US launches Operation Epic Fury

24:12Will Bain:Yeah, quite. Yeah. And how long it goes on for. Karen? Echoing a little bit similar to what Serana says, we're not going to see a mass exit, though. It's usually a case of like hold tight. In situations like this, it's hold tight. Reassess and keep options open. You know, unless businesses start to, you know, experience a lot less income or revenues over the next sort of three to six months, then we might see a slight shift. But I do believe that, yes, of course, there will be some who will leave. That's natural. But it will also be a time for others to probably enter the markets as well. I mean, it might be a case of it might be a bit more reasonable now to set up a business in Bahrain.

24:58Also, with perhaps even getting certain sector skill set jobs as well. So we're going to see a little bit of transitioning happening anyway. That has always been the case. I would say that nothing is very permanent. The government is doing an incredible job, I must admit. And it's not just because I'm living here. It's really they are taking care of the citizens, expats. 80 % of the workforce is expats. And we feel really comfortable in home. And we've been given all the facilities that locals are given. And so I just believe that we're going to see like a, yeah, there's going to be some maybe at certain entry level, you know, people at those certain jobs, they might be leaving potentially.

25:47But I don't think there are going to be a mass exodus. And I think still above all else, there are very few places left in the world which is sort of tax free. And Bahrain has that even more so than the UAE. So right now we're operating at 10 % VAT, as you could call it, sales tax, 0 % income tax. There is no corporate tax, no dividend tax. So this makes a huge difference when people are like analyzing where to live or where to set up a business or even, you know, trying to find a high paying job.

26:21Will Bain:Thanks so much for speaking to us this morning. Really appreciate it. And good luck. I hope business – well, how's it looking? Are you getting staff in and things over the next couple of days? Are you closed or what are you doing? Yeah, we're just closed. Even today, this morning, closed it. And we're going to probably just assess it for this week. And I think once things sort of calm down, then people will start getting into the office. I think people are still quite keen to get into the office. And we're just saying just work from home for now. You know, it's the right thing to do. But look, we're just hoping that things will de-escalate pretty quickly.

26:52And hopefully, you know, business can return to some sort of normality.

26:56Will Bain:Karen, thanks so much for your time this morning. Karen Trahan, British businessman based in Bahrain. Well, let's get a look at what the latest in the travel situation is, because the guys have mentioned it a few times as well, and Simon Calder, Independence Travelers has joined us. Simon, I think you're in China at the moment, right? Is that correct? Yes, absolutely. I've been travelling across from Istanbul in Turkey. Obviously, the airline gave the Gulf region a wide berth, as all the carriers are doing. And would you believe Afghanistan is now back in the aviation mainstream? Most of the airlines that previously would be routed over the Gulf, whether they're going from the UK to India or perhaps even the world's longest flight from the UK, over 9000 miles to Perth, that's now going over Afghanistan instead.

27:45But really interesting discussion you were having with the guys in the Gulf. Of course, in Dubai itself, tourism is such a huge part of the economy that there will be an awful lot of worried people now, simply because, as we were hearing, everybody assumed it was all calm and fun and great and everything. And now it doesn't look like it. The headlines this morning with, what, 94 ,000 people stranded in the Gulf, that's going to put people off. Now, I'm very much hoping that what we're seeing in terms of flight disruption is very short term and that people will be able to get back where they need to be.

28:27But longer term, it's going to take some work to repair the reputation of particularly Dubai, but also the UAE and Qatar.

28:36Will Bain:And what's the state of play, Simon, for people potentially setting off for UK airports today? because Dubai, as you were saying, become a huge, not just a destination in itself, but a hub airport, right, where people switch to go, change flights to go to other places, India, Australia, etc. As well. So what's the state of play as far as you're aware? Well, nothing moving through the Gulf at all. Normally, just to give you some idea, 250 ,000 people fly in or out of Dubai International Airport every day, the biggest global hub. and a similar number are also combined Doha and Abu Dhabi. So you're getting on for half a million people who are not getting where they need to be.

29:23Of course, many tens of thousands of them are actually stranded in the UAE and in Qatar particularly, and that's really worrying. But at the moment, if you're booked to travel from the UK and you're going somewhere beyond the Gulf, then it's actually down to the airline to find an alternative route for you. So, for instance, you go to Thailand, they're going to have to find you a nonstop flight or maybe something via a European hub because you are not going to be going in the next day or two, at least via Abu Dhabi, Dubai or Doha.

29:56Will Bain:And the usual information advice, I'm guessing, is always check before you set off, I'm guessing, as well this morning. If you are heading to an airport. Simon, thanks as always for your time. Really appreciate it. Simon Calder, the independence travel editor there as well. Sarana, give us a final take before we go to the news and let you go as well. Is it just a question now in terms of for the region and for businesses trading through there, is it just simply about how long this lasts for now? Yes, to some extent. It's also about how bad it gets before it ends, if there is a possibility. We do work through scenarios normally with businesses here.

30:38And the main scenario right now is that we'll see this continuing, this pattern of on-off exchanges of attacks for the next few days. But the real question is what the off-ramp is. Yes, as you said earlier in the program, President Trump seems to be suggesting that he's willing to find an off-ramp. Could be many options given several statements he's made. but the question is does iran really where where do these two meet in the middle and there's no middle right now to be honest and the killing of the supreme leader has not changed the creation significantly in iran and that is a that is not a one-man show um and the stated objectives of the us and israel are to um bring down the regime but without really defining what success looks like um it's hard to this could take months um the question then becomes does um iran's capability to launch missiles and drones uh degrade in time given the attacks and sort of depleting their arsenal uh or is there some change in the background in the regime enough to to try to negotiate um or sort of kick the can down the road but there are alternative scenarios which see more of an escalation like we've seen with Hezbollah today.

32:00Iranian proxies kind of getting involved in the conflict, potentially Gulf countries getting involved in the conflict as well, and the targets expanding to critical infrastructure as sort of beyond military assets. So there's different scenarios, but it is really a question of how much. and... What they are ultimately trying to create is going to replace humans. What it's doing is par-boiling the inside of your brain. This could be a turning point in the history of social media. Welcome to The Interface, the show that explores how tech is rewiring your week and your world. Coming up next in our latest episode, we look at the secret meetings at the world's biggest AI summit.

32:48the truth about the mystery of a brain-melting weapon, and the lawsuit that could shift the future of social media. Listen on bbc.com or wherever you get your podcasts.

33:05For how long?

33:06Will Bain:Wake Up To Money with Will Bade. Morning, welcome back to Wake Up To Money, Monday the 2nd of March. Sabitha Subramani and partner at Saracen and Partners is here in the studio with me this morning. It does sound like our guests in the first half of the programme in Dubai and Bahrain were far from alone in terms of hearing those explosions. Lots of stuff coming down on the news wires now saying explosions heard in Abu Dhabi as well. And the Bahrain government saying that one person has been killed in attacks there as well. You might have heard our guests in the first half of the programme saying they were hearing interceptors, intercepting some of that Iranian missile fire in both those Gulf states as well.

33:45Will Bain:We'll keep you up to date on that as the news moves through the morning. Interesting bit of news, though, on the wires as well, Sabitha, which are particularly busy this morning. It's come down from Reuters saying DP World, so one of the biggest shipping companies, port operators in the world, saying its port in Dubai, the Jebel Ali port, has resumed operations today. And that's been closed through the weekend. That's pretty significant, isn't it? Because that's one of the world's biggest kind of shipping ports, one of those ones that's a key kind of conduit for that route for goods that you were talking about in the first half of the programme.

34:15Yeah, I mean, that's interesting, especially given that we're hearing more missiles and being intercepted across the region. I would say I think, you know, it's good. It's a positive step. But also being open doesn't mean that you have a lot of ships transiting through your port. I think it could just be a measure to restore confidence in the region, which I think is really critical to sort of, you know, for them to remain sort of stable and predictable through what's happening.

34:45Will Bain:We've got a question in from Steve on text as well. Part one of Steve's question is, can Iran afford to cease oil and gas exports? And the second part of his question is, how will China react to any disruption to the supply? It's unknowable what China will do. But I would say that one of the key objectives from Iran is to keep the oil flowing into China. And I think China would like that to continue. And I think at the back of all of what's happening today is also just that simple fact that Iran is a key supplier of oil to China. And it's something that President Trump would like to disrupt. He has already disrupted China's supply of oil from Venezuela.

35:26And this would be another measure which he could actually use to contain China.

35:30Will Bain:And of course, the knock on potentially from all of this, whether it be goods, whether it be energy, is the impact that it could have on inflation. Yeah, I think, you know, when you step back, I think there are two things we need to really worry about. First is that this is a supply shock, and it's multiple supply shocks if it continues to last into weeks and months, multiple supply shocks hitting not just energy, but also the prices of goods that transit through the Suez. It's also a supply shock that will eventually feed into food prices, into industrial commodities as well. And it'll show up in inflation across the world.

36:09It'll show up a lot more in Europe because we import more of our goods through the Suez. So we will be more impacted. Asia will be impacted more because it imports more of its oil from the Middle East. And the U.S. surprisingly will be the least impacted of all participants in this war. So I would say it'll show up in inflation. And if this sort of war continues to persist beyond a month or so, and if oil prices and energy prices and goods prices start to remain, start to push up higher, it will then feed into what central banks can do in terms of cutting interest rates. We have the Bank of England scheduled to meet on the 19th of March.

36:48And the expectation was prior to this was that they were going to cut interest rates in the UK. And I think with another supply shock just on the horizon, I am not so sure that that's actually going to transpire.

37:01Will Bain:Yeah, well, we'll get into that domestic backdrop in more detail in a moment because we're going to talk about the spring statement. We might be the only people talking about it, I think, at the moment. And we'll ask whether that is deliberate, too, in a moment. But let's turn to that oil part of that supply shock, as Sabitha put it. And Robin Mills is with us. Robin, the chief executive of Kamar Energy, an energy consultancy based in Dubai, formerly an executive at Shell before that as well. Robin, morning from us. Thanks for being with us. Hello, good morning. Have you been hearing those explosions, by the way, those interceptors this morning as well?

37:34Will Bain:We had a guest from Dubai in the first half of the programme, Sir Rana, who was saying that. Has that been the case where you are as well? Yeah, that's right. We hear the interceptors episodically throughout the night. But they're loud, but that's a sign of the defences, fortunately. On oil prices then, saw a very sharp reaction, perhaps unsurprisingly, first thing this morning. It's tacked back a little bit so far as trading has continued. What's been your takeaway? Well, we expected a jump in prices, of course, with the market opened. Once we got that, then prices fell back a bit. This is all consistent with what we've seen in other big shocks.

38:16But really, I think what will happen over the next few days is, you know, will we see a physical disruption of supplies? At the moment, tankers are waiting, very careful to go into the Gulf, of course. And a couple of attacks, nothing too serious yet. We'll see if that gets worse or if tankers get confident in resuming transit.

38:34Will Bain:The context for the price is important as well. Do a little bit of that for us as well, compared to previous shocks too. where we are and where i suppose where we've got to go to well price is around 80 per barrel uh it's obviously up quite a lot from where it was at the start of the year but in historic terms it's not not particularly high it's pretty much historic average prices a couple of years ago we were at 90 and then of course during 2022 with the russian invasion of ukraine prices were well over 100 per barrel um so we're not really kind of oil shock territory yet and hopefully we won't get there no in terms of when the price spikes like this though and it moves quickly in a day what people often really want to know obviously listening at home two things really one input kind of cost for people who work with oil so industrial kind of input cost but then also what it means in terms of the filter through potentially for for prices for fuel as well well it'll come through into prices fuel pump inevitably and pretty quickly the question is just how How long does the spike and how high do prices go?

39:39If there's no physical disruption over a few days, then prices will come back down again, I think. They already ran up a lot because, obviously, there was anticipation that something was coming. The feed-through, again, depends on the length. If this is a brief interruption, I wouldn't expect oil prices to feed through into inflation much. Obviously, if oil prices are higher over a period of months, that's different.

40:03Will Bain:Robin, thanks so much for your time this morning. Robin Mills there, the chief exec of Kamara Energy, speaking to us from Dubai. So apologies if the line was coming and going a little bit in terms of the internet. You might be able to understand there with everything that's going on as well, that perhaps communications not working at their full speed at the moment out there in Dubai. Well, what it does in terms of that inflation backdrop then is going to be one of the questions for perhaps the least talked about spring statement in most of us is memory. But the Chancellor does indeed address all of us in Parliament tomorrow.

40:34Will Bain:about the state of the UK economy and some of her tax and spending choices. And alongside Sabitha here in the studio, Frances Haack is joining us now as well. Frances, the chief economist at the Bank Santander. Frances, morning. Great to have you back on the programme as well. Thank you very much. Good morning. Have you, they like to call these fiscal events, don't they? Tax and spend events. Have you come across a less talked about fiscal event in your time, in your job covering these events? No, I have to say, and last week we were having a meeting about various things and somebody suddenly went, it's the spring statement next week.

41:09And we're all like looking at each other going, oh, yes, it is. Yes. I mean, given the last few that have been talked about for weeks, months on end, actually very nice, to be honest with you.

41:20Will Bain:So actually, is that the point this time, do you think? It is. Yes, absolutely. So I think the Chancellor will be very happy about the fact that it's not been in the news much. No one's really been talking about it. And whilst it's not a non-event as such, certainly a quieter event, which is what they want. They want to be able to talk about stability and give businesses more stability. That's the whole point of moving away from doing any kind of change at the fiscal statement. So, yeah, I think they'll be very happy with that. It's what the government wants, Sabitha. It's what you lot want, isn't it, in the city as well?

41:54Will Bain:Haven't you forced them to be quiet? And it's not what we want on this programme. Yeah, I think the Chancellor has said that she wants it to be a very, very, very boring spring statement. And I think after sort of our experience in the last few statements, I think it's much, you know, well received by all of us. We don't want surprises and we don't want big policy moves. What are we likely to hear then, Frances, do you think? To be honest with you, not an awful lot, I don't think. I mean, we obviously will get the OBR report, which, to be honest with you, is what we'll be looking at to understand, you know, whether the forecasts have changed.

42:31I mean, we are assuming that they'll lower their 2026 growth forecast as they are a bit out of line, both with the Bank of England and consensus views. Although the rest of the growth forecast seems to be, you know, reasonably aligned. We're not I mean, whilst they obviously won't opine on headroom or anything like that, we will all be able to work out what the headroom still is. And people, you know, generally speaking, we're expecting the headroom not to have moved that much. It might be slightly positive, maybe slightly negative.

43:01Will Bain:I was going to say, from the last borrowing figures, it might be in quite positive territory now. Yeah, absolutely. I mean, she may even have a little bit of extra headroom, depending on, you know, because obviously interest costs are a little bit lower and equity prices will have boosted some of the sort of capital gains tax and stamp duty. So having said that, of course, there have been a couple of U-turns since the budget, not massive, the things that you're obviously around business rates for pubs and things like that. And obviously the new send costs will need to be in there. So, you know, it's probably a little bit of give and take.

43:38So, which I think in this respect helps the fact that it should be a bit of, as I say, a non-event, very quiet event, just simply because the headroom will still be there, which, you know, is obviously a positive, you know, both for businesses, the Chancellor and, you know, all of us sitting here trying to work out what's happening next. Obviously, you know, it's another discussion to have about what happens at the budget in the autumn, but certainly this time round, we're not really expecting to hear very much at all.

44:04Will Bain:So I'm sure there'll be some making the argument, I'm sure some of our listeners would be making the argument. We've talked endlessly on this programme about how stuck in the mud the kind of growth picture is in the UK. And all the kind of sort of economic fundamentals, right, about what's going on with hiring, what's going on with employment, those kind of things alongside that growth picture suggest it's an economy in the need of a little nudge, a bit of a boost, isn't it? Shouldn't, if there is a bit of headroom, she should be looking to tinker with something, shouldn't she? I think tinkering doesn't get you the results that people think they do.

44:36I think part of what the government has been doing is a lot of tinkering on the edges for not much revenue. And one, it doesn't get the results that they think it's going to get. And two, it just really confuses the marketplace. The U-turns aren't helpful. So overall, I think it's really good news when they do nothing, even if it might not be the best policies for making investments and people or hiring. I think it's better that they don't tinker too much.

45:03Will Bain:Frances, there'll be those in, I don't know, hospitality, restaurants, those kind of sectors, hotels, when there'll be saying, if there's a little bit of extra money, could you help us as well as pubs, for example? Yeah, for sure. And I think it's always difficult when you if you if she has got some some headroom for her to do do nothing. But I would I would agree. I mean, you know, we want stability. Businesses at least then know that nothing's going to change. There isn't something else that they have to worry about. I mean, don't forget, we have got the employment rights bill coming through and, you know, businesses have been concerned about that.

45:35So I think for them, I mean, as much as help obviously would be good for people like the hospitality industry in general, I think it's absolutely right that she just, you know, keeps the level that she's at because she's got decisions that she's going to need to make come the autumn budget.

45:54Will Bain:And presumably the wild card here, Francis, is what we've spent most of the programme this morning talking about. Just the absolute not knowing of, as Sarana Pavulescu made this point, not knowing how severe everything that's going on in the Middle East is going to get and how long it's going to last for. Yes. And I mean, you know, as you've already talked about, that's going to have an effect on inflation, which is obviously something that we've been desperately trying to get down in the UK. So in that respect, obviously, unwelcome if oil prices, I know that they're slightly up at the moment.

46:30But obviously, if that continues, as you've already said, that's then going to feed through to problems with cost of living, which obviously the government has been desperately trying to address.

46:40Will Bain:What's your hunch? Sabitha thinks, well, I don't want to put words in your mouth, Sabitha. You seem to think that it might give the Bank of England reason for pause a little bit, everything that's going on in terms of that interest rate decision. Is that right? Yes, I think this war is going to last for a couple more weeks and the Bank of England is not going to have the information that the supply shocks are just going to dissipate that quickly. So I think the prudent course would be not to cut. But you never know with the Bank of England, really. They always do surprise us. What's your hunch, Frances?

47:10Yeah, it certainly is an interesting one because I think up until now, I think just about all of us would have said March is very, very likely given what we've heard. But it certainly does throw a slight spanner in the works. It will be very interesting to see, you know, the comments that come out. I mean, depending on the decision one way or another, but certainly the comments that we now get from the MPC members to see whether that actually fed into their decision making.

47:34Will Bain:And if they don't, to bring us right back round in a circle again, that does put the government in another kind of bind again, right, in terms of ways, levers it's trying to pull or I hope other people pulls to try and nudge the economy and get a bit of growth going. Yes, I mean, certainly, certainly we they want what the government would like, you know, further interest rates cuts. I'm sure we all would in terms of mortgages, et cetera. But, you know, the Bank of England have got to to make their decision based on, you know, what they think inflation is going to be two years hence. And if they feel that actually that position has changed, then, you know, they they'll need to factor that in accordingly.

48:16But as you say, it's not helpful for the government. And particularly given that if they're not doing it, it's because they think inflation is coming, which then adds another headwind to the whole process.

48:27Will Bain:Is that not overridden by what we were talking about in terms of the employment picture? I know those two things have kind of been competing, haven't they? Whether inflation is gone and what's going on in the in the jobs market is what's going on in the jobs market to you. So worrying that that might override that this time. potentially i mean certainly uh obviously unemployment is high we've talked a lot about um in the press around youth unemployment which you know obviously is is very serious um it's quite difficult because of course the the indicators are very volatile for um unemployment in in the short term if you look at things like payrolls they often get revised so the thing is you're having to look back two or three months to sort of get the picture.

49:13But obviously, things have moved on. So, I mean, all the data that the Bank of England can get, you know, on vacancies, redundancies, payroll, and things like that will be obviously very important to them as well at this time. But certainly, the labour market is the one area where it is weak. You know, you've obviously got weak demand, but you've also got, you know, increased supply at the moment coming through. So that will be, that is difficult, I think, in making those decisions because you haven't got the labour market, you know, helping in that respect. Yeah, and I would say simply that, yes, the labour market is very weak.

49:52And part of it is in response to the government's policies in the previous statements where it's made it very difficult or increased the cost of hiring. On the other hand, I would also emphasise that the Bank of England has not met its inflation target for four and a half years, and they're looking at yet another supply shock coming through. So when they have to balance the two, I would say if it was an isolated supply shock, you know, isolated price increase in oil, they would look through it. But the circumstances of the here and now mean that actually we do not want, you know, yet another sort of stagflationary, sort of like higher prices, lower growth, impacting the economy.

50:32So I would It's a very tough and difficult position for the UK economy because it's going to actually, you know, actually be worse off as a result of the war. Wake Up to Money with Will Bain.

50:47What they are ultimately trying to create is going to replace humans. What it's doing is parboiling the inside of your brain. This could be a turning point in the history of social media. Welcome to The Interface, the show that explores how tech is rewiring your week and your world. Coming up next in our latest episode, we look at the secret meetings at the world's biggest AI summit, the truth about the mystery of a brain-melting weapon, and the lawsuit that could shift the future of social media. Listen on BBC.com or wherever you get your podcasts.