You can understand I love the UK to hat up and as it was system I do. I would like to somehow get that across because people think I'm latively. I'm really not. I'm just negative on not politicians.
I'm David Merritt and I'm Francie Blackwall and this is in the City, Bloombog's podcast, connecting you to the conversations at the heart of the City of London.
Dave.
This week billionaire investor Guy Hans. He's a founder of private equity from Terra FIRMA.
Yes, I was very excited to talk to Guy. He's been one of the most famous and high profile UK investors for decades and of course one of the most vocal critics of Brexit and pretty pessimistic about Britain. So I really wanted to dive into his views on Britain and the future, but also not just hearing moan about it all. Try to offer us some solutions, Francie, We.
Try and challenge him to out what the possible solutions for him would be to put the UK back on track. Guy, welcome to the podcast. You've been one of the most bearish on the UK as far as I can remember, certainly since the Brexit vote, has that changed.
No, it hasn't. That's actually was I was pretty bullish on the UK in twenty ten right through twenty twelve, but I was probably Yeah, I was very keen on an expansionist policy then rather than a very conservative strategy, and I probably remained against a Maverick and probably, you know, economically on the opposite side of the Conservative Party.
Obviously we've had a lot of economic termilk, guy, and you've come out and criticized the government. You've criticized Brexit obviously extensively. Is there any signs of optimism now we've got a new administration trying to get things like an inflation under control. The turmoil of last auto is definitely in the past where you predicted possibly an IMF bailout for Britain. Are there any signs of positive outlook on the horizon?
It's certainly a lot better than it was then. I mean, that was just a horrendous situation and it was quite quite clear by how long this trust survived that even the Conservative Party realized that her economic policies would be absolute disastrous and probably would have needed some form of bailout. I mean, you know, we were really running a huge
risk of an incredible run on the pound. I think the slightly sad thing about list Trust and that time was that her argument that the UK needed to become much more productive on a global basis to be competitive was one hundred percent right. I don't think her idea about how you got it was right, which was really, you know, you flogged the people until they until they smile.
But I do think her understand that the UK is in a really bad place was correct, and that she was basically putting forward back in twenty ten and it was pretty consistent. So I'm not quite sure when the Conservatives put her in as leader what they expected her to do, because what she did was what she said
she was going to do. The issue in the UK has is how outside of Europe is it going to be competitive on a world stage, and how does it become competitive on a world stage when you have a population which is very very socialist in its inner core beliefs and how a society should run in terms of for example, fairness, national health service, etc. So you can't do a Singapore solution, which is what Liz Trust is trying to do, but you do need to do a
solution which enables the country to be much much more competitive.
Guy, what do you take issue with now? So first, you don't think the UK now needs an imfbilout.
No, I think we're in a much more stablesition now that we were when as trust was there, much more stable. I think we're almost in sort of a situation with sort of geriatric decline. I look at the UK and see that two thousand and thirty Poland will be wealthier than we are. You know, that's sort of predicted, and
I think that will happen. Twenty and forty will probably be the poor man in Europe if we go in the way we're going at the moment, all you can really see is is Britain just becoming poorer and poor on a relative basis to the rest of Europe. And that's very sad because we've had fifty years of the UK really competing and becoming much better economically than Europe. So it's sort of actually, I say forty years, so it's sort of reversal of what the that right generation,
which is my generation, really experienced. We're very much back to the seventies at the moment.
And you called it geriatric decline and that's you know, I guess the thing about geriatricric and is it's kind of irreversible, isn't it. I mean, do you see any chance of putting us out of this, out of the situation? And you mentioned Liz Trust's policies, and you know, we hear this a lot from people on the on the on the right side of politics or on CONSERTI party saying that, you know, she diagnosed the right problem, but
the conundrum was the markets didn't like the solution. So was there anything else or is there anything else that she's soon at now in Downing Street can do to turbocharge the economy and pull us out of that geriatric decline.
Yes, And I'm actually probably on the lift side of politics, right on the right, but I think I'm honest enough to say that, you know, if you look listen to Corbyn, Corbyn has some really some good ideas. Yes, some terrible ideas as well, but we had some good ones. And I think probably I'm much as a businessman and more of a prognosis than a politician. And therefore I sort of think you have to look at and say what
is the problem. And the first issue we've got is we left Europe and that means we're competing on the world stage. How do we get ourselves in the position where we can compete on the world stage and what does that mean? I think rule of law consistency is really important, and the UK was used to be seen in a very consistent place with a very strong rule
of law. I think a lot of the battles over Brexit exposed that the government was willing to change and do things which they felt within their best interests, regardless of what the law was saying. So I think that's the first thing we need to do to sort of
give people confidence. There's been enormous amounts of change for political reasons over the last seven years, obviously stemming to some extent from the Brexit battle to the Conservative Party, and that for an investor is very very concerning and very very difficult to deal with. So get some stability, and I think Sunak actually is somebody who's probably pretty good at that. And if you like, that's sort of the housekeeping war stuff. We then need some exciting stuff.
And I think the exciting stuff would be actually to say, look what out of you we can actually now take some radical approach to some of our rules, and I would start with the labor. Labor laws. Employment laws in the UK are extraordinarily complex, very litigious and very very difficulties.
Aren't they a lot looser than Germany and France? They aren't they going? I mean, I think compared to many.
You know, they're not. Actually they're absolutely not. It's a great myth. You know, I have businesses in Germany, our businesses, and Italy. I have businesses right across the Nordics. The UK is a nightmare in comparison with those other countries, an absolute nightmare.
I'm a little bit confused. So you want the UK closer to the EU, but you also want the UK to have their own rules and break away completely from the U, like Singapore and theems that you can have both.
Well, no, I don't think you can have both. But I don't think your Pe and you. There isn't a politician out there on any political party who was saying let's get back into Europe or even let's have a single market financially. None of them are saying that there was a vote. One third of the population voted in favor. I mean, I'm sorry this whole argument about democracy is, you know, it's like saying a third of the British people voted to leave Brexit, therefore what we said then
is time stamped forever. I hate to say it, you know, but Hitler got a bigger vote in Germany than Brexit got in the UK. So I think using democracy in this way is a little bit. I think it's insulting to what democracy is about. Democracy is about representing everyone now and actually the majority of people did not vote for Brexit. Is it is a small not even a majority, it's a small minority voting for Brexit.
Do you think that should be a political party who comes out more pro Europe? I mean, should get starmer. Some of the polls now are saying the major ority of people regret Brexit in the UK, and yet there's no politician in a leading party who's going to maybe apart from the SMP who are on a national level, who will take that position.
Now, I have no question in my mind the Labor Party should should be supporting going back in or would least negotiating a single market solution. And there's nothing in the European labor laws or policies which the Labor Party would have a problem with.
Would you vote Labor in that case? Guy? Because you've been a Tory donor and supporter, would you would you would you switch to Labor if they came out as a pro European, pro EU policy.
Well, I've always said that if I had voted at the election with Corburn, I would have voted for Corburn, not because I necessarily politically support Corlan because I think he was the the least bad alternatment at the time, because I don't think he would have ended up with the Brexit we ended up with. I think we'd end up with much softer Brexit. Would I be in favor of Labor over the Conservatives if they were in favor of Europe, Yes, definitely. I mean, frankly, at the moment,
I think we've only got we've got two choices. We've got a choice of dismantling a lot of what has the political parties have spent thirty years putting in place so that we can be competitive on a world stage, or we need to go back into Europe.
Would you vote for Labor today or even become a Labor downer?
Now? I left the UK some years ago and I think for me to go to the UK election probably be inappropriate, So I wouldn't would I support them vocally absolutely, And.
That's because you think kir Starmer and Rachel Reeves would do a better job. I mean, putting the Europe question aside. We've seen Starma and Reeves really do a lot of outreach to the City of London to business and try to convince everybody that they would be better custodentcy, the economy, but also you know, thinking about the City of London now maybe reversing some of the decline we've seen in terms of business there. Do you think they have got the right proposals?
I think they're probably marginally better than where the Conservative Party is. Do I think where they are today we make a radical difference. Not really. On the other hand, to be fair, you never really know what politicians are going to do until they're in power. As you say, they have spoken a good game. I think you know, one area where I think they are right is with
regard to planning laws. But again that sort of follows my theme, which is if we want the UK to succeed outside of Europe, we have to reduce a lot of the bureaucracy that exists in the country, and planning is a big area regulation. You start to dismantle that and you can get the economy moving pretty quickly.
It's not too late. The government can still do that. Do you just see them as distracted or just not wanting to help out the city of London.
I think the Conservative Party is distracted. For the Conservative Party to be able to rule properly, it has somehow got to move on from this internal fight over Brexit and over Europe. And I think that means two things. Those who supported Brexit have to admit it hasn't worked out the way they meant it to and they failed to deliver what they said they would liver. And those who are remainers have to say, fine, you know we
are out of Europe. Now we have to think about how do we get the country to move forward out of Europe. I think the Conservative Party losing the next election, which is actually certain, the questions how much they lose it by, I think would be a good wake up call for them. You know, I think they need to lose, spend a few years in the wilderness and rethink the agenda, because at the moment it's too dominated frankly by a battle which was fought back in the seventies.
So assuming Keir Starmer wins and the election will have to come at some point next year, we have Rachel Reeves as the chancellor. We talk a lot on this podcast about the future of the City of London specifically, and we've seen, you know, the data is kind of starting to come in, isn't it in terms of the kind of the slow puncture it's sometimes called of jobs and capital and trading out of the City of London. How does it look from your perspective? Is that leaking
of business real? And what is the future hold? Is that? Is the City of London in a kind of terminal tailspin.
Yeah, it's it's unfortunate, it's very real. And I think the problem that the politicians had probably the British public to a certain extmpent that's largely the politicians fault because they haven't told them is the City of London is vastly more than just financial institutions. It's also a county, firms, consultancy firms, advertising agencies, et cetera, et cetera, et cetera. And once you start to lose that center there's a
massive businesses that will move apart. So even if you take for example, architects, you know, I would have used a London based architectural firm for some some of the architectural work I'm doing in other countries in Europe. Now out of Brexit, I'm not going to I'll use Italian architects and Swedish architects, and that's a chunk of money which will go to Europe and won't go to the UK.
Law firms. I'm using European law firms because frankly, I don't trust what will happen if I have a contract which I want to use in Italy which is under English law. I'm not convinced that Italian judge will look very favorably on that. So I'm using Italian law out and English law to do do contracts in terms of where one's set up and one has one's holding company, you know, frankly, I feel I've got to have a European country for that holding company, and I think that's
pretty typicult. So it's a slow puncher, but it's it's going to lead to a blowout at some point, and the only way you can change that is some free movement of business and people, and no political parties putting that forward at the moment. So I think without that change, we have to accept that the city of London will become less and less important. The only reason for the city of London to be beneficial to Europe in importance is if it's a global hub and you can benefit
from it. Outside of Europe, they don't benefit from it, so they've got no real interest in London succeeding. In fact, they've got every interest in London not succeeding. So if you're sitting in Amsterdam, you want to have some of the business that existed in London. If you're sitting in Milan, you want to have the consultancy, the architecture, some of
that business. And so pretty well, you know, if I'm sitting in any European city, I'm just looking at the moment, say how much of that business can I get from London? So that puncher will get worse. And as soon as it's feeling of weakness, and I think we're getting pretty close to that tipping point, you'll find people start moving very vaguanate.
Okay, how much of that activity can actually be lost? I mean a lot of people are still emphasizing the breath and the depth of London capabilities, and you know, I wonder whether you're just being too pessimistic. There's still the rule of law, people still speak English, you have a great schooling system.
I might question the schooling systems. I'm not sure. Anyway, we won't get into the data about English education. The rule of law in England has been questioned and continues to be questioned. We saw that the British government from you know, twenty sixteen onwards has been willing to do things which are right on the edge of law. And some people would say, and I don't think with an extreme exaggeration that actually the law in the UK is
not what it used to be. And if you go and want to do law with some consistency, you might choose to do Sweedisch law speaking English. You know, most senior people in Europe speak English. And you talk about the breath. The problem with breadth rule is the second that breaks down, then what do you have? And people are leaving, very very top people are leaving, and they're leaving increasingly, and it's more and more expensive to get
them here as well. You know what I have to pay to take a European to come to the UK. Now is a premium, whereas it used to be a discount. It used to be I want to come and work in London. Now I want a premium. And you know it's the same as you're not going to get And I know it's a bit of a joke, but you're not going to get your Polish plumbers back when they can earn more money in Poland and they feel they've
got a better lifestyle. You're not going to get your French bankers back when they think they can have a better time in Paris.
You mentioned Paris. We've talked about it a lot in this podcast. Is that the new financial coupital of the European Union? I mean, it seems like that's the place where the most jobs are being added. Where they seems, you know, the stock market has become the biggest by market value. Is that where the investment is flowing.
It's funny because everybody does talk about Paris but actually see a broader business, not just a financial law. And that's why I mentioned Milan, and I mentioned Lisbon, and i'd mentioned Frankfurt, and i mentioned Amsterdam, and I'd actually mentioned Stockholm. I think the city of London is a lot more than just financial institutions, and you're seeing some of those move, you know, all across, all across Europe,
not just a Paris is Paris the most aggressive. Yes, is there a risk that the French decide that they really want to wipe London out and say, fine, all business contracts in the Europe have to be done under European law or the local European law, or they try and introduce a European business law. I think that's that's a real risk. I mean, the French are without any question more anti the UK than other countries, and that's historically.
I mean, it goes back years and years. I remember once speaking to a French prime minister about doing business in Trance and he was very blunly to go, I'm not going to say this publicly, but you know, we spit in your seep and he said, just don't do business in France. You need to understand we hate you. We hate you since Joan of Arc and you burnt up our votes in the Second World War. I mean, it was really venomous. And so I've always worked in
the principle that the French don't really like us. The good news was.
Really maybe not all French guys hate you gay.
Well, not all French, but you know, but I think from a from a political point of view, they don't. You know. An ex English foreign farmist said, you know that the guidance that he was always given by his civil service was when looking at doing any form of negotiation in Europe regard to the EU, he was told, just take the opposite position to the French. You can't
go wrong. And so I think, I hate to say it, but from a political class point of view, the French and the English have always had this battle and I don't think it. I don't think it's going to go away. The great thing about the EU was we had to work together with each other. I mean, it's amazing the Channel tunnel ended up ended up actually connecting in the middle. I've always found that that really quite extortedly.
Maybe we do also speak to former presidents who actually love Britain. Of course, a bit of healthy competition, they would get business, would they? What the French not being more polite than the Bridge? Are they more than the Bridge army?
The French are so charming.
I no one's ever said that. On the podcast Before.
The Bridge, we're just so ghost. We just know we don't look good. We don't know how to carry things off. The French can make a movie which lasts two hours and nothing happens and everybody thinks it's wonderful.
Yeah, it seems so critical of the UK. You're also embroiled in a legal case with the UK government. Is there anything that politicians can do to win you over?
Well, let me just say I think the British people in the British countryside is amazing, and I think the food and Britain, regardless of what the rest of the world says, is spectacular. So you know, I loved Writtain as a place and I love the people. I just have a problem with what the politicians have done over the last twenty years. I mean, you know, it's when I first went to the business I was told three rules.
They're called shanks because the guy told me, you know, what goes up will come down, what goes down won't necessarily come back up. And the politicians at the end of the day were put all up. And I still basically think those are pretty good free things to remember. I think that UK was doing absolutely beautifully up until about two thousand and eight nine. We'd obviously had a credit crash, but we hadn't done that badly out of it. But since then I think the politicians have got it wrong.
What can they tell do to make me feel good? Short term stability and a long term steady rolling back of the bureaucracy that exists in the country. And you can put those two together, I think you can actually succeed, plus some attempt to try and rebuild the relationship with France.
And my view would be to try and do that one brick at a time, And I think the first brick, and the most important brick, is an agreement with regard to how London can fit into Europe, you know, as a financial center, and that that would take some give, quite a lot of give to get them back on the negotiation table to do that, particularly as the French clearly want to make Powis to take over from London.
But I think that that triple pronged attack on where we're going, I think it's realistic and I think it's achievable, and I think a political party who set out and said, look, that's what we're going to do, you would have my support. Whether they can convince the rest of the population, I don't know. I mean, you know, the reality is sadness about Brexit. As we're arguing over what Cornish farmers, like Cornish fishermen got, rather than arguing over what happened to
the city of London. It was just kafcoes. Quite bizarre. Frankly, go Hands.
Thank you so much, Thank you, thanks for listening to this week's in the City. We'll be back next week.
But in the meantime, if you like our show, please head on over to Apple Podcasts or wherever you listen to podcasts and rate, review and subscribe.
This episode was hosted by Me.
David Merritt and Me Francis Laqua.
It was produced by Sasadi and Moses.
And additional editing by Blake Maples.
Special thanks to Guy Hands.