Daybreak Europe: January 17, 2023

and fifty billion pounds a year. Those are the stories we're looking at in today's papers. And I'm leanne Karen's cluss trial and tribulation muskheads to court over tweets saying

that he would take Tesla privates. That's all straight ahead on Bloomberg Daybreak Europe on DAB Digital Radio London, Bloomberg eleven three oh New York, Bloomberg Washington d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties, San Francisco, syrus XM Channel one nineteen and around the world on Bloomberg Radio dot com and via the Bloomberg Business Set. Good morning. I'm Stephen Carroll and I'm Caroline Hipke. Here

are the stories that we're following today. China's economy grew at the second slowest pace since the nineteen seventies last year. GDP growth slow to three percent in twenty two as the country doubled down on it's now abandoned COVID zero policy, but the future looks brighter. In the fourth quarter of the world second largest economy expanded by two point nine percent compared to a year earlier. Vanessa Chan, head of Asian fixed Income investment directing at Fidelity, says they're seeing

a welcome shift from Beijing. I think to begin worth, we do see the policy changed in tontal stance compared to last year. So first of all, they've become a lot more pro growth and just some extempro business fidelities, Vanessa Chan spoke as new data also shows that China's population shrank in twenty two for the time in six decades.

Over one point four billion people lived in the country at the end of last year and now the risk premium on UK assets has all but gone, according to the Bank of England Governor Andrew Bailey, but the country isn't out of the woods yet. Speaking to the Treasury Select Committee, Bailey said that we're still recovering from the impact of Liz Trust's many budgets. To be honest, I mean, I think, you know, it's going to take some time to you know, convince everybody that we're sort of back

to where we were before. I mean, not because I doubt the current government. I'm not saying to be negative. It's just obviously there is a something of of a hangover effect. The Bank of England governor also warned MPs that the ultra tight jobs market in the UK could derail any drop in the rate of inflation. The World Economic Forums annual meeting is underway in Davos with a gloomy economic backdrop corporate executives and economists. They're warning that

a global recession is likely this year. Nearly three quarters of business lead year surveyed by p WC thought global growth would decline in three That's the highest proportion since poling began back in twleven. Black Rock vice chairman Philip Hilderbrand says he doesn't see central banks coming to the rescue. The central banks are going to continue on their tightening path. They're going to be very careful, very focused on not

losing the long term inflation expectation anchor. H And so I think we're going to see, you know, I don't see any chances, frankly, of easing this year. I think the market has that wrong. So they're going to make sure that we can really not just get from nine to four, but also limit any kind of risks that inflation expectations become un anchored. That's Philip Hilderbrand speaking exclusively

to Bloomberg in Davos. Will be live there later today with Germany's Olaf Schultz, who's set to speak in a one on one interview with Bloomberg's editor in chief John Michethwaite. Now two top corporate news memestock investor Ron Cohen is said to have taken a stake in Ali Barber and is calling on the Chinese tech giant to increase its shared by backs. A source says that Cohen built up a holding worth hundreds of millions of dollars in the

second half of last year. Cohen has a strong following among so called meme stock investors and played a central role in the frenzy of a game stop. The next chapter in Elon Musk's life drama will begin to play out in the San Francisco Federal Court today. It's all to do it tweets about Tesla. Bloomberg's at Baxter has the story. The issue was a number of tweets in twenty eighteen saying that he had lined up the financing to pay for US seventy two billion dollar buy out

of Tesla. He then followed up making it sound as if the transaction would be imminent. It fueled a stock rally, which abruptly ended a week later and culminated in a forty million dollar settlement with the SEC. The trial will make him explain his actions and intentions under oath in San Francisco. I'm at Baxter, Bloomberg, Gaybreak Europe. Those are a few of our top stories. Then this morning, we are very pleased to have so much coverage life from Davos,

including Hildebrand that you that we heard from earlier. But also I think just thinking about what CEOs are most concerned about this year. The PwC survey was very interesting. Yeah, I mean, apart from the forecast for a recession on hiring, which I think was one of the really interesting ones to watch is that the majority that we've seen of

executives do actually expect for them to retain staff. That they're not looking at cutting staff, six plan not to reduce headcount, not cutting pay, and that's because they're still trying to hang on to employees rather than go through

expensive recruitment processes. So at a time when we're talking about some of the big names cutting jobs, interesting to see that sentiment at least globally among CEOs that perhaps they are going to hold onto their staff this year and they're not so worried about the prospect of big job cuts. Okay, well that's the private sector. Here in the UK, we're much more focused on the public sector.

Nurses announced more industrial action, more strikes for the six seventh of February, and then also we had that news out that teachers have voted to strike. I think that's going to be the kind of big unknown. What does that mean for the UK economy if the schools are closed and so on, sending a chill down the spine of parents everywhere, and having to do with clothes schools

potentially with that strike as well. Okay, up next billions in UK tax school and collected remote learning to comeback, teacher strikes and ill health casting the economy a hundred and fifty billion pounds a year. Now the paper review on blue Bird Daybreak Europe. The news you need to know from today's papers. Now joining us is Bluemberg's Leanne Garan's with the front pages of this morning's newspapers. Good morning, Caroline,

good morning to you. So look, a lot of the newspapers are leading on a story that we haven't mentioned yet. This is the conviction of a Metropolitan Police officer, David Carrick. I want to mention it though he admitted to committing twenty four counts of rape, and it is really another major scandal for Metropolitan Police given that he's a very senior officer, came to the attention of police nine times

that remained as serving officer. So that I think locally for London is what a lot of people are thinking about. But then there are some other news stories, including the Financial Times which leads on UK tax billions going uncollected. Tell us about that. But Caroline, just before we get to that, just touching on that case of David Carrick, that you've mentioned there all over the front pages of

the newspapers. In light of this case, Scotland Yard is now reviewing more than sixteen hundred cases where police officers and staff are accused of sexual and domestic violence offenses. So we do know that this is now coming to light here off the back of that case. But we will move on to have a look at the headline in the Financial Times, and as you said, it's about taxes, and the newspaper reports on comments by the Treasury Minister.

That's Victoria Atkins who says almost two thousand, three hundred stars have been transferred to work on Brexit cases or the COVID nineteen loan scheme, which we do know have been the subject of fraud. Now this amounts for around ten percent of compliance staff at h M r C. And due to this movement, billions of pounds of tax is just not being collected. So it's been left uncollected.

And Sarah Olney, she's the Liberal Democrat treasury spokesman, she has put the question to the Treasury Minister Victoria Atkins, who has admitted that there's been this big transfer of staff leaving this whole when it comes to collecting money, and the Lib Dem Party says civil servants have been moved from one crisis to another in a constant game of whack a mole, leaving taxes uncollected. So there we are the latest on uncollected taxes. Okay, that's on the

front page of the Flantel Times this morning. The Telegraph. Meanwhile, headline at school's told to use volunteers and remote learning to combat true strikes. Yes, and you just touched on strikes earlier with Caroline there Stephen and A mass walkout of teachers who are National Education Union members is now scheduled to begin on the first of February. Now remember that is a significant date because they will coincide with

the Trade Unions Congress National Right to Strike Day. We also know the PCs is going on strike their hundreds of thousands of civil servants and with more strike dates in February and March, schools could be closed for four strike days in total in the coming weeks. Now, schools are under pressure to make effort to limit the disruption to pupil's Remember pupils went through so much disruption, especially

during the pandemic. And on Monday, the Department of Education is published guidance which urges schools to consider bringing in volunteers to help look after children and to keep the classrooms open during walkouts because as we know, there's a lot of parents who have to go to work who probably can't take this time off. It's currently really unclear how many of the nu Ease three hundred thousand members will choose to walk up, but as we know, yesterday

teachers did choose to strike. Okay um. Just lastly, the Times headline is rising levels of ill health costing the economy a hundred and fifty billion pounds per year. Yes, and this report in the newspaper touches on how ill health among working age people is costing the economy the equivalent of seven percent of the UK's GDP. That is a pretty significant number and this is according to an analysis by the paper's own Health Commission. So the Time

has been looking at all these figures now. Really, since the start of the pandemic, more than three hundred sixty thousand people have been forced to leave the workforce because they are suffering from a health condition that does affect their ability to work. So there we are just the cost of the economy when people aren't made able to make it into the workforce. Release dark figures. Earlean Garrans, thank you very much with that review of today's papers.

Let's turn next to the story out of China today the growth figures showing the expansion in the economy was hammered last year, but still come in better than forecast. In the final quarter, annual growth of GDP slowds just three percent. The pace in the fourth quarter, though, was two point nine percent of potential. Bright spot there, let's get the details from our China Economy editor James Meager,

who joins us now took us through then. James, the hit that the Chinese economy suffered from COVID last year. I mean, in the headline growth number three is the lowest since and that was numbers the lowest since six, which is the end of the Culture Revolution, which was a decade of chaos and China's economy. So you know the data last year and what happened to the economy

last year, it was pretty damaging. You saw massive lockdowns in Shanghai and nother sues across the country, and uh, you know, we were facing more lockdowns at dat of the year when the government's suddenly decided to open and basically everyone in China got it seems to have got COVID in December and January. So it's been a massive a year of massive disruption for for people here and and as you see in the data, also for for

the economy. The hope is that that now that you know, this outbreak which is continuing right now, once that are sort of subsided somewhat, people will be willing to go

out and spend again. People willing to go out shop again, and you'll see if we're rebounded in consumer spending and also in demand for the housing sector, because last year one of the big problems for the economy that wasn't COVID was this you know, more than year long slump in housing demand, which you know, it was one of the pillars of the Chinese economy, was seen as being about a quarter of GDP was related directly related to the housing sector, and that is really the bottom has

fallen out of that market. So the hope is that this year people willing to go out and spend again, go shopping also by homes um. Whether that actually happens or not, that's a that's an open question. Yeah, absolutely. Gosh, you described such a difficult year for for China, James. But this story also has caught our attention. On the demographics. China's population started shrinking last year for the first time

in six decades. This really has hugely profound implications, doesn't it, right, And there are some there are some demographers who said that actually started a number of years ago and the government has just been fiddling with the numbers basically. But you know, whether it happened in or whether it happened in two is kind of a mood point. When you're talking about one point four billion people, give or take a hundred million, I guess it's not so so important.

But yeah, as you say that that that slump or that the start of a real fall in in the population is an important story. And as you see in other countries in each stage or in other countries around the world, Japan, South Korea, UM, that will not be reversed. There is no way, there is no government in the world that has successfully reversed these kind of like long

term demographic changes. Where as people get richer, as they become more educated, they have less children, they have fewer children, and um, and that you know what the Chinese government has tried to do to try and reverse that. What they've talked about has been tried in other countries and has failed, and so there's no reason to believe that would be successful in China. And so what does that mean? You know, less demand for housing, less demand for education.

If you're an education provider in the US or Australia or the UK, and you rely on Chinese students coming from students come from China to buy your university courses, there will be fewer and few of those as time goes on, and less demand for commodities from other countries. Uh, maybe this will mean less maybe this will mean less consumer demand in the country. Obviously, you know, you can make there are some changes the government can make to

try and slow down the effects of this. For example, you look at Japan, the population has been shrinking for a decade now, but the number of people in the labor forces continue to rise because more and more all people are working. So that that is one thing that the government, you know, the Chinese government could also do lots to do to sort of keep more people in the workforce longer. But obviously, as you see in many countries, in on the world. It's a very very unpopular decision.

There are strikes and f on that exact issue about raising the working raising and retirement, as you have to work longer before you can get the pension. It's also a very very unpopular decision in China. The government has been trying to do that now for a decade or more, and basically every time they talk about it, there's such

a backlash that there they stop talking about it. So, yeah, there's some things that the government can do, but this change is inevitable, and I mean the decline is inevitable, and it's gonna cause profound changes to China's economy and to the blobble bore. This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Streets and beyond. Look for us on your podcast feed every morning, on Apples, Spotify, and anywhere else you

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