Highlights, no camera, action

0:00This BBC podcast is supported by ads outside the UK. Pop quiz. What's in your kids' lunchbox? At Whole Foods Market, they've already done the studying. Over 300 food ingredients are banned from their shelves. No hydronated fats in the peanut butter and no high fructose corn syrup in the cookies. And for sandwiches, there are no synthetic nitrates or nitrites in any of their deli meat. So you can pack lunchboxes with peace of mind. Get back to school ready at Whole Foods Market. How many streaming subscriptions do you have? Is it the same for your business? Avoid it by having all your business on one platform.

0:40Try Odoo for free at odoo.com. That's O-D-O-O dot com.

0:55Hello, morning. Welcome to Wake Up To Money. How many of you have been escaping the heat with a visit to your local cinema this summer? Quite a lot, it seems. We'll be hearing how a summer of blockbusters has meant more bums than seats than since 2019, apparently. You may also be planning a trip to see this singer this week.

1:16Well, you can look, but you can't film. Fans attending Phoebe Bridges' UK gigs will have to put their phones away while she's on stage. We'll hear how venues are planning to manage that by speaking to one of our biggest and our expert panel will be on hand, And as always on a Friday, to look back over a surprisingly busy August week, we'll be talking economic growth and what we learned from our interview with the Prime Minister. Wake Up To Money with Will Bain. Morning. Welcome to Wake Up To Money on Friday the 14th of August. Just gone five o 'clock in the morning. Will with you again this morning.

1:46Great to have your company. Yes, we're going to round up a really busy business week. We're going to hear a little bit more of our interview with Andy Burnham and chat to our panel about what they took away perhaps from it. Those GDP figures that Simon French was teeing up on the programme for us yesterday, we'll dig into what we learnt from them, including a surprising boost for advertising amongst others. And that might lead us to that bumper box office, the best box office takings around the world since 2019. Cinema really back, it seems, so we'll try and work out why as well. And we'll hear from one of the bosses of one of the world's biggest shipping firms.

2:17So lots to get to, but we will break away too if we get the result in this by-election in Clacton. And to bring you up to speed with the latest, if you weren't with Charlie there, 34 candidates, of course, UK record in this by-election, called by Nigel Farage in his Clacton seat. So none of the main parties stood. They reckoned this by-election should have taken place after the parliamentary investigation into Nigel Farage's finances. So none of them involved. 34 candidates, though, including the reform leader. and of course many who have been on your television screens a lot in the past few weeks, most notably Count Binface and lots of other satirical and comedy characters in there as well.

2:57Turnout we've had confirmed just at over 44%. The reform leader has already spoken at what he's called Farage Fest, an event with his supporters, not at the count. He's not planning to attend the account itself. He said he will not be humiliated, standing next to nobodies after what he claims is a resounding win. But the Reform Party, who are still at the count, have gone on to tell our reporter Harry Farley that Essex police had warned of a credible threat to Nigel Farage. And that's why he was not attending. That's been put to the returning officer there at Clacton. So that's the person who basically runs these events.

3:39That's Ian Davidson. And Ian Davidson has told the BBC in the last few minutes, We've worked closely with Essex police colleagues to ensure the election process is completed safely and securely, as is evident from the level of security we have in place here today. This includes a robust policing operation throughout the day and including at the count. It's a candidate's decision whether or not to attend the count. However, I want to reassure people we have no reason not to proceed with the count process at this time. A little bit of Nigel Farage's, I guess, speech because he's claiming victory already.

4:08he has said the people of Clacton will be his judge and he called this by-election because I wanted the people of Clacton the voters of this constituency to be my judge not the mainstream media in Britain the verdict has now come in he says it's a convincing and overwhelming win I've won far more votes than in 2024 we haven't got the official result yet if and when we do get it we will cross to it live here on 5 Live we're expecting and the returning officer saying around 6 o 'clock so if we don't get it here and wake up to money then Rima and Stefan will pick that up there. I'll keep you up to date with that if there's any changes but that is the latest there and we'll have some more on that in the news headlines as well.

4:44Shall we introduce you to our Friday panel then and get stuck into the business rather than the politics? Catherine Jacob is back with us, Chief Executive of the cinema advertising business, Pearl and Dean. Morning Catherine, great to have you back on the programme. Good morning Will. And we'll talk about it in a bit more detail but are you guys riding that comeback I guess for the box office? Oh of course we are, we're having a lovely time. And everyone's having a nice time going to the cinema too. Is it just blockbusters? I mean, we'll get into this in more detail. Is it the big blockbusters coming back or is there a bit more going on?

5:13Summer is always the time of the blockbusters. But, you know, even today we've got some smaller releases, but which will find an audience like The End of Oak Street and Sunny Dancer, which is filmed by a young 26-year-old British director, George Jakes, who's assembled a stellar cast in Sunny Dancer. so yeah there is Cinemarials I think I've bored you with before is all about what you offer people in choice and some people love blockbusters some people are looking forward to you know the awards corridor you know kids films have done really well this year as well with Toy Story you know doing very very well so it's horses for courses we offer something for everyone Well as I say we will chat a little bit more about that in depth a little bit later on and we'd love to know what you're seeing out there have you been out to the pictures have you been back more than you have been in the last few years because that seems to be the trend and have you been spending a bit more on it because that also seems to be the trend and that could well be to do with ticket prices 85058 is to get involved with that or anything else indeed you hear throughout the program this morning alongside Catherine for the next hour Justin Onyakuzi back with us Justin the chief investment officer at St James's place morning Justin how are you morning how are you yeah not too bad thanks been hiding out in the cinema to get away from the 38 degrees or too busy at work at the moment with earnings season yeah there's a few things that i've wanted to watch this year but i haven't actually been able to to go all year so i've been stuck in um my um understanding markets and watch driving returns year to date rather than rather than going to the cinema unfortunately what's been the takeaway we'll dive into some of the uk wide stuff this week but just from stocks and shares anything that's kind of um made your eyebrows raise in the last couple of weeks i both since we've had you on because we've had obviously US earnings season as well as lots of corporate results here in the UK.

7:01Yeah, I think the earnings season has been decent, but I think what continues to concern me is just the dispersion of stocks, the difference between the winners and the losers. And again, we saw that yesterday, a big difference between the UK and the US in terms of returns. So we'll talk about that later on, but there's this huge amount of dispersion in markets. And I think that's something that is concerning me. Yeah, really interesting. We will try and pick up on that in a bit more detail as well. The final member of our panel this morning, Linda Yu, back with us. Linda, economist at Oxford University in the London Business School as well.

7:33Linda, morning. Great to have you back too. Morning, Will. Great to be here. Much of a cinema fan yourself? Oh, I love cinema. I never actually thought about escaping to it just for the air conditioning. I'm not sure why it never occurred to me. But the one round me at the moment has got one of those chalkboards outside literally pointing saying cold drinks and cold air con, not even advertising the films at the moment. So shouting as a hangout. And as I was joking about yesterday on the programme, being as ginger as I am, both of those things appeal to me after getting up at two o 'clock in the morning sometimes.

8:05Right. Let's dive into the business news. We'll talk some cinema later on, because, of course, Fliss had this sit down with or it was a stand up, actually, looking at the pictures with Andy Burnham in Derbyshire, Ilkeston, a little bit early. on in the week. Among other things, the Prime Minister told us that he thought, though he appreciated the difficulties businesses were facing, the increase to employers' national insurance, further steps to help might be tricky. Of course, it added pressure. The cost of energy is adding pressure. So businesses, I understand what they're saying and what they're feeling.

8:40And my job is to not just hear that, but then respond to it and see what we can do. I wouldn't want to, at this point, start making commitments. Those are for the budget, and these issues can be looked at at the budget. And as I said before, the room for manoeuvre is not huge. Well, although he didn't want to make any more commitments, Flish pushed him, and he did talk a little bit about more commitments. He said he accepted his announcements aimed at tackling the cost of living and not enough on their own, and he did give a bit of a hint about further support. I can accept criticism that this isn't enough because I wouldn't say it's enough but I take an approach to politics where I do what I can when I can.

9:23Just take that little bit of pressure off and address an issue that you know needs addressing. It's not the end of the story. I've made it very plain that this needs to be a cost of living government. That has got to be our main focus and you can't solve that with one big move. obviously big moves can help what you've got to do is just put an accumulation of smaller things in that in the end will combine to take the pressure down. Catherine why don't you lead us off on this and we'll zoom in on what's going on in the economy a little bit more with when we talk GDP in a moment but just as a business leader a broad take of what the new government in the first few weeks what have you made of it what have you taken away of the approach?

10:04I think there's been An interesting approach, but, you know, it's very piecemeal. And I think that after kind of we've had this before, which is periods of uncertainty before budgets, etc. I think some clarity of narrative and even if it is, you know, that piece around we're going to do what we can when we can. Well, yeah, but can we understand the whole picture? That would be inordinately helpful rather than this sort of announcements that don't seem to have a joined up narrative. Linda, what's been your takeaway in those first few weeks? I think I'd agree with that. I think he is a bit constrained because he doesn't want to, they say this all the time, pre-judge the budget, which is coming in October.

10:47This always seems a helpful get out that, doesn't it, from the really difficult choices they've got on tax and spend. Yep, exactly. But I think generally, if he's very focused on cost of living, I think it would be fascinating to see whether or not the strategy actually shifts to improving average incomes. Because if you think about GDP growth, that's how the economy grows. It's actually a very different strategic focus to say we're going to improve people's disposable incomes. How much money do people have at the end of the day? And if you can regear growth strategy as well as and feed into the budget, because the budget isn't a standalone piece.

11:23It's trying to achieve something. It'd be interesting. I don't think it'll happen. But if they were to retarget rather than, you know, the usual things they have to, which is, you know, tax and spend, he says that he's going to stick to the fiscal rules. He, you know, is going to have strong fiscal discipline. However, your goal could be different than what the previous government have been. Because there's things, aren't there, Linda, outside of fiscal policy, tax and spend that you could do that could boost growth, aren't there? Yes. And I think he touched on actually, I think some of that, because he's very keen on devolution, as we all know.

12:00So you can focus on, for instance, borrowing to invest. That's another fiscal rule. So you can prove people's productivity through, for instance, better transport. You can, you know, there's a number of things you can do around infrastructure, both physical and digital. I think those kinds of things, I think, would actually make work a bit easier, cheaper to get to, easier for businesses to invest. So those types of investment-led reforms, I think, will be a focus. And I think they've already said they've got about nine billion pounds of capacity if they were to borrow to invest to do that. I think that could boost growth and how they do it would be key because I think we've heard about it for a couple of years now.

12:50But what exactly are they going to devolve and what kinds of investments can they actually do fairly quickly to help people's cost of living? And you can either cut the cost or you could boost their wages. I say this with a bit of trepidation because I heard one of my least favourite sounds in all of radio, which is someone's line very clearly disappearing there. Justin, was it yours? No, I'm still here. No, good stuff. That was a very risky game of radio roulette there early on in the morning. Glad I got the line that was still left. While we try and recover Catherine's that seems to have made the telltale sign of disappearing.

13:30Why don't you give us a take of, I guess, a market's perspective, a city's perspective of those first few weeks? Yeah, I think Linda's point is extremely valid. I think the key for us is, are we going to see the addressing of what I'd call the productivity puzzle in the UK, where the UK overall, from a productivity perspective, since the global financial crisis in 2008, has really struggled versus non-European countries to deliver productivity. Our view is that the way to do that is by having sustained business investment. So long-term incentives to encourage investment to drive growth, not short-term policy changes based on the election cycle.

14:19There are two other things which I think are just really important. And Linda's touched on this, like making households better off is really difficult when you've got inflation where it is. But also the fiscal rule acts as that constraint. We've already seen just how volatile UK bond markets have been on almost every single word that's coming out of the government at the moment. You're seeing volatility in the gilt market, the UK bond market. The last thing is around young people. we're really at the risk here of the young people of today becoming Britain's lost generation you've got one million people between 16 and 24 years old not in education employment or training so these so-called needs this needs to be addressed they need we need to get them into work we need to get them into training because clearly that will lead to greater productivity in the future Just pick up on your fiscal rules point.

15:21So what are you saying? Look at them again, change them, don't keep them? I think they have to be looked at and evaluated. And which bit of them? I think it's around, well, I think it's about assessing the fiscal rule and saying, actually, is there enough flexibility here to drive overall growth? In particular, I think the part around investment and growth for investment. Right. So being able to borrow to invest. Yes. Yes. Because ultimately that will help. If that's sustained and you can get business investment into the UK, then overall that should drive greater productivity in the future. But governments, plural, not just this one, right, have balked at doing that because of you guys in the city, right?

16:14And your colleagues trading UK bonds saying, oh, hang on a minute, if they can just change these rules any other time, then we think they're a riskier bet. We don't believe in all of their policies. We're going to make it more expensive for them to borrow. Yeah, and what you did see, you have seen tweaks, the fiscal rule in the past, where things like the Bank of England or how buying bonds is treated overall. There are tweaks you can do. But ultimately, what you have to try and do is encourage investment into the UK. And maybe devolution is one way of encouraging growth into our local economies rather than through Westminster.

16:54And that could be the defining economic reform under this government. Linda, being flexible with the fiscal rules, that's been music to some economists over the past couple of years, really. Yes, I think what we have seen is the underinvestment. So I completely agree with Justin in terms of why we grow so slowly. If you compare us to the G7, we just don't invest as much as a share of GDP, a share of the economy. So the question is, why? That's a big puzzle. But I think the government has a role to play, especially as we digitize the economy, in order to put in the basic infrastructure to crowd in private investment.

17:38And that's why I think if you look at the fiscal rules, bond markets like to see fiscal discipline. So you want to, you know, debt levels, let's face it, are really high. It's run 100 % of GDP. But unless you actually grow GDP, the denominator, all you're trying to do is constantly manage the numerator, which is the top number just for clarity. It is, after all, very early in the morning. And so we tend to think about debt to GDP. Well, I think we economists, investors, would like to see more GDP. And so it really does come down to how productive the investment is. And I think we all know the economy looks like it is potentially could be a lot more productive in the coming years if we can get AI technology adoption and basic infrastructure right.

18:26So I'm not suggesting that the borrow to invest rule could be expanded significantly because in other words, you have to look at the whole envelope of borrowing. But I do think there is more scope than possibly we have been allowing ourselves, because if you look at the other comparable economies, they have gotten private investment to be higher. And I think it'd be really interesting to see how much of that is better policies rather than just what the government can borrow. So in other words, how do businesses invest? Well, regulatory certainty, policy consistency. And I think a belief that the returns they generate by putting in billions into this economy will give them a good return in the future.

19:13And that is a complicated soup of demand and all sorts of things. Yeah, and we'll come in a moment to the impact potential on GDP. But just Catherine, just round us out on that, because I think Gavin in Manchester is texting on 85058, perhaps as what I was going to put to you, just as a business leader, that policy certainty that Linda was talking about there. I mean, that is why these rules don't exist for no reason at all. Right. They're one to signal to the financial markets what the government's plans are and rules are. But they're also to signal to businesses that we're going to stick the course and this is what it's going to be.

19:45And this is the framework to operate in. And Gavin here has said, morning, everyone. Government's borrowing to invest has got us into this mess of paying 100 billion a year in debt interest. Lower taxes and businesses will invest and create growth. Just on that certainty point, I suppose, Catherine, the chopping and changing of the rules. Does it matter, I suppose, for a business leader like you?

20:07Oh, we may have lost Catherine's line again. Linda, you just pick up that thought as well, the chopping and changing. Answer your own question, if you will. Well, it does make it, you know, quite simple. I ask the question, I get to provide the answer. I don't think there is one answer. But if you look at, for instance, surveys of businesses in Europe, the top two things on their list as to what drives them to invest or not to invest, the very first one is just uncertainty. Can government reduce uncertainty? The second thing is actually a skilled workforce. And then the third thing is energy cost.

20:42And I think on all three of those things, I think there are issues to be tackled on energy costs. Energy costs here are about seven times higher than the U.S. Just take a very clear indicator. Justin's talked about needs. And I think it's also the older workers that had dropped out of the labor force since COVID. And then on top of that, policy certainty. And I think the, you know, the Labour government over the past couple of years have tried to improve that. And they have another three years to really try and show, I think, through things like the Office for Investment, that regulatory and policy certainty is a focus.

21:25And I think those things are crucial if you want private companies to invest, because that's the only way, by the way, to get investment up. It's not going to be the£9 billion of borrowing capacity, you know, just through the government itself. Justin, quick thought on anything you'd add on that and then we'll get the weather. Yeah, I think one thing that's really important here is communication. We've seen this government really ramp up communication. And it's very easy to think that this is all about spin. But communication is key to explaining what the government is doing, how it's funding its initiatives and how success will be measured.

22:02So really, really important that communication is ramped up because that is one thing that can give both consumers confidence, but also investors into the UK economy, private investors confidence as well. Yeah, showing your workings as well, that sort of thing too. Little update on the Clacton by-election again then, and this is of course where Nigel Farage has been standing to try and get himself re-elected after calling this by-election ahead of an investigation into his finances, tendering district council, so the council running this, have advised the declaration of results from Clacton due at 6am.

22:38So we're right at the top when Rima and Stefan take over from us this morning. And we mentioned him with Nigel Farage in his what he seemed to be calling a victory speech to his supporters a little bit earlier on last night, had said that he'd been told by Essex police there was a credible threat towards him, which is why he wouldn't be attending the count because he's not going to go to it. And he says he won't stand on the stage next to others who will humiliate him in his words. Essex police in the last few minutes have been in touch with the team at BBC Politics. Essex Police has not advised any candidate that they should not attend the Clacton election count.

23:13Essex Police said in a statement, we have a proportionate and robust policing operation to ensure the safety and security of all participants in the count. The force did not provide any details of conversations with Mr Farage related to the Clacton declaration. We're expecting said declaration at six o 'clock, not expecting the reform leader to be there. You can see some of his speech on the BBC website, should you so which. Let's pick up with the thoughts then on GDP. Linda, what did you take away then? If that was the backdrop, what we've just been talking about, what did you take away from the number yesterday?

23:45My inbox, as I was joking on Five Live Breakfast yesterday, was absolutely filled with sort of strong-ish words beginning with R, robust, resilient, things like that from the economic think tanks. Yeah, well, I think it's because GDP grew by 0.4 % in the second quarter. That's from April to June. And GDP in June was unexpectedly increased by the start of the World Cup, which I'm going to say probably boosted GDP in July as well. Good news that England went deep. Yeah, nearly, nearly. as well as I try not to think about any of that yeah there's a whole other conversation isn't it and also actually by the hot weather so I guess people are buying more and those you know those portable fans you can hold yeah things like that but but I think the the overall picture is a slow economy so I think the second quarter looks pretty good but it is a slowdown from the first quarter so not 0.6%.

24:48And the Bank of England thinks that actually in the current quarter that we're in, GDP is going to stall. So what you're seeing is a, you know, I can see why you were getting messages like robust, because I think the expectation of slowdown because of the closure of the Strait of Hormuz is what's causing most to expect the economy to get weighed down by still very high inflation. And in fact, if you look at what some of the estimates might be for the rest of the year and the coming year, if the straight-up-home-wise continues to be closed, you know, I think estimates from possibly, you know, even the Treasury, which is what some of the reports have said that you could find inflation will peak at 4.3 % in their modeling in the first part of next year.

25:47Right now, it's 2.6 % or so, which is above target. It's been above target since the start of the war. And growth next year could be just not 0.3%. So that, I think, the overall picture is we do have, coming back to our earlier discussion, a cost of living crisis, despite the fact that The GDP looks pretty good. And fingers crossed. There is there's no big sporting event next year. Right. So 28 euros. One of the places where there was a bit of silver linings, Catherine, who's battling the tech gremlins for us this morning, was in advertising, Catherine, in the court, a big jump in advertising growth.

26:28What was going on kind of across the industry? you've got the um world cup which always kind of benefits everyone so i think itv did very very well you've got the associated the coverage of the games um and what have you and there was there's a general kind of feel-good factor around the world cup plus the fact that you know advertisers keep need to keep advertising even you know to keep their brands relevant with people you know one of the messages that the institute of practitioners and advertising is always saying to um brands is that advertising isn't an expense it's an investment because in a super competitive world people don't know who you are they don't know where to buy you yeah really interesting and the momentum then linda saying you know there's no more big events like that what keeps the momentum going for the for your sector um well christmas we were doing Christmas we were doing Christmas in July um and there's nothing quite like talking about the opportunities available to supermarkets with their Christmas spreads when you're sitting there you know in an air-conditioned office hoping that you don't burn to death on the way home we have a big it's a beautiful like old kind of period house opposite us that is um that is rented out for various things and they were in there the other day one of the retailers I saw them taking and all the fake snow and Christmas trees to do a photo shoot while I was sweating to death from it as well.