Starmer's fresh start?

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1:43BBC Sounds. Music, radio, podcasts. Wake up to money from BBC 5 Live. Hello, welcome. It is Wake Up To Money. We've got the King's speech later today, laying out the government's plans for the year ahead. How does that work with so many questions about the Prime Minister? He just isn't cutting through. He's not cutting through on the doorstep. It is now time to go. We'll get into what the priorities of Keir Starmer are right now, how the political turbulence might impact what happens to all those priorities as well elsewhere amidst all the trade wars and tariff battles. President Trump, he's on his way to Beijing.

2:22High state talks there with President Xi Jinping and this one, absolutely fascinating. We're going to hear about the innovations being made at a British company preparing to launch cancer drugs into space. Wake Up To Money with Sean Farrington. Good morning to you. It is Wake Up To Money. It is Wednesday morning, the 13th of May, and it is just after five o 'clock. Of course, it is. You know that. 85058 is also the number you know to get in touch with us. Your thoughts, please, as we get into a variety of topics over the course of the show today. We had plenty of messages from you yesterday throughout this week about what is going on at the top of government.

3:03What should go on next? What should the priorities be? It's an interesting day to focus on that with the King's speech, which would have happened anyway, laying out what the government's priorities were for the coming months, the year ahead, a bit of a to-do list of which bills and acts are going to be at the forefront of what the government's going to try and get through Parliament and actually see some changes on the back of all that. But, of course, just in the last few days, election last week, a lot has changed about what might be going on at the top of government and a lot may well change about the detail of some of those priorities as the months go by, particularly if there's any leadership challenges.

3:48As you've glanced at the front page of the paper today, You might wonder when the next steps of that might well be. In front of the Telegraph, streeting to confront Starmer. Paralysed by Labour, chaos is the Daily Mail. The Mirror stand off and the Guardian Starmer sees off threat. For now, a streeting challenge fails to emerge. And then the front of the Financial Times, which many will be keeping a close eye on, Starmer throws down gauntlet to rivals as turmoil rattles guilt's market. That is a phrase, that guilt market that we've often used on Wake Up To Money in recent years and often explained as well.

4:27We will do that once again today. What does that mean for interest rates and prospects for interest rates here across the country? What might it mean if you're thinking of trying to get on the housing ladder, mortgage rates, rents, the consequences for all of that? So we've got plenty to tuck into on Wake Up To Money today. Let's just get a little bit of an update, shall we, on where we are. because West Street is set to meet the Prime Minister after some of the toughest days of Keir Starmer's leadership so far. We've had four ministers resign, more than 80 Labour MPs urging the Prime Minister to stand down.

5:03So we're hearing, seeing all these deep divisions over the Prime Minister's future. Our very own Jeevan Nguyen has a little bit more on the latest for us. Yesterday was a busy day in Westminster. The Chief Secretary to the Prime Minister kicked things off. Look, I'm not going to get ahead of any decision that the Prime Minister may or may not take. He was very clear yesterday that he will not be walking away, as some of my colleagues have asked him to do. Prime Minister Keir Starmer later told his Cabinet that a leadership contest had not been triggered and that he would get on with governing.

5:34Several Cabinet colleagues publicly backed the PM after the meeting. Keir is showing really steadfast leadership. This government will do what we were elected to do, which is serve the British people. The Prime Minister has my full support. But the pressure continued to build as the number of ministerial resignations reached four. And some MPs had harsh words for Starmer. He gets very stubborn. He doesn't listen. That's why the public have stopped listening to us. And that's why they don't trust him. He is a very, very genuine, integral man. He just isn't cutting through. He's not cutting through on the doorstep.

6:10It is now time to go. Later in the day, the Deputy Prime Minister, David Lammy, weighed in. He has my full support. It's been 24 hours now and nobody has come forward to put themselves forward in the processes that exist in the party. No one. So that tees us up nicely for what is in store today. Got Max Rees with us this morning, who's the co-founder of the high protein fiber snacking brand, The Curators. Max, good morning to you. Morning, Sean. Great to be back. I know you're trying to run a business day to day, Max, when you see what sometimes is described as turmoil, political turmoil. We're used to those conversations in recent years.

6:56Has this changed anything in recent days for you when you're plotting your year ahead? Not really. I mean, we're so used to this kind of these kind of news cycles now. it's like following a reality tv show in the background isn't it i mean we we know what we're getting on with as a business and growing um there hasn't really been a huge impact for businesses sadly in a disappointing way um most recently where we're just looking for something a little bit more inspiring and some more leadership from our government but but ultimately the current economic climate is what it is at the moment we all know it and we're trying to get on with the job and control what we can control.

7:41How long have you been running the curators for now, Max? Is it 2018? So we founded the business in 2018. So, I mean, that has gone in a blur in some ways, but obviously, you know, running the business and building the early stages through COVID and then the start of the war in Ukraine and the big spikes in inflation we had at the time, you know, what we've had to go through and how we've had to build as robust a business as possible to survive and thrive in those circumstances. Actually, what's going on right now is just, it feels like, as I said, it feels like kind of reality TV and we're still trying to work out what really will be the impact other than not being able to rely on, you know, inspiring leadership at the top that might make us feel more positive about the future.

8:33And what does that mean? When you say, we're used to this now, and actually if you founded your business in 2018, you would have been used to the big run of leaders that we've had over the last eight years. What does that mean when you're almost trying to switch off from what is going on in government because you're used to that term? How does that mean you run your business? yeah well I think um you know obviously the the discussion between how much government actually really get businesses and you know they talk about how we're going to grow the economy and you know that is so dependent on you know private businesses on startups coming through employing more people and and helping us get out of this kind of cost living crisis through growth but what I I think what I'm saying when when I say we're used to it is we're used to hearing all that with no plan of action and nothing that comes through in terms of kind of legislation or policy that really does stimulate kind of small businesses or really gives them a leg up and support that would turbocharge that um you know we still are a very entrepreneurial country we you know i still am excited about the future of what we're building but there is a sense that we've just got to get on with it and make our own future and we're not gonna we're not going to get some new policy or new initiative from the government that's going to make me think, oh, this is really exciting.

10:03This is going to really stimulate growth for us. We've got to just go and do it ourselves. I'm just going to bring in Catherine MacLeod, Baroness of Kamasdurak, formerly a special advisor to Alistair Darling when he was Chancellor of the Exchequer. Good morning to you. Good morning. Just hearing how Max running a business right now sort of describes what it's like trying to do that in the UK. That's not what you know. You've been very, very close to the Treasury, which is trying to impact so much of the economy. That's not what chancellors want to hear. Is it a sort of distancing of businesses from the goals of the government?

10:46It is absolutely not. I mean, that's dreadful. Max is describing the government as a soap opera or reality television. Other people are saying it's like a psychodrama. That's very bad for business and very bad for the government. Did you see, when you were working with Alistair Darling, how that, I mean, let's bear in mind, that was at a pretty turbulent time for the global economy, the UK economy, and as the financial crisis was being dealt with and being reacted to. Do you see the difference when there's a confidence in the government or not from British business? Well, definitely, but I do remember during a while Alistair was Chancellor that there was a move afoot, I think after one kind of New Year party, that some people thought it might be a good idea to have a coup against Gordon Brown, who was then the Prime Minister, and Alistair very clearly didn't want anything to do with it, principally because it would be destabilising, would not be good for the government and would not be good for the country.

11:53So what do you make of this current situation, having seen, well, been so close to that politically turbulent time and then seen the aftermath in the 16, 18 years since? Well, what's happening at the moment looks terrible. I'm not in the inner circle. I'm looking at it like the rest of the country is looking at it. And it seems awful that either the Prime Minister has got to carry on and have the confidence of his cabinet or consider his position. If he doesn't, the cabinet have to make it clear if they are going to support the Prime Minister. But everyone seems to have their own agenda at the moment and it can't carry on like this.

12:42West Streeting, I'm sure now we're going to, by the end of today, we'll either have told the Prime Minister he's going to challenge them or he's going to resign. But you will know perhaps much more about it than me. But it's certainly, the perception is awful and it doesn't look good at home. And it certainly won't look good on the global stage where the Prime Minister is having to contend with very difficult issues. Do you think that we are, the government is, and those that are thinking there maybe needs to be a change, are thinking about how that looks on the global stage? Well, you would hope so.

13:27You wonder if they are, because since the local authority elections, there has been only noise in the press about what or who is going to do what. So perhaps this is inevitable. Perhaps this is a process that has to be got through, but it certainly doesn't look good. And since we've heard from very little from the people who might be challenging the Prime Minister, we don't really know what their agenda is. How much did the bond markets come up in conversation at the Treasury and with Alistair Darling, Catherine, and the importance of how the rest of the world, because it is, you know, a decent chunk of the money that the government borrows is borrowed from investors right around the world.

14:17and they will demand a certain interest rate. And if they're not convinced by what a government of any colour in any country will be doing, those interest rates might get higher. Was that at the forefront of conversation as much as we see now with headlines on the front page of the Financial Times about exactly that today? Certainly the bond markets, the interest rates, where our credit rating was seriously considered and was considered to be very important because at the end of the day, if people won't lend the country money and if borrowing goes up, it's the people that a Labour government wants to help most who are going to be hurt most.

15:02So, of course, the Chancellor and the Treasury thought a lot about how much borrowing was going to cost and I don't think you can be a responsible government and not think about it. I'm going to bring in Sunaina Sina-Haldea who's with us, Global Head of Private Capital Advisory for Raymond James. Sunaina, very good morning to you. Good morning. How did those investors around the world view what's going on in the UK right now when you look at effectively that interest rate that they're charging the UK government to borrow? Yes, not very well. It's just gone from bad to worse. Straight after the election, actually, the bond market bought that interest rate down that we borrow at, especially for 10 and 30 years.

15:54But it spiked back up given the turmoil yesterday. Unfortunately for the UK, we know that we'll feel the pain from the Iran crisis, even more so with respect to our energy prices. when you layer onto that the political instability that this situation now creates, it's insult to injury and the bond market is reflecting that. I think what it's saying is that without certainty as to what the leadership looks like, the leadership could be a government that will borrow more, spend more. And therefore, the interest rates now, especially in the longer end of the Giltz curve, really does reflect that, an all-time high since 1998, as we said.

16:39So just when we talk about that longer end of the gilts curve, so that is effectively, we're sort of picturing some kind of chart that is telling us what the interest rate is to borrow for the UK government over two years, five years, ten years, 30 years, and you can see how much that has changed further down the line. And so what are you saying? that it is that longer term borrowing over that 30 years where you've seen the particular moves? I know there are moves right across it. Yes, there are moves right across it. But at that longer borrowing bond that we issue, that investors buy from the UK government, that's where the interest rates have spiked.

17:21And that's a way for the bond investors to tell us, hey, we need to charge you more to be able to lend you money because we don't think you have the credibility to manage your economy within the fiscal discipline, within the inflation parameters that you have done so far. That means you and I all pay more. We'll pay more for mortgages. We'll pay more for any kind of lending. Our economy will pay more. We'll need to pay more into taxes in order to fund that debt. It's a charge on all of us as individuals, but ultimately it's a verdict on the UK for now. Now it keeps shifting day by day. So the turmoil is not helpful.

18:02And we really hope that the uncertainty passes so it can come down to normalcy. Catherine, Baroness McLeod is with us. Just seeing in the Financial Times, just in the last sort of 20 minutes, they've published something that is about, that they've asked those investors in the UK bond market, those investors looking to lend money to the UK government about what they think about the potential leaders. And they've come up with, Andy Burnham represents the biggest threat to the guilt market among frontrunners to replace Sir Keir Starmer as Labour leader. We heard yesterday on Wake Up To Money, it was effectively quoting, paraphrasing Andy Burnham's previous comments about the views of the bond market.

18:45We've seen other MPs in recent days who may be supportive of Andy Burnham talking about, I think there's just one quote here from Paula Barker, the MP, the Labour member for Liverpool, Wavertree, talking about the markets will have to fall into line. What do you make of that approach? Well, it would be interesting to see the markets falling into line. don't dance to many people's tunes. I don't think, I think that quite a lot of Labour MPs who will have a say in this, some of them, not enough of them, will probably be concerned about the bond markets. Having said that, they will be wanting to think about other things, other aspects of politics as well as the bond markets.

19:34But if they do ignore the bond markets, well, they will pay a high price in the end. Max from your perspective running a business if if those sort of longer term interest rates are higher does that have a ripple effect? Yeah of course it does I mean the the cost of borrowing for any young business is is absolutely crucial but I do think that's kind of overridden by just general confidence in the long-term economy so for us you know it's probably more important that you know banks and lenders have confidence that uk startups are going to thrive so that they're opening up opportunities for us in the short medium and long term anyway regardless of what the interest rate is so yes i would obviously love interest rates to be low that would benefit the business but ultimately that that feels in a crazy way kind of still a relatively short-term outlook compared to someone giving us a long-term plan that's going to see the uk prosper, consumers having more money in their pockets in the long term.

20:40And then that gives us all confidence as business owners to continue to push and grow. Catherine, hearing what Max is saying there, that idea as well that people want to see, to feel like they've got more money in their pockets. What would your, just finally to wrap us up, what would your message be today to the Prime Minister about what needs to happen next? Well, they've got to stop this turmoil. People like Max and everybody else deserve a stable government that they can look at with some degree of optimism and credibility. At the moment, the public must look and wonder what on earth is going on.

21:28It's like a soap opera because who knows what is going to happen next. I would think that the Prime Minister is going to do what John Major does. I did and say put up or shut up. If he's going to stand, he might be the Prime Minister at the end of the week. If he's not, who knows who's going to be the Prime Minister. But it's got to change. It's got to stabilise because it's not good for anyone. Catherine MacLeod, Baroness of Kamasdarra, formerly Special Advisor to Alistair Darling while he was Chancellor. Thank you very much for your time this morning. Very interested to hear that perspective on events today.

22:05And, you know, many comparisons get made, don't they, between now and the financial crisis, whether it's jolts to the economy, what's happening with interest rates, what's happening to the quality of that borrowing, what might happen to the size of government borrowing, all of that kind of stuff. not saying it's the same as the financial crisis, but plenty to be learnt from what's occurred previously. Let's get the weather forecast for the day. Here's Elizabeth Rizzini at the BBC Weather Centre. Hello there. It's a largely frost-free start to Wednesday morning, but it won't feel very much like May.

22:39There'll be further heavy showers streaming down from the north-west on a brisk westerly to north-westerly wind, with the risk of thunder, particularly towards eastern stretches of the UK. Some bright and some sunny spells in between those showers, but it's the wettest and the windiest looking day of the week. Very blustery with gusts of wind towards exposed western coasts of around 45 miles an hour and cooler too than on Tuesday. Top temperatures no higher than 10 to 14 degrees Celsius for most of us, locally 15 degrees in southern England and South Wales, but that's below the seasonal average.

23:14Further showers on Thursday. Elizabeth Rizzini, 5 Live Weather. Max, we've got Donald Trump heading to China to meet President Xi Jinping. If they actually said, you know what, first topic on the agenda is going to be what the founder and boss of the curator's protein and fiber snacking brand is going to be. With everything going on around the world, what would you be wanting the leaders of the two big economic powerhouses to be discussing first up? I mean, right now it's going to be putting an end to the war in Iran. I mean, that is the thing that is, you know, causing us the most turmoil at the moment on all of our planning.

23:56Fuel costs have such a monumental impact across the whole of the food supply chain, not just obviously the transport itself and the delays and the surcharges, but every element of production obviously involves some kind of fuel or energy input. So if China can help bring Donald Trump to some kind of, you know, bring him around to some kind of plan that's going to get him out of this mess that he's created for all of us, that would be very high up on our list. And then obviously we know that, you know, consumers are the losers from any trade wars. You know, this stuff, again, needs to kind of calm down for us all to have confidence in prices going forward.

24:40Got Shiana Yu with us now as well, Senior Asia Economist at Oxford Economics. Shiana, good morning. How much are those things going to be top of the agenda, do you think? Hi. Yes, we also broadly expect these two to be the main topics of discussion during the summit. It will definitely be Iran war. We'll probably see some discussion on that and probably what China can actually do to try and help de-escalate the situation. We are also anticipating some discussion on tariff and trade tensions with the extension into tech export controls possibly. Right. Okay. So I'll get on to tariffs and where we are with all of that malarkey in a moment.

25:32What can China do with the situation in Iran and why would it want to act? Yeah, I guess the key point here is that China can't simply end the war just because Iran is not a Chinese proxy. But Beijing does have meaningful leverage because it's one of Iran's most important economic partners and it's a major buyer of Iranian oil. So probably from our view, what China could do is to possibly quietly pressure Iran towards some kind of restraint and encourage maybe energy shipping stability and also to encourage the US side to avoid actions that undermine de-escalation. Maybe not just the US, also encourage the Iranian side.

26:23But we think China is unlikely to go fully aligned with the actions of the US, for example, completely enforcing US sanctions, just because China has generally been quite opposed to unilateral US sanctions. And neither is China likely to aggressively pressure the regime. So I think in terms of China's ideal outcome, it would be to not directly get implicated into the US-Iran war at the moment, but also to try and move things along in terms of reopening the Strait of Hormuz, in terms of normalising the kind of shipping routes that were there before. Is it strange that they're having this meeting, Shiana, given we spent so much of last year talking about trade wars, huge tariffs being announced by Donald Trump, a lot of pressure as well seemingly being put on countries around the world that do trade with China, that Donald Trump is making the efforts to go to China and meet the president?

27:35Yeah, I think at first glance, it is pretty strange. But I think Donald Trump, or at least the US administration has, you know, recognized that China is probably one way in which it could try to end this war with Iran, and it's a tap somehow through China, which is a key, which still has a key diplomatic relationship with Tehran. I suppose the other thing is, you know, probably they've also realized in the US administration that the tariffs are probably harming the economy, at least their businesses and consumers with a lag, but at least that's something that they're probably coming to their senses now.

28:15And for that reason, the best way to de-escalate or, you know, at least prevent further escalation is to have talks, it's to communicate with who you think is your enemy or your greatest adversary. So perhaps it is strange at first glance, but it's something that, you know, was probably a measured move by the US administration. Sunaina, we've sort of seen in the last day, haven't we, how the American economy is being impacted by the war in Iran in particular, with the cost of, as they call it, gasoline in the United States for the cars, groceries as well, has meant that when they get their inflation numbers, how much are prices going up by overall?

28:57They've risen at their fastest rate for three years. It lasted for three years indeed, and it was only a matter of time till it started showing up in the numbers in the U.S. While we know that the U.S. economy has more energy resilience, it is not immune to the energy shock that the whole world has faced. And this is their CPI, their inflation numbers at a lag coming good on showing that it is the common man and woman in the American households that are now paying the cost of this war. through the increased, not just gasoline prices at the pumps, but also grocery prices. And all prices have gone up because energy is an input into everything that we consume.

29:39So it will remain painful now for a while. They had expected their Federal Reserve to potentially cut interest rates. President Trump had been really angling for that, going after the Fed chairman to do that. But I think with this latest print, that is all but off the table entirely for the remainder of the year. And if it continues this way, it may even go the other way. Interesting stuff. 85058, as we talk more about the consequences of these major global events, the consequences of major events at the top of our government here in the UK. We'll be looking more at the energy market and bills and what policy changes might well be coming that way as well here in the UK.