Gen X working blues, Prediction Markets and Burnham's economic headaches
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What is the main topic discussed in this episode?
Taking stock with Susan Hayes Culleton. With Nifty Business, the fleet management specialists. Keeping your business fleet moving with service you can count on. This is Newstalk.
Hello and welcome to Taking Stock. I'm Susan Hayes-Cullerton and this is the show that looks at business and economics from a wider perspective. Coming up on today's show, why everything can now be a bet. We look at the rise of prediction markets. As Andy Burnham takes the stage, we ask what are the biggest economic challenges facing the new PM? Plus, are employment options decreasing for people in Gen X? You can email the show, takingstockatnewstalk.com or you can message me on socials at Susan Hayes-Cullerton. Now, I want to start off this week with an explainer around the JGB. So first off, the acronym itself stands for Japanese Government Bond. And specifically, when people talk about the JGB, they're really referring to the yield, which is the cost of Japanese government borrowing.
Now, you might be saying, why are you telling us about this, Susan? Well, the reason is the interest rate in Japanese debt, or the JGB bond yield, went up over 2.5% this week for the first time this century. And now that's due to a big fiscal stimulus, which is a government encouraging growth in the economy in fears of inflation. Now, a jump in yield happens because of a fall in price. So this higher yield since the beginning of last year makes Japan the world's worst performing major bond market over that period. Now, in a previous episode, we talked about Takeichi, the new Japanese prime minister. And this is a really big problem that she's facing. And it caught my eye this week since we're seeing the first time the JGB is up this high this century.
And I wanted to tell you about it. So watch this space. Now, he's only been in the job for less than a week, but the world is watching to see if Andy Burnham is going to face the UK's economic problems head on. He has identified solving the cost of living crisis as his number one priority, as one might expect. But can he do that alongside attempts to solve underlying structural problems with the economy? I'm delighted to be joined by Chris Blackhurst, an economics commentator with the London Independent. First off, Chris, Britain has not balanced its fiscal budget since the millennium. There's been no real growth in 20 years. And the economics facing Andy Burnham is the same that has faced the last several prime ministers.
Why this time do you think it'll be different? Or do you?
Well, put like that, it won't be different. And that is the problem. Look, you've identified it straight away. Somehow he has to be different.
And
I'm hoping that he's got some strong policies. We don't know what they are. What worries me is that he thinks that sort of optimism and almost fresh air will be enough and a new confidence. He needs to do a lot more than that. He needs to get people spending and investing and believing in Britain, and that will generate jobs and wealth. Obviously, the downside of what I've just said is that an easy win in terms of revenue for him would be to raise taxes, but we're already a highly taxed nation and that would send a very bad signal to the investment community.
What is the Japanese Government Bond (JGB) yield spike and why does it matter?
It's quite likely he'll raise public borrowing, but we just don't know.
OK, but if he raises public borrowing, already the interest bill in the UK is bigger than the education budget. And if we were to look at the bond yield or the UK gilt for the next 10 years, that's 5%. So raising public money then means that there's more interest to pay. And sorry to be explaining to people how to suck an egg, but there is very little fiscal room to do that.
It's not teaching people to suck eggs. It's what people face every day in their own lives when they deal with their credit cards and their bank loans. And sometimes there comes a point when you have to borrow more in order to keep going. And you're quite right. I mean, the danger in all this is that he ends up borrowing more just to help pay off existing borrowing.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–3:24
2
What is the Japanese Government Bond (JGB) yield spike and why does it matter?
3:24–9:48
3
What immediate economic problems is Andy Burnham inheriting as new Prime Minister?
9:48–20:34
4
How could Andy Burnham balance cost‑of‑living relief with fiscal discipline?
20:34–47:48
Speakers
4 identifiedMore from Taking Stock
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