Daybreak Europe: January 27, 2023

SUONAC looks to the student economy. Those are the stories we're looking at in today's newspapers. And I'm Leanne Garon's plus managing a diversity drive. Bank of America modes m

d s from underrepresented groups. That's all straight ahead on Bloomberg Daybreak Europe on d A B Digital Radio, London, Bloomberg eleven three oh New York, Bloomberg Washington d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties, San Francis, Go cyrus x M Channel one nineteen and around the world on Bloomberg Radio dot com and via the Bloomberg Business at Good Morning I'm Stephen Carroll and I'm Caroline Hecker.

Here are the stories that we're following today. In a major speech at Bloomberg's European headquarters here in London, the Chancellor Jeremy Hunt will lay out his plan for the UK economy. Hunt is expected to reject calls for tax cuts while arguing the country can use it's bregsit freedoms as a catalyst for prosperity. Former Chancellor Philip Hammond says the country has a major issue it needs to address. It's about productivity. It always was about productivity and it

always will be. The UK's shockingly low rate of productivity growth, which we're beginning to tackle with things like improvements in the technical skills agenda, but we've still got a huge amount to do and we just can't say it often enough. It is about productivity that is the route to sustainable higher standards of living. That was the former Chancellor Philip Hamment. His comments reflected in the data which show the UK is the only G seven economy with GDP below pre

COVID levels. Will be speaking to Bloomberg Anker and Edwards for more about this story in just a moment and now. Growth in the US economy beta expectations in the final quarter of two GDP expanded at an annualized pace of two point nine percent, down from three in the third quarter. The data suggests that there's still a path to a soft landing for the FED. Reacting to the news, President Biden gave this Bolitio assessment. Jobs are the highest in

American history. Wages are up, and they're growing faster than inflation. Over the past six months, inflation has gone down every month, and god willing will continue to do that. Despite President Biden's optimism, some economists believe that there are warning signs in the data. Personal consumption rose by less than economists had expected. The two point one percent gain suggests a

recession continues to be a significant risk for America. Shares in the Adanne Groups companies are continuing to fall today, with now more than thirty billion dollars wiped off their market value after a scathing report from a short seller earlier this week. In a call with investors, the Conglamorate

called Hindenburg's report devoid of facts and bogus. The Adanne Group is also understood understood to be exploring legal action against the investment research firm Our Asia Equities reporter Abishak Vishnoy says market reaction will be key today is the real tist because you know the share sale is going to open up for retail investors and you know other

other investors in general. So the response to that and how much stocks moved today would establish, you know where where the sentiment, whether Heinenberg's report has actually changed the sentiment, it marks a U turn in Adani groups again be uning rally, or it's just our dent along the way. A visionaries assessment comes. As the investor Bill Ackman said he found Hindenburg. The Hindenburg does cier on the A.

Daney Group highly credible and extremely well researched. And now sources tell Bloomberg that Japan and the Netherlands are set to join the US in limiting China's access to advanced semiconductor machinery. Bloomberg's You and Potts has the details. It's shaping up to be a powerful alliance to undercut China's ambitions to build its own domestic chip industry. Bloomberg has learned that Dutch and Japanese officials will conclude talks today on setting limits on what can be supplied to Beijing.

The Netherlands is to expand restrictions on a SML, which will prevent it from selling advanced chip making machinery to China, and Japan is likely to set similar limits on Nikon. The joint effort will expand restrictions the US government unveiled in October. China has fall back against the u S moves with the complaints to the World Trade Organization in London, i'mun pot spin bog day, but europe Intel shares fell in late trading after a dire forecast for the first quarter.

The U S chip maker expects maximum sales of eleven point five billion dollars, far short of analysts estimates of fourteen billion. CEO pak Elsinger used or urged investors to think of the bigger picture. I want to remind everyone that we are on a multi year journey. We remain focused on the things that are within our control as we navigate short term headwinds while executing to our long term strategy. Guessing there is now attempting a radical acceleration

into advanced semiconductor technology. The figures indicate, though the slumber demand for personal computers may persist this year. And in corporate news this morning, Bank of America has named three hundred and sixty new managing directors and more than half are from underrepresented groups. It's the third year in a row that the bank has awarded the majority of m D roles to women all people of color, with Wolfster Banks pledging to improve their diversity as senior levels. Competition

for top talent is heating up across the industry. Those our top stories this morning. Of course, we are looking ahead to Jeremy Hunt's big speech here at Bloomberg's offices in London, so more on that in a moment as well. Another name that was visiting us yesterday there was the Irish Finance Minister Michael McGrath, who met with Jeremy Hunt yesterday.

They were talking about the course of the Northern Iron Protocol talks and he did say that things had moved to a new level in advancement towards a solution there. So's some positive signals coming from the Irish side in that conversation. Yeah, absolutely, And of course we'll bring you the chance of Jeremy hunt speech live here on radio later on this morning. Well, the other issue. I think

that was quite interesting for me. A bit more in the weeds, but Esthma the European market watchdog again warning London based hedgephons and asset managers to build up their presence in the European Union after breggsit. It's not enough just to have a few Apparently the big band banks, according to our reporting, are really under pressure to move senior staff and the decision makers the places like Paris and Frankfurt and Ouncer down. Perhaps more flexibility for the

smaller businesses more to watch their up. Next, the BWI gets a warning from its ex Rolls Royce's burning platform and soon that it looks to the student economy. Now. The paper review on blue birdday Break Europe the news you need to know from today's papers to us now it's been basically and Garan's to take us through the interesting newspaper stories. The Telegraph headline reads the Bank of

England must slow down interest rate rises. WARN's ex chief economists tell us more lean Caroline, good morning to you and thank you. Yes, a warning from their ex Andy Haldane and here's the Bowees former chief economists says bluntly, flickers of life in the economy risk being hindered by Rishi Sunac's lack of a medium turned plan for growth. The ft says. Haldane is also warning that families were content need to be hit by painful price risers and

also falling real incomes this year. He was actually speaking to the BBC on Thursday where he also criticized the interest rate risers, saying he would have preferred to have seen the Bank of England and other central banks starting to raise their rates a little bit sooner. Hal Dane does believe this would have helped to nip inflation in the bud. The banks expected to raise interest rates for the tenth time in a row next week to four percent, which hal Dane is really fearing will cause more pain

for households as mortgage rates will also climb. And we're in a cost of living crisis as we know, food and lots of other things are extremely expensive. Energy included Okay Leanne in the Financial Times. Meanwhile, they have comments from Rolls Royce's new chief warning the company is a

burning platform. Well he didn't hold back, so the new CEO of Rolls Royce has given this brutal assess and of Britain's flagship engineering group and according to the FT, he has told employees it must transform the way it operates or it will just not survive. This is almost an iconic brand here in the UK and in a global address broadcaster staff, parts of which were shared with the newspaper, so we're shared with the FT. He said investors were losing patients with the iconic British band brand.

He used the address to launch a transformation program with a focus on efficiency and optimism. Now, many people who work within Rolls Royce was saying this has been interpreted as a signal to staff to expect another round of job cuts, in particular among white collar workers as they do try to get the company back on track. So all not terribly well in sort of industrial Britain. What about the Times headline though, when it comes to trying to help with this very tight labor market reci sooner

foreign student plan to show up economy. Yeah, this is a really interesting one and it's in the Times. And as you say, foreign students would be allowed to work longer hours under plans to boost the economy. And this, of course, Caroline, as you say, comes in a really tight labor market. Where there's loads of vacancies, especially in

hospitality and retails. So ministers are now looking at ways to encourage both British and over see students to take more part time jobs really to deal with all the shortages we're seeing. Britain's six hundred and eighty thousand overseas students currently can only work twenty hours a week during term time, but the newspaper says discussions have begun within government about either raising that cap to thirty hours or

removing it entirely. But remember, Richie Sunac is concerned that he will struggle to fulfill his pledge that the economy will grow this year unless the government can really deal with the surge in job vacancies. And it will be interesting to see against Suella Brahman's plans really for immigration at this time. Yeah, that's such an interesting story in the Times today, Leon Garran's thank you very much for

that review. Afterday's newspapers. Now, the Chancellor Jeremy Hunt will speak here at Bloomberg's European headquarters in London later this morning. He's expected to reject calls for tax cuts and also make the case for how Brexit will drive economic Growth. Bloomberg anchor Anna Edwards will be speaking to the chance later and she joins us, now, really good to have you, Anna. What do we know then about what's going to be in this important speed Yeah, good morning, Good morning everybody.

So he's going to be speaking here at Bloomberg and then he's going to be giving an interview to us a little bit later on. But what we do know then is he is set to rule out tax cuts and this is of course, in the build up to the budget in March. He's been under a lot of political pressure, in particular from his back benches to agree to some kinds of tax cuts. Some in the back benches of the Tory Party still think that this is the way forward, despite the termoil that was created in

markets by unfunded tax cuts around the mini budget. So that's a battle that he is, it seems, still fighting.

He's also going to talk about some of the positives as he sees them for the UK economy and in the post Brexit world, in particular drawing on the massive amount of money that is available in in for private investments in the UK and trying to channel that into green projects, and the reason that this was not available previously is because of solvency to regulations that meant that insurance companies had to keep large amounts of capital tied

up on their balance sheets. Now post Brexit, we know this, this has been talked about for some time. He's able to then remove the solvency to regulation, which frees up more money for investment, So there'll be some figures around that. And he also wants to talk about productivity. This has been an issue we've talked about on the program many times. It's been something that holds back the UK economy for such a long time. Tackling it head on is the words he's going to use a little bit later on,

in particular offering support individual sectors. And we know from our own reporting that the semiconductor, the chip sector could be in focus there the collapse of that business, British roleter course growing into into stark relief, the difficulty that perhaps the UK has at the moment in establishing those kinds of important strategic tech businesses. So that will be a focus. Are the key questions you're hoping to get answers to when he speaks. The chance well, a lot

of our focus given that this is Bloomberg. We will be talking about the economy, will be talking about investments, investments in the in the UK economy, account corporation tax is set to go up by six percentage points in April. What that means for business at a time when energy bills might still be going up, even though wholesale gas prices have been coming down. Will be exploring that and whether there is given that he said he's ruling out tax carts, are there is there any room to maneuver

around that at all? Will be will be trying to dig into that a little bit. What does all of this mean for business. We also live in a fast changing geopolitical environment. The news we carried earlier this week about the UK government support for the chip sector, and the news overnight about Japan and the Netherlands joining in a pact to try and keep China away from chip technology.

All of that's playing out very quickly. And where does the UK stand in that the Inflation Reduction Act in the in the United States is certainly going to incentivize a lot of investment there is that to the detriment of the UK. So these are certainly going to be some of the conversations will have and perhaps we'll mention the name Nadine's are we perhaps that might come okay? The have the issue around taxes, um, yeah, and and no doubt there will be some quite robust questioning around

leveling up. Because Bloomberg's own Joe May's is the reporter plus team who have done the deep dive into the big pledge by government to bring up the rest of

the UK, bring up the other regions in Britain. It's a very very difficult challenge that the government's not doing well us right, and there's so there's a lot of questions around the budget and how much room for maneuver the government really has to do their leveling up spending to settle some of the strike activity that we've seen taking place, of course, but but in terms of expectations around the budget, he's going to rule out tax cuts and we do have to remember there's not an election

until twenty four Eurasia groups saying, of course, giveaways much more likely ahead of that than now. This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify, and anywhere else you get your podcasts. You can also listen live each morning on London D A B Radio, the

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