that we have made
• 17:34
  Speaker 1: great strides forward in returning that stability to the economy,
• 17:38
  Speaker 1: which should pay dividends in terms of having money to
• 17:42
  Speaker 1: spend on the priorities of working people and to make
• 17:45
  Speaker 1: working people better off.
• 17:46
  Speaker 2: There was quite a lot in the forecast. I mean
• 17:48
  Speaker 2: there is a slightly lower growth forecast for this year,
• 17:51
  Speaker 2: and that's due to lower net migration, which the government
• 17:54
  Speaker 2: has obviously taken a lot of measures on, but the
• 17:56
  Speaker 2: ABI expects it and expects that fall in migration, the
• 18:01
  Speaker 2: increase in the labor force and people coming in to
• 18:03
  Speaker 2: be permanent, but that that sort of half a percent
• 18:06
  Speaker 2: of GDP loss and growth will be made up for
• 18:09
  Speaker 2: in productivity will actually get more out of the people
• 18:12
  Speaker 2: we have working in this country. So is that the
• 18:15
  Speaker 2: new UK growth model that we were not really welcoming
• 18:19
  Speaker 2: people in the same way, but we want to get
• 18:20
  Speaker 2: We hope employers get more out of British workers.
• 18:24
  Speaker 1: So we want to make sure that the best talent
• 18:27
  Speaker 1: in the world comes to Britain and that's why we've
• 18:29
  Speaker 1: extended our global talent visas and they're available for high
• 18:33
  Speaker 1: net worth individuals, entrepreneurs and also academics in key subjects,
• 18:39
  Speaker 1: particularly where they bring research teams with them to the UK.
• 18:43
  Speaker 1: And those new global talent visas are proving very popular
• 18:46
  Speaker 1: and that is about us being able to have greater
• 18:49
  Speaker 1: say about who comes into this country. And we have
• 18:52
  Speaker 1: tightened up the rules around dependents, around students, around low
• 18:56
  Speaker 1: skilled workers, that is the right thing to do, and
• 18:58
  Speaker 1: we want to make sure that people who are already
• 19:01
  Speaker 1: here have got the skills to fill the vacancies that
• 19:05
  Speaker 1: exist in the economy. But as I said before, I
• 19:08
  Speaker 1: want Britain to be seen as a country that is
• 19:10
  Speaker 1: welcome to investment, trade and talent and that's what those
• 19:13
  Speaker 1: global talent visas do. Now. The OBI have revised down
• 19:16
  Speaker 1: their forecasts for net migration, so it's something like two
• 19:19
  Speaker 1: hundred thousand net migration a year. That is obviously way
• 19:23
  Speaker 1: down on the nearly a million number we had a
• 19:26
  Speaker 1: couple of years ago. But what matters in terms of
• 19:29
  Speaker 1: GDP is whether that GDP is felt in people's lives,
• 19:34
  Speaker 1: and that's why GDP per capita is probably the better
• 19:36
  Speaker 1: measure of whether that GDP is actually impacting on your
• 19:41
  Speaker 1: living standards. And what the OBR today say is that
• 19:44
  Speaker 1: they're revising up GDP per capita and expect GDP per
• 19:48
  Speaker 1: capita to increase by five point six percent during the
• 19:51
  Speaker 1: course of this parliament, and of course in the last
• 19:54
  Speaker 1: parliament GDP per capita actually fell and so that is
• 19:58
  Speaker 1: a sharp turnaround from one parliament to the next, and
• 20:02
  Speaker 1: those numbers were revised up today, which is very welcome,
• 20:05
  Speaker 1: because in the end, what matters is whether that GDP
• 20:09
  Speaker 1: is being felt by you and your family, and GDP
• 20:12
  Speaker 1: per capiture is what really shows that.
• 20:14
  Speaker 2: Yeah, that's very striking in the numbers. I mean, if
• 20:17
  Speaker 2: we end up I mean the path we're on now,
• 20:19
  Speaker 2: we could have negative net migration by the end of
• 20:21
  Speaker 2: the year. I'm quite interested in whether that's going to
• 20:24
  Speaker 2: be a sort of cause for celebration inside the Treasury,
• 20:26
  Speaker 2: given the pressure on the government to reduce those numbers,
• 20:30
  Speaker 2: or concern about how that was achieved. I mean the
• 20:34
  Speaker 2: things that were easiest to control. I mean students. For example,
• 20:37
  Speaker 2: I spoke to someone at a major university last night
• 20:39
  Speaker 2: that has been benefiting from some of the measures you
• 20:42
  Speaker 2: just talked about attracting foreign academics, academics from the US,
• 20:47
  Speaker 2: but at the same time they're losing foreign students who
• 20:50
  Speaker 2: find it less attractive the regime here and are even
• 20:52
  Speaker 2: sort of worried about the environment for foreign students. So
• 20:56
  Speaker 2: if you're undermining the business model for universities and it
• 20:59
  Speaker 2: doesn't matter so much able to attract all these great academics, I.
• 21:02
  Speaker 1: Think we've done a lot to support universities since we
• 21:04
  Speaker 1: came into office, we've increased R and D funding and
• 21:08
  Speaker 1: obviously a lot of that budget goes to universities to
• 21:11
  Speaker 1: invest in basic research, and we are reintroducing maintenance grants
• 21:17
  Speaker 1: for the poorest students to encourage them to take that
• 21:21
  Speaker 1: leap and go to university. But we've got to get
• 21:24
  Speaker 1: the balance right. It has been the case on some
• 21:28
  Speaker 1: courses at some colleges and universities many people at the
• 21:32
  Speaker 1: end of their course are applying for asylum in Britain
• 21:35
  Speaker 1: and that is not what student visas were ever meant for,
• 21:38
  Speaker 1: and so we have got to be tightening up when
• 21:40
  Speaker 1: there is abuse. But at the same time that gives
• 21:43
  Speaker 1: us greater freedom to introduce those high talent visas because
• 21:48
  Speaker 1: we're freeing up space to enable us to offer more
• 21:52
  Speaker 1: of those and I think that's what is most valuable
• 21:54
  Speaker 1: to us as a country, to attract that wealth creating
• 21:58
  Speaker 1: talent to the UK, and that is that is our ambition.
• 22:04
  Speaker 1: At the same time, we've got to do more to
• 22:06
  Speaker 1: make sure that young people in particular who are already
• 22:09
  Speaker 1: in this country have got the skills and the confidence
• 22:13
  Speaker 1: to succeed in the jobs market.
• 22:15
  Speaker 2: Do you worry some of Our most successful sectors that
• 22:18
  Speaker 2: we would encourage people to go into are in professional
• 22:21
  Speaker 2: services that are potentially going to be the most transformed
• 22:24
  Speaker 2: by AI. So do you worry that some of our
• 22:26
  Speaker 2: most successful companies and sectors has got this massive missile
• 22:29
  Speaker 2: headed in its direction called AI.
• 22:32
  Speaker 1: The industries where we are successful, like professional business services,
• 22:36
  Speaker 1: financial services, creative industries and AI and tech and life sciences.
• 22:42
  Speaker 1: Of course there are risks of destruction and some jobs going,
• 22:46
  Speaker 1: but there's also massive opportunity if we seize them to
• 22:49
  Speaker 1: get the innovation and get the research here in Britain
• 22:52
  Speaker 1: and then build those new businesses in Britain. I am
• 22:55
  Speaker 1: an optimist when it comes to innovation and AI. Every
• 22:58
  Speaker 1: other wave of transformation and in industrial change has resulted
• 23:04
  Speaker 1: in there being more jobs and better paid jobs. There's
• 23:07
  Speaker 1: no reason why this revolution can't be the same. But
• 23:11
  Speaker 1: we've got to make sure that people in this country
• 23:14
  Speaker 1: have got the skills to be able to do those jobs.
• 23:17
  Speaker 1: We're well placed. We've got some of the best universities
• 23:19
  Speaker 1: in the world, we've got some of the best entrepreneurs
• 23:22
  Speaker 1: in the world, and we've got a government that is
• 23:23
  Speaker 1: backing that, for example through R and D funding but
• 23:27
  Speaker 1: we've got to seize that opportunity rather than being scared
• 23:30
  Speaker 1: of it. And one of the things I'm going to
• 23:31
  Speaker 1: be talking about in my Maiz's lecture next week is
• 23:34
  Speaker 1: how a government as a country can do more to
• 23:37
  Speaker 1: back innovation and AI, but in a way where the
• 23:41
  Speaker 1: rewards are reaped by ordinary citizens.
• 23:44
  Speaker 2: I mean, as you know, Chancellor, there's a lot of
• 23:46
  Speaker 2: people in the city, a lot of Bloomberg clients who
• 23:49
  Speaker 2: talk about how the environment, the tax environment and elsewhere
• 23:52
  Speaker 2: other things has changed since Labor came into power, and
• 23:55
  Speaker 2: they're all they say they're advising their children to move
• 23:59
  Speaker 2: to Dubai, seeing clients move their accounts, hedge fund investors
• 24:03
  Speaker 2: and others move their accounts to Dubai. Does that look
• 24:05
  Speaker 2: like such a safe decision today when the missiles are flying.
• 24:08
  Speaker 1: Look, I think all of us are reading stories in
• 24:11
  Speaker 1: the paper or hearing of people who we know or
• 24:15
  Speaker 1: we've worked with, who have made those decisions to move abroad.
• 24:21
  Speaker 1: But I would say that there are lots of things
• 24:23
  Speaker 1: that are attractive about the UK. A safe and secure
• 24:26
  Speaker 1: economy with strong defenses, and that is one of the
• 24:29
  Speaker 1: many things that is attractive about being in the UK.
• 24:33
  Speaker 1: But We only have those things because we pay for them,
• 24:36
  Speaker 1: including investing more in our defense, which in the world
• 24:39
  Speaker 1: that we live in todays, seems more important than ever.
• 24:42
  Speaker 2: Well, another time I'll ask you how you're going to
• 24:43
  Speaker 2: get that three percent of GDP, but i I'm getting
• 24:47
  Speaker 2: ushered out. So thank you very much, Chancellor for joining us.
• 24:50
  Speaker 2: Thank you, Stephanie, thanks for listening to this extra special
• 25:00
  Speaker 2: this episode of Trumponomics. It was produced by Samasadi and
• 25:03
  Speaker 2: Moses and with special thanks to James Wilcock. We'll be
• 25:06
  Speaker 2: back tomorrow with our regular episode