As good as gold?

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0:30at Whole Foods Market. Odoo, providing tools for businesses across industries into one fully integrated platform. Whatever your business needs, Odoo is committed to providing it. Learn more at odoo.com. Wake Up To Money from BBC Five Live. Hello, welcome to Wake Up To Money. US Treasury Secretary Scott Besson is threatening sanctions against countries that continue to do business with Iran in what he's calling Economic D-Day. Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone. So what will that mean for those who do business with Iran and for ordinary Iranians?

1:16Pubs have welcomed the government's review of business rates for the hospitality sector, but we'll hear from a retailer worried other businesses could be left behind. And as the price of gold climbs, we meet a jeweller getting creative with the alternatives. Wake Up To Money from BBC Radio 5 Live. Morning, morning, morning. Welcome to Wake Up To Money. It's Tuesday the 25th of August. It is four minutes past five. We're going to be talking business rates. We're also going to be talking about a fresh call on the government to cut employers' national insurance contributions ahead of the autumn budget.

1:48That's one that businesses really, really want to happen. And also, of course, we're going to be talking about gold. Lovely, lovely metal and lovely commodity to talk about just towards the end of the programme. And we've got two great guests with me this morning. This morning we've got Taya Barrett, General Manager of Crampton's Sports Bar in Broadstairs, Kent. Taya, good morning. Good morning. How are you? Yeah, I'm good. Tired at this time of morning, of course. Well, we appreciate you getting up. That's OK. We've also got George Godber, Fund Manager at Polar Capital, who is no stranger to an early wake up to money hit.

2:23Good morning, George. Good morning. How are you? Yeah, great, great. Well, listen, Taya, I'm going to start with you because I think listeners might remember you joining us during the World Cup. So just remind us about Crampton's. Take us there, the business that you run there. Yes, I run a sports bar in Broadstairs, so right on the coast. So I can see the sea from where we are, which is lovely. We're heavy on sports. So the World Cup for us was massive. We've got 17 TVs, a lovely beer garden, interactive dartboards. And we're a heavy, we do food and drink, but heavy wet lead business, but definitely sports heavy.

2:56So very, very happy that the Premier League's back. It sounds lovely, particularly right in the coast there. So how has the summer been for you? I mean, the weather, we see all the photographs and we've witnessed our gardens just going to ruin, haven't we? But at the same time, I suppose sun's out. That's good for a beer garden, isn't it? Definitely. Great for us. It also means that we can split the business a bit more. So have music in the garden while we've got sports on inside. So it gives us a bit more of a spread. Obviously, the environmental side of me panics a little bit. It's very hot and the heat waves aren't good.

3:29But the business side of me is always happy when I see a sunny day and a good weather forecast. And it essentially doubles our capacity. We've got a big garden with 100 covers. So if the garden is available to use, it's obviously great for us. Yeah. And, you know, that brings in more money. What's more important? Is it the football or the sunshine? Football, 100%. The power of football is astronomical. The sunshine helps, but for us, we actually probably had a busier weekend this weekend with the Premier League returning than we had for the previous three weekends with the sun being out. For us, it is our bread and butter.

4:01All right. OK. I have a note here saying that you introduced a Premier League passport this year. What is that? How does it work? We did. I was inspired by it. It's kind of a loyalty card, but it is aimed around the football. So I didn't want to be complacent. I never want to be complacent that we're going to have people in for the football. Luckily, we did. But, you know, we want to always find a point of difference. So basically, you get a stamp for every game that you watch and all the stamps are different. So they say things like red card, a promoted team win, which we've seen already, which has been good so far this season.

4:31Things like a hat trick is scored or your team loses, your team wins. and every stamp you get, it builds up to prizes. So you get a free pint if you get 10 stamps, for example. And if you get all 38, if you watch every single televised Premier League game with us this season, then you get a package on our dartboards and drinks for your friends. So it's been fun. It's been really good so far. We've issued 100 and all 100 have been collected. So we'll see if we need to print some more. There you go. Don't even need fantasy football anymore. We do have a fantasy football league as well. Okay, fair enough.

5:00Yeah, yeah, yeah. I'm not doing well on it at all. So I'm keeping that one on the down. I'm doing terrible. What about you, George? Are you a pub goer? Would you go to a pub for a match or are you kind of sit at home and say, I'm just going to look at it in live score or whatever? No, I love watching all sports in the pub, but where I am, I'm sort of, I think like many, I'm in a rural area. Most of the pubs around me have been shut down, sadly. Oh, no. That must have a big effect on your area and just somewhere to go for an event even. I mean, the bank holiday weekend's coming up too. Yeah, fingers crossed.

5:33I think the one in the next door villages, I've heard rumours it's reopening. That'll be big, exciting. But yeah, it's been utterly brutal for the pub industry for the last five years. So yeah, not surprised. Taya, I'm going to ask you about the bank holiday weekend because what are you expecting for it? Hopefully a busy one. Obviously, again, weather depending, but football's good for the weekend. We've got an event on the Sunday. We do an annual music event called Crampton's Fest that we've done the last few years that's always really good, which hopefully will sell out. That's one of the few ticketed events we do a year.

6:05I don't like making barriers for people. I want to always be open as much as I can. But sometimes when you put on kind of five back-to-back musicians, you need to do a ticketed event. So we do that every year on the bank holiday, which is always fun, kind of an end of summer. Thank you really to our customers as well as just a big celebration. So it's always fun to do. Yeah, it sounds fantastic. I'd love to go. Yeah, come down. It's a great time. There's a few tickets left. It's an interesting one. And I feel like on Wake Up To Money and some other shows that we do on our business desk, we speak to a lot of businesses that have brought in these things in the last couple of years, particularly because their costs have risen and they do need to make events and they need more people to come through the doors.

6:46Are these things that you've done kind of pre-pandemic or are these kind of new initiatives that you've brought in? Yeah, no, Crampton's Fest was pre-pandemic and then it stopped for a little while. And then when I took over Crampton's, I was working for the same company and I kind of re-brought it back but it was a pre-pandemic thing but I think people now more and more are looking for bigger events as opposed to the smaller community pubs and we're seeing that in the trends of as George just said with closing pubs it's definitely becoming more competitive and when you are doing an event it kind of has to be a big one for me it's not necessarily worth doing Friday night music that works very well for other pubs in the area but for me with the size of my venue I kind of need to either go big or not really bother because the cost of the band, the cost of everything is too much, which is why we tend to lean towards things like a festival where we have four or five bands in one day as opposed to every week having music.

7:39That just seems to work for us. But other pubs, obviously, with potentially either a physically smaller venue or a bit more established on the music scene, that's their bread and butter. For us, obviously, it's football. But yes, definitely something we've carried on throughout the pandemic, but it's been harder and harder and the events have become more and more big rather than small and consistent. They are big and one-offs. Yeah, that's interesting. George, we hear a lot from businesses, particularly in the hospitality sector, about you've got the higher wages, national insurance, we're going to talk about that in a second, energy, food costs.

8:11So how much are those higher costs still squeezing them? I hear it constantly. It's especially prevalent in hospitality, but the same in retail, same in most companies. I mean, wage bill, electricity bill, these are the things that keep coming up. Isn't the government's gift to alter this? Because most of your electricity bill is government tax, not anything else. And likewise, you know, they put the price of wages up enormously, especially for young people. Whether or not they'll do anything about it, I don't know. But it comes up all the time. Yeah, well, let's get into that, actually, because the CBI is calling on the government to cut employers' national insurance contributions ahead of the autumn budget.

8:53it's arguing that rising employment costs are making it harder for business to recruit, train and invest. Particularly, it says it's going to give firms more headroom to hire if that was cut and they would hire more young people. So, George, I guess the first question about that is, does the maths add up there? Are these business costs directly hampering job opportunities for young people? Is that how it works? So if we take a step back in the last two years, the cost of employing a young person, So, you know, I'm just talking that sort of straight after school bit has been put up by the government by 33 % when you look at the minimum wage move at the younger end and the NI hike.

9:35So if anyone sees the cost of something go up 33%, they buy less of it. That's what companies are doing. On top of that, obviously, you've had legislation that has made it much more difficult for a business to get rid of someone if they don't like them, if there's something that's not working. So it's also been made much more risky for a business to hire a young person. And if you've got friends, family, who've got kids around school leaving age or trying to get that first job, you'll know how difficult it is. Just even to get a Saturday job in a shop is really, really, really hard. And it's been driven by policy.

10:08I don't think it's, you know, we all got our first jobs doing whatever it was, you know, working in a shop, working in a factory just to get, you know, on the rung. and it's been made incredibly hard by the government. Whether or not they'll do anything about it, I doubt, but I think the logic is very compelling for them to act. Yeah, here's the thing. It would cost some billions, right, to go back on that, wouldn't it? It would, but that's a short term. At the moment, youth unemployment for the first time in 20... In fact, in my living memory, it's now worse than anywhere else in the European average, and that's a really dreadful thing, and that has very long-term, you know, bad scarring effects.

10:51So it is something that they need to face up, that they made a mistake and get on with it. I don't think they will because I think they think they've done a good thing. But anyway, that's... Yeah, I mean, it is a broad... What they're looking for is a broad cut to employers' national insurance. They're not actually targeting young people here, are they? I mean, there are probably other initiatives that they could do. And then you could also argue at the same time, would businesses actually do that? like hospitality sector, fair enough. You have to have somebody, you know, busk the tables. They have to take the orders, et cetera.

11:23We don't have robots who can do that yet. But in an office, would they actually make those savings? Would they say, oh, great, I'll just pocket that and I'll get AI to do those jobs anyway? It's difficult to say, but what we can say is in the last two years, almost every single month, unemployment's got worse. And that's a pretty strong trend. so we can look at what the cause of it was and it stems from that first Rachel Reeves budget when she hikes national insurance. It's not like, it's not sort of a little blip in the data. It's a very, very, very clear trend that that event caused this continual spike in unemployment.

11:59So I don't think it's unreasonable to say if you reverse the policy, you'll see a reverse in that unemployment trend. I can't tell you whether some people will go off and use AI or whatever, but generally speaking, most businesses kind of want to get out and hire and grow. Yeah, for small businesses, I imagine that would be the case. Well, Taya, what about you? Business rates, one of the biggest pressures probably for you at the moment, also national insurance contributions. How is this all feeding into your business? our insurance contributions increased by about 10 000 pounds per payroll for our company so we've got 18 units and about 400 employees and without an increase in employees are increasing national insurance from from rachel reeves hike a hike went up by 10 000 pounds every four weeks which is just an astronomical cost that that gets passed on to the consumer the cost of everything goes up and when there's already a cost of living crisis it obviously has a knock-on effect i'm completely in agreement with George that they need to reverse it, even if it is billions in costs.

12:57It's such a short-sighted policy that doesn't help. I mean, I naturally hire a lot of under-18s. We have glass collectors. We have people that clear tables. We've got people that take orders, et cetera, as you said yourself. And it is on the decline. What previously would have been maybe an eight-hour shift divided by two people that were 16 doing two four-hour shifts each, I've got no real incentive to hire under-18s to do that when I'm paying the same amount of money or the cost has gone up so much that I may as well have someone do the full shift themselves, be trained, be able to serve and you just completely lose that.

13:29And hospitality has got a great history of employing young people, you know, not forcing them, but helping them become more confident and more active and be part of the workforce. I mean, I've been in hospitality my whole life and it is so important. It's such a great industry that's really undervalued and this is just adding to that, one, the undervalued and two, really limiting experiences for young people before they go to uni or whether they stay in the industry long term. It's a really difficult thing for us to navigate. We naturally want students. We want young people back for summer. It helps us navigate the sunny seasons and then the cold seasons.

14:03But it is just becoming more and more. I mean, 10 grand every four weeks is just not feasible. It's definitely a lot, particularly for a smaller business. So hypothetically, right, if national insurance is cut what would you actually do differently then um i would change when i'm hiring people i would be looking more or more my rota i'd be looking more at splitting those shifts and making them shorter so one of the key things for us was the threshold drop so again we hire a lot of people that maybe are using this as a ease back into work if they've just had a kid for example so we get lots of of new mums that want to do certain shift patterns which absolutely works for us if they want to do a breakfast shift for example and we can really make that work and that's the beauty of this industry is it's so flexible when the insurance came in and the rate of which you pay not only increased but the threshold dropped it meant that a lot of our people that were flexi and part-timers fell into that national insurance and so suddenly people that were cheaper for us to hire but also more flexible became very expensive and their shift patterns changed we worked with them but that does mean that now when i hire i'm a bit more apprehensive of what that looks like in terms of shift pattern because i'd rather have one person here full-time than three people here part-time that potentially don't have as much experience so that would be my biggest biggest shift i'll be able to go back a little bit and go actually we can make this work we can be more flexible but that the national insurance increase coupled with a six-month probationary period and all the changes to the employment legislation just makes you more and more cautious to hire i'm actively not hiring as opposed to actively advertising and going out of my way we now don't run paid ads because i don't need to because people are constantly asking for employment whereas previously post-covid it was an indeed out every you know on the run every every day we were paying for it and now we just don't need to George that's a really interesting point isn't it there was just this boom in hiring post-covid and now I guess it's a vicious cycle because if people like Taya aren't hiring then people don't have discretionary spend and that just feeds into the economy yeah well if you read john maymar canes you know one of our most famous uh economists he always described that actually biggest driver of economies is animal spirits how do people feel um and their confidence and that impacts what they spend in the shop do they do they think i'll treat myself let's go to the pub to watch the game let's stay at home let's you know get friends around entertain whatever and that has a big knock-on implications for the economy.

16:33You're spot on. It drives everything. Now, the US has launched a new campaign to further isolate Iran from the global economy and is warning countries and companies that continuing to do business with Tehran could leave them facing American sanctions too. US Treasury Secretary Scott Besson called it Operation Economic Outcast. This is how he introduced it just after six o 'clock UK time last night. We are launching an economic onslaught against Iran's financial connections around the globe. Around the globe. Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone.

17:17Now, the U.S. has already sanctioned nearly 60 individuals, companies and vessels and has widened the types of activity that could be targeted in the future, including shipping, aviation, technology, gold and digital assets. But when Mr. Besant gave few details about who could be targeted or when. So let's speak to Rowena Adourazak, a lecturer on the Middle East and Africa, SOAS University of London. Rowena, good morning. Good morning. Thank you for having me. Well, thank you for being here. Just explain this to me. Iran is already one of the most heavily sanctioned countries in the world. So what is actually new here?

17:54That's a very good question. And it really sounds like the US is just trying to find the straw that will eventually break Iran's back. And they are truly clutching at straws. You know, they've tried different tactics. They've tried military tactics. They've tried the blockade in the Strait of Hormuz. And now they're just trying to isolate Iran even further. It's quite hard to see if there's anything new per se, but they do know that, and this is true, Iran is under quite a lot of pressure. We do know that even before the war started, Iran had been facing quite a lot of economic pressure that did lead to quite big protests against the government.

18:37So I think they're trying to recreate the circumstances, well, the US is trying to recreate the circumstances where Iran feels even more economic pressure and the Iranian people might rise up against the government again. But we are facing a very different Iran from six months ago. So Iran is now hardened by war. They're more determined. And even the Iranian finance minister has come up and said that they're going to resist this. So they're really in full survival mode. They're in full resistance mode. So whether it's new per se, it isn't new, as you've said. Iran is not new to sanctions. They know how to survive under economic pressure.

19:17But at the same time, they're trying to just find the pressure point that will eventually make Iran capitulate. Whether that would happen is obviously will remain to be seen. And it's got the Strait of Hormuz. That's the thing that it's now realized is its power, essentially. It is. It is. It is. And but at the same time, you know, the blockade that the US has imposed on Iran has hurt Iran to some extent. You know, it has stopped quite a lot of ships going into Iran. So we have seen that. But nonetheless, it hasn't quite resulted in the collapse that it was expecting, the U.S. blockade anyway.

19:55So hence this need to try and find something new. And, you know, with the 60-day deadline passing, I think the U.S. needs to be seen to be doing something, especially when facing such resistance on the Iranian side. Having said that, you know, Iran is trying to find a solution with regards to the Strait of Hormuz. It has entered into talks with Oman already. So, yeah, I think it's trying to, the US is trying to find different ways to sort of put Iran to task, as it were. It's one of the big threats on these sanctions against people and businesses outside Iran that continue dealing with it. You've got China, you've got different, you know, major kind of third or lower income countries rather that do deal a lot with Iran still.

20:44Yes, definitely. And a lot of these middle powers, I think on the 60 entities that they mentioned are mainly based in Hong Kong, Singapore, China, I think also Switzerland as well. But, you know, in the past, many other countries have actually sort of facilitated Iranian sort of Iranian economy in places like Thailand, Malaysia, Pakistan, all of these other middle powers. And they have been penalized before for helping Iran. And some of them have also ignored sanctions. So whether the sanctions are actually going to be honored by these countries also remains to be seen. We know that China doesn't really, you know, they don't subscribe to the sanctions.

21:31So then they may quite ignore this new threat. And from what I understand, some Chinese financial institutions that actually help oil exports are not targeted either. So it's not a complete isolation. So the sanctions are, I mean, these new sanctions are not fully encompassing either. I thought that was quite interesting because China is Iran's biggest oil buyer. And yeah, they didn't target and they kind of fell short of targeting those banks. Exactly. And China is going to protect Chinese interests. And as far as China is concerned, you know, they're probably going to keep their flow of oil from Iran happening.

22:10And in fact, from what I've understood, one of the reasons why, especially in Asia,

22:18the oil, the blockade in the Strait of Hormuz hasn't really affected oil in Asia is because of China. So I think America also knows this as well. So it doesn't want to hurt too much the global economy. Yeah. George, I'm going to bring you in here. So if the US starts targeting companies or banks in third countries for doing businesses with Iran, where does that market risk show up first, do you think? Oil price? So there's a few sort of moving points. First of all, as you previously said, look, China is the key participant here. During this whole conflict, they've run down their strategic reserve quite aggressively from a couple of billion barrels to a billion.

23:02And so if they come back into the world market, you'd see a very aggressive move up in oil. And, yeah, that would have consequences for us all in terms of power prices. But, you know, the knock on bits down the chain in terms of diesel and other. The U.S. is trying to engineer very severe economic outcomes in Iran. and we're seeing that we've got inflation at 60, 100%. The currency's absolutely collapsed. The regime themselves then faces the challenge of will they face social unrest? And last time they did that, they went onto the street and started machine gunning their own people. So it was really brutal.

23:46So there's a lot of consequences from this. So we've got to keep a sort of close eye. But ultimately, I think what the US is trying to do is at the moment, there is no negotiations. There's no real direct talks. They're trying to get them back to the table. I mean, markets have lived with sanctions on Iran for years. So do investors think that this latest move is materially different? that's a good question i think the reality is no i think the market we've seen the market comprising more attention to what the iranians are saying than what trump is saying because he's still i mean even last week he sort of sent a tweet out saying the straits open the oil is very freely you know it's sort of still a little bit sort of erratic what comes out of him um and you know actually the market is basically pricing in that there'll be some form of a resolution between now and year end but then we just said exactly the same sort of three months ago that we'd be you know before the midterms there'd be something i think that still remains the key date that he would like to have it um sorted out by because if he's going to sort of stand in front of the uh u.s public and try and get you know get his senators and you know the government's re-elected, that's going to be pretty hard work with gasoline prices are high because it does really affect the US voter.

25:10Rowena, when we talk about sanctions, they can kind of sometimes be this abstract idea, right? But actually, who bears that economic pain of these sanctions inside Iran? Well, it's ordinary people. As already mentioned, the Iranian real is at an all-time low. I think it's gone down quite a lot, although I think the free market is slightly different. I think generally they price the Iranian real about 29 % higher because the Iranian central bank has actually issued a statement saying that it does hold foreign currency that will help with exports and imports. So Iran is desperately trying to reassure people that they've got enough to provide for medicines that come from abroad and that sort of thing, which was one of the big issues a couple of months ago.

26:02Certain medicines were not coming in. Whether that, you know, Iran can say one thing, but whether that translates the same to ordinary people is different. We've seen the increase of food prices by about 100 % in the last few months. So, you know, the cost is going to be quite a lot for people to bear. But at the same time, again, this is a country that does know how to work around sanctions. It's a very self-sufficient country. It has quite a lot of good food supplies, although with quite bad drought. Just a few months ago, I don't know if anyone remembers, but Tehran was facing horrible drought and there was even talk of evacuating Tehran.

26:45This is a city of about 15 million people because of this drought. So food security certainly has decreased in the last year at least. So the pressure will be immense on top of that, having had to live through war. So the anxiety of Iranians has also increased as well. Rowena Abdul-Rozak, thank you so much. Lecture on the Middle East and Africa, SOAS University of London. Thanks so much for joining us. Thank you for having me. Now, Taya, I'm going to bring you in here. Now, this may feel a long way from a sports bar and broad stairs, But at the same time, you might hear about another geopolitical development saying it could push up oil or energy prices.

27:28So does that make you nervous? I wouldn't say nervous. I think we've weathered many a storm, including similar situations before. But yeah, definitely when it's piling on, it does become very intense. I mean, when cost of living happened and the massive increase in energy bills occurred, it was really stressful. I mean, for us, we were getting quoted a quarter of a million pound increase in a year of energy bills. And it's not falling back down and stuff like this makes it go. It's another thing to contend with. And as George touched on earlier, you know, you want confident consumers. And if we don't have confident consumers, whether that's here or across the whole hospitality market in the world, it obviously has a massive impact on spending.