9/11: 25 years on

23:55I mean, I read this and I thought, well, actually, you know, we're in par now with our European colleagues. And, you know, it's very common. It's not unknown. own so maybe it was but it was going to come at some point so I wasn't that indifferent about it however when you hear reports like that for an average household an extra 100 120 pounds I think it's it's not what we need to hear right now um you know that's we want to bring tourism in it's great for the economy it's great for the country is now the right time for this sort of tax is probably the question I would have I don't think it's it's probably going to come at some point but what will this do now it will yes help in terms of raising more funds but does it help the average spender one day we want them to increase consumer spending as we're talking about and we want people to have a holiday we want them to go out and spend in restaurants and go away and do these things so do we want to limit that right now i don't think now's the right time um look i'm a big fan of the staycation and i spent myself my summer in uh in devon this year and so i um you know i i feel for um any of the the uh companies that are going to be affected by this because obviously an increase or a tax will will either have an impact on demand or have an impact on margins for them and i think that's the bit that um i'm most focused on and obviously from a corporate perspective when we look at this for listed companies um it's hard to find a positive in it because it has to have some sort of a negative effect well the consumer i mean it's

25:22Will Bain:the positive not that it makes the the area around where these businesses are better right i mean that's the idea isn't it that it's meant to beef up local authority cash to keep these places clean make the infrastructure better make it easier to get to them make it easier to get around that's good for businesses isn't it oh of course i mean if the if the infrastructure um follows suit and the money is recycled into uh local infrastructure then of course i think we'll it's hard to to argue the case for this but i think that's the big if katherine um the fact that it's a levy rather than a flat fee as some of those ones that Yigita was talking about in Europe.

25:58Will Bain:From an economist perspective, does that make sense to you? That actually people with the deeper pockets going to fancier hotels, spending more money are going to pay more of this than people going on a budget trip somewhere? Yeah, I think what I have been more focused on is the why. Why is this happening just now? And if we think about, you know, the big event that we're looking ahead to in the next month is the budget, the UK budget. And I think this story just really highlights these unabated fiscal pressures. We can all think of, you know, quite urgent things that need to be, where money needs to be spent in terms of building up public infrastructure, etc.

26:48etc. And it's about creating the fiscal space to enable that. And I can well imagine that particularly for a place like the UK, that does have a very thriving tourism sector, so many people love to come to this country to see, you know, all the fantastic things that there are to see and that there would be a real concern that actually this could end up costing more than it's actually benefiting. And, you know, I haven't seen or done that analysis, but I think really what it's highlighting is this difficulty that we face. It's not unique to the UK that we need to invest more and we need to invest more in all the different regions and that's going to cost money and for that we need the fiscal space and it's either going to come one of three ways we're going to tax more we're going to spend less on the existing things that we've been spending on or we need to borrow and there's really no other way around it well

27:56Will Bain:Catherine use that to to look ahead both to the budget and also seven o 'clock today we get the GDP latest GDP numbers don't we what should people expect when they hear that number on five live in the in the news at seven o 'clock later um what would what should they be listening out for to tell them what's going on i guess and then use that to kind of lead into um a thought about growth in the budget well i think really what we're hoping to see is that the month-on-month growth in july in uk gdp is going to be uh slightly positive uh that that will sort of reinforce this picture that I mentioned earlier of seeing, you know, a bit of a recovery, a turning point, increased resilience in the UK economy.

28:45And it would really just give us more conviction in that view. And that's what we're hoping and expecting to see. And alongside that, I think, you know, that should set us up for a labor market that also looks like it is starting to improve as well, which is obviously extremely important. You talked about consumer surveys, you know, people's perception about how likely it is that they can keep their jobs and how easily they can find new jobs is probably one of the most important indicators that underpins consumer confidence to kind of go out and to make big or smaller discretionary purchases. So those things have been looking positive.

29:35And I certainly hope that that trend continues when we see this latest data today.

29:41Will Bain:Obi and Yigita, I'll get your thoughts on this after the news, because we're right up against the news. But I've just got a question I think is for Catherine that's coming from Richard. Catherine if I can before I let you go Richard Moss asking I struggle to see how high interest rates help the UK economy when the inflation is not being caused by unwise spending but is the result of external factors outside our control surely we need consumers to spend money in the UK economy to boost British business Richard Catherine describes himself as a confused non-economist I'll try and have a go I think there's a lot of merit in what Richard has set out, because when this shock is happening for exogenous reasons, all of a sudden the relative price of energy is going higher.

30:29What that does is it squeezes demand and spending on everything else, most of which are things that we produce and make and buy right here in the UK. And that's the bit really that the Bank of England has more control And so this is why I would say, you know, beyond the immediate foreseeable future, the trend for interest rates coming from the Bank of England is more likely to be that these will come down. But right now, the concern is that this one-off shock that has happened outside of the UK becomes embedded in people's expectations around pricing and starts to be reflected in other items that are not directly related to the higher energy cost.

31:19And that would end up harming our economy even more than the original shock from the higher energy prices. So it's straddling this sort of dynamic picture of needing to keep interest rates a little bit higher over the immediate foreseeable future to try to stop this inflation shock from becoming embedded. and as soon as that risk starts to fall away, then the Bank of England can start to bring those interest rate downs to stimulate and support the UK economy.

31:58Will Bain:Richard, I hope that answers your question. Catherine, thanks so much as always for your time. Really appreciate it. Thank you. Catherine Neistat, the Deputy Head of Global Economics and the Chief European Economist at PGEM Credit. As I said, we'll get the guys' thoughts on that in the second half of the programme. We're also going to be talking about the 25th anniversary of 9-11. And we will be, after an announcement from Associated British Foods, the owner of Primark, the last holdout really to online shopping on the high street. Primark is going to go online. We'll be chatting about that in the second half of the program too.

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33:28Will Bain:Wake Up To Money with Will Bain. Morning, welcome back to Wake Up To Money on Friday the 11th of September where Yagita Bauer is one half of our panel. Yugi to the managing director and co-owner of the London-based Medical Aesthetics Practice Time Clinic. And Obie Chikeme is the other half, Global Equities Fund Manager for Carmen Yak. 85058 is the place for your text. It's got lots that we'll get to on what we were talking about before the news around the budget and also around that introduction of a tourist tax. But mentioned it's September the 11th. 25 years ago today, the world changed really as we knew it, didn't it?

34:01We have unconfirmed reports this morning that a plane has crashed into one of the towers of the World Trade Center. CNN Center right now is just beginning to work on this story, obviously calling our sources and trying to figure out exactly what happened, but clearly something relatively devastating happening this morning there on the south end of the island of Manhattan.

34:22Will Bain:2 ,977 people lost their lives after a suicide attack has seized four U.S. passenger jets and used them as guided missiles ostensibly to crash into landmark buildings in New York and the Pentagon in Washington. Two planes hit the World Trade Center in Manhattan, as we heard in that CNN clip there. Another, the Pentagon, the headquarters for the U.S. Defense Department. While a fourth crashed in a field after passengers fought back against the hijackers. Here's how Five Live reported the news that morning. It's now being reported that two planes have crashed into the World Trade Center in New York.

34:55Some of the most famous buildings in the whole of the states and the whole of the world, they are based now. Another passenger plane hitting the World Trade Center. These pictures are... I was in the base of the building when this happened. First of all, there was a huge bang, and it felt as though a construction company or something like that

35:16Will Bain:had dropped away from a very, very great... I heard a big explosion coming down. Everything just went black. Everything came down glass up. It's very upsetting to watch. The whole thing comes tumbling down. The second tower at the World Trade Center has collapsed. They have both now collapsed. It was about seven minutes to two that we started to look at the first pictures. Simon Mayo there on Five Live describing how the events unfolded. They went on, of course, to have profound impact on politics around the world fairly, obviously, but a massive impact on economics and on the markets as well.

35:46Will Bain:This is how Bloomberg News described the events on the markets right after the attack. Wall Street never opened on 9-11. The open was delayed after the first plane struck and then canceled after the second plane crashed. Markets wouldn't open until the following Monday. It was the longest shutdown since the Great Depression. Once trading resumed, there was a massive sell-off, the biggest one-day loss in the history of the New York Stock Exchange. The Dow Jones Industrials were down 14%, but by early October, stocks were back up to where they'd been the day before the attacks. One of those who was working in the city that day was Sean Windiatt, now the co-chief executive of the BGC Group.

36:28Will Bain:and Sean joins us this morning. Morning. Good morning. And BGC Group, significant, Sean, because of your colleagues and the impact that they unfortunately felt on 9-11. Oh, absolutely. I mean, listening to the footage as I've waited to talk to you there, it just brings back such chilling memories of that morning. And for me in particular, working for Cantor Fitzgerald at the time BGC's sister company and actually I was physically on the phone to my colleague in the trade centre when the plane hit Right, yeah, because Cantor Fitzgerald were based on what floor of the World Trade Centre and how many colleagues were working there at that time Yeah, so we were on floors 101 to 105 of the North Tower and at the time, Canterfish Sherrod had around 1 ,100 employees in that building and of course at the time, the time was quarter to nine and therefore at that time there were 658 people of the workforce already at work at their desks and I think as has been well publicised, nobody of the 658 people that day who were in the office survived.

37:51Will Bain:Obi, it was your first day in the office, right? in the city or one of your early days in your first job in the city. Do you remember it? I joined Cantor Fitzgerald in 97. So, you know, on that day, I'd been at the company for four years. And, you know, I was a young 28-year-old chap working in the finance department of Cantor Fitzgerald. And I started the day as normal, talking to my colleague in the US at 8.30 and then 15 minutes into the call, the line went dead. And pretty rapidly, you work out what was happening. Well, I was just going to ask you exactly that. How long did it take you guys within the office to realise that something extremely serious was unfolding?

38:40Not that long because you're talking back in 2001. So it wasn't that you had lots of screens around the place, but I remember there were a few screens at the back of the finance department there And obviously, firstly, we then saw the first pictures. The first thing we're trying to do is to work out, was it our tower that had been hit? And then, you know, I think time moves so quickly there. But within a very short space of time, you realise exactly what had happened.

39:10Will Bain:And in the days after, I mean, what was that like? I guess the weeks even after going back into work again? oh on the day the day itself um i mean firstly i think we we actually had to evacuate uh our building uh on on you know within a couple of hours of uh of of the planes hitting so because nobody of course knew you know from a terrorism perspective nobody exactly knew what uh what was happening and then the next day though and i remember this incredibly well the next day went to work as normal. And I got a phone call from what became my boss, Sean Lynn, who became the president of BGC. He called me and he said, look, you know, we've got one hell of a job to do.

39:58He'd actually offered me a job a couple of years before that. And he said, look, I know you didn't do it then, but I'm offering you again now and you've got 20 minutes to decide. So I think within two minutes I'd left my desk on the fifth floor down to the trading floor on the fourth floor and we got to work trying to save the company really at that point.

40:21Will Bain:Yeah and that process presumably took what years? Yes you know you really go into crisis mode you know you had obviously Howard Lutnick the the chairman and CEO of the group. He was, yeah, he'd lost his brother, he'd lost his friends and the company. And so with Sean Lynn and the then co-CEO Liam Atis, we just got together. London really worked 24 hours a day for as long as I can remember, you know, the time really, It just was an issue. Everybody pulled together. And those first few weeks were incredibly intense. Trying to work out and do things that you weren't used to doing. You had to learn on the job.

41:16And I think it definitely took in excess of a year. It really did. And one thing that sticks out in my mind was at the end of 2002, so you're now talking 15 months after, we opened up our office in Switzerland. And really, that was the first time that I could say we were really in growth mode again. So survival mode for at least a year, followed then by that growth mode.

41:42Will Bain:Did it change financial services at all, do you think? The fact that financial services was sort of – was under attack, I guess, in a way. There was a deliberate reason that those targets were picked, right? That they were sort of seen as like a castle of capitalism, American capitalism, if you like. Did it shift anything, change anything, do you think? I think what we saw – yes, it did. And I think what we saw is we saw the financial community, though, really come together. You know, it's a competitive marketplace, but I think we saw every company come together. I mean, the help that we received as an organization from a number of people around the city, you know, be it from clearing providers, from technology providers, everybody, from clients, Everybody was pulled together because, as we know, a stronger city and a stronger financial service sector leads to a stronger economy.

42:40And I think it was a wonderful sign how, in the end, everybody came together. And really, look, for us here at BGC, managed to create what we've created today.

42:55Will Bain:Yeah. And one of those other legacies as well, Sean, is what you're doing today. So tell people about that because you've done it every year, I think, haven't you, right? Since in the 25 years since. Yeah, so one of the first things we did was we pledged 25 % of our future profits to the families and the first responders of those who lost their lives in the atrocities. And then once we'd looked after the families, we thought, what a great idea to turn something so terrible into something so positive. And in 2005, we commenced the first BGC Charity Day, where 100 % of the revenues that we generate go to good causes, charities around the world.

43:45Will Bain:And people have seen some of the pictures, I'm sure, in the past, right? You've got sort of celebrities coming in and helping you guys on the trading floor and that kind of thing. I'm sure they have. Honestly, it is such a wonderful day. you know the charity day has raised 234 million dollars since its inception back in 2005 and last year in excess of 14 million dollars so if we you know here's fingers crossed we have a great day today and that we can go through that 250 million dollar barrier well good luck today and thank you for styling it by speaking with us really appreciate your time it's a pleasure thank Thank you.

44:21Will Bain:Sean Windyak there, the now Chief Executive Officer at the BGC Group, parent company of Cancer Fitzgerald, as he was mentioning earlier, who lost more than 650 colleagues on 9-11. Obi, I was going to bring you in there as well, but I understand you were very early in your career in financial services right on 9-11. Well, I mean, I was actually pre-financial services, but I remember I was about a week into my commute into London, and one thing that stood out for me was just there wasn't as much information back then as we have today. You know, we didn't have phones that told us minute by minute exactly what was going on.

44:56So there was this sort of sharing of information between people and, yeah, very, very, very sombre moment that was.

45:02Will Bain:Yeah, plenty more reflections, I'm sure, throughout the day on Five Live. I know there's plenty on Five Live Breakfast to come as well. Just gone 10 minutes to six here then on Wake Up To Money. If you were listening to Sean a little bit later on in the morning yesterday, you'd have heard him talking about this interesting line that appeared in the financial results of Associated British Foods, the parent company of Primark, because the high street stalwart has been a long-term holdout on the idea of selling online. Not for much longer. Buried in the financial results was a suggestion that now may be a good time to shift there.

45:36Will Bain:So why? Paul Sims is with us. Paul was the chief architect at Primark from 2022 to 2024, advising on its technology strategy. He's now Retail Technology Strategy Advisor at the consultancy Equal Experts. Morning, Paul. Thanks for being with us. Good morning. A surprise? Has this been brewing when you heard the cunning news yesterday? Yes, it was somewhat of a surprise. I mean, while I was there, Primark stood by that view that they would never, ever do home delivery, largely because, you know, the fulfillment costs, the handling costs, the impact on margin. and Primark's one of those retailers that has a very small operating margin comparative with other retailers.

46:19But that was that long-held view that they would never, ever do it because they'd always be a bricks-and-mortar retailer. But I do remember saying to somebody there once, never is only never until the right person changes their mind. And I think it's – so why now? I guess it's the question I was reading yesterday. I think there's a commercial imperative that effectively they have to. And there's two main external factors. So that de-merger from the parent company ABF, which is due by December next year. So that means that Primark have to appear, I guess, somewhat attractive to investors. And an improved e-commerce ability with home delivery is going to be more appealing than just having Click & Collect that they do at the moment.

47:01But there's also the Shein factor. So not just Shein, there's Temu too. And Zara's parent company, Inditex, have that low brand lefties moving into Primark's territory. and all competing at very comparable price points to Primark with home delivery as standard. And that home delivery is becoming increasingly expected for younger shoppers.

47:23Will Bain:Really interesting. Let's get the view of our investor. Obi, give us a take on what they're doing. Look, I think it's responding somewhat to consumer demands and consumer needs. I think that's the big story. There's only so long that you can sort of hold out for. I mean, I think back to all the sort of bricks and mortar retailers that didn't want to go online in the first place. And we can see the difference in the share prices of those who moved online and those who remained bricks and mortars retailers. And so this is just an extension of that to facilitate what customers are moving forward to.

47:58Will Bain:Yugita, what do you reckon? Because there was something sort of almost noble, wasn't there, about being we're going to be the last one standing firm on the high street? Absolutely. But isn't the question of when are they going to do it? I think, you know, Primark is a place where people would like to go for maybe everyday necessities and things like that. And I think they just needed to do it or they're going to get left behind. There is a novelty in going to the actual physical shop. But as Obi's just mentioned, that, you know, it is going to impact their trading and their numbers. So I think it's a positive move from them.

48:28And I think it will be a positive move for consumers.

48:31Will Bain:Yeah. Paul, do we have an answer to Yagita's question there? is the target, do you think, do you guess, to be tied up with that demerger you mentioned? I think otherwise, I mean, it was a fairly modest trading statement with a reduction in like for like. So all of a sudden you've got this positive statement in there. And that£90 million acquisition of the warehouse in Sheffield is a pretty strong commitment to home delivery. So you can read from that it's not going to be small. But there had to be something in that statement. and there was a positive statement to investors looking at Primark in the future.

49:06Will Bain:You mentioned about sort of fulfilment. What has changed then, because you've been in this space, that's made it easier, I suppose, or have things changed that have made it easier and more cost-effective for these companies to get into that space? Yeah, there's a change in how the warehouses are managed. I mean, this is a really shrewd move by Primark in terms of the warehouse they bought. There's something operated by Deminence Group and Boohoo Group beforehand as a fully automated warehouse. It had all the facilities and infrastructure already in place to do delivery, fulfillment, and returns handling, links to the couriers.

49:42It's a central-ish warehouse. It's ideally positioned. But also, if you take the lead of some of the other retailers at the moment who are offering a minimum price for delivery, £50, I think Zara has, but also retailers are starting to charge for returns. now there was something in the statement from the abf ceo yesterday where he said that the market has changed a little bit and there was a better way to manage returns which would hint that primark

50:10Will Bain:will certainly be charging for it you get i was interested in that around returns well that some of them the big ones the ones who've kind of led the way in this and paul i'll get your thoughts on this too but say the mns is a next who seem to have worked their way around this um that you If you take your returns back into the store, you get your money back on your card much quicker than if you send it back to them and that kind of stuff. Is that the sort of prodding that consumers need? Well, I think some people do get a bit disgruntled when you're returning by a post, let's say, and you have to take the charge for that delivery.

50:46And if you go to the store, you don't get that charge. So, you know, there is a choice to be made there for convenience or going in.

50:52Will Bain:Would it make you choose between where you shopped? Do you know if it was sort of a similar price, similar type of item, that kind of stuff? I think so, yes, because you don't want that, if you want to call it a hidden cost, because they do put it, they don't always make it that obvious as well, but you don't want to spend an extra£4 or£5 or whatever it might be just to return an item that's no good to you. It feels a bit unfair, I think, for people. So I think it does make a difference where people choose to buy, especially if it's a similar competition, a similar price, as you say. I'll be interested to see what Primark do.

51:23Obviously, it is a low-cost type of clothing retailer. So if they are going to have extra costs in there for returns, will that impact the consumer spend on that? It'd be interesting to see. But I think that people will, if they're forced to go back into the store to return, maybe that's good as well because when you go there, people might browse a bit more and end up buying something else or exchanging something else. So let's see what they do.

51:46Will Bain:Paul, what do you reckon? Yeah, I completely agree with that. I mean, that's always going to be Primark's mantra. And the reason that Click and Collect was effectively given the green light back in 2022 was predicated on the idea that customers would have to go into the store to pick the items up. And the business case was based on will they buy additional items while they're in the store? And it was proven successful. So they rolled it out. So absolutely. And are we seeing that with others as well? I mean, I mentioned some of the big, big guys in that space. Is that what they're kind of seeing or perhaps it would be your best place to answer that, looking at the results of someone like Next?

52:20Well, yeah. I mean, Next is obviously one of the standouts in the UK. But I just think that the primary factor that I think is key here is just giving consumers what they want. And I think that's essentially what seemed to have happened here. You know, as a consumer myself, I sort of go with everything that was just said. I mean, anything that makes it simple to return a product that you're just not happy with, the wrong size or whatever it is, has got to be a good thing for the consumer.

52:47Will Bain:And Paul, how about lockers as well in all this, you know, the sort of in-posts and those kind of things in this world, changing that and making it cheaper too to do this? Yeah, I completely agree with that. I mean, that's always going to be Primark's mantra. And the reason that Click and Collect was effectively given the green light back in 2022 was predicated on the idea that customers would have to go into the store to pick the items up. And the business case was based on will they buy additional items while they're in the store? and it was proven successful, so they rolled it out. So absolutely, Prymott will always do it.

53:18Will Bain:And are we seeing that with others as well? I mean, I mentioned some of the big guys in that space. Is that what they're kind of seeing? Or perhaps it would be your best place to answer that, looking at, say, the results of someone like Next? Well, yeah. I mean, Next is obviously one of the standouts in the UK, but I just think that the primary factor that I think is key here is just giving consumers what they want. And I think that's essentially what seemed to have happened here. you know as a as a consumer myself I sort of go with everything that was just said I mean I anything that makes it simple to return a product that you're just not happy with the wrong size or whatever it is it's got to be got to be a good thing for the consumer.

53:55Will Bain:And Paul how about lockers as well in all this you know the sort of imposts and and those kind of things in this world changing that and making it cheaper too to do this? Yeah I mean locks have been around for a while now Quick thing, just to add on the mix here as well, is the ability to offer home delivery for Primark also potentially opens a window for a hook for loyalty, which Primark haven't had for a while other than repeat business. But if you can offer things like free delivery or attract people through other means... Then you sign people up to that loyalty scheme as well. Yeah, they certainly all want that, don't they, Rita?

54:33Will Bain:It's really interesting. Paul, thanks so much for talking us through it. Really appreciate your time. Thank you. Paul Sims there, formerly from Primark, now at the consultancy Equal Experts. Big thanks, too, to Yagita Bauer of Time Clinic and Obi-Ege Kemi from Carmen Yac for being our panel this morning. And, of course, a big thanks to all of you for listening to us here this morning on Wake Up To Money. Wake Up To Money with Will Bain. Five lights full. So here's the first ball of this series. All the cricket you love. Check, Robbie W. Ouch. Lives on BBC Sounds. Smash straight back down the ground, this girl.

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