UK, Treasury, Andrew Bailey discussed on Bloomberg Daybreak Europe


Finances and for the economy from the office for budget responsibility, which is still not due until a 31st of October. So we could still see before that arrives continued volatility and uncertainty and nervousness in the markets. Does that mean that the Bank of England governor Andrew Bailey can stick to this deadline today? We were speaking to Martin wheel and other former NPC members saying that actually the next few days, Monday Tuesday Wednesday going to be very crucial. Does Bailey have to extend the emergency bomb buying to support pension funds next week? Well, he's still got another package in place. A repo arrangement, which the funds that are affected can have access to. So we'll have to see if that's going to be sufficient. But I think Andrew Bailey is right. That this should be a temporary measure, so it should come to an end. And it seems to have had the effect of calming markets to some degree, they obviously did not go back to where they were. But they have definitely come back a bit from some of the high levels we saw earlier this week. Until your point we're seeing yields again down quite dramatically here in the UK within the context you've seen, of course, significant volatility currently, the 30 year guilt at trading at four 36 that's a move lower by 18 basis points. Andrew, my question for you then is on the permanency then of any scarring to the UK economy, but also to UK assets and the way that UK assets are perceived by international markets as a result of everything that's transpired since that many budget. Is that a risk? Is that a material risk and that can not be overcome? Well, there seems to be a higher risk premium is being priced in. And there's also questions being raised about the credibility of government policy. The UK has normally been seen as a sort of safe pair of hands, so to speak in managing fiscal matters. And of course we have the banking England which is independent handling monetary policy. I think the very nerve wracking thing about this was monetary policy and fiscal policy were pulling in opposite directions. And while the bank was trying to take demand out of the economy, the government was pumping it back in at quite a significant rate. So alongside any specific measures that are announced, I think that that problem needs to be addressed and we need to see forecasts that suggest that the fiscal policy is acting in a more consistent way with monetary policy. One of the issues with that Andrew is people, one of the risks that the government took was in firing Tom scholar, his replacement, being James boehler, who does have 20 years of experience at the treasury, but his background is in budgets, not in financial markets. Do you think that treasury has enough people with enough market know how, right at the top of the team? Well, there are lots of people who employed in the treasury, so I think and there's a lot of expertise there. So it doesn't all just hinge on one or two individuals. But I think the issue in the treasury is to make sure that the chance of the exchequer is actually listening to his officials and taking their advice. So we can so he can make judgments based on all that accumulated experience. And it did seem with this mini budget fiscal event, however it's described. There was a great rush to bring something out and maybe it wasn't processed and discussed enough within the treasury. But I think they expertise is still there. But has there been a politicization of the treasury under this current administration? Well, we're into the early days of this administration. I think over a long term, I think we have seen perhaps more political influences on policy making from special advisers, et cetera. But I think a bit too early to say, if that's really changed dramatically under this government. What are some nomics survives? I mean does quarantine survive? Does trust herself survive? What are the actual policies survive? Well, the whole heart of the truss and economics agenda was basically a supply side measures that are aimed to raise the growth rate of the economy. Now, the difficulty with that is that supply side measures even if you've got the right ones and they are working, take quite a long time to affect the growth of the economy. And I think the notion that we were going to sort of bounce back. So a two and a half percent growth rate was really totally unrealistic and I don't think many economists believe that's on the cards for the foreseeable future. So I think perhaps there needs to be a reassessment of the types of measures that have been taken under this government and also the time scale in which they can really affect growth and hear from the office of budget responsibility what they think. At the end of this month, very briefly because unfortunately, we're running short of time. Your expectations about rate hikes from the Bank of England in November and going forward. Well, I would expect a rate rise of either three quarters of a percent or 1% in November. I think the bank are beginning to realize a bit there behind the curve a bit, and they need to do something a bit more dramatic than they've been doing up until now. Okay, Andrew, we're really appreciate your time. Thank you so much for coming in to speak to us here live on Bloomberg radio Andrew center at senior adviser to Cambridge econometrics and former member of the NPC at the Bank of England talking about the idea of bouncing back to two and a half percent growth in the UK being really totally unrealistic, so this, as we continue reporting on the trust and quoting agenda whether there'll be a U turn. Okay. So that is one of our key interviews then for this 30 minutes, but we're packing in a lot, and we thank you so much. So we also want to talk about black history month and for that I'm joined by Bloomberg a producer Eileen. So throughout this week, Eileen, we've had such a fascinating number of conversations. Black history month is in October. It's been celebrated since 1987. There are loads of events going on. Now you've also brought a special guest into the studio for us this morning, hi, Ida. Hi. Good morning, Caroline. Yes, so the cost of the most basic standard of living has jumped by 20% in Britain, and this is as the country is facing the biggest squeeze on household budgets in a generation. So here with us to discuss inequality in the UK economy is the founder of the black economics neck work. And economists at the resolution foundation, Felicia danson, hi Felicia. Hello, hi. So black people have constantly been found to have just a fraction of the wealth of their white counterparts. What do you see as some of the key causes of this? I think from an economist's perspective, I think things from historical accounts in terms of how black people have been treated in the UK, how we have access to less resources as well compared to our white counterparts have

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