Do Not Disturb

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0:49BBC Sounds. Music, radio, podcasts. Wake Up To Money from BBC Five Live. Hello, welcome to Wake Up To Money. What is at stake for England in their World Cup semi-final? Never mind a potential World Cup victory. What about the sponsorship for the players? The hospitality boost here in the UK? Could there be a productivity hit? We will take a look elsewhere. Night-time curfews and an automatic off-switch for features which encourage scrolling. Just two of the new measures announced this morning to try to get young people off social media. We'll find out more there. and it's been a chaotic 24 hours which has seen Donald Trump pull his threat of a 20 % fee on ships travelling through the Strait of Hormuz.

1:34Because I don't think anybody should be able to charge a fee for the Strait. Wake Up To Money with Sean Farrington. Good morning. Wake Up To Money on BBC Five Live on this Wednesday morning, the 15th of July. Thank you very much for being with us. 85058. Get that number stored in your phone for the day ahead. The reaction to the match later tonight on BBC 5 Live. Lots to discuss over the course of the show about what the World Cup might mean for you, what it might mean for the players, what it might mean for business right around the UK. We've been looking at plenty of aspects of that over recent weeks and we'll dig into the numbers a little bit more on Wake Up To Money this morning.

2:22I've got Byron Dixon with me, founder and chief executive of the Leicester-based biotech company Microfesh, joins us from Leicester this morning. Byron, very good morning. Good morning, Sean. How are you doing? You all right? I'm good, thank you. I'd normally see you in the flesh, Byron, and I'd be feeling your morning energies without a World Cup game on the horizon. How are you doing today? Yeah, I'm good. There's my metaphorical wave over the airways. So, yeah, it's good. It's early, but I'm not complaining. Yeah, glad to be talking to the nation. You can start all of your analysis and your thoughts about what the line-up should be and how England might possibly, if they win, look against Spain in a final on Sunday.

3:05Were you watching the game last night at all, keeping an eye on that? I did, ironically, and I thought Spain were very good. We've just opened a new manufacturing partner in Spain, so we were texting each other, having the banter, I think is the phrase. Of course, I was telling him how good Spain were before I realised, eek, we might be getting them in the final. Yeah, one step at a time. Hey, Laura. Laura Lambie also with us this morning, Senior Investment Director at Rathbones, joining us from Glasgow. Laura, good morning. Good morning, Sean. Always, you know, I'm treading delicately here. You know, I don't want to just jump in and make assumptions.

3:43You can assume all you like. My husband is English. I will be supporting the English team tonight. Good. Well, that's England fans around the country will be pleased to hear all the added support they're getting. Laura, we'd often have a little look at how major events impact the way we're all behaving. And months later, I think over the years, it could be Taylor Swiftonomics, where we've seen hospitality booms around the world and hotels selling out and things like that. When it's something as major as a World Cup, and we'll get into the specific numbers of this World Cup a bit later, but it does seem that on some fronts, people are considering it a success.

4:25What does that mean economically for a country like the UK? Oh, I think the hospitality sector is really enjoying the increased footfall. They are, I think we were listening yesterday to one of your guests who was talking about putting screens up in outdoor areas, in pubs and clubs and whatever. And that can only be a good thing for the economy, getting people out and about. And also, you know, it's the feel good factor about all of this. I mean, the feel good factor in Scotland was the fact that we actually qualified, which was enough to give the Scottish economy a boost, I think. But, you know, we're going, you know, the English team are getting through and that, you know, has big events today.

5:12If they get through to the final, then I'm sure the hospitality sector will be welcoming the final and all the benefits that that will bring. And I guess if there's a run of success, as England have had, if you get a bit of momentum over many years, which has been the story over the last eight years for England, then businesses may be starting to plan a bit more for success and people mentally thinking, right, there's a World Cup or a Euros round the corner. I've seen that with the men's and women's team. I'm going to be making plans for the coming month and thinking about where their spend might be.

5:49So 85058, join in the chat. Let us know what your plans are for tonight, where you spend, has been this World Cup, where it might be in the next few days. We've got plenty else to discuss as well. We're going to be tapping into our colleagues in India this morning more than we usually do because there's plenty of stories coming out of Asia as we wait this morning, including about China's economic growth. Keep an eye on these numbers. They have the targets in China and it's missed its latest economic growth targets. It's already reduced those targets, an already reduced target that was set in March.

6:27It's lowest growth and lowest period, lowest growth target since 1991. Archana Shukla joins us from our Mumbai office in India. Archana, good morning to you. Just give us an upsum of what's happened with China's economy. Hey, good morning. Well, China has reported its slowest growth that it has reported in four years. But it's also at the lower end of the target, like you were mentioning. They have given themselves a target of 4.5 % to 5 % economic growth for a quarter period. but they've reported it at 4.3 % and it really shows the kind of concerns that are there for the second largest economy in the world.

7:10And some part of it is driven by the war in Iran, but largely it's driven by lack of demand within the Chinese economy. So Chinese people are not buying and consuming as much as they were earlier. There is a slowdown there and that largely is impacting China's growth. And why is that? Well, you know, China is actually going through a period of demand supply mismatch. So China is largely now focused on exports, not so much on domestic demand, because, you know, people don't have as much money to spend on buying things. There has been a prolonged property slump, you know, that has taken away money from the market.

7:55and that also has hurt consumption in China. And that's one of the reasons why the domestic economy is not doing that well. The government itself is also not spending as much money in the domestic market. Even in the current numbers, there is a drastic decrease in the amount of money the government is spending, fiscal spending in terms of doing infrastructure or other programs and projects, subsidies, etc. And that also is reducing money from the market for consumption. Archana, thank you for that update this morning. Archana Shukla there from Mumbai. So there's a lot of ripple effects that can occur if the economy in China is not growing quite as much as it was hoping it would in China.

8:41And Laura, maybe if others around the world are not expecting China's growth to be what it once was, even what it might have been just a few months ago. I imagine that can change confidence for lots of businesses around the world trading with China. Very much so, yes. I mean, as your reporter said, it's a very significant economy. Historically, you know, has generated about a third of annual global growth. So I suppose there's two big things. One is the biggest consumer of commodities. You know, things like copper, iron ore has an impact on those producers. And, you know, for the retail side of things, many multinational businesses rely heavily on Chinese consumers.

9:26So things like luxury goods, luxury cars and also on the kind of industrial side, IT plays an important role. So, yes, a very significant economy, not a massive miss in terms of their GDP. But, yes, it's slightly concerning, I would say. Byron, your biotech company, Microfesh, am I right in saying you make your stuff in the UK? We do, that's right. So we often hear of things being made in China and the competition that can come from a booming, strong Chinese economy increases that pressure on other manufacturers around the world. Is yours an industry where you're sort of aware of whether it's Chinese competitors or where that economy might be in the background?

10:15Absolutely, Sean. Our products exported to China. So we're going back in empty containers and then their goods, finished goods, have exported across the world. So although it does affect us, it doesn't affect us so much. But what I do know is that the numbers that we're talking about, the fact that forecast 4.9 to 5 % growth and got 4.3 is seismic. It really is, because I remember being on this program about a year ago, talking about 7 % growth for China. And just for the listeners to put it into context, in the UK, we typically talk about 0.1 or 0.2 % growth. Yes. So that is absolutely seismic.

10:52So our China office are doing quite well. They're just under pressure for pricing. That's the only thing. but demand is still there. Right. So what do you think's going on in the Chinese economy then? We heard sort of Archana's take there on the numbers this morning, but you're dealing with businesses, you've got offices there. What's really going on that means it's not growing how it once was? I think there's a couple of things. One is that the Chinese consumer has less to spend. From what we know, a lot of manufacturing is now moving to cheaper countries, cheaper alternatives like Bangladesh.

11:25So that's affected the Chinese exporting economy quite badly. So there's pressure there that they've generally not had for several years. And I know I think it was mentioned it's their lowest economic growth since 1991, which coincides almost with the start of the, as they call it, the Chinese economy growth. Yeah, the lowest target, to correct myself there from a little bit earlier. But they're expecting that their lowest growth, you know, that is what they're sort of aiming for. The target is the lowest it's been since that period. So all playing into exactly what you're saying there. I'm going to bring in Megan Sutcliffe, who's a geopolitical and security intelligence analyst specialising in the Middle East and Africa at Sibyl Iron.

12:10Megan, good morning to you once again. Listeners will be very familiar with us talking to you over recent months because of developments in the war in Iran. And we're going to do that this morning. I just wondered if there was, you know, you saw a link between China's economy and what has been occurring in the Middle East with the struggles to get products out of the Middle East. Good morning, Sean. There is absolutely a link between what has been going on in the Middle East and in the Strait of Hormuz and what is going on in China. There are two primary drivers here. The first, of course, is that China is heavily dependent on the various energy exports that come out of the Gulf, and particularly in the past few years, has gained a unique access to discounted Iranian crude exports due to the fact that it is willing to deal with the complex network of international sanctions on Iranian exports.

13:04That fuels Chinese manufacturing and helps to keep costs low. But more broadly, as China is increasingly an export geared economy when it comes to sending goods overseas and selling those, when consumers have less confidence and are not feeling as willing to spend money on different goods or services that are produced by companies with a presence in China, that impacts their output. Over the past few months, we've seen rising fuel prices and increasing uncertainty in both consumer and business markets. So that all comes together to have an impact on the Chinese economy and to undermine prospects for progressive and continuous growth, at least through the rest of 2026.

13:46And Megan, let's catch up with the latest on the Strait of Hormuz and what's occurring between the United States and Iran. Because this time yesterday morning, we were chatting about Donald Trump's plan to place a 20 % fee on traffic going through the Strait of Hormuz. The only way that could potentially work is if the US, for some reason, would say, fine, we will send you a bill, you will have to pay the money, or we will impound your ships, which would basically go against any international shipping rules. I do not see how this could work in practice. That's Lars Jensen, who's a former director at Maersk, a big shipping company, and he's chief executive of Spooching Maritime Shipping.

14:26Since that conversation, Megan, Donald Trump and that demand didn't even seem to last 24 hours. He said, actually, he's not really inclined to take a fee. What happened? Well, really what we saw here was Trump in a relatively unexpected but predictable move when it comes to the way that he deals with the international community and particularly with the Gulf was him changing tact and saying that instead of collecting this 20 % tariff from each and every vessel, that rather the Gulf monarchies, so Saudi Arabia, Qatar, Kuwait, Bahrain and Oman would reimburse the United States for protecting shipping by investing in the US.

15:07Now, it's entirely unclear what exactly Trump is looking for here, the size of any potential investment package, what industries or locations that would be in. But generally speaking, what that speaks to is the broader ambiguity at play here when it comes to resolving the situation in the Strait of Four moves, what the role of the United States is going to be, and how the Gulf fits into all of that. Right. And so where do you see this going next, Megan? Because we're starting to get these headlines again of petrol and diesel prices here in the UK on the up once more. The price of a barrel of Brent crude certainly jumped a fair bit at the beginning of this week and I think is a little higher again this morning, so$85.5 a barrel.

15:54Given how many times we've spoken to you in recent months and where we've been on the rollercoaster ride of whether a deal is going to get done, a deal getting done, a memorandum of understanding getting done, more optimism. Does this remind you of any previous points of the war that we've been at? This does remind me of a previous point in the war, because at present what we're looking at is the United States and Iran engaging in increasingly frequent kinetic exchanges, essentially exchanging attacks back and forth over the Persian Gulf. And while those tensions have not completely boiled over at this point in time into conflict resumption, the situation is becoming increasingly serious.

16:38And that is not going to be helped by US President Donald Trump's statement last night, indicating that not only is the US going to continue intensifying its airstrike campaigns today and tomorrow, but that next week the US will allegedly begin striking energy facilities within Iran. That is a claim that we have seen from Trump before, though. It's a way that he will often attempt to maximize pressure on Iranian negotiators to make concessions in negotiations that are likely continuing through informal and back channels at this point in time. So what we're likely going to see over the next few days is a continued intensification of the hostilities we've seen over the past week.

17:19That is, of course, a very concerning situation when it comes to market stability and when it comes to operational conditions in the Gulf. So it expects to see continued price volatility on various energy and commodity markets. However, given that these are threats that Trump has repeatedly made before, oil going over, for example,$100 a barrel is not something that will likely happen at least in the next few days. But of course, the broader trajectory of prices and of stability in the region is going to be entirely dependent on whether or not the US and Iran are able to meet each other with their negotiating positions in the next few days.

17:55Megan, thank you once again for your time this morning. Megan Sutcliffe there, analyst from Sibylline specialising in the Middle East and Africa. We'll have a little bit more of a look about how this ends up impacting prices. We're seeing some data in the United States, how it's impacting prices, what that might have happened for prices here in the UK. Are we starting to have different views about interest rates again, or are those changing views that we've seen this year becoming a bit more embedded as people are making their own household decisions on budgets, seeing what conversations are happening with their rents, with their landlords, all of this plays into that.

18:30So, Byron, how's Leicester this morning? Leicester's great. It's a little bit chilly. Chilly? Yeah, for this time of morning. But they tell me that it's going to warm up later. I would say it's probably 15, 16. so I haven't got my overcoat on, but yeah, it looks like it's going to be a warm one. Oh, wow. Chilly. Haven't anybody used that word for a good few weeks? Laura, how are you in Glasgow? We're very much the same as Byron. It's not, I don't know if it's necessarily chilly, but it's overcast, but I think we're going to get really good weather. We had a beautiful day yesterday, albeit it started cold.

19:07Yeah, I think Byron's just taken for granted what we've had at Chile. I can't believe that. Byron, let's get back onto business matters. Hearing what Megan was describing there and how she was putting what's happened in the last 24 hours and the oil price rising out of the Middle East once again. How does this start to filter through to a business like yours when this uncertainty now has been around for quite some time and any confidence that people had of a deal being done has gone? Are you able to crack on regardless? Sure. The short answer is no, we're not. This instability, it's chronic now.

19:55It's just something that's inbuilt now into business life. Prices are fluctuating daily. When we get raw material prices now, the quotes are typically seven days. They used to be six months. So to try and reinvest into your or try and invest in your business or reinvest, it's really, really difficult. And we're seeing this play across lots of different fields, not just business economy, but also in things like house pricing. Everybody's on pause because we're not sure what's coming next. And in terms of your price pressures, Byron, are they changing at all? Are they being passed on at all? Yeah, I mean, in the early days of the Iran-US war, they were all over the place.

20:37Well, always going up, ironically. There's been some stability now. With the last conflict in the last few weeks, it's not gone up that much. But in the early days, it was awful. We were getting, as I say, seven-day quotes. Now there's been some settling and we're trying to push our suppliers to 30-day quotes, which is quite difficult, but that's what we're having to do. To try and lock it in for a whole month. Try and lock it in for a month, but there's nothing beyond that. So at the minute, I know SME owners are really feeling that instability and that lack of confidence. You don't know where you are week by week.

21:10Laura, we've got some official numbers out of the United States about how consumer prices, Its consumer price index over in the US have moved and they rose by less than expected. And it seems to be thanks to lower energy costs. This is a reflection on June, of course. What do you make of this? This is CPI, consumer price index, year on year down to 3.5. And I think very positive for markets, as you say, reflecting lower energy costs. I mean, America's in a very different position than us here in the UK, where we don't have really control over our energy costs. And, you know, as Biden was saying, it's extremely difficult to manage a business, to invest, to take on staff if one of your major input costs fluctuates so daily.

22:03And, you know, you can't plan on the back of that. But certainly with the US, it was greeted quite favourably and indicates probably that the Fed will not hike interest rates, which will, I think, please the president. And, you know, that has positive impacts for interest rates, not just, I think, in the US, but globally. And can that have a ripple effect on any interest rate decisions happening here? I noticed that yesterday, when we look at the bond market and effectively the one way of looking at the cost of borrowing for the UK government over a 10 year period, it went above 5 percent again.

22:47And this morning, you know, when we look at where it is, it's slightly looks like being slightly below that. But it's it's around those more heightened levels. Does does the interest rate prospects for the UK change because of all of this? I think there's a kind of double edged sword to the UK. One is the global nature of high inflation having an impact on interest rates. But also, I think it's the the impact of who is going to be the next chancellor and what impact that will have on things like government spending, which if it increases, then that has a negative impact on the direction of interest rates.

23:27i.e. interest rates may well go up because of higher borrowing, higher inflation expectations, and let's hope not, but a potential loss of fiscal credibility. So there's two things going on in the UK. And just a quick one on BP, Laura, again, tying into all of this, but it's updated everybody yesterday saying it reckoned it would see profits be bigger in the second quarter of the year because of oil and gas prices. I know BP was sort of giving investors like yourselves a bit of a heads up of what might be coming, but were you expecting this anyway? Yes, most of the oil majors will not unexpectedly benefit from a higher oil price at$85 a barrel or whatever.

24:16BP is quite interesting because they've come through a kind of traumatic period. They've gone through three chairmen and three chief execs in three years. They seem to have settled down a bit. New CEO Meg O 'Neill has promised a big improvement in returns on capital and seems to be delivering. But really, it's higher oil prices and stronger gas prices that have prompted this good result in terms of earnings. Right. 85058, do keep your thoughts coming on all we are discussing this morning. interesting falls as well, Laura. IBM, the share price down more than 25 % yesterday. So worst day on record.

24:56Now, I know we often talk about tech companies in recent times as being some of the biggest businesses in the world. And I know some haven't had as good a few months, but is IBM struggling relative to some of those big names that we often discuss? It's an interesting one. As you say, they lost a quarter of their value yesterday. They finished down 25 percent. Worst day decline since the market crashed in 1987. So it's really significant. And this was really a shift of consumers, of their clients, redirecting spending towards servers and storage and memory rather than IBM's core offering. And I suppose the question is, is this temporary?

25:44Are we going to bounce back in the next quarter? Or is it a permanent shift in spending patterns? And if that's the case, then that has big impacts for IBM. Byron, I wanted to pounce this one on you that we've not prepped you for, about entrepreneurship in the UK. It was a very interesting tweet shared by our, or post on X, as we say, by our economics editor, Faisal Islam, yesterday, that was about Stripe, the huge global payments, financial services business, and the insights that Stripe has on various countries around the world. And the boss at Stripe sort of saying that actually, you know, maybe there is a bit of an entrepreneurship boom in the UK.

26:32Official figures not showing an increase, but in their numbers at Stripe, when this is to quote the post on X, we dug into the data, and as far as we can tell, the official figures are probably misleading. The good and the bad news, mostly good I think, is that the UK is almost certainly witnessing an unmeasured boom in entrepreneurship. Do you detect, Byron, in your years with peers around you in the entrepreneurial sector that are we in a boom? Does it feel like there's confidence there? I absolutely do feel that, yeah. I mean, the definition of entrepreneurship is we take a lot of risk. So there's a lot of young, especially younger risk takers saying, I've got an idea.

27:13I'm going to make this idea brilliant and I'm going to sell it because they don't want corporate life. They don't want a job. A job now can be seen as more insecure than being an entrepreneur. So I talk to a lot of entrepreneurs and there is a massive boom. We are third in the world for startups, entrepreneurship with 13th for scale ups, which is a conversation for another program. but a lot of especially younger people see entrepreneur almost like a job title they say i'm talking 12 to 15 year olds i work with say i want to be an entrepreneur and what kind of things are they doing uh they'll do anything it's you know i mean it's not kind of like the tuck shop selling crisps for a small profit but that's how they're thinking and i'm going to say this um a lot of people are disillusioned with the education system so they see a way out it's to be an entrepreneur.