44. Mark Carney: Bank of England, Trussonomics, and Brexit

26:03And I mean, that's a simple version. But broadly speaking, the Bank of England is putting more money into the system. The government is buying up banks. And that's one of the ways in which we try to get through the 2008 financial system. Yeah. Okay. So now we're, I'm really enjoying this and we're losing all our listeners because we're going down into - They love it. They love it. They love it. Okay. But this is central to everything we talk about and nobody's ever explained it to us. Okay. So, 85 % of the money in the system, what we think of as money is created by banks themselves. And they're created by lending out to individuals.

26:36Now, when you have a financial crisis, when they lose a lot of money, when there's a lot of uncertainty, their willingness to lend goes down dramatically and that money collapses. So, what happened post financial crisis is the bank money collapsed and the central bank comes in and leans against it, but it can't lean against it enough. Now, I still haven't gotten to your productivity answer, but part of it was that the financial system wasn't functioning for a few years and that hit investment. And then unfortunately, we start to come out of that, we the UK start to come out of that. And we get knocked by a bit by the euro crisis, but not quite as much.

27:17But then there's definitely, and I'm sorry to say this, but the facts just are absolutely clear that you see investment flatline, business investment in the UK as a share of GDP, it absolutely flatlines from the point of the calling of the referendum and it hasn't really recovered since then. And that is a big element of my judgment of why the UK's productivity has performance has been worse than others, even though the performance of others has not been great post financial crisis. Okay, Mark, Rory, let's take a quick break.

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29:03Well, no doubt we'll get on to Brexit, but let's do it via the bridge of austerity. So George Osborne travels halfway around the world, decides you're the guy. he talks you into it you were pretty reluctant at first i get the sense but then he talks you into it you come and do the job and you are kind of you know you've got these two massive things that are happening you've got you've got austerity and you've then got the brexit referendum happening on your watch you're totally opposed to it you talk about it's going to hit us for at least two percent on growth it's going to cause all sorts of problems you get vilified by parts of the right wing in politics and the media for saying what you think, and on we go.

29:41But looking back now, first of all, your assessment of Cameron and Osborne as political and economic leaders. Secondly, your assessment of austerity, about which Roy and I argue a lot. And thirdly, your assessment of how much damage Brexit has done. In terms of the first, look, I think that as political leaders, you're better judges of this, far better judges than I am. In terms of having clear objectives, taking the country in a direction that it wasn't going in, being successful politically, I mean, getting reelected, etc., largely getting their program through, I would say they were very successful.

30:20I mean, there were misjudgments, and then you can make judgment about specific policies, but they definitely swung in the direction and worked, at least from what I could see, and I saw only a sliver of this, but they worked effectively as a team and were complements to each other on that. And Mark, sorry, just one of the things that Alistair and I often talk about is, and we interviewed George Osborne on the show about this, a narrative has obviously developed very, very strongly amongst the British left that all the problems of the country are due to austerity and that austerity was entirely unnecessary and that there wasn't any reason to try to reduce public spending or control debt after the 2008 financial crisis.

30:59What would be your sort of balanced assessment of this if you were trying to hit a middle ground between George and Alistair on this? Not to lead the witness. I would like to, yes, I would like to give a very reasonable balanced answer to those two extremes. To that leading question. Yes. Which totally misrepresented by position, but carry on. Look, I think that the UK was in a position post-financial crisis where there was any for the polite word is consolidation of the fiscal situation. It did not have the ability to have a large fiscal response. In other words, a large budget that would support the economy during the initial times.

31:41And that's a grand way Mark is saying, it didn't have the option of spending lots of money. It didn't have. It didn't have. No, it didn't have the option of spending lots of money. And then the question becomes, governing is all about choices, and it becomes about which choices you make when you spend less money and how that is done. Look, there aren't that many levers. If you know you're going into a very difficult period for families and households and adjustment because of the financial crisis, because the overall economic situation, do you choose austerity to focus on benefits and people or do you focus on other elements of spending?

32:19Because in the end, your ability to spend as a government is determined by the totality of that spend. And so whether it's in defense, whether it's in foreign aid, whether it's in, you know, there are other pockets of money that could have been used. So essentially, you're saying that you felt that there were really few options other than to reduce spending. You just felt that you would have preferred them to reduce spending in other parts of government expenditure rather than putting the cuts on things like benefits. Yes, it's easy for me to say, and I was pretty consumed with my responsibilities, Governor.

32:53But I think when you have these necessary reductions in spending, there has to be an element of we're all in this together. And there has to be a recognition of those in society who are most affected by the reductions. And perhaps a bit more thought could have been put into that. But again, look, I'm sitting in Ottawa making these judgments well after the fact, and that's quite a different circumstance. Yeah, so some of us were saying that kind of thing at the time, but the Etonians were on the march and they just weren't being stopped. Mark, let's then close off on Brexit. You were pretty vocal.

33:30As I said earlier, you got quite a lot of flack from that. But tell me what you were feeling as the governor of the Bank of England as that debate was unfolding and as it led to its conclusion. And then rather a extraordinary moment when David Cameron resigned and there was like a vacuum and you became part of the voice that sort of stabilized the country and the economy, which must have been a very, very strange feeling, was it not? I mean, it was an extraordinary time without question. And everyone who lived through it, I think, would view it as such. There is a link between the two though and I'll make it which is, you know, our job as a central bank is to plan for failure in various ways.

34:08So, we should spend our time thinking about, well, what if not, oh, the UK banks are strong and therefore nothing can happen but what if one of them goes down? What if one of them does something really stupid, it goes down? What would we wish we had done in advance in order to protect the British people, the system but really the British people in that regard? So our issue with Brexit, what we had to do with Brexit as it was going through the referendum was, what if leave wins and we leave immediately with a hard Brexit, what gets known as a hard Brexit? Because after all, that was the scenario that would be most disruptive to the financial system, most disruptive to the economy.

34:45Our job was not to sit around and think, well, what if it's a soft Brexit or no Brexit, et cetera? That's the easy scenario. So what we did was think, okay, well, what would the economic impact of that potentially be? By the way, it looks like we basically got that right. Secondly, what would we want the banks to do in advance? And we talked about liquidity a moment ago. What we did get them to do was to pledge silently huge amounts of their balance sheets to us so that we could lend to them up to 300 billion pounds on the day of the referendum, if necessary, to stabilize the system. But we did that because we thought, well, what's the worst case and what can provide confidence in that circumstance?

35:28And our analysis, what happened during the referendum campaign is that accountability mechanism going to parliament is they pulled our analysis out. They said, if you've done analysis, you've got to tell us about it. So I had to go and testify and we had to release that analysis of these worst case scenarios, which as I say, ended up being certainly directionally right, Absolutely true. But then on the day of the result, George Osborne called me 6 a.m. and said, the prime minister is going to resign and he will make a statement. And can you make a statement after the prime minister? And it was obviously an extraordinary circumstance, but it was a very easy statement to make because the core of the statement that I made was, we are well prepared for this.

36:13British people have decided to leave, we are well prepared. And as soon as I say, we are in a position to lend up to 300 billion pounds to the UK bank, then that whole issue is taken off the table. The economics aren't taken off the table, but the financial system being in a tough spot. What sort of weight did you feel upon yourself? Did you not feel an incredible weight in that moment. I think the, I mean, yes, but that's the value of preparing. So I did feel, I felt very confident that we had done what we needed to do. And I was well advised, Jenny Scott and others who I worked with, well advised.

36:53And I think how to communicate that in a way, don't speak like I normally speak, but speak in a way that somebody who's watching announcement says, okay, that's fine. Bank of England, the financial system is under control. Because, of course, this is happening only a few years after the financial crisis when the financial system was anything but under control. When we did the analysis of what would happen with Brexit, what it would mean is that the supply side of the economy, the productive potential of the economy would go down. We're ripping out our trading relationships with Europe. We'd have lots of issues in the labor market and for a period of time, our capacity in the UK would go down.

37:32We then thought that's going to mean that unemployment is going to go up because a bunch of people are oriented to Europe and now they have to reorient that the pound would go down, which it clearly did. It went down 20%. Inflation will go up even though the economy slows and the Bank of England will need to raise interest rates in order to keep inflation under control and protect the value of money. And I have to say that, you know, in talking to people in advance, they were like, well, there's no way all of that's going to happen. And that is exactly what happened. And that what's happened to the UK economy and the rest of the world is on top of that, we got the COVID shock and an energy shock, all of which went in the same direction, all of which made this that much worse.

38:15It was there for all to see. It was denied. And, you know, the as they did for many reasons, and a lot of it to do with identity and sovereignty, and I fully understand that. As an organization, do you wish you could have done more to, if you like, educate the country about the realities that you were dealing with? Or do you think it was just impossible because of the way it was playing out politically? I don't think it was our job to educate people on it. It was our job to ensure that the financial system could handle whatever result the people chose. It was the job of others to do that education.

38:55And we failed. Yeah. Or I think people did not fully appreciate the economic consequences. I think it's safe to say that. The damage that you've outlined that Brexit has done, is it recoverable? And in what timeframe? And with what decisions in regard to Europe? The experience since the financial crisis has been when you get a shock to the economy, you move down the level of where the economy would have been relative to its previous path. And then the question is, what's its speed limit going forward? What rate of growth can it sustain? And what has happened with each of these shocks is it's moved down relative to previous paths.

39:33And as Rory was saying on productivity, is that productivity growth hasn't picked up relative to previous rates. So you don't recover. We haven't in the UK recovered from the financial crisis shock. We haven't recovered from the Brexit shock and we're not tracking in order to recover. And so that gets to your question, which is what can be done to do that. Look, the whole exercise of the economics of it was predicated on two things. One was that we can make up for the lost markets in Europe with bigger markets elsewhere, that's virtually impossible in the current geopolitical environment. The math never stood up, but it's impossible now.

40:16Just on that one, because I think that's an interesting one. I mean, I think it's worth reminding people that one of the big arguments at the time was that the Chinese economy was growing much more quickly, for example, in the European economy, you know, had grown by 40 % in a period in which the European economy had grown by 9%, 40 % of global growth compared to 9 % of global growth coming from Europe. And that as you say, one of the things that's shifted since 2016 is the geopolitics, the sense that we can't really build an economy reliant on trading with places like China. And that actually there are strategic reasons for the relationship with Europe, which went beyond how fast its economy was growing.

40:51Yeah, I agree with all of that. And of course, what's also happened now, we're in the process of happening now, and it's given various terms like French shoring, or on-shoring, et cetera. But what is becoming critical is to be part of a web of trading relationships amongst like-minded countries. So if you're Canada, you have a free trade deal with Europe, you have a free trade deal with the US and Mexico, you have a free trade deal with Trans-Pacific Partnership, everyone in Asia bar China, and you're part of exactly those supply chains that you want to be. And the UK is trying to build that. And what's missing, which is where Alistair started is the trading relationship.

41:33Where is the trading relationship going to settle out in Europe? It's not in a position that gives the benefits that Canada has in terms of the trading relationship, despite the fact that much of UK industry has not just historically, over the course since 1973, but over the course of centuries has been integrated with the European Mark? Can I just quickly come in? Because many of our listeners listening to this talk about predictions will remember Project Fear. So I think it's worth, again, for people remembering that one of the most dramatic bits in the Brexit referendum was that George Osborne and the Treasury produced a whole series of claims about what they said was going to happen in the aftermath of the referendum.

42:17So they said that unemployment would increase by around 500 ,000 in the wake of Brexit vote. They claimed that it would push the UK into recession with four quarters of negative growth, that there would be an immediate rise in interest rates. None of that actually happened. I'd be interested in trying to get a sense of what lessons you take for these kinds of things about the ways in which chancellors and treasuries get involved in campaigning. Because of course, the consequence of that, as Bob Kerslake said a couple of years later, was a profound loss of trust from a lot of the British public in the Treasury and Treasury predictions, because those doom and gloom predictions were not confirmed in the way that Osborne predicted.

42:57Well, there's two things. And this is what gets lost in scenarios or predictions and things like the Treasury did, is that what is Brexit and when does Brexit actually happen? So what happened with the referendum is how to vote to leave. And as we all know, tremendous uncertainty about the actual terms of that leaving and the timing of that leaving that plays out through the May government, the Johnson government, et cetera. Gradually, a deal is negotiated. What happens to asset prices is the one variable that anticipates the direction is the exchange rate, the sterling exchange rate. It falls weighted against all currencies by about 20%.

43:39Now, what does that do to the economy? That gives the economy a boost because it is anticipating something that has not yet happened. So British goods and British activity is cheaper, but it's cheaper because it's going to be harder to export, but it isn't yet harder to export because we haven't actually left. The UK hasn't actually left. And so you don't get the hit from Brexit until you actually leave. You actually get the dampener in terms of the exchange rate before you leave. But eventually the UK does leave and eventually you get the accumulated impact, which is what we're seeing now in terms of lower investment, scrapping, you know, plant and equipment, lower exports, lower income growth, lower productivity, all of that is coming to pass.

44:22You know, we have lower labor force participation. Now, part of that is because of COVID and other factors. But, you know, the hit is starting to accumulate and it will accumulate on current trajectories to the orders of magnitude of, you know, a 10 % difference in GDP that people had expected. Last point, things can change. The relationship can change. Other economic policies can help change the trajectory here. So it's not like the country is without agency, but directionally those predictions were right. And what was compared in the immediate aftermath of Brexit, just to re-emphasize the point, of the Brexit referendum was an economy that had not left the European Union yet.

45:04It now has. And I think to all but the most ardent supporters of it, it's pretty clear the direction of the economic impact. One thing I want to thank you for, for your time as governor of the Bank of England is the Bank of England became a time to change employer and a leader in the mental health field. And I did some work with the bank at that point. And I want to thank you for that. But the reason I specifically you don't want to raise that, is the last time I was there doing some of that work was just in the aftermath of the Trust's Quarteng mini budget, where I got the feeling that the sense of sort of being very, very close to the edge of a cliff was, if anything, even greater than when you were pushed out the door by George Osborne to say, everything's stable, everything's fine.

45:53Give us a sense of how looking from a distance that trust moment looked to you and whether you understood why the markets went quite as crazy as they did. Yeah, I think your assessment is right in terms of directional. The difference with the Brexit referendum is we had prepared, number one. Number two, we had a breathing space because there still was the whole thing to be negotiated. Look, from a distance, it looked like a couple of things. One was, first off, you had fiscal policy operating in a different direction of monetary policy. Monetary policy is trying to be tight. All of a sudden, fiscal policy gets incredibly loose.

46:29So you mean taxes are being dropped? Taxes are being dropped. You're trying to stimulate the economy at the same time that the Bank of England is trying to tap down on the economy because inflation is far too high. So you're putting on the accelerator and the brake at the same time? Accelerating the brake at the same time, exactly. And if you were in Canada, then I could extend the analogy because what happens is there's ice on the road and you're going to skid off the road. That's one thing we know here. It's not quite ice outside my window yet, but I'm sure it's coming. The second thing, and this is the really damaging thing, is we talked about this earlier implicitly about institutions and the institutional setup of the Bank of England.

47:08That budget and what surrounded that budget both publicly and very much privately was absolutely an attack on the core institutions, the OBR and the Bank of England, and the Bank of England's independence and setting policy. And Mark, just help remind people of that. So essentially, they didn't bother to consult with the Office of Budget Responsibility before they went forward, and they didn't really include the Bank of England in this decision-making. Well, on the contrary, they attacked the bank for not being fit for purpose. Yeah. Yeah. Yeah. As Alistair says, that's in effect what they did and X decisions.

47:43And the third thing they did, which is more, but it goes back to the austerity discussion, is that from afar, the reading of the measures was effectively they doubled down on inequality because they cut tax for the wealthiest. They got rid of the bonus cap and intended to do more in that vein. And it was at a time when you had increased inequality, a lot of suffering from the financial crisis, from COVID, from the post-Brexit economy, just exacerbating that. That's the mixture of policies that just doesn't look sustainable. Mark, I said right at the outset, and thanks for giving us so much time.

48:24I'm really enjoying this. I hope you are. I just want to ask you, do you still have political ambitions and aspirations of your own? You kind of look like a politician. You sound a bit like a politician. You've got charisma and all that stuff. If you can avoid going into politics, if you can influence policy without going into politics, I think that's a better life, having witnessed it up close, to be candid. But sometimes you need to step up if others are going to step up. So that's an open question. you'll be the first to know. So it's not a yes, it is not a no. Yeah, it's not. I mean, it's openly in either this stage.

49:04I'm fortunate at this stage where I have a fair bit of influence on aspects of addressing climate change locally and globally. And I'm always going to be in and around, I think, like both of you, policy in some way, politics, maybe with a small p, maybe with a big P. And on the climate, what did you think of Rishi Sunak's seeming volt fast in terms of the British government's attitudes? I thought it was unfortunate for a couple of reasons. One is that the UK has actually built a very good system for addressing climate, right? Clear, it's in legislation. We have the Climate Change Committee, which is another independent institution, which basically marks the government's homework.

49:52It says, you know, the objective is, let's say, 60 % in emissions down by 2030. The policies in place only get us to, let's say, it's 40%. So there's a gap. What are you going to do to fill the gap over to you politicians to figure it out and explain to people what you're going to do? And the UK had credibility about closing that gap. And when you combine that with a financial system in the UK, particularly that's more focused on solutions to fill the gap, that's a very powerful mechanism that gets people investing in anticipation of action. So along comes the government most recently and says, you know what, we're going to take out some of the key planks of those policies as key objectives, which it's entirely right for them to do if they think they have a better way of closing the gap.

50:38But what they didn't do is put new policies in place that would have closed the gap. One of the examples of that would be to go directly to homeowners up and down the country and provide them with solutions around, you know, a shift to heat pumps, actually get their home energy bills down, you know, address a current problem and make a meaningful dent in UK emissions. UK is one of the worst housing stocks in terms of emissions. So this is what they could have done. They didn't do that. So they undermine credibility. They put carbon back in the atmosphere by taking out some of the measures. They didn't address it by taking it out with other measures.

51:13And then on top of that, and understand there's Baltics around it, I don't know what the right word is, but they sort of juvenileized the debate with the meat tax and the seven bins and things like that, which just, again, it chips away at the credibility and the clarity of the ambition. And last point, UK has had great momentum in dealing with these issues. And you start to throw that into question and you end up giving a lot more up than just the specific measures. Mark, really last question for me, the politics of climate change. I mean, in some ways, I guess, a bit like Alistair and me, you are a product of the optimistic world of the 90s and early 2000s.

51:57We're now in a very different age. Since 2014, we've been in an age of populism. And one of the big things that's becoming clear is that entrepreneurial politicians around the world are beginning to sense that the public is reluctant to take many of the steps required to address climate change, partly because the earlier steps were kind of low-hanging fruit, and now the stuff is really hitting people in their fuel bills or through ultra-low emission zones. And that's causing a big, big problem politically. How do you find a way of reconciling science, your technocratic instincts, your desire to clean up the environment with the raw, brutal politics of the fact that politicians around the world, voters around the world are becoming extremely reluctant to reach deep and take the economic pain to make the climate change targets?

52:47It's in many respects the question, and I'd say the following. First is, I think it is important to underscore just how much progress is being made. And there's various ways to package that. Maybe we don't have time for me to do all that. But if seven, eight years ago in Paris, the world was heading to three and a half degrees, today we're headed to 2.4 degrees. But realistically, it's probably sub two degrees given where momentum is on policy. Five years ago, the world's spending$500 billion on clean energy, okay? $900 billion on oil and gas, conventional, et cetera, a year. Last year,$1.2 trillion clean energy,$900 billion oil and gas.

53:24This year,$1.8 trillion clean energy, half of that on oil and gas. basically. So the spend on addressing the issue is going through the roof. It has almost unstoppable momentum. And these numbers, and I could give you a slew of statistics in and around it, but the progress that's being made is much faster than people expected at Glasgow two years ago. It's much more impactful. It's much more economic. This is where the future is and the future is now. But let me get to the difficult question of the now, because you've got to hold the political consensus, you have to reinforce it. I think the first thing is I'm a big believer in mission, purpose, objective, and having that clear objective.

54:06And if you're Canada, I'm in Canada, you're appealing rightly to pride. We have been an energy superpower. We are going to be a clean energy superpower. That is a core goal of the country. I think the second thing is you need to, and you are both far more expert than this, than I, but one of the lessons I learned over time is you see clearest when you see from the periphery, right? So when you go to people who policies affect, we talked about austerity earlier, you think about climate change and climate change policy. So who is being affected by the energy crisis in the UK right now? It's households up and down the country, households in the Northeast, where the heating bills have been going through the roof, tapped down by government intervention, but they basically have a structure of housing that lays them exposed to this.

54:58And so the number one priority should be to address that. If I were to spend climate dollars in the UK, I would spend it on heat pumps. I would spend it on home retrofits. As Boris Johnson used to say, the UK is lagging on lagging. That's absolutely right. We don't allow Boris Johnson was right statements on this podcast, Mark. I'm sorry. You'll have to rephrase that. Someone once said that. So going into that, because you have to give, as you know, tangible results to people that this is part of the bigger mission. And we're talking, you know, four or five hundred pounds a year of savings for people on their energy bill.

55:41I mean, that's real money. Those are climate change committee points or calculations. And then the last thing, and again, you'll be better judged than I, but I think part of what has to come here is this is about security. It is about geopolitical security, not being hostage to Putin, not being hostage to large petro states, whether they decide to pump oil, but it's about economic security. We've talked a lot about the future of this economy, the UK economy. This is a fundamental driver of jobs, competitiveness, exports, growth. And the UK has had a leadership position in this. My judgment absolutely should double down on that position because that is part of what's going to return some of the productivity that's been lost.

56:27Listen, my final question. Were you aware when you recorded that very short message of support for Rachel Reeves that it would have quite an impact? No, that's the short answer. Seriously? I thought, look, I thought, I mean, don't ask, don't get. So they asked. Yeah, they asked and she asked. I have a lot of respect for Rachel Reeves. I know her. I know her ideas. I know the way she thinks about things. and I thought, oh, yeah, and I happened to be in London. So, I was like, okay. And they got someone out to where I was and I guess I thought that it would be, you know, a series of testimonials, I guess, except I thought, but you know what?

57:09I mean, she's, as I said in that, she's a serious economist. I think, you know, the important thing, and this is maybe a sub-theme if I can try to draw together our disparate conversation is you need to, you know, in policy, you need the macro, you need to know the big picture, these bigger forces, but then you need to translate the solutions down to, you know, the economics of place and family. Because if you don't hold that, if you don't deliver that in relatively real time, you're not going to be able to do the big policies. And I think she's got a good sense of that. And it didn't lead to another phone call from George Osborne saying, WTF are you up to?

57:49George Osborne. I think George, well, George can speak for himself. I think he's probably - You think he was hearing as well? George can speak for himself. I think he's, George is less tribal in his views these days. Yeah. Well, listen, it's been absolutely fabulous to George. Thanks for giving us so much of your time. Mark, thank you very, very much indeed. And it was a real pleasure. And thank you for, I mean, it's great to get not just a central banker, but one who was so much at the center of such critical events and who is now right at the center of the transitions on climate change. So thank you so much for joining us.

58:24My pleasure. Thanks for having me. Thank you. It's been great. Thank you again.

58:31Well, I thought that was a very, I really enjoyed talking to Mark Carney, I have to say. He's got a lovely man. I think he should go into politics. I really do. He's a real charmer, isn't he? He's a real charmer. I mean, one of the things that viewers won't have picked up is that the real sign of the charm of the man is as soon as we got off air, he was asking Alistair Ernest questions about Burnley and talking details football. And then he went on to ask me when I was going to go back into public life. He's very courteous. I thought he was great. I mean, I think as with any person like that, there is always an uncertainty, a question about what happens if they really were to go into elected political life.

59:04And I guess Canadians will wonder whether a bit like Michael Ignatius, you have this very distinguished kind of international figure with a big reputation, but who hasn't been part of the practical campaigning on the ground coming in. And can you make the adjustment from being a good policy thinker to being a kind of retail politician? Yeah. The only thing I say, I mean, look, you sort of picked him up a couple of times to explain terms and phrases that he would take for granted. but actually for somebody who lives has lived in that world of finance and banking all his life i think he explains things incredibly clearly i'm not big on money and stuff and and i really understood how he was breaking things down and and he's definitely got that it was interesting that thing when his analysis of cameron osborne which i thought was very fair in terms of how they thought and how they set things out and work towards objectives i got the feeling that was that was his approach.

59:58And I loved his observation about you sometimes see things more clearly from the periphery. Yeah. I also think his analysis is right. I think Mark is right. I think I agree with him absolutely that there needed to be cuts. There needed to be whatever you want to call it, austerity. But the way in which it was done and the place in which those cuts was put was deeply, deeply damaging. I mean, I obviously talk a lot about this in relation to prisons. I think the same is true about the approach to benefits. Where I think it's more difficult for people like me and Mark is when people then say, well, okay, but then where would you have cut?

1:00:32And of course, he's talked about foreign aid and defense. Which neither of us would want cuts. No, I think that the point I've always made about austerity is that a political strategy was turned into an economic approach that went too far. That's my basic feeling. So the other thing I think that we didn't maybe give him enough time on, but I think is a reason why Mark is very interesting, and we might even think about bringing him back again, is that he's done amazing work on climate and the environment. He's done a lot of work with the UN. He's done a lot of work with big international organizations.

1:01:04He was one of the first people to really think about how you put private capital to work. I mean, because of course, the point is that you can't fix this just with government money. There is all this money, both in terms of oil and gas investment, but banking financial sector, which needs to be brought to bear. And he was really at the beginning of that. He did a lot with our current king, with King Charles on this, through something called the Sustainable Markets Initiative, which was also about thinking about how you harness the private sector to move climate change. And it was striking, I think, that optimism.

1:01:34We haven't interviewed anyone in nearly two years now who's made the point that coming out of Paris, it looked like we'd only be able to keep global warming at sort of 3.5 degrees. And he now thinks that it'll be down to probably two. No, I thought the right mix of proper analysis and positivity. I loved his observation as well that this is the bit where we're losing all the listeners. We'll be able to track whether that is the case. I think they'll have stuck with us to the end. Well, I was very grateful to get someone actually talk about 2008 financial crisis. I mean, I think that's the final thing.

1:02:09I was thinking, of course, he is very, very good at explaining things. But my goodness, it's actually quite difficult stuff. And when you think about how central it is to the way our whole economy works. What a central bank is, what it does, what on earth this stuff about fiscal and monetary policy is. And the fact that I'm afraid as a retail politician, I would struggle to communicate some of this stuff clearly to a lot of my voters. And yet it is right at the heart of what determines what happens in our economy. And that is a problem. I mean, that's really where the rubber hits the road. When we put together the induction course for new young MPs, we should have lectures from Mark Carney.

1:02:48That's good. Well, you know, now Mark's committing to more public service. He could sign up for that. Sign up for that on the spot. See you later. See you later. Bye-bye.

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