Welcome to In the City, Bloomberg's podcast, connecting you to the conversations of the stories shaping the world of finance. I'm David Merritt in our London studio with Franci Maquar and Allegra Stratton, and we've all just healed ourselves away from watching Jeremy Hunt deliver He's our or so long autumn statement. So we're going to be reacting to that, seeing how business is feeling, how the city is reacting, and so with us. Also today is our City editor
Katherine Griffiths. Welcome to In the City again.
Catherine, thank you very much.
So you've pulled yourself away like the rest of us. We've just watched Jerry Hunt and Rachel Reeves responding to his awesome statement. What are your takeaways?
Well, my main takeaway, quite honestly, was to be extremely annoyed not to have got the story that they were going to spring a retail share offering in that west in US and down and then the share anyone, my goodness. Although I am going to take a little bit of credit for this amazing policy because a few weeks ago I literally did I don't think anyone had thought of it, and at the Conservative Party conference, I was on a panel with Andrew Griffith, who's obviously been moved on since
being City minister. The griff The griff the Griffiths. This is like to stick together. I'm related. Disclaimer not yes, disclaimer very important. And I said, how about you do a retail share offer because he was saying how it would be great if we had more of a share owning culture. I don't think he said yes. I think he may have said no, or you know, didn't say very much at the time, just kind of gave a negative sense. But yeah, and so I do think perhaps that's that's down to me, guys original.
So how is it going to go down more broadly outside of the square mark. We're going to have a big offerer of network stock and the government is going to completely sell down their state. Yeah.
Yeah, so they'll probably sell some other ways as well. To institutions. They have this thing weirdly called a dribble out where they when the shares are at a certain price, they sort of very gradually do dribble the shares out into the market. But the retail offer will be you know, it will be a really eye catching story and it's amazing really that they're going to do it, because they will make an enormous loss on what they sell the shares for compared to all those years ago during the
financial crisis, what they bought them for. And I must say I'm of the view that that's a bit of an unfair criticism because they bought nat West at that time to save the banking system, and that's one thing, but it will be ugly that the big loss and a.
Weird time as well for that West. I mean, they're going through a leadership. I mean, they've had this crisis over Rose having to step down and the whole cutes thing is tall.
Yeah, a really weird time, and I think in some ways I wonder if that partly kind of sharpened their resolve on this because having all forty percent of that West during this whole Nigel Farrage fiasco has been just
a horrible nightmare for the government. And you know, it looked like they stepped in a very direct way to get rid of Allison Rose as chief exec So just it's sort of highlighted I suppose that really isn't the best idea for governments to own big banks and maybe it's best for everyone to have a parting of ways, and it genuinely is a way for people out there perhaps to think, you know, they will have heard of that West if you are going to try to get
people interested in owning shares. Famously, of course the tel sid campaign from the eighties, which it yeah about British gas, then it's you could you can see why if they if they've come to terms with the fact they're going to get criticized over the loss, it's probably quite a good idea.
And that is one of the interesting philosophical ideas bubbling around at the moment when you see how they're trying to increase investment in startups and so on. Is this idea of why are Brits particularly why do we seem to be sort of averse or think it's a slightly kind of dirty pastime to get involved in capitalism and supporting companies and so on. So that is one of the interesting things that Andrew Griffis was trying to do when he was city minister. He is city minister no more.
After you interviewed him, he was moved on, yes, sorry, promotion, Yeah, but that was one of the things he was trying to do. It was a springboard. They heard it and they said, get that man up further up the notches of government.
How political overall was this, you know, Budget Catherine.
I think it was definitely political, and there was some I thought there was some quite sharp jibes at labor. Obviously that's part of the sport normally, but I thought it was particularly sharp today. But I guess it was also quite expected. It was for business certainly. The kind of the big hundred percent expensing on captain investment was they were in a tricky place because everyone expected it, but they had to make a big deal of it
because it's really expensive to to give businesses that. But it is a pretty significant thing, so that was good. I think there was some stuff on housing and planning which was broadly seen to be pretty positive. National insurance. I'm not the expert, but it seems like timing wise, announcing it now might suggest they're trying to kind of get themselves into a position to go earlier on an election maybe rather than later.
He was accelerating it to January as well, right, there was going to be so rather than waiting until the end of the tax shit. So yeah, trying to get that money in people's pockets potential ahead of a spring election.
Well, we we always talk about looking for the rabbits in the hat and in the redoubt. I have said, this is a slightly fatter rabbit than we expected. We expected the penny, we didn't expect the two piece. In the Bloomberg newsroom, there was a tiny, tiny and as much as he's cool, exactly, especially cool cats at Bloomberg are surprised by many things, there was this like kind of oh, two p not one piece. Well raise, yeah, exactly,
that's right, So slight whimper. It's a funny kind of politics because I think that there's a number of things that they've announced today that labor will probably back, like full expensing, So it's sort of very political. You're right, Catherine, because it's definitely sort of, if not the last then one of the last big fiscal financial moments before in general election. So clearly, of course, maybe off their rocker.
Not to make it political. I think the other politics and themes that I'm starting to hear are around Sunak and Hunt talking about being businessmen and contrasting themselves with Reeves and Starmer, who for all that Rachel's incredibly impressive and has had that period in the Bank of England. It isn't running your own company and taking that kind
of risk. And certainly the Chancellor Hunt today and he now takes the mickey out of himself for doing it because he did it a lot during the leadership race,
but talks about fourteen years running his own business. So I think we'll probably start to see quite a bit of that to come full circle to this point about you know, Britain and this kind of do we quite understand setting up your own business, the risk you take and then wanting to keep equity and control and not being able to and so decamping to the States and so on. How do we start to reverse that cult or change that culture in the UK.
But and actually to both of you, I mean this at the margin won't make a huge difference. I know there were tax cuts, but they're still the highest in seventy years. So it's giving I guess something for people to say, oh, maybe you know, maybe I'm not that badly off, or maybe I'll it'll get better, But it's not really a game changer, and it's all been possible thanks to higher inflation. So the ober found this money.
I mean, they didn't really find the money, but they said, look, you have more physical space because inflation has gone up and so tax revenues have increased because they froze the bands. So it's not really new money there no.
And on the sort of investment side, and as Alego says, there's this incredible kind of push to try and get the UK more investible. There had been all sorts of ideas floating around. So they have said they're creating a growth fund, but they don't seem to be putting any kind of government backing behind it. And they had considered that they'd considered creating something a bit like Canada's Growth Fund and actually sort of trying to make it more
enticing by there being some co investment. And that side of the announcements were pretty mealy mouthed and maybe a little bit underwhelming.
I mean I actually wrote down the quote because it's so striking when he said this is delivering. This budget delivers the biggest business tax cut in modern British history.
I mean, is that once you're counting is it post war?
Yeah?
Exactly what is modern British history, I suppose is debatable but is that credible? I mean, does it stand up to your point? Ran seeing about where this money has come from? Is it just because of inflation it has been so high? I mean, what is it really going to goose the economy? Is it really going to goose investment? And you know, is this I mean, we didn't see the pound really moved.
You're probably relieved it wasn't the budget of last year those traders.
Right, we which we forget, don't we?
I was just twelve months ago.
We're anything that.
Not so many budget and I haven't checked in the last few minutes.
But I think everything stable.
Well. I think they would say, if they were here, that it's about the supply cide reforms.
So you use that phrase, right, yeah, you're complete?
Right? How are they defining modern history just to pick the easy ones? And there is a kind of credit. I think our reporters are going to be writing about this right now. They're kind of you know, taking from Paul to pay Peter. Rachel Reeves stood up and she said this is pickpocketing. It wasn't a phrase I particularly loved at the time, but her point was, you know, yes, yes you're giving, but you've done it by taking through fiscal drag and so on. So I think that's what
the question will be today day. If that's what right now everyone be working out when they write their newspaper headlines into tomorrow morning and so on.
But I think what the.
Government would say is that this is a moment about firstly, they are now starting the tax cutting that they have
been promising they will do. But secondly, this is about for me, less interesting than the planning elements, but certainly the changes around trying to get more investment into the city, trying to make London more attractive to list in, trying to make sure that pensions are actually being invested in something that's risky rather than not risky, the full expensing, and some one I think they think that that's what's going to get it going. Now, does it get it
going quickly enough? Does it get going you know, for next the next year. Because it is interesting, we've talked about it before. Labor back a lot of this because if they come into government, this is this is.
This is the list of things aren't there. We've we've we've analyzed these on this podcast over the month, So like what is with London? What is up with the London Stock Exchange, What are the rules that need to change? What can we do about the appetite for risk among institutional investors here? So that I think, you know, Jamie Hunt's been listening to our.
Podcast, but I guess if you put growth measures in place, and the Ober put out a useful tweet moments ago basically saying, look, if you look at how the Chancellor is spending the fiscal improvements in twenty twenty seven twenty twenty eight, he's just targeting three main measures right which we mentioned, which is a two pea cut in the National Insurance contribution, the permanent upfront tax right after business investment, then welfare and health reforms. But is that going to
be inflationary because if they're creating a problem. So if they're growing but creating a problem for the Bank of England, who still had that two percent target, then it could go south quite quickly in terms of the economy.
Another thing in the lead up, there was a lot of talk about harnessing retail investors, wasn't there And okay, so we've got the nut West thing, but he certainly didn't mention anything to do with ices that was going to be a big part of this budget, and in the last few days, certainly among the banks, there was a so a sort of slight sense of concern that there could be some kind of problems with how these products might be sold to people in terms of making
people understand fully about risk. And I think there was some concerns raised and maybe at the last minute some of that stuff got put.
On to winkle out. Catherine helved it.
Yes, yes, exciting, yes.
And how do we think Rachel Reeves did standing up and responding to the speech. I mean she attacked the downgrades and growth of the BAT, didn't she she did?
I mean I think there is complexity to the downgrades and growth, I think, and they're not quite as kind of pro the labor positions as Reeves would have liked. It's the most difficult job in politics responding no, no, no, no, no, get up on your feet immediately. And I thought she had some good repasts and I think, you know, her attack of earlier in the year is probably going to be the main one, which is, Okay, yes, you're giving money away, but how have you paid for it? It's
from these people over there you're giving it. Well, it's a kind of shuffling around accountancy rather than necessarily a bonanza and giveaway, and I think that will be where most people are right now as we as we speak, are kind of winkling out the small print.
And they're sitting on a twenty point lead. Let's not forget nothing is budged that up to this point. So they're in a kind of position of strength here. It's unclear whether any of these measures that hunters and an ounces day is going to break through to those people or quickly enough.
But I think I think labor will know that things will will start to change closer to an election. But you're completely right, they're sitting pretty right now.
Do you think there's another budget before before the next election or Dave, I mean this, you know, the timing of the election can be quite crucial.
I mean, I thought it was telling as we as we said that they're rushing through the tax cut on an I to January. And to your point about the sort of the political positioning of this around the business, the very pro business points. So it does feel like they're laying out what the campaign when it comes is going to be full and it's not far away.
I mean, they have to do it January twenty twenty five. So, and the thing that we always have to bear in mind is that you know, it takes a while for these things to be felt in people's pockets. So I think, yes, you know, rushing forward to January is significant and interesting, not least because the one p was trailed and sort of trailed or scooped who knows what anymore. But so
I think it is definitely substantial and interesting. But I think, come, what, may you do it quickly because you want to say you want to say, okay, for the last however many months, you guys have had a bit more money in your pocket. You're right, Fran, you know money in pocket can mean inflationary. What I think we know about this lot is because of what happened to Liz Trust and how it was such a catastrophic end for her and for all her followers and so on. I think we know that they
are almost setting store by by being so different. So I suspect all the relevant authorities and so on will have been sense checked on this well.
One of the other things that, of course, which was drowned out a bit by some of these measures, was a cut in the forecast for growth next year as well, So there might be a sense that the longer they leave it for the election, you know, maybe the economic news isn't as good next year as the months pass, and maybe the spring. I mean, best guesses are the autumn at this point, aren't they for the poll?
But you know, I'm really laughing because we focus on the economics and you're right there sort of they sort of sort of switch around quite a lot. But also there's two of those other pledges on the NHS and on stop the boats, which are.
Are are tricky, yes, tricky.
So we're talking about economics and thinking about the timing of an election, but actually there's there's other aspects to think about that that are that are proving elusive.
Make people richer, they'll forget the rest if you look at the bond sale, also a program that they put in place, so they kind it compared to last year. And again, this just feels like they think they have more fiscal room right because they don't have to go to the market so much because of what the OBR announced a couple of weeks ago. So it just it does feel like we're in a more stable footing. I don't know, for how long, certainly compared to twelve months ago.
Yeah, it does, and then it's and then it's sort of how they're kind of distributing their the goods, and so yes, it's kind of quite sort of popular move on tax cuts rather than while the sort of rhetoric, and certainly some of the measures are around investment and business investment, but they they definitely haven't gone as far on that side as people might have hoped. And you can obviously see why they as they head for an election.
And I think that the full expensing is great, as they said, you know, bet Semens, these huge companies are saying, fantastic, this is Christmas.
But bet shares rocketed right right, But you know, we are.
A service economy, so there's there is also a question the extent to which it necessarily will help will help people who can you know, once they've full expense the laptop or five and what does it do for them? So I think, you know, it's obviously they are trying
to work out. They know they're in the doghouse with business because corporation tax, so they're trying to do something that shows that they are quote unquote the party of business because I think you are seeing in this and in other statements recently, this dividing line, which is Hunt Sunak, we have done business. We know what it's like to run businesses versus the others. Let's see if that's something
that cuts through with the electorate. So they want to position themselves as the party of business, whether or you know, they don't feel that cutting corporation tax was the right thing to do. Rich she Stu next talked about that in loads and loads, not least because it didn't help with productivity. So they try something else. It's a different lever. And is it Is it a lever that comes through with results anytime quickly?
Yeah?
And Catherine does it like, does it come through in the next two years, three years?
Yeah?
I think very hard to tell, but you know, in terms of sort of the messaging in the restoric of course. So next week they're going to get all these big names in from around the world, Jamie Diamond, David Solomon from God sets to this big let's see investigation in the UK, investment.
Steve Schwartzman, anyone. You know, we just have a couple of Wall Street Titans showing up and just the odd one or two or may not come on the airwave.
I'm sure they will, and then they'll say none of this is enough, we want more.
But it will give I guess the hope if for for Hunt and Sunak is some of these things today will give them sort of some nice things to talk about next week amidst the splendor of Hampton Court.
And that's all. The narrative is all part of this narrative rights we've been saying. This is like, it's amazing, isn't it. Just a year ago we had the the implosion of that budget, we had the you know, the attacking of the bean counters and all of this narrative, and now it's like we're on another planet now and that every action, whether it's convening Titans of Wall Street in Hampton Court Palace or the messaging in this budget seems to be wearing the square mar right and getting them on side.
And he was quite need the Chancellor. I don't know whether people become funny when the House of Commons. I loved one of his jokes, which one he did a couple, I mean there was one.
Then I stopped myself to tell the listeners what the joke is there's a plagiar that the Shadow Chancellor has been caught red handed by a newspaper investigation, and that some passages from her book seemed to be lifted from Wikipedia and other places.
Which is just the gift for which is us.
So he teased her about copy and pasting stuff, which again I raised a raise a snigger from my which.
There was also a good joke about his way both of us. There's his wife, but also I'm now like channelling Jeremy Hunt. Both of us have tried to get people called Jeremy elected and that was obviously kissed arm trying to get Corbyn elected. And it's always nice where the Telly does the cutaway, you know there's a swallowing a wasp as they try not to kind of.
Fry all laugh jokes.
Yeah, the Brits are very good at theatrics.
Yeah, I think, yeah, I think we wanted to get out more if we're laughing too much for the chances. Great. Thank you so much Catherine and everyone for listening to this week's in the City. We will be back next week and in the meantime, if you like our show, please head on over to wherever you listen to podcasts and rate, review and subscribe. It helps people bind the show. This episode was hoped by me David Merritt with Francie
Laquar and Allegra Stratton. It was produced by Soasadi, with additional editing by Blake Maples and special thanks again to Katherine Griffiths