Latest / Merryn Talks Money / Is the Age of Growth in the UK Really Over?

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Is the Age of Growth in the UK Really Over? · Merryn Talks Money

• 0:00
  Speaker 1: John, Hello, Hi man, how's it going.
• 0:03
  Speaker 2: That's good feeling, I hope.
• 0:06
  Speaker 1: Well. I was going to say, I'm worried about a
• 0:08
  Speaker 1: couple of things. But one of these things is the
• 0:10
  Speaker 1: way that I'm beginning to accept that I'm just getting poorer.
• 0:14
  Speaker 1: Are you doing the same? Absolutely?
• 0:17
  Speaker 2: Absolutely? I mean the case from the Bank England told
• 0:20
  Speaker 2: me to do it, so I may as well just
• 0:23
  Speaker 2: lie down and deal with it.
• 0:24
  Speaker 1: And what with their record of being absolutely right and
• 0:27
  Speaker 1: their instructions being something that you should always follow, I've
• 0:30
  Speaker 1: resolved never to ask for a pay rise again just
• 0:32
  Speaker 1: to get poorer and poorer and poorer. So it's to
• 0:35
  Speaker 1: help the Bank of England meet their inflation targets, because
• 0:37
  Speaker 1: you know, those poor guys, someone's got to help them
• 0:39
  Speaker 1: out right, So you me all that listeners, never ask
• 0:44
  Speaker 1: for a pay rise again, because it's not fair on
• 0:46
  Speaker 1: the men at the Bank of England. Yeah, you asked
• 0:51
  Speaker 1: for a pay rise, Yes, to write a letter to
• 0:53
  Speaker 1: the Chancellor? Is that fair? Is that reasonable? Unacceptable? Unacceptable?
• 1:00
  Speaker 1: So all your people out there just take it on
• 1:02
  Speaker 1: the chin. Ten percent, how much poorer than you were
• 1:05
  Speaker 1: last year?
• 1:07
  Speaker 2: I think exactly.
• 1:10
  Speaker 1: That is that I've got a bit of paper in
• 1:12
  Speaker 1: front of me. Actually, that's six hundred pounds per household
• 1:14
  Speaker 1: poorer than you were this time last year.
• 1:17
  Speaker 2: I mean more. There you go. It's not our much.
• 1:20
  Speaker 2: You can take it in the yeah.
• 1:23
  Speaker 1: Anyway. So what mister Pill, the chief economist at the
• 1:26
  Speaker 1: Bank of England, was trying to say, I mean, what
• 1:27
  Speaker 1: he wasn't saying is, by the way, here at the
• 1:30
  Speaker 1: Bank of England, we have only one job, and it
• 1:32
  Speaker 1: is to keep inflation in check. And our job, our
• 1:35
  Speaker 1: only job, is to make inflation hidden around two percent
• 1:38
  Speaker 1: a year because that's what we need to oil the
• 1:39
  Speaker 1: wheels of an economy. We dedicate ourselves to that. Boy,
• 1:42
  Speaker 1: oh boy, have we really messed it up. Looks like
• 1:44
  Speaker 1: our models don't work. Really sorry, guys, let me do
• 1:47
  Speaker 1: everything I possibly can to make that work out for you.
• 1:49
  Speaker 1: What he's actually saying is general population. This is your
• 1:53
  Speaker 1: fault because you won't accept where we are and you
• 1:55
  Speaker 1: keep asking for more money, and that's why we have inflation.
• 1:58
  Speaker 1: Nothing to do with me, mate, being of there, I
• 2:02
  Speaker 1: am I'm being a fair John. John is much better
• 2:05
  Speaker 1: at moral stuff than I am. I'm really sorry, but
• 2:07
  Speaker 1: I've been afid to thank of England I'd like to
• 2:08
  Speaker 1: take it all back. I'm sorry, sorry, sorry, mister Bill.
• 2:12
  Speaker 2: You're not being unfair. But the I think the problem
• 2:15
  Speaker 2: with this stuff is that I'll be actually, there's there's
• 2:18
  Speaker 2: a whole load of problems. In a really clumsy way.
• 2:22
  Speaker 2: He's sort of turned around and saying inflation is going
• 2:25
  Speaker 2: up because and I think the fundamental problem here is
• 2:29
  Speaker 2: just that he is wrong about what's caused this inflation,
• 2:32
  Speaker 2: and whether that's deliberate or not is another issue. But
• 2:35
  Speaker 2: he's basically saying, so gas prices have gone up, so
• 2:38
  Speaker 2: there's an external shock. The whole of Britain is having
• 2:42
  Speaker 2: to pay more for energy. That means we're poorer. Therefore,
• 2:46
  Speaker 2: all that's happening now is is a fight over how
• 2:48
  Speaker 2: it gets distributed. And therefore, like me and you ask
• 2:51
  Speaker 2: for more wages, so our employer then turns around and
• 2:55
  Speaker 2: puts its prices up. So me and you ask for
• 2:57
  Speaker 2: more wages, our employer puts his prices up. And it's
• 3:00
  Speaker 2: that kind of They call it past the parcel where
• 3:04
  Speaker 2: you get an inflationary spiral because nobody wants to take
• 3:08
  Speaker 2: the hit. But overall, the whole economy is poorer, and
• 3:12
  Speaker 2: my main I mean like, I've got a fundamental problem
• 3:15
  Speaker 2: with that, which is that I don't think it's correct.
• 3:17
  Speaker 2: But there's also the problem of although lots of people
• 3:20
  Speaker 2: are turning and saying, well, no, you're not being entirely
• 3:22
  Speaker 2: fair to mister pill as I just did there. The
• 3:25
  Speaker 2: fact is the Bank at England job is it is
• 3:27
  Speaker 2: a commons job. You need to be good at communicating
• 3:31
  Speaker 2: to do it. I mean, it's not you know, this
• 3:33
  Speaker 2: is not and this is not new when Alan Greenspan
• 3:36
  Speaker 2: used to go on about this all the time, and
• 3:37
  Speaker 2: Melvin King talks about it a lot as well. It's like,
• 3:40
  Speaker 2: you have to be aware that, for God's sake, you
• 3:43
  Speaker 2: are the second in charge of the Bank at England.
• 3:45
  Speaker 2: Journal inflationary crisis. Whatever you say on whatever podcast, regardless
• 3:49
  Speaker 2: of how obscure it is, what country is in, it's
• 3:51
  Speaker 2: going to get picked up and it's going to be
• 3:53
  Speaker 2: a lesson too, and it's going to be this is I.
• 3:55
  Speaker 1: Need to interrupt him. This is not an obscure podcast. Well,
• 3:59
  Speaker 1: I don't be podcast.
• 4:00
  Speaker 2: That podcast is you know, very high profile. But the
• 4:03
  Speaker 2: podcast on which he was speaking, I mean, I say,
• 4:06
  Speaker 2: Columbia Law School will make it annoyed at me if
• 4:08
  Speaker 2: I say that is obscure, but it's certainly not one
• 4:11
  Speaker 2: I'd heard of. Maybe this is my point. It's like,
• 4:14
  Speaker 2: if you owe me your mouth and you're at the
• 4:15
  Speaker 2: Bank England just now, you should be prepared to see
• 4:17
  Speaker 2: headlines based on that, and therefore you should be thinking, well,
• 4:21
  Speaker 2: how am I coming across just now? And if you're
• 4:23
  Speaker 2: coming across as.
• 4:24
  Speaker 3: A then be aware of it, yes, and be aware
• 4:31
  Speaker 3: of the fact that you know, presumably hear old people
• 4:34
  Speaker 3: on this know that inflation is very much a bad
• 4:36
  Speaker 3: inflation expectations because it's inflation expectations that drive a wedge demand.
• 4:42
  Speaker 2: You would think you would think a long stand to
• 4:45
  Speaker 2: wonder because you know, it took the Central Bank so
• 4:49
  Speaker 2: long to start reacting to this, and most of them
• 4:52
  Speaker 2: are just following the FED because that's what they do.
• 4:55
  Speaker 1: You know.
• 4:55
  Speaker 2: They start there like, oh, no, jer own pills doing something,
• 4:58
  Speaker 2: We better do something as well. I'm not sure that
• 5:02
  Speaker 2: I like the confidence that this lot actually to have
• 5:07
  Speaker 2: a proper grip or an open mindedness about what's caused this,
• 5:14
  Speaker 2: you know, I think that actually maybe they genuinely believe
• 5:16
  Speaker 2: that the vast majority of this is down the world
• 5:19
  Speaker 2: in Ukraine, even though though all of the inflation happened
• 5:22
  Speaker 2: before that, and certainly blaming it all in kind of
• 5:25
  Speaker 2: energy prices going up? Is it kind of points to that,
• 5:28
  Speaker 2: And I think that's that's the more fundamental issue I've
• 5:31
  Speaker 2: got with this, that.
• 5:32
  Speaker 1: They didn't realize or refused to realize, that it was
• 5:35
  Speaker 1: the vast level of money printing that's driven a lot
• 5:38
  Speaker 1: of this.
• 5:39
  Speaker 2: Yeah, yes, you know, I guess what it was. Partly
• 5:43
  Speaker 2: your fault, partly Eh, that's been kind.
• 5:47
  Speaker 1: But it does seem, doesn't it, that there's an extraordinary
• 5:49
  Speaker 1: amount of groupthink across central banking across the world. They're
• 5:52
  Speaker 1: all a bit to be, all using the same kind
• 5:53
  Speaker 1: of model. That model doesn't work, but no one gets
• 5:55
  Speaker 1: around to changing that model. I mean, although I feel
• 5:58
  Speaker 1: bad talking about central bankers like this, because you and
• 6:00
  Speaker 1: I know that they're much more highly educated than we are,
• 6:03
  Speaker 1: and hopefully much cleverer than we are, that much higher IQs,
• 6:05
  Speaker 1: you know they must be. They're central bankers for a reason, right,
• 6:09
  Speaker 1: But somehow, but possibly it shows us that however clever
• 6:14
  Speaker 1: you are, have well educated you are, however numerate you are,
• 6:16
  Speaker 1: have a good you are at math, something to remember, Rishie,
• 6:19
  Speaker 1: you can still get caught up in group thing.
• 6:22
  Speaker 2: Well, I think the problem is you just believe what's
• 6:24
  Speaker 2: convenient to believe at the time. And we have said
• 6:29
  Speaker 2: this before, but central banks is that they, like anyone else,
• 6:32
  Speaker 2: they'll take the path of the least resistance. And for
• 6:35
  Speaker 2: a long time, you know, it's been quite nice to
• 6:38
  Speaker 2: be a central banker because all you needed to do
• 6:40
  Speaker 2: was either print money or cut interest rates, and everyone
• 6:42
  Speaker 2: was quite happy because those are those are happy things
• 6:46
  Speaker 2: to do. That's giving out stuff. And now they don't
• 6:48
  Speaker 2: have any raised interest rates. That is not a fun
• 6:52
  Speaker 2: thing to do, and it makes you unpopular and everyone's saying, oh,
• 6:57
  Speaker 2: why the interest rates need to go up?
• 6:59
  Speaker 1: Now?
• 6:59
  Speaker 2: What's the point when putting up mortgage rates to tackle inflation?
• 7:03
  Speaker 2: And you can say, well, actually, yeah, you know that's
• 7:06
  Speaker 2: not necessarily an unfair point. But in that case, why
• 7:08
  Speaker 2: did we lower interest rates so much thinking that that
• 7:12
  Speaker 2: was going to make the economy better? You know, I
• 7:14
  Speaker 2: just we like to have it both ways. But you
• 7:17
  Speaker 2: can't have your cake and eat it, as I believe
• 7:19
  Speaker 2: Boris Johnson would say, you.
• 7:22
  Speaker 1: Kind of can if you're a central banker, because you
• 7:24
  Speaker 1: know what if you've got an RPI link defined benefit pension,
• 7:28
  Speaker 1: you aren't getting any poorer. There's a small group of
• 7:32
  Speaker 1: people out there who are not getting any poorer, and
• 7:36
  Speaker 1: the majority of those people are have well public sector pensions,
• 7:41
  Speaker 1: because even private sector defined benefit pensions tend to have
• 7:45
  Speaker 1: an inflation cap of some kind, and lots of them
• 7:47
  Speaker 1: are capped at sort of three percent. So there'll be
• 7:49
  Speaker 1: a lot of private sector pensioners who, even though they
• 7:53
  Speaker 1: have a defined benefit pension. My dream, by the way,
• 7:55
  Speaker 1: as regular listeners well know my dream, even those people
• 7:59
  Speaker 1: will be getting poorer. There's a very small group of
• 8:02
  Speaker 1: people in the UK at the moment who are not
• 8:04
  Speaker 1: getting poorer.
• 8:05
  Speaker 2: It's true, and I mean it's you know, I don't
• 8:09
  Speaker 2: think people think en off a bit of the pensions
• 8:12
  Speaker 2: to understand this, even the central banks. But you know
• 8:15
  Speaker 2: the fact that the Bank England has the vast majority
• 8:17
  Speaker 2: of its pension find it was invested in index linked points.
• 8:23
  Speaker 2: You know, it does sort of like think, well, somebody
• 8:26
  Speaker 2: knew something somewhere along the line.
• 8:29
  Speaker 1: Someone had a sneaking suspicion those Bank of England models
• 8:32
  Speaker 1: weren't working quite right. Yeah, clearly it wasn't. Mister pill.
• 8:37
  Speaker 1: Now listen, I just want to mention one more thing
• 8:39
  Speaker 1: before before we move on to talking to our rather
• 8:42
  Speaker 1: brilliant guest today, and that is that, you know, you
• 8:45
  Speaker 1: and I have been writing for so long about the
• 8:46
  Speaker 1: cheapness of the UK market and how everyone must pile
• 8:49
  Speaker 1: in because there's lots of cheap stuff in there. And
• 8:51
  Speaker 1: we've also been saying and listen up, guys, if you
• 8:54
  Speaker 1: don't get in there and buy UK equities, somebody else
• 8:58
  Speaker 1: will and it's going to be private goody, and you
• 9:00
  Speaker 1: won't like it. And that is really happening. And people
• 9:03
  Speaker 1: keep talking about how it will happen, but it is happening.
• 9:06
  Speaker 3: You know.
• 9:06
  Speaker 1: There are so many bids coming in for UK companies.
• 9:09
  Speaker 1: It's beginning to get slightly disturbing, isn't it. You know.
• 9:11
  Speaker 1: I speaking to a fun Energy the other day in
• 9:13
  Speaker 1: the middle small cap space. He told me that the
• 9:16
  Speaker 1: biggest risk for him, or the biggest risk that he feels,
• 9:19
  Speaker 1: is that lots of the companies in his portfolio are
• 9:21
  Speaker 1: going to get bought out by private equity at a
• 9:24
  Speaker 1: price that is way do relative for the value you
• 9:26
  Speaker 1: would expect them to build up two over the coming years.
• 9:29
  Speaker 1: So there's a genuine risk here to the UK market
• 9:32
  Speaker 1: that not only are we is our equity market shrinking,
• 9:35
  Speaker 1: but it's shrinking at the wrong price.
• 9:37
  Speaker 2: I think that's a really good point. And on the
• 9:40
  Speaker 2: one hand, you know, I sort of say, in the
• 9:44
  Speaker 2: short taim as an investor, that's an opportunity because at
• 9:47
  Speaker 2: the end of the day, if someone else is going
• 9:49
  Speaker 2: to value this stuff properly, you may as well take
• 9:51
  Speaker 2: advantage of it. But in the long one, yeah, it's
• 9:54
  Speaker 2: over your pain in the neck and all the lots
• 9:58
  Speaker 2: of in the all days, lots of microcap one managers
• 10:01
  Speaker 2: used to complain about that with Aim and things like that,
• 10:04
  Speaker 2: where any half decent company would either get taken private
• 10:08
  Speaker 2: by its founders before it got to its massive growth
• 10:12
  Speaker 2: stage or get bought out by something else. And it
• 10:15
  Speaker 2: was always a frustration because Okay, you made a quick
• 10:18
  Speaker 2: bump on the bid, but in the long run you
• 10:20
  Speaker 2: then had to find another decent company and doing that
• 10:23
  Speaker 2: is hard. And the problem is I.
• 10:28
  Speaker 3: Don't know.
• 10:30
  Speaker 2: I mean, you've written a book about this, which is
• 10:32
  Speaker 2: a lots of good ideas and how to resolve this,
• 10:34
  Speaker 2: but I don't know how we end up getting to
• 10:38
  Speaker 2: a situation where there is that environment where the public
• 10:42
  Speaker 2: markets because at the moment they're not competing with the
• 10:45
  Speaker 2: private markets effectively, especially not at the small cap and
• 10:49
  Speaker 2: it's better for are in the US.
• 10:52
  Speaker 1: You know, the stop market in the US are not
• 10:54
  Speaker 1: shrinking in the same way. How as this company still
• 10:56
  Speaker 1: list in the US. You know, and we might argue
• 10:59
  Speaker 1: about the American market is too expensive and the UK
• 11:02
  Speaker 1: market is too cheap, etc. Etc. But nonetheless, if you're
• 11:05
  Speaker 1: going to list, why would you do it in the
• 11:06
  Speaker 1: UK not in the US. List in the US you
• 11:09
  Speaker 1: can double evaluation and as people keep telling me, your
• 11:12
  Speaker 1: CEO can also get properly paid. If you're the CEO
• 11:15
  Speaker 1: of a tech company in the UK and you're thinking, well,
• 11:18
  Speaker 1: I want a list, you've got two choices. You can
• 11:20
  Speaker 1: go list in the US, get a significantly higher premium,
• 11:23
  Speaker 1: and then pay yourself four or five times what you
• 11:25
  Speaker 1: would in the UK and not be subject to all
• 11:28
  Speaker 1: the sort of rules about having to stay on the
• 11:29
  Speaker 1: board for nine years and then leave and all this
• 11:31
  Speaker 1: kind of thing worries about founder control, all of which
• 11:35
  Speaker 1: you have in the UK. Or you can go to
• 11:37
  Speaker 1: the US and have none of that worry. An a
• 11:39
  Speaker 1: whole power more money, So what do you do. Of
• 11:40
  Speaker 1: course you go to the US. So there's a lot
• 11:42
  Speaker 1: of work to be done in the UK to try
• 11:44
  Speaker 1: and make our our market attractive again. I think both
• 11:46
  Speaker 1: of us will write columns on that. What do you think.
• 11:49
  Speaker 2: I think that's good because I mean, I agree, I
• 11:53
  Speaker 2: can see why it's heartening and I can see why people.
• 11:56
  Speaker 2: You know, of course you would go to the US
• 11:57
  Speaker 2: if you had the chiants so and it's much much
• 11:59
  Speaker 2: cheesier tho than at Wine Sports. But at the same time,
• 12:02
  Speaker 2: other certain things about the US that we really don't
• 12:05
  Speaker 2: want to follow on Lake found us having all of
• 12:08
  Speaker 2: the vote and shares regardless of home watching, the actual
• 12:10
  Speaker 2: capital they own, and things like that. So it's a
• 12:15
  Speaker 2: really interesting topic. I think it's one that's it's will
• 12:18
  Speaker 2: run and join and join.
• 12:20
  Speaker 1: Well, it may run and run and run, but we
• 12:22
  Speaker 1: can't let it run too long because without deep liquid
• 12:26
  Speaker 1: and active public markets shoulder democracy dies and it takes
• 12:30
  Speaker 1: a little bit of democratic capitalism with it. So we
• 12:33
  Speaker 1: don't want this run to run and run. We wanted
• 12:35
  Speaker 1: to run just for a little while and then be
• 12:37
  Speaker 1: sorted out. Welcome to Marin Talks Money. The podcasting it
• 12:52
  Speaker 1: is people who know the markets explain the markets. I'm
• 12:54
  Speaker 1: there in some set web this week the conversation with Baroness,
• 12:57
  Speaker 1: Dandees and Moyer. Now Dan Lisa is extremely busy, but
• 13:00
  Speaker 1: a few of the things that she does. She's a
• 13:02
  Speaker 1: global economist, she speaks all over the place. She's an author.
• 13:04
  Speaker 1: She's written a couple of fascinating books that I assist
• 13:07
  Speaker 1: you go and buy and read. She says on a
• 13:09
  Speaker 1: couple of boards of listed companies, including three and Chevron
• 13:12
  Speaker 1: and Condo. Now and she says on the investment committee
• 13:15
  Speaker 1: at Oxford University, so super interesting, Denbi, So thank you
• 13:19
  Speaker 1: so much for joining us today. I hugely appreciate it.
• 13:22
  Speaker 1: Thank you, good to see you. You and I we've
• 13:24
  Speaker 1: talked quite a lot before, and I think the last
• 13:26
  Speaker 1: time we talked properly was just after your twenty eighteen book,
• 13:30
  Speaker 1: Edge of KOs came out. Yes, that sounds right. Yeah,
• 13:33
  Speaker 1: And I have this feeling looking around us now that
• 13:36
  Speaker 1: we're no longer on the edge anymore. We've slightly slipped
• 13:39
  Speaker 1: off the edge everything. You know, since we last talked,
• 13:42
  Speaker 1: so many things have changed, the financial world has changed,
• 13:46
  Speaker 1: the political world has changed. The peace dividend that we
• 13:49
  Speaker 1: lived with so long, for so long has gone. Globalization
• 13:53
  Speaker 1: has slightly turned around. It feels like deglobalization is is
• 13:57
  Speaker 1: well underway. So so much has changed. And when we
• 14:00
  Speaker 1: look at that reflected in our oath, so I forgot
• 14:02
  Speaker 1: to mention the pandemic that was that as well. And
• 14:05
  Speaker 1: we see that reflected in it in our growth rates.
• 14:08
  Speaker 1: And you know, Stee, I believe, and I think you
• 14:10
  Speaker 1: believe as well, that economic growth is the most important
• 14:12
  Speaker 1: thing we should strive for because everything else comes from
• 14:15
  Speaker 1: that in the end. But yet we're not really seeing it. Oh,
• 14:19
  Speaker 1: everything around us is fairly sluggish, and it's hard to
• 14:23
  Speaker 1: see how that can change. And in the UK and
• 14:26
  Speaker 1: in particular, things feel just a little bit more sluggish
• 14:30
  Speaker 1: than in other places. Is that right?
• 14:33
  Speaker 4: Well, I think the most important thing is to put
• 14:35
  Speaker 4: these things in context. You're right, You and I spoke
• 14:38
  Speaker 4: some time ago, and since then, we've had inflation come back,
• 14:42
  Speaker 4: we've had a war, we've had a pandemic, and you know,
• 14:46
  Speaker 4: we continue to grapple with a whole list of other
• 14:49
  Speaker 4: geopolitical challenges that you've talked about, rise of China, deglobalization,
• 14:53
  Speaker 4: et cetera. But putting this in context, Even before the
• 14:57
  Speaker 4: pandemic hit in earnest in twenty twenty, many economists, policy makers,
• 15:03
  Speaker 4: academicians were already worried about the structural growth decline. That's
• 15:09
  Speaker 4: to say that we were worried that growth was trending
• 15:12
  Speaker 4: downwards again before the pandemic, and organizations as varied as
• 15:18
  Speaker 4: the World Bank and the Congressional Budget Office in the
• 15:22
  Speaker 4: United States, as well as many economists in the UK
• 15:25
  Speaker 4: and elsewhere, were worried that actually the engines of growth
• 15:30
  Speaker 4: had started to stall in the post financial crisis era,
• 15:34
  Speaker 4: but even before the pandemic, and in that sense, the
• 15:37
  Speaker 4: pandemic was really an accelerant to a lot of the
• 15:40
  Speaker 4: problems that were already foreseen. You know, we were worries
• 15:44
  Speaker 4: about debt, the sheer amount of debt that the global
• 15:47
  Speaker 4: economy was carrying. Obviously that's become even worse the post
• 15:51
  Speaker 4: the pandemic. Worries about demographs, you know, in terms of
• 15:56
  Speaker 4: the population growth around the world. That has also become
• 16:00
  Speaker 4: rather problematic, with disordered migration that we continue to see
• 16:04
  Speaker 4: not just in places like the United States but also
• 16:07
  Speaker 4: very much so in the UK. We were also worried
• 16:10
  Speaker 4: about things like the advent of technology, what that was
• 16:15
  Speaker 4: going to do to jobs. Again, with AI, we're now
• 16:18
  Speaker 4: in a world where that is becoming much more of
• 16:22
  Speaker 4: a realistic situation. So I think, Maren, just to maybe
• 16:27
  Speaker 4: to put this into one sentence, the great worry we
• 16:31
  Speaker 4: have and we continue to have.
• 16:33
  Speaker 1: And just in the last couple.
• 16:34
  Speaker 4: Of weeks, the World Bank and IMF have had their
• 16:36
  Speaker 4: Spring meetings and they have published reports saying that the
• 16:41
  Speaker 4: growth trends over the next ten years will continue to
• 16:44
  Speaker 4: go downwards. What do we mean by downwards? And this
• 16:47
  Speaker 4: is my one sentence, that growth is going to be
• 16:50
  Speaker 4: below that magic three percent number. We need to be
• 16:53
  Speaker 4: growing by three percent per year in order to double
• 16:56
  Speaker 4: per capita incomes in a generation. But developed and developing
• 17:00
  Speaker 4: countries all over the world are way below that number
• 17:04
  Speaker 4: and struggling to attain that number. Perhaps one last thing
• 17:09
  Speaker 4: before I send it back to you, you know, I
• 17:11
  Speaker 4: think a motivating framework not only in identifying where the
• 17:16
  Speaker 4: problems lie for growth, but also thinking about how do
• 17:21
  Speaker 4: we think about solutions. I think is going back to
• 17:24
  Speaker 4: basics and appreciating that a lot of the modeling that's
• 17:30
  Speaker 4: been done around growth, certainly over the past century, has
• 17:35
  Speaker 4: identified three key drivers of growth, which are capital, how
• 17:39
  Speaker 4: much money you have, labor, the quality and the quantity
• 17:44
  Speaker 4: of your workforce, and the third item being productivity, which
• 17:49
  Speaker 4: has always been a catch all for everything from rule
• 17:52
  Speaker 4: of law issues around regulation and taxes, which I know
• 17:55
  Speaker 4: will come to in a moment, but really that is
• 17:57
  Speaker 4: the framework from which we should identify the problems in
• 18:00
  Speaker 4: the UK and around the world and then start to
• 18:03
  Speaker 4: think about solutions.
• 18:05
  Speaker 1: Well, one of the main things to look at here
• 18:07
  Speaker 1: is a supply of labor, isn't it. And we can
• 18:09
  Speaker 1: get onto productivity in a minute. But we've been through
• 18:11
  Speaker 1: this lengthy period pretty much since China was ascended to
• 18:15
  Speaker 1: the WTO and became a major part of the global economy.
• 18:18
  Speaker 1: We've lived in a world, and particularly in the UK
• 18:20
  Speaker 1: because we our mass immigration from Eastern Europe, but we've
• 18:23
  Speaker 1: been able to rely on a steady and seemingly infinite
• 18:27
  Speaker 1: supply of global labor to take on every job you
• 18:29
  Speaker 1: might think of, and that is definitely reversing. We see
• 18:32
  Speaker 1: it in every major economy. We see people talking about
• 18:35
  Speaker 1: a shortage of labor, and that's partly because of a
• 18:38
  Speaker 1: falling supply of people overall, but also a falling supply
• 18:42
  Speaker 1: of people prepared to work.
• 18:44
  Speaker 4: That is correct, but also related to that, it's not
• 18:47
  Speaker 4: just people's wish to work, but ability to work. If
• 18:51
  Speaker 4: you recall, you and I are now of a certain age,
• 18:53
  Speaker 4: we'll remember the era of Terry Leehy and others who
• 18:57
  Speaker 4: were talking about need snow education, employment or training. There
• 19:02
  Speaker 4: was massive discussion around For those of you who weren't around.
• 19:06
  Speaker 4: I believe Terrany was at Tesco, if I'm not mistaken,
• 19:09
  Speaker 4: but Jewett Rose with that was at Marks and Spencer
• 19:12
  Speaker 4: back in those days, and they at that time were
• 19:15
  Speaker 4: talking about a skill shortage. There was a massive mismatch
• 19:18
  Speaker 4: back then. You know, Frankly is serving in the boardrooms
• 19:22
  Speaker 4: in which I serve. I think that the sort of
• 19:26
  Speaker 4: bigger discussion now is, you know, in the here and now,
• 19:30
  Speaker 4: you're right, there's a skill shortage, but there's a bigger
• 19:32
  Speaker 4: question coming very quickly, which is what are we going
• 19:36
  Speaker 4: to do with the labor that will exist educated and uneducated,
• 19:41
  Speaker 4: or I should say skilled and unskilled in a world
• 19:44
  Speaker 4: where it seems we're going to need less labor. Yeah,
• 19:47
  Speaker 4: and this is what I'm hinting at the AI Revolution,
• 19:51
  Speaker 4: which by most calibrations, people who like Elon muscor Bill Gates,
• 19:56
  Speaker 4: who are very steeped in the technology debate, is going
• 19:59
  Speaker 4: to be as at least as transformational as the Internet,
• 20:02
  Speaker 4: and these AI models are really much less human, you know,
• 20:10
  Speaker 4: in terms of labor required, and we have to start
• 20:14
  Speaker 4: thinking it from a policy framework, but from a business framework,
• 20:17
  Speaker 4: also starting to think about what happens to that labor
• 20:20
  Speaker 4: because it may be a shortage in the here and now,
• 20:23
  Speaker 4: but I think there's a bigger societal question that's emerging
• 20:26
  Speaker 4: as we move away from this sort of dependent on
• 20:28
  Speaker 4: labor markets.
• 20:30
  Speaker 1: That's interesting. This is the kind of question that comes
• 20:33
  Speaker 1: up every generation. Also, doesn't it we're making these huge
• 20:35
  Speaker 1: technological leaps forward, what's going to happen to our labor?
• 20:39
  Speaker 1: But even though we always ask this question, the answer
• 20:43
  Speaker 1: always provides itself in the sense that jobs exist that
• 20:47
  Speaker 1: you and I would never have imagined could have existed
• 20:49
  Speaker 1: twenty thirty years ago, when we were being told by
• 20:51
  Speaker 1: our school career service that if we like to read books,
• 20:53
  Speaker 1: we should be lib librarians, remember that, or gardeners or
• 20:56
  Speaker 1: whatever it was. Those career services now lists of jobs
• 21:00
  Speaker 1: that simply didn't exist and we had no concept could exist.
• 21:05
  Speaker 1: Twenty years ago. I mean, there are now universities in
• 21:07
  Speaker 1: the UK dedicated almost entirely to gaming, for example. This
• 21:11
  Speaker 1: is entirely new. So when I look at this kind
• 21:13
  Speaker 1: of thing, I wonder if we should not worry about
• 21:16
  Speaker 1: the employment side of it, because in a way there's
• 21:18
  Speaker 1: a you know, people make their own jobs somehow. But
• 21:21
  Speaker 1: what we should think about is the productivity side of it.
• 21:24
  Speaker 1: In that sense, it could be our great savior. The
• 21:25
  Speaker 1: thing that has been our big problem, particularly in the UK,
• 21:28
  Speaker 1: where we've got used to having low wage people do
• 21:31
  Speaker 1: all the jobs that may be elsewhere they may they
• 21:34
  Speaker 1: may be using more machinery, robotics, etc. For productivity has
• 21:37
  Speaker 1: been very low. And if AI does all the things
• 21:39
  Speaker 1: that it is promised to do, our productivity problem could
• 21:43
  Speaker 1: just go away.
• 21:44
  Speaker 4: Well, so you know, you've said a number of things.
• 21:46
  Speaker 4: I'm less sanguine than you are because I do think
• 21:49
  Speaker 4: some of the AI modeling that I'm seeing not just
• 21:53
  Speaker 4: in sort of shall we call it lower skilled jobs,
• 21:56
  Speaker 4: but it really the ability to disrupt business models, even
• 22:01
  Speaker 4: for established corporations which are probably going to need less capital.
• 22:05
  Speaker 4: You know, one person with a machine will be able
• 22:08
  Speaker 4: to do the work of forty thousand sort of the view.
• 22:12
  Speaker 4: You know, I think that certainly we can go back
• 22:15
  Speaker 4: and forth and debate, but you know, we should not
• 22:18
  Speaker 4: lose sight of the facts that what has bailed us
• 22:20
  Speaker 4: out in the historical context that you're just alluding to
• 22:24
  Speaker 4: was that people did have skills. And what is going
• 22:27
  Speaker 4: to be demanded of us now as labor in the
• 22:30
  Speaker 4: future is much more of a skilled workforce in science
• 22:34
  Speaker 4: and technology ability to run these models, and that's where
• 22:38
  Speaker 4: I think that risk becomes much more pronounced than in
• 22:42
  Speaker 4: the past. But to your point of productivity, and I
• 22:44
  Speaker 4: think again, just to frame it for the listeners here,
• 22:49
  Speaker 4: I mentioned that growth is a function of capital, labor,
• 22:52
  Speaker 4: and productivity. Productivity explains about sixty percent of why one
• 22:56
  Speaker 4: country grows and another one doesn't. So crucially important that
• 22:59
  Speaker 4: we have productivity, and it's essentially how we're able to
• 23:03
  Speaker 4: transform the capital and labor into growth. How do we
• 23:06
  Speaker 4: convert this into growth? And this is one of the
• 23:08
  Speaker 4: big worries because we've lived in a technological era for
• 23:12
  Speaker 4: twenty years and there was a lot of expectation that
• 23:16
  Speaker 4: living in a world of computers and the PC and
• 23:19
  Speaker 4: iPhone was going to drive greater productivity. But you and
• 23:23
  Speaker 4: I both know that actually productivity has declined and continues
• 23:27
  Speaker 4: to be very challenged in both developed and developing countries.
• 23:31
  Speaker 4: And so you're right that I think a lot of
• 23:34
  Speaker 4: us are hopefully quite optimistic about productivity gains being an
• 23:39
  Speaker 4: offset to job losses in an ai world. But for now,
• 23:43
  Speaker 4: we have not seen those productivity gains, even with more
• 23:46
  Speaker 4: nascent types of technology over the last twenty years. So
• 23:49
  Speaker 4: I think it would be somewhat full hardy for policymakers
• 23:52
  Speaker 4: to sit back and say, oh, well, we think technology
• 23:54
  Speaker 4: is going to bail us out. That has not been
• 23:56
  Speaker 4: the case, And if the past is a predictor of
• 24:00
  Speaker 4: the future, we could end up with a situation where
• 24:03
  Speaker 4: we're losing a lot of jobs, which again is heavily
• 24:06
  Speaker 4: forecasted from the World Economic Forum and others, even though
• 24:09
  Speaker 4: there are potential net gains to your point earlier, but
• 24:12
  Speaker 4: we might not just see a loss in jobs. We
• 24:14
  Speaker 4: might also see not the productivity gains to offset the
• 24:18
  Speaker 4: growth that we need.
• 24:19
  Speaker 1: Can we connect this failure of productivity levels to improve
• 24:23
  Speaker 1: and super low interest rates Over the last twenty years,
• 24:26
  Speaker 1: we've had this environment where we've developed extraordinary technologies that
• 24:30
  Speaker 1: we look at and we think could be used to
• 24:31
  Speaker 1: increase productivity, but perhaps because of the availability of easy
• 24:36
  Speaker 1: money and the lack of stress and pressure that comes
• 24:40
  Speaker 1: from correctly priced money, so interest rates at reasonable levels,
• 24:43
  Speaker 1: we've used that technology badly. So we've done all sorts
• 24:47
  Speaker 1: of things that add nothing. I give you TikTok dancing nurses,
• 24:50
  Speaker 1: and the end is looking at cat pictures, etc. Etc.
• 24:53
  Speaker 1: We've used that technology, but we've used it in ways
• 24:56
  Speaker 1: that don't bring us anything as a society. But with
• 25:00
  Speaker 1: interest rates rising and that kind of non useful economic
• 25:05
  Speaker 1: activity possibly no longer being possible, might we see a shift?
• 25:10
  Speaker 1: Might rising interest rates be the thing that bring us
• 25:14
  Speaker 1: the productivity we've been after? And we're already seeing, for example,
• 25:16
  Speaker 1: business failures at four year high as in the UK,
• 25:19
  Speaker 1: which is terrible in one way and slightly encouraging in
• 25:22
  Speaker 1: another in that we do need non productive businesses to disappear.
• 25:27
  Speaker 4: Yeah, it looks I think you're absolutely right that being
• 25:30
  Speaker 4: in a world where we actually have interest rates at
• 25:34
  Speaker 4: the correct equilibrium rate will definitely wash out some of
• 25:38
  Speaker 4: the bad capital allocation decisions that we have seen. But
• 25:42
  Speaker 4: I think it's also quite a risky proposition. First of all,
• 25:47
  Speaker 4: the reason rates were low were in response to market dislocations.
• 25:52
  Speaker 4: We had a financial crisis, and then we've had a pandemic,
• 25:55
  Speaker 4: and that's being remedied right now. But I think there
• 25:57
  Speaker 4: are more fundamental questions about where we'll it'll be allocated
• 26:01
  Speaker 4: in a high interest rates environment, and at this stage
• 26:04
  Speaker 4: it's not clear to me that that will necessarily lead
• 26:08
  Speaker 4: to higher productivity gains.
• 26:10
  Speaker 1: I would like it to, and as.
• 26:12
  Speaker 4: You rightly pointed out earlier, technology has bailed us out somewhat,
• 26:16
  Speaker 4: as have labor markets, not just China coming into the
• 26:19
  Speaker 4: World Trade Organization and bringing in all that into the
• 26:22
  Speaker 4: global market, but also the convergence of emerging market countries.
• 26:26
  Speaker 4: But add to that, if you go back into World
• 26:28
  Speaker 4: War two era, certainly women coming into the workforce was
• 26:32
  Speaker 4: also a massive boost for growth because we started to
• 26:35
  Speaker 4: bring in not just more workers, but also more demand
• 26:40
  Speaker 4: for products. So look, there are lots of moving parts here.
• 26:43
  Speaker 4: I think that you've picked on one plausible explanation for
• 26:48
  Speaker 4: productivity declines, which is the low interest rate environment, But
• 26:51
  Speaker 4: I could list out three or four other ones. I've
• 26:53
  Speaker 4: published papers on this, and I don't think we actually
• 26:56
  Speaker 4: yet know with specificity in terms of balancing which one
• 27:01
  Speaker 4: has the most influence. What exactly the problem is with
• 27:05
  Speaker 4: technology or with the productivity not responding to technology as
• 27:10
  Speaker 4: much as we would have liked to see.
• 27:11
  Speaker 1: Okay, let's talk about the UK a little. And there's
• 27:15
  Speaker 1: lots to talk about the UK being growing more slowly
• 27:18
  Speaker 1: than elsewhere and about us not getting back to our
• 27:20
  Speaker 1: pre pandemic levels at the same speed in other countries.
• 27:23
  Speaker 1: Is that actually true? And if it is, what do
• 27:26
  Speaker 1: you think is driving it?
• 27:27
  Speaker 4: Let me just start by saying that, you know, I
• 27:31
  Speaker 4: think that there's a lot of structure problems that are
• 27:33
  Speaker 4: true across the board. So I already mentioned that many countries,
• 27:37
  Speaker 4: developed and developing countries have been dealing with the issue
• 27:40
  Speaker 4: of structural declinents and growth. Really, if I take a
• 27:44
  Speaker 4: step back and I think, what is it in the
• 27:46
  Speaker 4: UK that makes it more unique or it puts it
• 27:49
  Speaker 4: in a unique position to be grappling with these with
• 27:53
  Speaker 4: the post pandemic period in a way that's different.
• 27:56
  Speaker 1: From other countries. I think there are a handful of things.
• 27:58
  Speaker 4: So we could sit here and say COVID was felt
• 28:01
  Speaker 4: by all, the current war implications are being felt by
• 28:05
  Speaker 4: all many countries have debt to GDP ratios that are
• 28:09
  Speaker 4: incredibly high, sometimes even higher than the UK. And you
• 28:13
  Speaker 4: could also argue that everybody's facing inflation. But what makes
• 28:17
  Speaker 4: the UK situation unique and this is not going to
• 28:20
  Speaker 4: be a surprise, but certainly, in one word, it would
• 28:23
  Speaker 4: be uncertainty. Where's that uncertainty emerged from Brexit? Absolutely, And
• 28:28
  Speaker 4: I should just be clear that I although I spent
• 28:32
  Speaker 4: quite a considerable time writing articles before twenty sixteen saying
• 28:36
  Speaker 4: that we should remain, you know, that becomes immaterial when the.
• 28:40
  Speaker 1: Decision was made.
• 28:41
  Speaker 4: We ought to have gone headlong into making sure and
• 28:45
  Speaker 4: by we I think society but also policymakers as well
• 28:49
  Speaker 4: as business leaders.
• 28:50
  Speaker 1: We should have gone.
• 28:51
  Speaker 4: Headlong into making the country as successful as possible in
• 28:55
  Speaker 4: this new regime, and I think we have not done
• 28:57
  Speaker 4: that for a whole host of reasons. There's also not
• 29:01
  Speaker 4: just uncertainty from Brexit. There's also been enormous uncertainty from
• 29:04
  Speaker 4: the political environment, partly because of response to the pandemic
• 29:08
  Speaker 4: and war and inflation that I touched on earlier, but
• 29:11
  Speaker 4: also a uniquely political volatility. You know, obviously most manifestly
• 29:18
  Speaker 4: what we saw last year with three prime ministers in
• 29:21
  Speaker 4: just a several months and these what is the consequence
• 29:24
  Speaker 4: of uncertainty of Brexit, end of the political environment, absolutely
• 29:29
  Speaker 4: less investment And you know, maybe as a finer point,
• 29:34
  Speaker 4: going back to something we touched on earlier, which is deglobalization,
• 29:38
  Speaker 4: the Brexit move was in a sense de globalization, and
• 29:43
  Speaker 4: I think what has happened if you look at the data,
• 29:46
  Speaker 4: is that we have not been able to yet fully
• 29:49
  Speaker 4: capture the eighty percent replacement with free trade agreements that
• 29:54
  Speaker 4: we had thought we would have by now. I was
• 29:57
  Speaker 4: a partner in parcel with the in the the IT
• 30:00
  Speaker 4: Department of Trade, International Trade. So I'm very much aware
• 30:04
  Speaker 4: that in particular, just to again put a finer point
• 30:07
  Speaker 4: on it, we've not yet done a deal with the
• 30:09
  Speaker 4: United States, and that alone is about twenty percent of trade.
• 30:13
  Speaker 4: I know we're all working furiously to get that done.
• 30:17
  Speaker 4: But just as a specific example of bringing the uncertainty
• 30:22
  Speaker 4: that came from Brexit, the uncertainty that's come from the
• 30:24
  Speaker 4: political volatility, we have not yet been able to sort
• 30:30
  Speaker 4: of fill in the gaps both in terms of trade
• 30:33
  Speaker 4: and investment, but also in the mind's eye of investors.
• 30:37
  Speaker 4: We've not yet convinced them that the UK is a
• 30:40
  Speaker 4: place where you can generate real returns above the cost
• 30:43
  Speaker 4: of capital.
• 30:43
  Speaker 1: Yeah, a lot of this is people looking in and going, well,
• 30:46
  Speaker 1: I'm not one hundred percent convinced yet. Is when you
• 30:49
  Speaker 1: ask international investors, it's hard for them to put their
• 30:51
  Speaker 1: finger on exactly what it is. They just know that
• 30:53
  Speaker 1: it's not quite the same and they feel uncertain about it.
• 30:55
  Speaker 4: Correct and look, there's a lot more regulatory morass that
• 30:59
  Speaker 4: needs to be dealt with. Okay, we see now out
• 31:02
  Speaker 4: of the EU. Great, Well, what's the new regime for
• 31:06
  Speaker 4: everything from the green economy but also the financial services economy.
• 31:11
  Speaker 1: How do we think about rebuilding.
• 31:14
  Speaker 4: The UK to be purpose built in an environment where
• 31:18
  Speaker 4: the new rules and the new landscape is not yet clear?
• 31:23
  Speaker 1: Do you expect and just wank briefly back to the
• 31:25
  Speaker 1: global economy and deglobalization. I'm assuming that that's something that
• 31:29
  Speaker 1: you expect to continue with the rise of protectionism globally
• 31:33
  Speaker 1: and ongoing. Well, you can call it a cold war
• 31:36
  Speaker 1: or trade war, whatever you like, but that's not going
• 31:37
  Speaker 1: away at it. It's not.
• 31:39
  Speaker 4: It really isn't. And I mean I think if anything,
• 31:41
  Speaker 4: it's accelerating. You know after Jenney Yellen, the Treasury Section
• 31:45
  Speaker 4: in the United States, it made a statement that seemed
• 31:48
  Speaker 4: to be taking the air out of the stress between
• 31:52
  Speaker 4: China and the US. See there's a bigger statement coming
• 31:54
  Speaker 4: from the US saying that South Korea should not sell
• 31:59
  Speaker 4: microchips to China. I mean, these are very very aggressive moves,
• 32:04
  Speaker 4: both by China and the United States. I know because
• 32:07
  Speaker 4: I spend a lot of time in investing space that
• 32:09
  Speaker 4: there are many American investors who have received letters from
• 32:13
  Speaker 4: the government saying we do not want you to invest
• 32:16
  Speaker 4: in China. This is true for endowments and other pools
• 32:21
  Speaker 4: of capital.
• 32:22
  Speaker 1: I don't think this is just about trade, It's about
• 32:25
  Speaker 1: capital flows.
• 32:26
  Speaker 4: I think the immigration flows will start to see a
• 32:29
  Speaker 4: lot more of people leaving these different regions. Seen I
• 32:33
  Speaker 4: was just in Singapore, a lot of much more aggressive
• 32:38
  Speaker 4: pro Singapore anti I'm using shorthand, anti immigrant, anti expat
• 32:44
  Speaker 4: type moves. I think we're going to continue to see
• 32:47
  Speaker 4: it in the breakdown of multilateralism. These are the big
• 32:49
  Speaker 4: pillars trade, capital, immigration, technology, multilaterals, and these are the
• 32:56
  Speaker 4: big pillars of globalization, and all of them are certainly
• 32:59
  Speaker 4: under threat.
• 33:00
  Speaker 1: Are there positives in there for the sectors, for example,
• 33:03
  Speaker 1: of the UK economy that were the big losers from globalization,
• 33:06
  Speaker 1: So our industrial sector for example, and you know the
• 33:09
  Speaker 1: areas of the Midlands, et cetera that used to be very,
• 33:12
  Speaker 1: very globally active and haven't been as a result of
• 33:15
  Speaker 1: long term globalization. Is there a possibility that we might
• 33:18
  Speaker 1: see a reindustrialization of the heartlands of the UK, for example.
• 33:22
  Speaker 4: So I think the the that's a complicated question for
• 33:27
  Speaker 4: two reasons. The world has moved on. So when we
• 33:30
  Speaker 4: say a rejuvenation and industrial heartland, even if they talk
• 33:34
  Speaker 4: about places like the United States, you know, the world
• 33:37
  Speaker 4: is no longer an industrial lead economy in the way
• 33:42
  Speaker 4: that it was twenty or forty years ago when globalization
• 33:46
  Speaker 4: really took off. So the one piece of it is
• 33:48
  Speaker 4: do we even want.
• 33:49
  Speaker 1: To go back to that?
• 33:51
  Speaker 4: Really really the way the world economy is shaped, And
• 33:54
  Speaker 4: you're just to give you some statistics. You know, we
• 33:58
  Speaker 4: now many developed economy have about eighty percent of the
• 34:01
  Speaker 4: economy and services and eighteen percent twenty percent in manufacturing.
• 34:07
  Speaker 1: But that that has basically flipped.
• 34:09
  Speaker 4: If you went back in history, you had sixty percent
• 34:12
  Speaker 4: of people working in agriculture and working in manufacturing, but
• 34:16
  Speaker 4: that's been declining precipitously over the last generation. So point
• 34:21
  Speaker 4: one is when we say we want to reindustrialize, what
• 34:24
  Speaker 4: are we really talking about, especially within a technology space.
• 34:27
  Speaker 4: But the other point is that we've lost a lot
• 34:30
  Speaker 4: of these skills.
• 34:31
  Speaker 1: You know.
• 34:31
  Speaker 4: One of the things that has been talked about quite
• 34:34
  Speaker 4: a lot is that, you know, in the UK, with
• 34:37
  Speaker 4: Brexit happening, we had to go back to the drawing
• 34:40
  Speaker 4: board and think about negotiation, thinking about free on board
• 34:45
  Speaker 4: and imports and exports and how do you calculate all
• 34:48
  Speaker 4: this stuff that was It's a lost skill, you know,
• 34:52
  Speaker 4: it's we've had forty fifty years when we didn't have
• 34:54
  Speaker 4: to think about having these unique contracts in that sort
• 34:58
  Speaker 4: of way that we we had many many years ago
• 35:01
  Speaker 4: when we were a separate country and not part of
• 35:06
  Speaker 4: the sort of EU construct, a free trade construct. And
• 35:10
  Speaker 4: so I think these are two questions. Do we want
• 35:12
  Speaker 4: to go back to what does that mean? Are we
• 35:14
  Speaker 4: going to be back to pick and shovel, you know,
• 35:17
  Speaker 4: to use shorthand? But second, secondarily, what do we do
• 35:21
  Speaker 4: with the missed skills we've.
• 35:23
  Speaker 1: Had forty years?
• 35:23
  Speaker 4: People have not been investing in that skill we've been
• 35:26
  Speaker 4: doing something else, and so I don't think it's as
• 35:29
  Speaker 4: easy as we might like it to be. And reskilling
• 35:32
  Speaker 4: and retraining is with an older population, as you and
• 35:35
  Speaker 4: I both know, is a very challenging thing, no matter
• 35:37
  Speaker 4: how much we'd like.
• 35:38
  Speaker 1: To see it. I think I could reskill if I
• 35:40
  Speaker 1: really try. Yeah, not quite sure as what, but I
• 35:43
  Speaker 1: could give it a go. Well, let's talk a bit
• 35:46
  Speaker 1: about then, what can the UK do? I mean, here
• 35:48
  Speaker 1: we are and there's a slightly difficult global situation. We
• 35:51
  Speaker 1: have our own domestic problems. Our economy is grotesquely unbalanced,
• 35:55
  Speaker 1: we have this insane level of debt. How can we
• 35:59
  Speaker 1: how can we build a better future? You say, rebuilding
• 36:01
  Speaker 1: Britain or making Britain from the beginning? Again? What can
• 36:04
  Speaker 1: we do? What is politically and economically plausible as opposed
• 36:08
  Speaker 1: to what would you and I really like, which I
• 36:10
  Speaker 1: suspect it is probably not politically or economically plausible. What
• 36:13
  Speaker 1: can we actually do here to improve things and to
• 36:16
  Speaker 1: give the UK the growth it needs? Yeah?
• 36:19
  Speaker 4: So I think you know, Rather than give you a
• 36:21
  Speaker 4: laundry list of ten things which I could do, I'm
• 36:24
  Speaker 4: going to point to my maiden speech in the House
• 36:26
  Speaker 4: of Lords and say, look, there are two things that
• 36:28
  Speaker 4: we should be thinking as a frame of mind, which
• 36:31
  Speaker 4: is to say, you're not going to grow if you
• 36:33
  Speaker 4: have high taxes and high regulation. Impossible. You have to
• 36:38
  Speaker 4: be one or the other in these types of environments. Now,
• 36:42
  Speaker 4: I you know, it's the proverbial teaching policymakers to suck eggs.
• 36:47
  Speaker 1: They know that.
• 36:48
  Speaker 4: And I think there is a lot of effort and
• 36:50
  Speaker 4: people are leaning in to recalibrate the tax regime and
• 36:54
  Speaker 4: recalibrate the regulatory regime. But we are not going to
• 36:58
  Speaker 4: be competitive if we have taxes which we do and
• 37:01
  Speaker 4: high regulation, which we do. And so just in terms
• 37:05
  Speaker 4: of really low hanging fruit, go and just do these
• 37:08
  Speaker 4: two things. Focus on these two things. That's what I
• 37:10
  Speaker 4: would do. Everything else in terms of investment in infrastructure
• 37:14
  Speaker 4: and thinking about new sectors and how Britain can lead
• 37:18
  Speaker 4: in the bio and technological spheres, all that stuff is fantastic,
• 37:24
  Speaker 4: and we want to see all those sorts of things
• 37:26
  Speaker 4: thinking more again, less about the industrial economy of the past,
• 37:30
  Speaker 4: but thinking about the technological economies of the future. That's
• 37:33
  Speaker 4: all wonderful, but before you get any even to that place,
• 37:37
  Speaker 4: people need to feel like they can invest in any economy,
• 37:40
  Speaker 4: they can feel like there's a lot of visibility and
• 37:44
  Speaker 4: in policy making, it's not going to be time inconsistent
• 37:47
  Speaker 4: where they're putting a policy today and five years later
• 37:50
  Speaker 4: they decide to unwind it and change it. You know,
• 37:53
  Speaker 4: those types of things are very unattractive, especially in a
• 37:56
  Speaker 4: world which is deglobalizing and deglobalizing and where the rules
• 38:01
  Speaker 4: are much more attractive elsewhere. Just take the green economy.
• 38:06
  Speaker 4: The United States, not just their chip announcement but also
• 38:10
  Speaker 4: the announcement around inflation reduction, really has made many European
• 38:15
  Speaker 4: countries sit up and say, why are we investing in Europe?
• 38:17
  Speaker 4: We should be investing in the United States. I mean,
• 38:20
  Speaker 4: that is not the sort of thing we should just
• 38:23
  Speaker 4: sort of navel gaze at. I mean, where is the
• 38:26
  Speaker 4: response And if you look at the responses, they've been
• 38:28
  Speaker 4: pretty weak thus far, not just from the UK but
• 38:32
  Speaker 4: across Europe as well. And so it's those kind of
• 38:35
  Speaker 4: things that are not going to get anywhere. People always
• 38:38
  Speaker 4: feel that the first thing they think about when they
• 38:41
  Speaker 4: think about investing in the UK or Europe is tax
• 38:43
  Speaker 4: and regulation. Maybe just one last finer point there and
• 38:47
  Speaker 4: if I may. The other thing is as we think
• 38:49
  Speaker 4: about these complex things like the green economy. As a
• 38:53
  Speaker 4: specific example, I think Europeans and I'm afraid I'm going
• 38:57
  Speaker 4: to put ourselves as Brits in there.
• 39:00
  Speaker 1: We tend to be very rules based.
• 39:02
  Speaker 4: This is the rule, this is what everybody has to
• 39:04
  Speaker 4: abide by. The US tends to be much more principles based,
• 39:08
  Speaker 4: and I think balance for businesses understanding we want to
• 39:13
  Speaker 4: get to net zero without these being hard and fast
• 39:16
  Speaker 4: rules gives many more degrees of freedom to think about
• 39:19
  Speaker 4: innovating to those to those goals as opposed to, you know, risk.
• 39:24
  Speaker 4: When you have these rules, you start to risk mitigate
• 39:27
  Speaker 4: so aggressively, and I think that means that you get
• 39:29
  Speaker 4: less innovation, less job opportunity. I was just looking at
• 39:33
  Speaker 4: a statistic. In the past decade, the US has doubled.
• 39:38
  Speaker 4: It's the size of its market caap as doubled as
• 39:42
  Speaker 4: compared to Europe. And a lot of that is because
• 39:45
  Speaker 4: there's a lot of innovation. People are interested in all
• 39:47
  Speaker 4: sectors biotech. It's not just in in cars, it's also
• 39:52
  Speaker 4: in in in food production, it's in pharmaceuticals. All that
• 39:57
  Speaker 4: type of motivating the business community to work hand in
• 40:02
  Speaker 4: hand with government and the third sector in trying to
• 40:06
  Speaker 4: find solutions.
• 40:07
  Speaker 1: I think leads much.
• 40:08
  Speaker 4: Better for an economy than risk mitigating and thinking about
• 40:12
  Speaker 4: downside risks only.
• 40:14
  Speaker 1: It's interesting, though, isn't it, Because I think it'd be
• 40:16
  Speaker 1: hard pressed to find very many people who disagree that
• 40:19
  Speaker 1: we should do something about a sort of fairly overwhelming
• 40:21
  Speaker 1: regulatory burden and about our tax burden. But every time
• 40:24
  Speaker 1: we talk about cutting any taxes, everyone gets hysterical about
• 40:27
  Speaker 1: the debt and about our deficit, etc. And say, well,
• 40:29
  Speaker 1: you know, we have to deal with that before we
• 40:32
  Speaker 1: can cut taxes. So it's a little bit chicken and egg,
• 40:34
  Speaker 1: isn't it. And it's the same with the regulations. Yeah,
• 40:37
  Speaker 1: and look, let's see what happens.
• 40:38
  Speaker 4: I mean, we're definitely in a high tax environment with
• 40:41
  Speaker 4: that argument that you've just laid out. We need to
• 40:43
  Speaker 4: pay our obligations and we need to be in more
• 40:46
  Speaker 4: balanced budgets, et cetera. That's reasonable, for sure, but there
• 40:50
  Speaker 4: is absolutely an expectation that at some point before too long,
• 40:54
  Speaker 4: we need to get ahead of this. Otherwise, what we're
• 40:58
  Speaker 4: missing out on is people are still making capital a
• 41:00
  Speaker 4: location decisions. They are still investing, and they're not going
• 41:03
  Speaker 4: to sit around and wait for the UK to decide
• 41:05
  Speaker 4: when it's going to cut its taxes. If it doesn't
• 41:08
  Speaker 4: happen relatively soon, people will decide to invest in other
• 41:12
  Speaker 4: countries and other regions and we are seeing some of
• 41:14
  Speaker 4: that already.
• 41:15
  Speaker 1: Yeah. Interesting, Can I just ask you to finish up?
• 41:18
  Speaker 1: Dunbee said by saying that this is it might not
• 41:21
  Speaker 1: be easy, but let's give it a go anyway. But
• 41:23
  Speaker 1: it's saying the most optimistic thing you can think of
• 41:26
  Speaker 1: about the UK economy. What are all big positives? Location?
• 41:30
  Speaker 4: For one, I mean, really to this central location. It
• 41:34
  Speaker 4: absolutely has a great intellectual base, which for the AI
• 41:41
  Speaker 4: the sort of future world scenarios and technology and biotech
• 41:45
  Speaker 4: and pharma, et cetera, which are touched on a moment ago.
• 41:48
  Speaker 4: We've got a better hand than many other countries. I mean,
• 41:51
  Speaker 4: I think the whole leap frogging that we saw from
• 41:53
  Speaker 4: emerging markets, that's a big at risk because they don't
• 41:56
  Speaker 4: have the ability to leap frog because of the technological
• 41:59
  Speaker 4: and sort of education background.
• 42:02
  Speaker 1: We have that in the UK and that needs to
• 42:04
  Speaker 1: be fostered.
• 42:05
  Speaker 4: I do also think that there's a lot of scope
• 42:08
  Speaker 4: to do much more in terms of orderly migration. Really,
• 42:13
  Speaker 4: there's a lot of reasons people want to live in
• 42:15
  Speaker 4: the UK, why they want to invest in the UK,
• 42:18
  Speaker 4: but a lot of that has to come from understanding
• 42:20
  Speaker 4: and having proper plans around orderly migration and thinking much
• 42:25
  Speaker 4: more strategically, I think, then reactionary in an interreactionary way,
• 42:30
  Speaker 4: which you know, for a whole host of reasons we've
• 42:32
  Speaker 4: ended up in that situation.
• 42:34
  Speaker 1: Okay, thank you. So the future can be very, very bright.
• 42:37
  Speaker 1: We just have to grab the opportunities that we've already
• 42:40
  Speaker 1: got sitting waiting to be taken absolutely. Dunbiesa, thank you
• 42:44
  Speaker 1: very much, and I'm going to put in the podcast
• 42:46
  Speaker 1: notes the link to your maiden speech, which I've listened
• 42:48
  Speaker 1: to and I think everybody else should as well, so
• 42:51
  Speaker 1: that will be there, and listeners please do click on
• 42:53
  Speaker 1: that and listen to it because you get more of
• 42:55
  Speaker 1: Dunlie's ideas there. Thank you, Denbiesa, thank you so much
• 42:58
  Speaker 1: for joining us usually it and everybody else, thank you
• 43:02
  Speaker 1: for listening to this week's Maren Talks Money. We'll be
• 43:04
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• 43:06
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• 43:21
  Speaker 1: This episode was hosted by me Meren Somerset Well. It
• 43:23
  Speaker 1: was produced by SOMEERSADI additional editing by Blake Naples and
• 43:27
  Speaker 1: special thanks of course to danby Simayo and to John Steppik,
• 43:30
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• 43:35
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  Speaker 1: regret it. It's very, very good