Chapter 1: What is the main topic discussed in this episode?
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Let's maybe start with with the news of the week. You know, the prime minister, Starmer and others are rebuking Donald Trump and saying he's wrong. And yet they're still trying to stop him escalating. I mean, can you really have it both ways or is now the time to go strong against him?
We absolutely want to de-escalate. The future of Greenland is for the people of Greenland. But the message that I've come here with this week in Davos is that amidst all the uncertainty and instability in the world, Britain's plan for economic growth, built on the platform stability, investment and trade, is actually going very well.
We've had six interest rate cuts since I became Chancellor of the Exchequer. Inflation is coming down. The Bank of England expect it to get back to target in the next couple of months. And we've done trade deals with India, with Korea. We're improving our trading relations with Europe.
And despite challenges at the moment, we've secured a trade deal with the US as well, which means we've got lower tariffs than pretty much anywhere in the world.
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Chapter 2: What are the main concerns regarding Trump's tariff threats?
We firmly believe in the UK and across Europe that we do that by NATO allies, by friends working together to secure the best outcomes, not unilaterally making decisions about another country.
What are the risks if this escalates? Is it to the economy or does the UK and Europe worry about intelligence sharing with the US and Ukraine?
All of our focus is on de-escalation, not in worst-case scenarios. We have worked incredibly closely with President Trump the last year because we believe it's in our UK national interest to do so. The strategic relationship between the US and the UK, the military and strategic partnership between our countries is more important than...
partnership between any two countries in the world and it's very important for the safety and security of the western world that that continues and we're determined that it will do so. Similarly the fact that we were able last year to secure the economic partnership deal with the US and we continue work on the
the transatlantic markets work that we're doing at the moment to make it easier for our capital markets to be better integrated and firms listed in the UK and the US raising finance in each other's jurisdictions, greater collaboration when it comes to digital assets, all of that is in the UK's national interest and we'll continue to pursue our national interest
vigorously, but I don't think it's in anyone's interest to escalate tensions or to allow rhetoric to be a substitute for hard work and diplomacy.
But you think the trade deal stands? Because at the moment there's wild speculation about whether everything needs negotiating, whether President Trump goes really hard. How do you model this?
I would just urge people to keep cool heads. I mean, that's what we did all through last year, and it actually served us pretty well.
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Chapter 3: How is the UK planning to de-escalate tensions with the US?
And whilst trade barriers are going up around the world at the moment, we can all see that. In the last year, barriers to trade with the UK have fallen. We've secured a comprehensive trade deal with India, which will come into force in the next few months, just taking legislation through both of our parliaments to secure that.
That includes trade in services, support for exports and also around government procurement. That's a huge deal. The deal with Korea, one of the fastest growing economies as well in the G20 is very important for the UK.
Chapter 4: What is the current state of UK economic growth and stability?
But most important probably is the trade with our nearest neighbours and trading partners in the EU, which was damaged after leaving the EU, voting to leave the EU in 2016. We are now fixing that mess by improving trade relations and cooperation with our closest allies and neighbours.
And I want to get back to you in a second. Governor Bailey, though, said that he worries about also President Trump's attacks on the Fed and that could create shockwaves for the UK. Do you agree with that?
I think that people recognize that certainly with this government and with me as chancellor, there's huge respect for independent economic institutions, whether that is the Bank of England or the Office of Budget Responsibility. One of the reasons why the UK has been so
has had challenging economic times the last few years is because the previous Conservative government, particularly under Liz Truss, both played fast and loose with the public finances, but also undermined the economic institutions that make Britain, have made Britain, a safe and secure place to invest.
We're undoing that damage, working closely with the independent economic institutions, but respecting their independence.
uh and that collaboration and fiscal policy supporting monetary policy has enabled those six cuts in interest rates taking rates down to 3.75 percent it's the fastest speed of rate reduction in the uk in 17 years and that's only possible because of the stability that we've returned to the economy and the decisions we've made on fiscal consolidation
And the IMF say that amongst developed economies, we have got the fastest pace of fiscal consolidation over the next few years. That gives investors confidence around the stability in the UK, our grip on the public finances and our grip on inflation.
So there's no worry about central bank independence that could also impact or inspire maybe some of the opposition in the UK were they to come to power?
Well, look, we won a massive majority just a year and a half ago. We have three and a half years remaining in our term in office. And I'm confident that our economic plan to grow the economy with the stability return to the economy, bringing investment in global investment, as well as unlocking domestic investment,
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Chapter 5: How are recent trade deals impacting the UK economy?
Again, we'll waive those visas as well as a specific scheme for people, gold medalists in the Maths Olympiad, offering a number of scholarships to UK universities for those people. Because we want Britain to be a magnet for global talent in the same way we want it to be the best place in the world to trade from and to invest in.
Chancellor, there's a growing clamour in labour circles, even from some of your own cabinets, for the UK to join a customs union with the EU. Is that on the cards?
No, it was very clear in our manifesto that we wouldn't be rejoining the single market, the customs union, or bringing back free movement of labour. But what we have done already is brought back the Erasmus scheme, which enables young people both from the UK to go and study at European universities and young people from Europe to come and study at our brilliant universities elsewhere. in the UK.
We also have agreements in principle from last May around the UK doing a food and farming deal to reduce barriers to trade at the border, around electricity trading and energy trading, as well as some form of youth mobility within the European Union and the United Kingdom. So we're making progress in all of that.
looking to have another summit this year where we can mark ourselves on progress against those ambitions and set new ambitions because that summit last year was just the start of improving relations between the UK and the EU. And I would just say that
You know, at these sort of times when others are putting up barriers to trade, what Britain is arguing for, and what I believe in strongly, is that those of us who believe in free and fair trade should practice what we preach and reduce barriers between ourselves. That goes to the UK, the EU, Canada, and other allies around the world. And we are determined... to lead from the front in that.
We've already secured trade deals with countries around the world. We want to do more in the months to come.
But Chancellor, I mean, mathematically, just, you know, if you leave politics to one side, again, rejoining the customs union could be more beneficial. So do you see a future at any point where the UK goes back in?
We can't go back in time. And since we left the EU, we have done trade deals with India, with the US, with Korea. And obviously, you would lose some of the benefits of those trade deals if you were to re-enter a customs union. Things like the benefits of the deal we did with the US for our automotive sector. The deal that we have with India is better than the deal that any other country has with
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Chapter 6: What challenges does the UK face in its relationship with the EU?
And when the barriers to trade in other markets are going up, We want to create more opportunities for our businesses to trade with other countries around the world.
There is, of course, big news about a new embassy, a Chinese embassy in London today. How do you see actually the relationship with the UK and China evolving?
Yeah. So we've given planning permission today for a new embassy. Obviously, China already has an embassy in London. This will be a new embassy, a move. But, you know... If you just sort of take a step back, Britain has embassies in almost every country around the world and almost every country in the world has an embassy in London.
They are absolutely vital for diplomatic relations and also for resolving tensions. And so it is right that China has an embassy in London in the same way that it's important and right that the UK has an embassy here. in Beijing and I was at our embassy in Beijing just last January when we restarted the economic and financial dialogue with China.
It was the first time that we'd had an economic and financial dialogue between our countries for six years and whilst other countries had been securing benefits for their financial services sectors in growing markets in China, we refused to engage and that was the wrong thing to do. It was not in Britain's interests, and that's why we changed that approach.
The Chinese hosted the economic and financial dialogue last year. We secured significant benefits for UK businesses, and we'll be hosting the next economic and financial dialogue with our Chinese counterparts in the UK this year.
If the US continues being a little bit, you know, not a little bit, actually belligerent with Europe, do you see the UK getting much, much closer to China?
Well, let's just look at the numbers. The US trades more as a share of GDP with China than the UK does. Almost every big country in Europe trades more with China than the UK does. And that's because... The UK under successive conservative governments retreated from the global sphere for a number of years and that was a mistake and we lost out on growth and trade as a result of it.
We are pursuing a very different approach which is to relentlessly focus on our national interest and our national interest means tackling the cost of living and growing our economy with more good jobs, paying decent wages in all parts of our country.
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