Latest / The Fourcast / Does Reeves and Starmer economic growth plan make any sense?

Transcript

Does Reeves and Starmer economic growth plan make any sense? · The Fourcast

0:06
Hello and welcome to the forecast.
0:08
Rachel Reeves, the chancellor, has just given her big growth
0:12
speech and yes, she's backed 1/3 runway at Heathrow, expansion of
0:16
transport links in the north of England and also an Oxford
0:20
Cambridge arc which involves transport, housing, reservoirs
0:25
and lots of infrastructure. But when will that growth
0:28
arrive? Will it be enough?
0:29
And will it solve Labour's political problems on the
0:32
economy, which are quite deep seven months into their term of
0:37
government? Joining me today are the
0:39
economist and former adviser to George Osborne when he was
0:43
chancellor, Rupert Harrison and from King's College, Cambridge,
0:47
and the Financial Times, Gillian Tett.
0:50
Let's put aside the politics for a second from the economics and
0:53
get your instinctive reactions to the announcements in the
0:57
speech, Gillian. Well, listen, this is good news
1:01
that she's now embarking on a policy shift, or a tweak, as
1:06
they like to say. I only wish she'd done that
1:09
three months ago. Frankly, I thought the messaging
1:12
up until now has been pretty bad for international business.
1:15
What we're seeing right now in America is animal spirits
1:18
unleashed in a truly extraordinary way, which makes
1:22
Europe in general and the UK in particular look pretty dismal by
1:26
comparison given the loss of business confidence.
1:29
So the fact that they have belatedly realised they need to
1:31
do more to unleash and noble spirits is great.
1:34
I still think they can go further, but I do welcome the
1:37
fact they are shifting now. Rupert.
1:40
Yeah, I totally agree. And actually, you know, you say
1:42
separate the politics. There isn't a lot of sort of
1:45
traditional left right politics in what she's announced today.
1:49
There's a lot of local politics and, you know, facing down
1:53
interest groups and taking on, you know, locally and nationally
1:57
objectors to things like expanding Heathrow on
2:00
environmental grounds or building new housing locally.
2:03
So there's kind of politics there, but it's not, you know,
2:05
this could easily have been a speech of a of a Conservative
2:08
chancellor and in many ways should have been.
2:09
There's a lot of stuff in here that the last government should
2:12
have done. And so if she can deliver on
2:14
this stuff, then that is definitely a positive for the
2:17
longer term. But Julian's absolutely right
2:19
that, you know, it's quite extraordinary to me that this is
2:23
coming seven months in when we had an, the whole election
2:25
campaign was growth is everything.
2:28
We're going to come in with a big growth plan.
2:30
And then there was really nothing.
2:31
There was sort of nothing there. And it's taken them this long to
2:33
kind of cobble this together. In the meantime, a lot of damage
2:36
has been done to animal spirits, as Julian says, because tax
2:39
rises doom and gloom. And there hasn't been a kind of,
2:42
you know, a narrative that the UK was open for business and,
2:45
you know, doing the kind of things that that you need to see
2:48
to get people excited about investing.
2:50
But how does it stack up as a growth plan, Gillian?
2:53
I mean, given growth is a problem now and all of these
2:56
things are quite long term. I think that the budget that was
3:01
announced was quite damaging for the growth messaging because for
3:05
two reasons. Firstly, that instead of simply
3:08
having simple income tax cuts that they had foolishly ruled
3:11
out putting essentially this burden on business through the
3:15
National Insurance contributions and also introducing these
3:19
number of measures that is scaring away growth capital.
3:23
And if you like financial entrepreneurs and financial
3:26
investors from London right now, and I know a number of them who
3:29
are leaving as we speak, was very, very damaging overall.
3:33
She hasn't talked about reversing that sadly yet.
3:35
I wish she would, but she hasn't talked about that.
3:38
And I do think that's definitely something dragging down the
3:40
animal spirits amongst financiers and entrepreneurs and
3:43
investors talking about things like the Oxford, Cambridge Link,
3:46
Heathrow expansion, house building, getting better water
3:49
infrastructure, that's all fabulous, but it's also a long
3:52
term project. It's not going to happen
3:54
quickly. And so one of the problems is
3:56
knowing how quickly this will come through.
3:59
So good they are at least trying to kick start animal spirits,
4:02
but they need to do more. Rupert, what, what could they do
4:05
right now to, you know, to release the animal spirits as
4:09
Gillian talks about them? I mean, is there much, you know,
4:11
there? Are there many options?
4:13
Well, there aren't very many options that don't involve a
4:16
sort of political reversal of things that they've done or are
4:19
doing. So, you know, you could reverse
4:22
the employee National Insurance rise.
4:24
That's pretty unlikely. As Gillian says, You know, if
4:27
you were going to have raised taxes, and I think that they,
4:30
you know, there were, there were probably preferable
4:31
alternatives. But if you wanted to raise
4:33
taxes, it would definitely be better to do something like
4:35
income tax or VAT from an economic point of view because
4:37
there'd be much less distortion, much less reduction of incentive
4:42
to higher. So the employer next rise was
4:43
kind of almost the worst possible tax you could choose.
4:46
There are other things they are doing that again would be a
4:49
question reversing. So I think they've pushed some
4:53
of the things around the non Dom regime too far that is pushing
4:56
people out of the country. The labour market reforms that
5:00
are promised, they are large parts of those are going to be
5:03
very negative for business sentiment and for recruitment, I
5:06
think. And again, that's a difficult
5:07
thing to reverse on. So, you know, there's there's
5:10
not very much they can do short term that isn't a question of
5:12
sort of reversing stuff they'd already done.
5:15
They she could in the budget. Yeah, or not, sorry, the spring
5:18
statement is not going to be a budget.
5:19
But if she does have to to tweak her spending plans anyway she
5:23
should, she could come back with something that was more growth
5:25
friendly around corporation tax, around incentives for
5:27
entrepreneurs, around capital gains tax.
5:30
You know, maybe she can find money to do that.
5:33
But, you know, the truth is that in the short term, you know, as
5:37
as all chancellors, certainly over the next 12 months, she is
5:40
really at the mercy of the global economic cycle at
5:43
whether, you know, if there is a kind of boom in the US, can that
5:46
lift Europe and the UK out of the doldrums?
5:49
What is the Bank of England going to do?
5:51
Are we going to get some relief on inflation and can that lead
5:53
to interest rate cuts? Those things are probably all
5:56
all of which are outside of her control.
5:57
They're probably more important for what is going to happen over
6:00
the next 12 months. And if she were going to do
6:02
anything immediate to help business in in the spring by
6:06
giving them some money back, effectively she'd have to find,
6:08
you know, she'd have to cut something when she she'd have to
6:10
cut spending. Yeah, she'd have to reduce her
6:13
spending envelope that she has set for the spending review
6:16
either over the three years that they're going to set out
6:18
departmental budgets or the years after that, because her
6:21
fiscal targets bind in, in the 5th year.
6:25
The, The, the problem with, if she only does it at the end of
6:28
the, of the period, the problem then is one of credibility
6:30
because it's basically saying we're going to massively
6:32
increase public spending in years 1-2 and three.
6:34
And then we're going to be very, very tight with public spending
6:37
in years 4:00 and 5:00. And, you know, governments have
6:39
done that before and, and you know, everyone will question,
6:43
well, you you say that, but is that really likely to happen?
6:46
I mean, Julian, in terms of optimism, I mean when you talk
6:48
about the change in mood in America, I suppose what Labour
6:52
is trying to do here is set a new mood and saying we're we're
6:55
doing all the things that needed to be done.
6:58
This is going to set Britain on a new trajectory and to try and
7:00
lift optimism and spirits. I mean, does that work or or is
7:06
business more short term? The core problem is right now is
7:09
that in America you have a group of people who've either been in
7:12
business or been start up entrepreneurs essentially
7:15
running the government and setting the tone so they know
7:18
what they need to do and say to actually appeal to business.
7:21
And they basically scream from the rooftops that America's open
7:25
for business, They'll do whatever it takes to help
7:27
business flourish and grow. And that is a number one
7:30
priority. The problem with the UK right
7:32
now is that not only do we not have a group of business people
7:35
running the government, but so much the messaging in the first
7:38
few months was not the kind of thing that businesses and
7:41
investors and entrepreneurs want to hear.
7:43
Sitting here in Cambridge where there's incredible intellectual
7:46
capital around AI, quantum life sciences, green tech, all the
7:52
sectors that are going to grow the economy in the future, we
7:55
think and hope. Sitting here surrounded by all
7:58
these wannabe entrepreneurs, you know, at the Entrepreneurship
8:00
Lab Kings and elsewhere across the city, who are just desperate
8:03
to get out and start building things.
8:05
What they need to see is both a really strong message of support
8:09
and championing what they're trying to do and recognizing
8:12
that wealth creation, building companies, actually creating
8:16
innovative platforms is a good thing.
8:18
We need to be screaming from our rooftops about what we have in
8:22
Britain, both Oxford and Cambridge and all the other
8:24
amazing universities, and talking about it really loudly.
8:28
And we need to be putting in measures that actually encourage
8:30
people to want to build businesses here and to stay
8:33
here. Because at the moment, one of
8:35
the biggest problems is that we have this brilliant brainpower
8:38
in Oxford, Cambridge and elsewhere that create start-ups,
8:41
but then they go to America and breaking that cycle is going to
8:45
be absolutely critical going forward.
8:48
So, so I mean the, the Oxford Cambridge arc, which she's
8:51
announcing today, I mean that that doesn't do it for you.
8:54
No, I think it's a fantastic first step.
8:57
Thank heavens they're talking about actually putting in money
9:00
and getting that rail link ASAP, because that's an obvious no
9:03
brainer that needs to happen very quickly.
9:05
Thank heavens they recognize this appallingly embarrassing
9:08
impediment for Cambridge, which is in a country where it rains
9:12
the whole darn time. We don't have enough water to
9:15
actually in the reservoirs to actually build more housing.
9:17
This is a fundamental infrastructure problem.
9:20
And if only we looked at places like the Middle East right now.
9:23
And so it's all, say, Saudi Arabia's doing with all of its
9:26
desalinization techniques and how quickly they're getting the
9:29
deserts to bloom by getting water to the places that needs
9:32
it. You know, if we looked at that,
9:34
we should be asking why can't we just quickly get the reservoir
9:37
situation sorted out in Cambridge to enable the city to
9:40
boom? There are so many infrastructure
9:42
projects which could and should happen really quickly with
9:45
determination which are critical.
9:48
And if those could actually be implemented quickly using
9:51
central government power if necessary to breakthrough a lot
9:54
of the regulatory obstacles, that would send a really
9:57
powerful signal that the government actually means it
10:00
when they want to create the conditions for enabling business
10:03
to flourish. And sitting in Cambridge using
10:06
our brilliant intellectual riches that we have, these are
10:10
world beating riches. We've got some of the best
10:13
talent in the the world sitting in our universities.
10:16
We need to find a way to get that moving as fast as we can.
10:19
I. Mean you you sound like you you
10:20
you do agree with that criticism of government that it that it
10:25
doesn't in some way really understand business that the
10:28
levers it's using are about, you know, infrastructure transports
10:33
and you know, is that what you're saying that they're
10:36
they're not really getting it It's.
10:38
Both I saw some of the business leaders in Davos last week and
10:42
they were doing a dramatically better job now of trying to sell
10:45
Britain to the global business and investing community.
10:48
And so IA 1000% salute what they're trying to do in terms of
10:52
getting things moving. And I just wish they would hurry
10:55
up, deal with more force. And I hate to say this, but, you
10:58
know, I think Britain really has to learn to hustle.
11:01
And there's so many bad things about America right now that we
11:04
don't want to borrow. But I think one thing Britain
11:06
has to do is be a little bit less British about hustling on
11:09
the global stage if it wants to get the business to really
11:12
believe it's open for business right now.
11:14
I. Mean Is that possible?
11:15
Is the Treasury capable of hustling?
11:17
It is possible I. Think the British government has
11:19
in the past done that. I mean, I, I would say this
11:21
because I was a part of the government.
11:22
But if you go back to the the the government between 2010, two
11:25
1015, that that government came in with a very similar sort of
11:31
political message, which was of course kind of blaming its
11:33
predecessor for the state of the public finances and a kind of
11:35
focus on reducing the deficit. But there was also a clear plan
11:39
to say Britain's open for business.
11:40
We had a corporate tax road map which was pre committing to
11:44
reduce corporation tax over a series of years.
11:46
There were reductions in the cost of employing people and the
11:49
hustle. There was like trade missions,
11:51
big focus on kind of overseas deals.
11:53
There was something called the Great Britain campaign where we
11:56
actually put a huge amount of resource and people and
11:58
celebrity into kind of advertising that Britain was
12:01
open for business. And you might think that this is
12:03
a bit superficial, but it actually all adds up.
12:06
And I think that businesses don't.
12:09
Businesses understand that these things have long lead times and
12:13
that investment takes a while to pay off because that's what they
12:16
see in their own businesses. You've got businesses in the UK
12:18
where their investment cycle is 10/15/20 years.
12:21
So they understand that the problem is you've got to see the
12:23
pipeline. It's got to be credible.
12:25
So doing these things takes a long time, but if you've got a
12:28
clear plan on infrastructure, if you're doing good things around
12:30
regulation, if you're investing in skills, if you're saying
12:33
we're open for business, if you're setting a tax regime that
12:36
attracts globally mobile entrepreneurs says if you're, if
12:39
you're sorting out your capital market so that a successful
12:42
business can actually list in London instead of having to go
12:45
to to the NASDAQ, You know, that that kind of package, even
12:49
though a lot of the, you know, actual impacts on growth might
12:53
take five, 10-15 years. That can create a sense in the
12:56
business community that OK, the UK is getting it's act together,
12:59
it's serious, and then you can start to get the investments
13:01
flowing. So, you know, it does, it does.
13:03
There's a sort of as well as tackling the tough decisions and
13:06
actually delivering on what you say, there is a sort of, you
13:10
know, sales element to this. And can I just say that, I mean,
13:13
for me, aside from what happened after 2010, the first decade or
13:17
the until between 2000 and 2007 or so, there was this whole
13:21
mantra of Cool Britannia. And there was a real sense on
13:24
the international stage that London was a fantastically cool,
13:27
trendy place to be and the rest of the country by default.
13:30
And we were attracting a lot of talent into the UK then.
13:34
And I think we desperately need to find this Cool Britannia vibe
13:37
again. And in some ways, we have this
13:40
amazing opportunity right now. As someone who's spent a large
13:43
chunk of the last 15 years in America and talks a lot to
13:47
American business leaders and investors, Many people are both
13:50
excited about the potential for America's growth right now, but
13:53
also pretty scared about the political climate with Donald
13:56
Trump in the White House. And there's a real concern that
13:59
actually America's over hyped and too expensive.
14:02
So there are a number of business people and investors
14:04
who want to diversify and hedge away from America.
14:08
Where better to do it than the UK?
14:10
So we're basically in a race against time against countries
14:14
like Singapore, Dubai, Switzerland, to some degree,
14:17
Europe, continental Europe. And if we can get our act
14:21
together right now and put out our stall as Cool Britannia.
14:24
Talk about welcoming in life science groups that are worried
14:28
about the potential arrival of Bobby Kennedy Junior at the
14:32
health department in the US. If we can pull in, say, the AI
14:36
computing people who want to diversify, and green tech, which
14:40
of course is getting a big backwards push from the Trump
14:44
administration right now. If we can do it, now is the
14:47
moment to be absolutely aggressively trying to grab
14:50
business away from America because people do want to
14:53
diversify. I mean, I suppose that's exactly
14:55
what Rachel Rees would say, isn't it?
14:57
I mean, isn't that what Rachel Rees would say she's doing by
15:00
both deregulation making planning easier, and taking away
15:04
the the objections? But she's, you know, she's doing
15:06
it after seven months of the reverse, right?
15:08
I mean, that's the the problem is that there's been this
15:10
incredible negative messaging and then suddenly they're kind
15:12
of scrabbling to realise they've they've overdone it.
15:15
And there is an opportunity to present the UK as kind of
15:17
dynamic, competitive, but also stable and predictable, which I
15:20
have historically been British, British, you know, strengths.
15:23
We certainly, you know, we undermine some of those
15:25
strengths a little bit over the last decade with, you know, sort
15:29
of things like Brexit, which was seen as kind of very sudden and
15:33
unbusiness friendly decisions. But we still have, you know,
15:36
relative to the USA, very functional political system.
15:39
We have a legal system that's extremely reliable and you know,
15:43
we should be able to retain those benefits.
15:45
And I'd also say, by the way, there are things they could do
15:48
again to signal like getting the youth mobility visa with the
15:51
European Union in place as quickly as possible.
15:54
Again, sitting in Cambridge, you know, we have these brilliant
15:57
students who want to be able to travel.
15:58
We want to also attract the best talent from the continent as
16:02
well. And there's a lot that, you
16:04
know, wouldn't cost the UKA lot in terms of either economics or
16:07
politics, but would go a long way to signal that we're moving.
16:13
Let's talk about Heathrow for a second.
16:14
I mean for a lot of people this is sort of, it's counter
16:17
intuitive. There's a lot of Labour people
16:19
in the cabinet who were traditionally opposed to 1/3
16:23
runway at Heathrow. Ed Miliband once said it sent
16:26
the wrong signal. But now that's all kind of been
16:29
swept away by the the push for growth.
16:32
And there's this argument that if you can do it all within
16:35
Britain's carbon budgets, then there's no there's no problem
16:39
with development and there's no problem with aviation.
16:42
I mean, first of all, how much of an economic boost is 1/3
16:46
runway to to Heathrow? Or is it really about signalling
16:50
and messaging? Well, it's a good signal
16:53
message. It actually is an important
16:55
economic boost because Britain's role is very much as a kind of
16:59
entrepreneur, entrepreneur, trading hub.
17:01
I mean, you know, in many ways I used to joke that London was
17:03
like Constantinople when it was called Britannia because
17:06
everyone came here to trade and to do business here.
17:09
And that was really powerful. We have a very important
17:11
judgment crossroads position in the global economy.
17:14
So I think it is important. I do understand the green
17:18
concerns. You know, there are a lot of
17:20
people who involved in sustainability who will be
17:23
disappointed. I would just say, though, that
17:25
again, in the UK, we have some of the world's leading research
17:31
outfits looking at green aviation and how to get aviation
17:34
more sustainable. So I would suggest that if
17:36
Rachel Reeves wants to go ahead with this, she should be
17:39
simultaneously throwing money at green tech researchers across
17:42
the UK that we should feel very proud of to show that we
17:45
recognize we need to travel, but we need to also fight to do it
17:49
sustainably in the future. I mean, Ripley, are you
17:52
surprised at how quiet the opposition is at the moment?
17:55
Well, look, they are not going to be quiet.
17:58
Look, there's this is going to be a huge row.
18:00
It's going to be a huge row within the cabinet.
18:01
It's going to be a huge row with the environmental groups.
18:05
I mean, on the substance, look, this is this clearly is pro
18:08
growth. It's definitely pro growth
18:10
directly because you get more activity.
18:12
It's also pro growth because the key thing about 1/3 runway and
18:14
more flights is that you get more direct flights from the UK
18:18
to fast growing parts of the world.
18:20
And that means that the UK becomes a much more obvious
18:22
place to locate your headquarters or your logistics
18:25
hub. And so therefore those direct
18:27
flights from the UK are kind of definitely growth positive.
18:31
You know, if you're sitting in the treasury about what can move
18:33
the dial over the next 1020 thirty years, this definitely
18:36
sits in the kind of obvious wins category.
18:39
And on the environmental, you know, side, a lot of these
18:42
routes, if they don't happen from Heathrow, will happen from
18:45
Skipol or Charles de Gaulle or other, you know, airport, other
18:50
airports in the EMEA time zone. And so, you know, from a global
18:54
emissions point of view, having these in the, having these
18:57
routes flying from the UK rather than from someone else from
18:59
somewhere else is, is, is neutral, right?
19:02
So in terms of the overall climate impact on the world,
19:05
this is just the UK beating someone else to it by having a
19:08
better airport. The problem is that we have this
19:10
kind of unilateralist approach to climate change in the UK,
19:13
where we've set these UK carbon budgets.
19:16
And the the problem is this is going to increase the carbon
19:18
budget for aviation and therefore the government is
19:20
going to have to show how it can reduce its carbon budget
19:23
elsewhere. And so this is going to put
19:24
pressure on delivery for things like home heating, switch to
19:28
electric home heating, electric vehicles and transport and
19:31
reducing emissions elsewhere. But the true impact of the
19:34
Heathrow decision on global warming and climate change
19:37
overall will be pretty neutral. It's just that we might as well
19:40
have these flights happening from the UK then happening from
19:43
another country and giving them the economic boost.
19:45
Having everyone who comes through Heathrow being asked to
19:47
make a small contribution to green tech research in the UK as
19:51
well. Green aviation research.
19:53
Let's get moving with sustainable fuels, with electric
19:56
batteries, with hydrant power flames and what the Whittle Lab
20:00
is doing, which is basically trying to streamline the
20:03
friction points around aviation to again cut the emissions
20:07
using, by the way, the same techniques they've used to help
20:10
the British Cycling team win medals in the Olympics.
20:14
I mean, I, I said let's separate the politics.
20:17
I think we can bring it in now on this one really.
20:19
I mean, because if Labour can deliver this and keep going on
20:23
it in a way that the Conservatives couldn't for all
20:27
that time, do you think they will get the credit, Rupert?
20:32
Yes, I think they will in in two ways.
20:35
You know, in the end, it will come down to the reality.
20:38
And a lot of this, as I said, is beyond Rachel Reid's control.
20:40
So a lot of it will come down to at the next election, can they
20:43
point to income growth, inflation under control, jobs
20:48
being created and and some of that is in their control, but
20:51
some of it is out of their control.
20:54
But I also think if you can, there is a sort of credibility
20:57
in voters minds that comes with being a government that clearly
20:59
can get things done. And that was something that I
21:01
think seriously impacted the the sort of tail end of the last
21:04
Conservative government where voters increasingly got a sense
21:07
that this was a government that just couldn't achieve anything.
21:10
You know, it's set out all these ambitions and it all it was
21:13
doing was kind of cancelling HS2.
21:15
You know, for example, the, the government actually initiated
21:18
the Oxford to Cambridge arc. East West Rail was something
21:21
that was launched by David Cameron in 2012.
21:23
It actually went through. So the constituency that I ran
21:25
as a candidate in Bistrom would stop in the last election.
21:28
East West Rail goes right through Bista.
21:30
There are going to be Oxford to Milton Keynes services happening
21:33
this year. So you know, this, this stuff
21:35
takes a long time, but it's happening.
21:36
The problem was the last government then abandoned the
21:38
Oxford Cambridge arc under pressure from local councillors
21:42
and MPs because local communities didn't want all the
21:44
housing and they were worried about the popularity.
21:46
And so it was a government that kept sort of abandoning stuff,
21:49
not able to actually deliver change, even if that change is
21:52
controversial. And I think if this government
21:54
can get to the next election and say, look, we've actually done
21:56
stuff that's been on on on sort of the back burner for decades.
22:00
We're delivering on Heathrow. We've got, you know, we've
22:02
linked up Oxford and Cambridge. We've got growth going in the
22:05
north of England because we're investing in, you know, Trans
22:08
Pennine, you know, links. All of this stuff might sound a
22:11
bit abstract, but I think voters will reward the sense of a
22:13
government that is functional getting stuff done.
22:16
The challenge is it's just really hard to do that.
22:18
It's not just the politics. There's, there's going to be
22:20
judicial review, legal challenge process.
22:24
You know, there's a lot of giving the speech today is, is
22:27
all very well. That's, that's like day one.
22:29
There's there's, there's hundreds of days to come of
22:32
actually delivering this stuff and showing voters they've got a
22:34
functional government that can actually get things done.
22:37
I mean, do do you think culturally Britain is ready to
22:40
make that shift though, because the planning objections have
22:43
traditionally been massive and massive political problems.
22:47
You know, do you think this idea that you can sweep away the
22:50
objections to. Well, it's about.
22:51
Political leadership, I think that the, I think that the
22:53
country is ready for the message and you've got a government that
22:56
on the face of it has this enormous majority.
22:58
So if ever there was a government that would be able to
23:00
force this kind of stuff through, it's this government,
23:03
right? They do not have to worry about
23:04
losing votes in the House of Commons.
23:06
And that is a huge benefit. But it's about having the
23:09
political leadership and the courage and, and you know, the
23:11
conversation in the prime minister's study has got to be,
23:15
we have got to deliver Heathrow and not listening to the voices
23:17
saying, well, we're worried about losing seats and votes to
23:20
the Green Party. You know, you've got to stick to
23:22
the goal and then make, you know, have confidence that you
23:25
can win the political argument at the next election instead of
23:29
just sort of chopping and changing and, and, and all these
23:32
sorts of allowing the short term objections to to, to put you off
23:35
course. I mean, Julian, there's a,
23:36
there's a poll out today that puts reform ahead of Labour.
23:42
So, you know, so, so late Labour's got sort of the Green
23:44
Party snapping at one end and reform at the other.
23:48
I mean, what do you think of this sort of the idea that Keir
23:51
Starmer can lead a sort of a cultural shift towards growth
23:56
and to unleash animal spirits? I mean, animal spirits and Keir
23:58
Starmer are not things that would normally go in the same
24:00
sentence, are they? No.
24:02
He's trained as a prosecutor, so he's very good at mastering
24:05
briefs on a micro level very quickly and understanding
24:10
logical sequences to get through a brief and argue it.
24:12
But the ideological searing vision stuff isn't something
24:16
that natural actually comes to him.
24:18
I would argue what you see by the fact that you've got support
24:21
for Greens and Reform at the same time is people are hungry,
24:25
desperately hungry for a click up vision that they can rally
24:28
around and a message about the future.
24:31
Green and Reform are each offering a strong vision message
24:35
brand that people can understand quickly.
24:38
You might hate it and they're radically different, but the
24:41
thing that's very clear is just technocratic government alone
24:44
doesn't do it right now. You've got to offer people a
24:47
really clear cut vision and sign of hope that they can rally
24:51
around for the future and a sense of direction for better or
24:55
worse. And most people in Britain would
24:56
probably say worse, Donald Trump is doing that in America very,
24:59
very clearly. Unfortunately, much of
25:02
continental Europe doesn't have that right now.
25:04
But if they can come out and carve, really hoist their flag
25:07
to a vision for the future, for growth, then I hope that will
25:11
start to turn the economy around, turn around, unleash
25:14
some animal spirits and also provide a serious, you know,
25:19
counterpoint to both reform and the other voices that are coming
25:23
onto the stage right now. I.
25:24
Mean Rupert mentioned, you know, that the idea that actually
25:27
Rachel Reid isn't really in control of this and that if, if,
25:29
if America has a big economic boost, then we, we, we might get
25:33
a boost a lot, you know, on, on the coattails, I mean, against
25:37
that is obviously still the sort of the uncertainty around
25:40
tariffs and what kind of impact that might have on our economy.
25:44
I mean, how do you think all of that is going to balance out?
25:49
Could I just say thus far, you know, and I talk quite a bit to
25:52
the Trumpians or the Trumpies, what you call them, thus far,
25:55
the UK hasn't been focus number one at all.
25:58
It's been primarily Canada and Mexico and China.
26:02
I suspect the UK will come into focus at some point.
26:04
They are more focused right now amongst the Trump group on
26:07
France and Germany than they are in the UK.
26:11
They will be looking to see where Keir Starmer grows again,
26:15
if he does unleash some kind of growth, pro growth agenda, You
26:18
know, you know, that's likely to make it easy to negotiate over
26:21
tariffs and threats. Of course, the main issue within
26:24
the UK and the US is service sector.
26:26
But it's going to be interesting to see, you know, how that
26:28
develops because, you know, we've already had a lot of
26:30
messaging from the Trump team that if it looks as if they are
26:34
going in the eyes of the Trumpians, very left wing, then
26:37
the risk of tariffs is likely to rise, which I'm not interesting.
26:42
You know, it's a horrific situation to have this kind of
26:44
almost, you know, imperial approach towards dealing with
26:48
other countries. And we are going back to a world
26:51
of power politics and very much hegemonic power politics when it
26:55
comes to trade. But that is the reality.
26:57
And so it's something which is going to impact the UK going
27:00
forward. I wouldn't get overly worried
27:02
about the impact of tariffs on the UK economy because you know,
27:06
goods and manufacturing exports to the US is not a major part of
27:09
the USUK economy. We're a more service based
27:12
economy and so we're not the most vulnerable, whereas if
27:14
you're sitting in Germany, you'd be a lot more worried about what
27:17
might be coming down the track. But also the UK, I think is
27:20
going to the art of the deal means that the UK needs to be
27:24
negotiating for a position of strength and to have other
27:26
things to offer. And the UK, for example, to the
27:29
Trump team can offer its leadership in security and
27:32
defense and particularly defense spending, but also defense
27:36
technology. And I think the other area that
27:39
is going to come under pressure is EU KS relationship with
27:41
China. And so I do think that it's
27:43
quite interesting that this government has started this kind
27:45
of reset with China that is going to go down really badly in
27:47
the White House. And I don't know how maybe
27:50
they're doing this because they're super smart and they're
27:52
basically setting this up so that they can junk it as an
27:55
offer to the to the US administration.
27:57
I'm not sure that they are as smart as that, but that might be
27:59
what ends up happening. Although Trump's slightly
28:01
playing it both ways on China at the moment as well, no.
28:03
He is, I mean, he clearly is angling for a deal on China
28:06
rather than kind of full on confrontation, at least as far
28:09
as we know. I mean, he we know with
28:10
President Trump that he can do a full 180 when you're least
28:14
expecting it. So any statement has to be
28:16
hedged, I think. So I mean, overall I'm I'm
28:18
getting from both of you that you know, what she has announced
28:21
today is, is good, but it doesn't really get her out of
28:27
her immediate problem. I would say Glass half full is a
28:31
fantastic step in the right direction.
28:33
Hooray, should have happened earlier, but it's a step in the
28:36
right direction. Glass half empty, she has a lot
28:39
of challenges in actually implementing this and actually
28:42
convincing business leaders who she has already scared off to
28:45
some degree. But thank heavens we've seen
28:48
this. Yeah, look, she is.
28:50
I agree. Look, it's good.
28:51
And the messaging from the Labour Party on growth over the
28:53
last couple of weeks has been so much better than it was.
28:56
But why wait seven months? It's absolutely extraordinary.
28:59
I don't understand it. But also she's going to keep
29:01
getting a lot of negative messaging from business about
29:04
the the National Insurance rise, about the labour market
29:07
regulations, about incredibly high industrial energy costs,
29:10
which is a massive problem for for UK manufacturing,
29:12
particularly heavy industry. So there's a lot of other
29:15
problems that aren't dealt with today, but it is definitely a
29:17
step in the right direction. I think we give her AB Plus
29:20
sitting in Cambridge University. What name minus?
29:24
I think that's great inflation. No comment.
29:30
Gillian Tester, Rupert Harrison, thank you both very much indeed.
29:32
That was the forecast. We'll be back next week.
29:35
Until then, bye bye.